Authorities move to prevent unfair trade practices in Ghana's industrial sector

The Cement Manufacturers Association of Ghana (CMAG) has repeatedly pressured the government over the course of the past couple of years to take action against what it views as unfair trade practices, in particular from Nigeria and China. As a result, the government recently adopted protective measures, including establishing mechanisms to improve government control of imports over time and address the grievances of local producers. In the meantime, cement importers appear to be investing in local production, raising competition in this sector.

Issuing Import Licenses

In October 2016 CMAG protested against the attribution of a 500,000-tonne cement import licence to Fujian Cement. The state-owned firm from China affiliated with Sentuo Steel is part-owned by the Ghanaian government through the Social Security and National Insurance Trust Fund. According to CMAG, the government did not consult the Cement Monitoring Committee (CMC), a recently established institution meant to advise the government on cement trade, when approving this one-year licence, starting in August 2016.

While the debate about whether the government needed to consult the CMC before taking this decision was still ongoing at the time of publication, the government argued that the scope of the cement licence, roughly the equivalent of less than 10% of local annual cement production capacity and 25% of annual cement imports, did not put the local cement industry at risk. Moreover, as the Ministry of Trade and Industry publicly explained, its attribution was decided as an incentive towards a larger investment – the establishment of another local producer – bringing more competition to the sector. Fujian, the government reported, is constructing a cement plant and has plans to become a manufacturer of ceramics and furniture. This, the ministry argued, falls in line with the government’s efforts to convert importers or processors into domestic manufacturers.

Dumping

Local producers also raised concerns over dumping, detailing allegations that imports were being sold at a cheaper price in Ghana than in home markets and – in the case of one importer, Nigeria’s Dangote Cement – also benefitting from a 30% Nigerian export subsidy. CMAG called on the government to adopt protective measures, such as increasing the freight on board (FOB) charge to $90, and preventing dumping and other unfair trade practices.

According to the association, imported Chinese cement costs and freight values were being under-declared, with indications that figures were as low as between $25 and $30 per tonne. With 500,000 tonnes of imported bagged cement entering the country, CMAG estimated that Ghana was losing more than GHS50m ($12.9m) in undeclared freight.

Protecting Producers

To tackle the impact of imports on the local cement industry, the government promoted a number of protective measures. In July 2016 Parliament passed the Ghana International Trade Commission Bill, establishing an independent, quasi-judicial government agency in charge of overseeing the country’s compliance with international trade rules and regulations, and protecting the domestic market from unfair trade practices.

In August 2016 Parliament passed the Export and Import (Restrictions on Importation of Portland Cement) Regulations 2016 Legislative Instrument 2240, establishing the CMC and creating an import licensing system for Portland cement importers, excepting firms licensed under the ECOWAS Trade Liberalisation Scheme. Prior to this, in January 2016 the Ghana Revenue Authority raised the FOB charge on imported cement, from $26 to $60 per tonne.

Competition

Some importers are now seeking to expand their foothold in Ghana. Dangote recently announced the construction and inauguration of a second $100m clinker grinding plant in Takoradi by 2017, with a 1.5m tonne annual production capacity.