Chamber Of Commerce Worried Over Rising Production Cost

By Times Reporter

The Ghana Chamber of Commerce and Industry (GCCI) has expressed concern about the rising Producer Price Index (PPI) and its attendant effects on industry in the country.

In a statement issued last week, GCCI said data from the Ghana Statistical Service for the month of July 2014 indicated that the PPI rose by 47.4 per cent, compared to July 2013, and that between June 2014 and July 2014, the rate of inflation increased by 10.2 per cent.

The  statement, signed by its President, Dr. Seth Adjei Baah, and copied to the press, said: “These are very steep increases in production costs for our members, who are already reeling under unfavourable local business environment.”

The situation, it said, had made domestic production and domestic industry uncompetitive relative to imported products, adding that “the Chamber believes this situation has the potential to worsen the country’s balance of trade.”

The GCCI said President John Mahama’s campaign on the patronage of made-in-Ghana goods, although a laudable call would remain an illusion if local industries could not produce to meet local demand due to rising cost of production, as reflected in the soaring PPI.

The Chamber said rising import bills have resulted in large and growing trade deficit, with its direct consequence of economic policy regimes penalizing domestic production and making imports super lucrative.

“The implications for employment in particular and overall national development are obvious,” it said.

The statement said: “Indeed, our excessive consumption of imported goods has been cited as one of the main reasons behind the rapid depreciation of the local currency.”

The GCCI said Ghana could not hope to build a strong industrial base, if the business environment continued to deteriorate and production cost hit the roof, and emphasized the need to lighten the burden on domestic industry.

The Chamber cited the high cost of utilities as one of the key factors that fed into the rising cost of production for all other industries, and said what was needed was the political will to address the deficiencies in that sector to bring relief to both industry and households.

It further identified the tax rate and its administration as another aspect of the business environment that required constant and structured interactions between government and industry to address.

“The GCCI uses this opportunity to invite government to a dialogue on these and many other issues that are inimical to the industrial base of the country,” the statement said.

According to the Chamber, the important lesson from countries that had made the transition from primary commodity production into industrial value added economies was that domestic industries that were considered strategic to national development, including employment generation, needed to be supported, protected and nurtured into maturity.

It said there was a lot that government working with the industry players across the board could do to avert a collapse of domestic industry and, therefore, called on government and other stakeholders to put hands on deck to mitigate the situation as soon as possible.

The PPI measures average changes in the costs of production over a specified period.

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