L.I. on Import Restrictions: A Recipe for Economic Stagnation, Business Suffocation and Market Distortion

The YAFO Institute is deeply concerned by the purported action of the Trade Minister, Hon. Kobina Tahir Hammond to introduce the Legislative Instrument (L.I) on import (Restrictions on Importation of Selected Strategic Product Regulation, 2023) which imposes import restrictions on twenty-two (22) goods and requires businesses to obtain import certificates before importing. We believe that this L.I. is harmful to the Ghanaian economy and will bring adverse consequences to both businesses and consumers.

This L.I. would distort the natural market and negatively impact businesses, including

  1. Increase Cost: The L.I. will raise Ghanaian businesses operating expenses, making it harder for them to compete with foreign firms.
  2. Decreased Efficiency: Businesses will be slower and less effective as a result of the import certificate requirement, which will add an extra layer of needless bureaucracy to the import process.
  3. Restricted Access to Goods: The L.I. will make it harder for businesses to get supplies and materials they need, which might cause shortages and higher prices for customers.

The L.I. on import seeks to restrict the following twenty-two (22) goods: (1) Rice, (2) Guts, bladders and stomachs of animals (offal), (3) Poultry, (4) Animal and vegetable oil, (5) Margarine, (6) Fruit juices, (7) Soft drink, (8) Mineral water, (9) Noodles and pasta, (10) Ceramic tiles, (11) Corrugated paper and paper board, (12) Mosquito coil and insecticides, (13) Soaps and detergents, (14) Motor cars, (15) Iron and steel, (16) Cement, (17) Polymers (Plastics and Plastic Products), (18) Fish, (19) Sugar, (20) Clothing and apparel, (21) Biscuits, and (22) Canned tomatoes. 

There are many different products on the list, ranging from consumer goods like mineral water and clothes to staple foods like rice and fish. These goods are essential for basic needs and shortage of them would harm the quality of life enjoyed by consumers.

The L.I. has been cloaked to protect local industries; however, it is an underpinning of a selfish and grand theft scheme to rob local businesses through fees that would be charged for import certification. This arrangement would breed corruption and allow ‘goro boys’ (middlemen) thrive on unofficially fees for securing import certificate timely for business efficacy. This would bring extra cost to businesses and suffocate local businesses to crash out since they do not have the financial muscle to sustain such arrangement as well as compete with foreign companies. 

If the Trade Minister, Hon. Kobina Tahir Hammond, seeks to protect local businesses, then he should push for tax cuts and eliminate the needless and nuisance taxes on local businesses in Ghana.

Again, we are in an era of promoting the African Continental Free Trade Agreement (AfCFTA) hence regional blocs are working to achieve one market integration. Therefore, the protectionist underpinning of the L.I. is a step backward toward achieving a single market for goods and services and investment. 

In addition, Ghana is signatory to several international trade agreements such as the Africa Growth and Opportunity Act (AGOA) which was signed in May 2000 as Public Law 106. AGOA opens the US market to Ghanaian local businesses and allows these businesses to also import US goods duty-free to enhance price competition for better consumer welfare. This arrangement has been extended several times and the most recent would expire in 2025. Clearly, the L.I. on import restriction is inconsistent with existing trade agreements like AGOA. 

Also, the actions of the Trade Minster, Hon. Kobina Tahir Hammond, rely heavily on subsidiary legislation (thus L.I) to impose a restriction that would adversely impact the entire citizenry, is dubious and seeks to ignore necessary steps for broader consultation. This is because the unwitting approach which shoves the L.I. under our throat as a subsidiary legislation would come into effect under the expiration of twenty-one (21) sitting days after being laid before parliament pursuant to Article 11(7) of the 1992 Constitution. Hence preventing broader and vigorous debate on the L.I. on import restriction.

We, therefore, demand that the Government of Ghana promptly review and revoke the L.I. on import restriction (Restrictions on Importation of Selected Strategic Product Regulation, 2023) and stop any attempt to re-introduce same. The economy of Ghana will ultimately suffer from this L.I., which will also negatively impact consumers and businesses. We implore the government to collaborate with industries and businesses interest in creating solutions that will boost the economy of Ghana and enhance the quality of life for all Ghanaians. We also call on the members of parliament who have demonstrated resistance towards such dubious L.I. on import restrictions to continue to be vigilant and prevent such a bad law from passing in the house.

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Note to Editors

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The mission of the YAFO Institute is to educate and connect students, young professionals, and entrepreneurs with global opportunities through free enterprise research and innovative public policy advocacy for a prosperous society.

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