Trade imbalance hinders Ghana’s devt — Experts call for urgent steps to reverse trend

The country’s excessive dependence on imports is worsening its international trade vulnerabilities, a development which has prompted calls for the implementation of urgent measures to reverse the present trade imbalance against the country.

Government Statistician, Professor Samuel Kobina Annim, who made the call was of the firm view that such an action would help to reverse the serious trend, make the country self-dependent and be a net exporter to gain some more foreign exchange.

Using the findings of the country’s Trade Vulnerabilities Report 2022 to justify his call, he noted that the impact of Russia’s invasion on Ukraine on food imports and the recent consequences of the coup in Niger on imports such as onions and other vegetables brings to the fore the need for Ghana to drastically scale up its domestic production of goods and intensify efforts in their value addition to reduce the risk on the economy.

He indicated that another striking and problematic issue is the dependence on so few commodities and so few countries for exports.

“The global uncertainties are real and will get worse.

This is the reason we must quickly grab the opportunity to turn the situation around for good to prevent an economic crisis which might not auger well for the country,” he told the Graphic Business in an interview as he responded to questions about the findings of the report.

The report highlights Ghana’s international trade vulnerability, which has the potential to constrain the strengthening of the Ghanaian economy.

Heavy reliance on imports has been a matter of grave concern because of its continuous impact on the value of the local currency, the cedi, against the major foreign trading currencies and inflation, particularly importation of  food items.

Experts View

Commenting on the report, an Executive Coach and Former Vice-President of Global Markets, Unilever, Yaw Nsarkoh, in an exclusive interview with Graphic Business, said the report was yet another proof that the economy was still very much in a neoliberal capitalism, noting that “neoliberal capitalism have never taken an economy from the periphery, stuck in neocolonial legacy structures as extreme servant-partner in the interstate power struggle for domination and world hegemony, to development”.

According to Mr Nsarkoh, it was instructive to note that the country’s economy since the days of Ghana’s first President Kwame Nkrumah is very much a “neo-colonial economy from the periphery”, stating that “in spite of the obvious, Ghana like many other African countries has been unable to make the structural and fundamental changes to improve the essence of the economy”.

Explaining, he said “ Ghana hardly trades with other African countries. The structure of its trade is heavily exposed to Europe, still just like during the colonial era. It imports from 209 countries”, asking “what on earth is Ghana importing from that many?”

Mr Nsarkoh noted that in spite of the flowery rhetoric and Pan Africanist solidarity, the African Continental Free Trade Agreement (AfFCTA and the Economic Community of West Africa (ECOWAS) and so on, very little value was added to the country’s exports.”

He said “yet Africa and Ghana in particular continue to show policy addiction and thought capitulation to its central cannons, despite the evidence”.

“This Ghanaian economy remains ossified at that structure that prevailed in 1990 some years after the Berlin Conference, he said, and called for courage, originality and determination to escape what he described as “the periphery in the world system that has developed since capitalist modernity emerged”.

“If we needed a reminder that neoliberal capitalism does not work, this report offers yet more proof.  And that proof endangers our neoliberal democracy for it demonstrates yet again that our experiment with neoliberal democracy has left too many people without an economic dividend, while it has significantly enriched a tiny minority to vulgar and exhibitionist ostentation. An explosive reality”, Yaw noted.

An investment firm C-Nergy Ghana in a recent publication on the mid-year budget called for intentional policies that would drive an export led-economy.

It mentioned the need for value addition to the raw exports on raw materials.

Mention of the aluminium integrated industry, cocoa processing value chain which has a value of over US$40 billion and the need to add value to the recent resource find, lithium.

The report further exposed the sad realities of how Ghana remains a “Guggisberg Economy”, that is, exporting raw materials and importing almost everything needed in the country.

Although, there have been talks of changing the structure of the economy to an export led one, such ‘rhetorics’ are yet to translate into action as many experts have observed.

Much as many presidents including the sitting President has time again referred to the economy as  a ‘Guggisberg Economy’ referencing the prevailing colonial structures which only exported raw materials without value addition, the situation remains the same, more than sixty years after independence.

The unfortunate phenomenon still begs the question about the impact of the special initiatives of the present government such as the One-District, One Factory policy (1D1F), One Village One Dam (1V 1D) on exports as experts continue to question whether these policies have yielded the desired results.

Consequently, they have called for a review of those policies to ensure that the country takes full advantage of its export potential.

Key findings 

The report which data was gathered from what he described as administrative sources showed that four commodities (gold bullion, crude petroleum, cocoa beans, cocoa paste) constituted about three-quarters (75.0%) of all exports.

Meanwhile, for imports, on the other hand, a whopping 219 different commodities make up about three-quarters (75.0%) of all of the country’s imports.

Four countries (Switzerland, China, Canada and South Africa) account for over half (50.0%) of all exports, while six countries (China, UK, Netherlands, USA, India, and Switzerland) are the source of about half (50.0%) of all imports.

“It is only in Africa and North America that the value of exports exceeds imports,” according to the report.

The report further found out that in 2022, the country’s total exports amounted to GH¢144.1 Billion while total imports hit GH¢148.6 billion.

Of the total number of Ghana’s trading partner countries, it emerged that the country imported from 209 countries but exported to just 161 countries.

By way of share of the commodities traded, two commodities, gold and petroleum oils and oils obtained from bituminous minerals and crude constituted a whopping 67 per cent, a development which begs the questions as to whether governments over the years are serious about their resolve to fully diversify the country’s export base to reduce the risk of global commodity price shocks and to rake in more money from non-traditional exports.

By way of revenue from the top export commodities, Ghana earned GH¢53.6 billion from gold bullion, GH¢43.3 billion from petroleum oils, and oils obtained from bituminous minerals and crude, GH¢10.4 billion from cocoa beans, superior quality raw beans, GH¢3.4 billion from cocoa paste and defatted, and GH¢ 2.0 billion from cashew nuts in shell.

In terms of top import commodities, Ghana imported GH¢20.2 billion of diesel-automotive gas oil; GH¢14.7 billion worth of light oils; motor spirit and super; GH¢3.1 billion worth of cement clinkers; GH¢2.7 billion worth of used vehicles and GH¢2.1 billion of cereal grains, worked but not rolled or flaked, of other cereal grains, worked but not rolled or flaked, of other cereal.