Ghana’s private sector is struggling under what experts describe as an “unsustainable tariff regime” that could push the economy toward stagnation and possible international trade retaliation if urgent reforms are not made.
In a detailed policy analysis titled “Before the Fall: How Ghana’s Tariff Madness Could Bankrupt the Economy,” Dr Leonard Larbi warns that Ghana’s complex and overlapping system of import duties, levies, and administrative fees is choking business growth, driving inflation, and weakening the country’s competitiveness.
A Perfect Storm of Taxes and Interest
According to Dr Larbi, Ghanaian businesses face “a suffocating stack of charges at the port” alongside double-digit interest rates that make borrowing and expansion nearly impossible.
The combined effect, he argues, is higher consumer prices, stifled investment, and mounting unemployment.
“Entrepreneurs are not asking for handouts,” Dr. Larbi notes. “They’re asking for oxygen.”
He proposes capping import tariffs between 5% and 10%, scrapping redundant levies, and ensuring interest rates fall in line with Ghana’s declining inflation, which recently dropped to 9.4% — the lowest since 2021.
The Hidden Cost Behind Every Import
While official import duties are advertised at 10–20%, Dr Larbi’s analysis reveals that additional taxes and fees substantially increase the true cost of imports.
These include the 15% VAT, 2.5% NHIL, 2.5% GETFund levy, 1% COVID-19 Health Recovery Levy, ECOWAS levy (0.5%), AU levy (0.2%), and ICUMS and processing fees of up to 1%.
“When combined, these charges can push the total tax burden to 50–100% of the landed value,” he explains. “This is a competitiveness killer for small traders and local manufacturers.”
Constitutional Questions Over Some Levies
The report further raises legal concerns, suggesting that parts of Ghana’s import taxation system may violate Article 174 of the 1992 Constitution, which requires all taxes to be authorized by an Act of Parliament.
While duties such as the Import VAT, NHIL, and ECOWAS levies are legally backed, others — including the ICUMS fee, disinfection fees, and customs processing charges — lack clear legislative authority.
“These charges amount to double taxation,” Dr Larbi argues. “Import duty itself is already a tax. Layering multiple levies on the same value base distorts prices, fuels inflation, and undermines the rule of law.”
Economic Consequences and Global Risks
The analysis warns that Ghana’s opaque tariff and valuation practices could expose the country to sanctions under World Trade Organization (WTO) rules.
If major trading partners retaliate by imposing tariffs on Ghana’s key exports — cocoa, gold, and agricultural goods — the economic consequences could be devastating.
“A 20–30% tariff on Ghana’s cocoa exports could erase hundreds of millions in revenue and devastate rural livelihoods,” the report notes. “Ghana cannot afford a trade war it cannot win.”
The Cost of High Interest Rates
Although inflation has fallen, lending rates remain high — between 20% and 30% in practice. Dr Larbi stresses that lower inflation must translate into affordable credit if businesses are to thrive.
“With inflation down, it’s time for interest rates to follow,” he says. “Otherwise, entrepreneurs will continue to struggle to restock, hire, or invest.”
A Blueprint for Reform
To avert an economic crisis, the author proposes a seven-point reform plan:
1. Cap all tariffs and duties at 5–10%.
2. Eliminate non-statutory levies such as ICUMS and disinfection fees.
3. Make VAT, NHIL, and GETFund non-cascading.
4. Publish transparent valuation data.
5. Align interest rates with inflation.
6. Audit all trade taxes for WTO compliance.
7. Promote value-added exports to strengthen the cedi.
A Call for Urgent Action
Dr Larbi cautions that without immediate reform, Ghana faces a “ticking time bomb” of inflation, unemployment, and potential default.
But if the government acts swiftly — simplifying tariffs, lowering borrowing costs, and improving transparency — the nation could stabilize its economy and restore investor confidence.
“This isn’t ideology,” he concludes. “It’s survival.”
