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Liberalisation in ICT services detrimental to local companies – Survey

Even though liberalisation of trade in ICT services has led to increased investments in Ghana, the policy has nonetheless been detrimental to indigenous businesses, a recent survey by the Science and Technology Policy Institute (STEPRI) has shown.

The perception survey carried out on the International Liberalisation of Trade in ICT Services to identify the challenges for the private sector in Ghana, indicates that multinational corporations in the ICT sector, have captured the local market, which has affected indigenous companies to take advantage of competitive market.

The survey was carried out in 2011 by the STEPRI of the Council for Scientific and Industrial Research (CSIR) in Ghana with support from the PANOS Institute of West Africa, with funding from the Canadian International Development Research Centre.

The report says in spite of numerous benefits that the international policy on trade in ICT services offers, very little efforts have been put in place in Ghana to educate local businesses of the benefits in the ICT sector.

“Thus many stakeholders who provide ICT services do not have adequate knowledge on liberalisation in ICT, suggesting that they are not able to take the advantage of the full benefits of liberalisation,” Dr Godfred Frempong, a Director at the STEPRI and a co-research of the report said.

He said Ghana’s system of taxation was one major policy that had made it very difficult for the local businesses to reap the full benefit of the liberalisation in trade in ICT services.

“The tax structure makes it cheaper to import complete computers rather than to import parts and assembly them here. This to some extent has discouraged local assembly of computers and constrained the growth of small firms…” Dr Frempong said.

This he added could pose a threat to the development of local innovativeness, especially in the area of software development.

Again Dr Frempong said many multinationals repatriate their profits or earnings to their mother-companies to the detriment of the national economy.

He said though the country’s procurement law makes provision for local content to feature prominently in the goods and services supplied by multinationals, it has not been well articulated and promoted.

“The challenge therefore is how to support the local companies to compete effective with the MNCs to reduce capital flight and contribute to the development of the sector and the economy,” Dr Frempong said.

A positive development the report notes is that knowledge about international and regional framework governing liberalisation of trade in ICTS services was good in Ghana, though participation in the consultation process that led to the international negotiations was not strong.

Ghana is among the first countries to liberalise its telecom sector in Africa in the early 1990s and today it has one of the most liberalised mobile telephone markets in Africa with six mobile operators.

The ICT sector has made some direct contributions to the Ghanaian economy in the area of trade, government revenue and employment but the report says more can be done with proper implementation of government policies to address the constraints in the sector.

Source: GNA

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