Business News of Tuesday, 9 April 2013
Source: Daily Guide
Ghana loses approximately GH¢69 million annually due to the activities of rice smugglers who operate along the country’s borders with Cote d’Ivoire.
A report by the Ministry of Information, which made this known, said importers are also losing out while the livelihood of local farmers have been threatened because of unsustainable farming. The situation is said to have hampered efforts at creating jobs. “Every year more than 100,000 metric tonnes of rice is brought into Ghana from Cote d’Ivoire. The rice is smuggled along the routes of Enchi, Sampa, Nkrankwanta, Elubo, Debiso and Dadieso.
“Smugglers are using various methods for their smuggling activities. Sometimes the rice is transported in large consignment trucks travelling from Cote d’Ivoire’s main cities to Ghana,” the report mentioned.
On a daily basis, it said 25 to 35 trucks cross the borders and travel to various parts of Ghana, with the most prevalent brand being ‘Uncle Sam’ of Thai Hom Mali (perfumed) rice. Rice imports into Ghana lag behind those of Cote d’Ivoire, as that country’s total imports are said to have grown by 19 percent in 2012.
Also, the duty differential of 34.5 percent between Ghana’s rice and rice from Cote d’Ivoire is very high and negatively impacts Ghana’s business people. In 2011, Ghana imported 450,000 metric tonnes of rice while Cote d’Ivoire imported 800,000 metric tonnes. Also in 2012, Ghana imported 496,000 metric tonnes while Cote d’Ivoire recorded 950,000 metric tonnes. Meanwhile, Cote d’Ivoire currently enjoys a significant duty advantage of zero import duty stocks.
The report noted that rice purchased under such a scheme had already reached the shores of Cote d’Ivoire and were expected to flow into Ghana, adding that the potential impact of this is far reaching. “While importers in Ghana pay 20 percent import duties, 12.5 percent VAT and 4.5 percent levies totalling 37 percent, importers in Cote d’Ivoire do not pay any import duties or levies except a mere VAT component of 2.5 percent.”
Due to the difference in the duty scheme, the price of perfumed rice has increased by 34.5 percent; the report said, stating that the significant price difference drives the consumer to purchase a bag of ‘Uncle Sam’ from Cote d’Ivoire rather than a bag of local or locally-imported rice. Thus, ‘Uncle Sam’ is currently sold on all Ghanaian markets and retail outlets.
Comparing the two scenarios
According to the report, “A metric tonne of perfumed rice imported into Ghana at GH¢2005.50 will incur duties of GH¢742 hence GH¢2747.50, as opposed to a metric imported into Cote d’Ivoire which would incur duties of GH¢50.60 hence GH¢2056.10. This is a difference of GH¢692 per metric tonne which works to a disadvantage of GH¢17.5 for a 25 kilogramme bag imported in Ghana vis-à-vis that of Cote d’Ivoire.”
Markets in Kumasi, particularly the main market and Adum, experience the effects of the cross-border illegal trading activities due to their proximity to the borders through which the rice arrives into Ghana, the report avers.
However, it added that it is not only the markets of Kumasi that are stocked with Uncle Sam products. The Nima, Madina, Okaishie, and Agbogbloshie markets, and also Takoradi, Cape Coast, Sunyani, Tarkwa and Obuasi markets are all flooded with rice from Cote d’Ivoire. In view of the foregoing, the report called for control and regulation of illegal cross-border activities to ensure a stable and conducive economic, political and business environment where local businesses and communities could flourish.