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18 October 2016

Trade Ministry clarifies role of Cement Monitoring Committee

SpioThe Trade and Industry Ministry has clarified the brewing impasse between it and the Cement Manufacturers Association (CMA).

In a statement released Monday, sector Minister, Dr Ekwow Spio-Garbrah explained the role of Cement Monitoring Committee (CMC) which he said is mandated to advise him and make recommendations.

“However, the L.I does NOT mandate the Cement Monitoring Committee (CMC) to determine for the Minister who should be granted a license. The L.I is very clear about this and indeed the CMC is not mentioned in the entire License Approval process, and is not intended or expected to interfere in the licensing process,” the statement said.

The statement further explained that the main issue with the CMA and the manufacturers-dominated CMC is that cement manufacturers misrepresent their roles in the licensing process.

The Ministry was emphatic that no authority or mandate has been given to the CMC to instruct or direct the Minister on who should be awarded a license and what that company’s specific annual imports should be.
Read the statement below:

The attention of the Ministry of Trade and Industry (MOTI) has been drawn to a Press Conference held by the Cement Manufacturers Association (CMA) which was given wide publicity by the Ghanaian media.
The Ministry wishes to proffer the following clarifications.

The Export and Import Restriction on Cement Imports, Legislation Instrument (L.I) 2240, 2016 was passed in Parliament on 1st August 2016. The L.I. was specifically put in place to make cement imports into Ghana possible but under a regulated regime and based on sound facts and analyses.

The most immediate effect of this LI and the initial cement license granted, among other factors, has led to reductions in cement prices in the interest of consumers.

The role of the CMC

It is a fact that the Cement Monitoring Committee (CMC) is mandated by the L.I to advise the Hon. Minister and make recommendations for his consideration with regards to quantities and quality of cement to be imported. However, the L.I does NOT mandate the Cement Monitoring Committee (CMC) to determine for the Minister who should be granted a license.

The L.I is very clear about this and indeed the CMC is not mentioned in the entire License Approval process, and is not intended or expected to interfere in the licensing process.

The main issue with the CMA and the manufacturers-dominated CMC is that Cement manufacturers misrepresent their roles in the licensing process.
No authority or mandate has been given to the CMC to instruct or direct the Minister on who should be awarded a license and what that company’s specific annual imports should be.

The CMC’s role is intended to give the Ministry and all stakeholders’ access to relevant information and data for the effective implementation of the Cement LI. Indeed, the legislative crafters made it a point to separate the paragraphs dealing with Licensing procedures and the role of the Cement Monitoring Committee.

Under the licensing procedures, the CMC have NO role whatsoever. Otherwise, we would have the ludicrous situation of domestic manufacturers sitting in judgement over importers of cement.

The license to Fujian Cement

A major reason for granting a license to Fujian Cement to import cement into Ghana, is because of the advanced stage they have reached in constructing a cement plant in Ghana. Most prospective manufacturers of any product in any country often need to import some of their products to prove themselves in the marketplace before going ahead with any massive investments in factories and machinery. This is the same process with Fujian Cement.

Fujian Cement company, which has been given the license, is a Chinese State-owned company which is affiliated with Sentuo Steel of Tema.

Sentuo Steel is partially owned by the government of Ghana (GoG) through the Social Security and National Insurance Trust (SSNIT), with the Fujian State of China as majority shareholder.

Fujian Province in China has a sister city agreement with Greater Accra Region. So this license is not one that has been awarded to some strange “Chinese” company that is unknown and unaffiliated with the GoG. Quite clearly, the license was awarded to a “Ghanaian company”.

With regard to the quantity of 500,000 tons license awarded to Fujian Cement, the Cement Manufacturers Association (CMA) have claimed in their own reports that as much as 2 million tons of cement are imported annually into Ghana, thereby putting undue pressure on the market domination by the several “foreign-owned” domestic manufacturers.

For the sake of further and better particulars, it must be stated that Fujian Cement actually applied to MOTI to import 1.5 million tons of cement per year.
However, they were granted a license to import only one-third of that quantum, which is much less than the 2 million plus that the CMA itself claims is imported each year into Ghana.

So far, the 500,000 is the total annual quantity of permit given by MOTI for cement imports, well below recent annual average imports.
The 500,000 tons is less than 10 percent of the annual output of local cement manufacturers. This quantum which would be spread over a year at about 40,000 tons annually could not be deemed to lead to any massive influx of foreign cement into Ghana.

The Ministry has NOT granted any import licenses to Dangote Cement and Sol Cement as alleged by the CMA.

Providing a permit to a company to import cement, consistent with the procedures in the LI, does not mean that GoG/MOTI is encouraging Ghanaians to buy that specific cement product. In any case, this company and several companies have been importing cement into Ghana for years anyway.

Without the LI, Fujian could conceivably have imported far more than has been approved for them—as until now there has been no legislative and regulatory framework for limiting imports of cement into Ghana. The Cement LI is simply to regulate when who and in what quantities cement may be imported into Ghana during a given period.

The Cement Licensing Process

According to the L.I, the Minister is bound to offer a response to an applicant to import cement within 30 days hence the issuance of a license to Fujian Cement before September, 30, 2016. Until October 5, 2016 the Minister had received no advice from the Cement Monitoring Committee (CMC)
Currently, there are several other cement importers whose applications and documentation are awaiting MOTI’s review and Ministerial action.

It must also be realized, that under the law the Minister has specifically 30 days within which to respond to an application. So the Minister cannot look elsewhere and ignore qualified applicants simply because some stakeholders may wish for cement importers to disappear altogether.

The criteria to qualify to import cement into Ghana has deliberately been made quite stringent in order to eliminate any companies that do not have the financial gravitas to import cement in such quantities as will justify their keeping the prices reasonable and affordable to consumers.

It is worth noting that, to prevent the capricious action by a Minister, the Cement LI also provides for an Appeals Committee of eminent men and women to whom an importer can appeal if his application is rejected by the Minister. That Appeals Committee has the power to reverse the Minister’s action.

The Cement LI specifically does NOT place a ban on imported cement but rather provides a mechanism, rules and procedures for controlling the imports. The objective of the LI is not intended to create a monopoly for the CMA for cement distribution in Ghana.

The LI is also not aimed at any nationality of the importers or manufacturers of cement. Indeed, currently, the cement industry is totally dominated by foreigners – Europeans, Indians, Chinese, Nigerians and Liberians.

As such, there is no merit in the CMA, which is itself totally dominated by foreigners to give the impression that something is wrong because the licensed importer is Chinese.

The role of MOTI in Supporting Ghana’s Industries

So, as with numerous other industries, the strategy of MOTI has been to convert importers or processors—of sugar, rice, cement, juices, beverages, etc into manufacturers, as part of the GoG’s made in Ghana (MIG) policies.

Fujian Ltd also has plans to become a manufacturer of ceramics and furniture in Ghana, thereby making them a prominent prospective member of both the Cement Manufacturers Association of Ghana (CMAG) and the Association of Ghana Industry (AGI).

High quality and affordable imports put pressure on local manufacturers to maintain high standards, keep their prices low, and invest continually in technological innovation in order to remain competitive.

The job of the Ministry of Trade and Industry almost always involves a careful balancing of the competing interests of several actors in any value chain—investors/financiers, growers, producers, buyers, traders/distributors, importers, processors, exporters and consumers.

Whether one is dealing with rice, cashew, sugar, textiles/garments and other commodities, MOTI is often seen by any of these groups within the value chain as favoring another segment of the value chain.

The difficult responsibility of MOTI to defend the unwritten national interest and act as a fair arbiter and public administrator who must carefully balance the often competing and conflicting interests of many in the business sector is not often appreciated.

As such, any value chain member would naturally feel very aggrieved anytime a decision is taken that they perceive as reducing their revenues, profits, market share or other benefits. And yet, most public policy decisions cannot have a neutral impact.

It is important to conclude that following from the issuance of a license to Fujian Cement Company to import cement into the country, government has decided that MOTI should refer to the Cabinet any applications for licenses to import cement.

Source: Myjoyonline

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