Manufacturing Sub-sector Sees Growth
– As tax collections, SSNIT contributions surge
Story: Isaac AIDOO, Accra
THE manufacturing sub-sector in Ghana showed significant improvement five months into 2024, as indicated by notable increases in direct tax collections and contributions to the Social Security and National Insurance Trust (SSNIT) Pension Scheme (Tier-1) by private sector workers.
This is from data published by the Bank of Ghana’s monetary policy report which covered the first half of 2024.
Direct tax collections surge 43.7%
Total direct taxes collected in May 2024 increased by an impressive 43.7% year-on-year, reaching GH¢4.11 billion, compared to GH¢2.86 billion recorded in the same period in 2023. This growth reflects enhanced activities within the manufacturing sector and improvements in tax compliance.
For the first five months of 2024, cumulative direct taxes amounted to GH¢22.19 billion, representing a 31.6% increase from GH¢16.86 billion collected during the corresponding period in 2023. This surge highlights the resilience of the sector and the government’s efforts to improve revenue mobilization.
In terms of contributions from the various tax categories, income tax (PAYE and self-employed) accounted for the largest share, making up 48.8% of the total direct taxes. Corporate tax contributed 38.4%, while “other tax sources” accounted for 12.8%.
Private sector contributions to SSNIT up 39.6%
Alongside the growth in tax collections, private sector workers’ contributions to the SSNIT Pension Scheme (Tier-1) also saw a significant increase. In May 2024, total SSNIT contributions grew by 39.6% year-on-year to GH¢470.92 million, compared to GH¢337.23 million in May 2023.
Cumulatively, for the first five months of 2024, private sector workers’ contributions to the SSNIT Pension Scheme reached GH¢1.97 billion, representing a 28.8% growth from GH¢1.53 billion collected during the same period in 2023. This increase reflects positive trends in formal employment and higher incomes in the private sector.
Sector growth and economic outlook
The substantial rise in both tax collections and SSNIT contributions underscores the strength of the manufacturing sub-sector and its role in Ghana’s broader economic growth. With improved industrial activity and greater compliance in tax and pension contributions, the manufacturing sector is playing a crucial role in driving government revenue and ensuring social security for workers.
This growth in fiscal revenues and pension contributions is also indicative of the economic recovery efforts post-COVID-19, with a rebound in industrial output and formal employment.
However, sustaining this momentum will require continuous support for businesses, improvements in tax collection efficiency, and incentives to encourage private sector growth.
The manufacturing sector in Ghana continues to show positive signs of recovery and growth, as reflected in the increased direct tax collections and higher SSNIT contributions. The sustained growth in both indicators points to a brighter economic outlook for the sector, with implications for national development and social security.
