The Association of Ghana Industries (AGI) has expressed concern over the potential removal of taxes on imported sanitary pads and its detrimental impact on local manufacturers.
The AGI in a recent press release, emphasized that while the intention to make sanitary pads more affordable for young women is commendable, such a policy measure would severely harm the few remaining local sanitary pad factories, negatively impacting the economy.
According to the AGI, local manufacturers of sanitary pads and diapers have already been struggling due to the influx of cheap and sub-standard imports, which are sold at significantly lower prices.
As a result, “these manufacturers are currently operating at only about 30% capacity, with some factories forced to close down and lay off workers?” statement signed by CEO of AGi Seth Twum-Akwaboah read.
The complete removal of taxes on imported sanitary pads would likely “lead to the collapse of the remaining factories or force them to transition into importers rather than manufacturers”.
The AGI argues that “instead of granting tax waivers to imported pads, the focus should be on providing the necessary incentives and support to local companies, enabling them to meet domestic demand and preserve jobs and foreign exchange”.
The AGI proposes an alternative approach, suggesting that the government consider exempting local manufacturers of hygienic sanitary pads from Value Added Tax (VAT) and import duties on their imported raw materials.
They argue that if such tax reliefs are granted, the cost of sanitary pads produced by local manufacturers could be significantly reduced, making them more affordable for approximately 70% of young women in impoverished communities.
The AGI points out that exemptions from VAT and import duties are already in place for various medical supplies, services, and essential drugs, and “extending the same dispensation to the raw materials for sanitary pads would be fair and beneficial”.
The association urges caution in the ongoing public discourse and social commentary advocating for the removal of import duties on sanitary pads.
They argue that such a move could have adverse consequences for local manufacturing, job creation, and revenue generation for the government.
Instead, the AGI calls on the government to prioritize supporting local manufacturers through incentives, rather than favouring imports. They highlight the importance of industrial transformation, attracting investments, creating jobs, and shifting the economy from an import-oriented to an export-oriented structure.
The AGI added that while some countries “adopt countervailing taxes to protect their local markets, it would be unfortunate for Ghana to eliminate taxes on imported sanitary pads, especially when there are local factories producing the same items”.
They stress the need for policy prescriptions that promote long-term economic growth, attract investments, and facilitate the transformation of Ghana’s economy.