The prevailing 20 percent excise duty on natural fruit juices is undermining the country’s efforts to stabilise the cedi, deepen import substitution and strengthen its agro-industrial base – with as much as US$1.77billion in exports potentially lost annually, the Chamber of Agribusiness Ghana has warned.
In a recent communiqué signed by its Chief Executive Officer, Anthony Morrison, the Chamber called for an urgent policy reversal; warning that the tax – originally introduced as both a revenue-raising and public health measure – is producing the opposite effect.
It said the policy is weakening local industry, discouraging healthy consumption, destroying value-chain jobs and undermining the country’s efforts at import substitution and export growth.
According to the Chamber, the economy spends between US$350million and US$450million annually importing beverage concentrates, powdered drinks and sweetened alternatives which could be produced locally if domestic processors were better supported.
“With a supportive tax regime, natural juice processing could realistically achieve 30 to 40 percent import substitution within 3 to 5 years,” the statement read in part.
“This could add another US$120 to 180 million in annual foreign-exchange retention,” it added.
Instead, the Chamber argued, the 20 percent excise duty is protecting imports and worsening foreign-exchange leakage; placing additional pressure on the cedi at a time when macro-economic stabilisation remains a national priority.
The national food import bill was estimated to be US$3.25billion in 2024, exceeding the cumulative US$3billion to be received in 36 months under the ongoing Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF).
While the local unit has appreciated by more than 30 percent against the US dollar as of beginning November this year, it has not been without significant interventions by the Bank of Ghana (BoG).
Threat to industry
The national ambition to industrialise through agriculture, create jobs – particularly through the 24-Hour Economy – “depends heavily on agro-processing” the Chamber said, describing the excise duty on natural fruit juices as a “structural brake” on those objectives.
“Natural fruit juices, especially 100 percent juice, not-from-concentrate (NFC) and fibre-rich blends, do not fall into this category,” the statement said, rejecting the classification of such products alongside traditional excisable goods.
“Taxing them as if they were unhealthy beverages sends a dangerous signal: that adding value to agriculture is being penalised rather than encouraged.”
The Chamber noted that local juice processors already face high production costs driven by expensive energy and water, imported packaging materials, high interest rates and the seasonal, perishable nature of raw materials.
The additional excise duty, it said, raises shelf prices sharply and makes locally produced juices less competitive than imported alternatives.
“As demand falls, factories are forced to operate at 30 to 45 percent capacity instead of an efficient 70 to 85 percent. This underutilisation has serious consequences: farmers lose reliable offtake, fruits rot in the fields, factories cut shifts and bank loans become stressed,” the statement added.
These dynamics, the Chamber warned, undermine Ghana’s import substitution agenda and erode the country’s ability to conserve scarce foreign exchange. By discouraging domestic value addition, the tax “directly contradicts macro-economic stabilisation efforts”.
The statement also linked this excise duty to broader fiscal risks, arguing that any short-term revenue gains could be outweighed by longer-term losses. “Any short-term excise revenue risks being outweighed by lost PAYE and corporate taxes, higher NHIS and public health costs and increased unemployment-related social pressure,” it said, describing the outcome as a “negative fiscal multiplier”.
From a currency perspective, the Chamber stressed that agro-processing offers one of the fastest routes to reducing import dependence while strengthening domestic production.
Juice processing, it said, sits at the intersection of agriculture, manufacturing and trade – with the potential to anchor rural incomes and stabilise supply chains.
The excise duty however “protects imports, increases forex leakage and adds unnecessary pressure on the cedi”, the statement said.
The Chamber called for a more targetted tax regime that distinguishes between natural juices and heavily sweetened or artificial beverages.
“Ghana does not need to choose between revenue and development,” it said. “A better approach would zero-rate or exempt 100 percent natural fruit juices and apply excise strictly to sugary and artificial beverages.”
The Chamber further stated that the issue goes beyond a single sector.
“The 20 percent excise duty on natural fruit juices is not just a tax – it is a structural brake on Ghana’s development. Removing or restructuring this tax is one of the fastest, lowest-cost policy corrections Ghana can make to unlock growth, protect health and secure future export earnings,” it said.
Source :https://thebftonline.com/
