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Sunday, January 16, 2022

What Is Being Done About Food Smuggling In Ghana?

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Food smuggling has once again reared its ugly head in Ghana as reported by the Daily Guide recently and the question is once again, “What is the Government of Ghana (GoG) doing about this?”

The Daily Guide report named its source as a report by the Ghana Ministry of Information.

This is not the first time that this criminal activities of immense proportions have been reported and Food Security Ghana (FSG) has been reporting on this extensively in the past.

As reported by the Daily guide the incentive for the smuggling is the huge differential between import duties between Ghana and the Cote d’Ivoire. As reported by the Daily Guide legitimate rice imports into Ghana attracts “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.”

This situation creates a massive differential of 34.5 percent in duties and taxes and provides the incentive to smugglers to bring rice in via Cote d’Ivoire and thus create an illegal cost advantage over both locally produced rice and legally imported rice via Ghana’s ports.

The negative impact of this is obvious. In the first place the state loses $millions in revenue collection and according to the Daily Guide report this is estimated to be as much as GHS69 million, or approximately US$34 million.

In the second place the existence of legitimate importers of rice is threatened. These importers are huge investors in the Ghana economy and provides jobs for thousands of people. In addition they further contribute to state coffers via normal corporate taxes.

Thirdly the development of local rice producers are jeopardised. The local industry is fighting a huge battle to improve the quality of locally produced rice and must now on top of that fight in the market against superior rice that are sold at lower prices caused by illegal activities.

The big question, once again, is what is being done to stop this?

The smuggling of rice reared its ugly head in 2010 after the GoG of Ghana reintroduced the 20 percent import duties after it was scrapped by the previous government during the 2007 – 08 food crisis in order to protect Ghanaian consumers against the shock of high food prices.

When the new government re-introduced the duties the motivation was that the food crisis was over and that it was done to protect the local rice industry. Both of these statements have time-and-again been proved to be wrong and false.

At that time of the re-introduction a duty and tax differential of 24.5 percent was created between Ghana and Cote d’Ivoire. It did not take very long for the criminal elements to pounce on this “lucrative” opportunity.

When the smuggling was exposed with clear indications of involvement by officials of the Customs Excise and Preventive Service (CEPS) it took the government many months to respond to the situation. Eventually a commission of enquiry was announced, led by CEPS.

This caused a huge outcry as it was seen as “asking the thieves to catch the thieves”. After a long period some officials were implicated by the enquiry but the smuggling continued unabated.

With continued pressure to act CEPS eventually made some efforts to try and stop these criminal activities by trying to enforce parities in duties and taxes on imported rice between direct imports and imports via Cote d’Ivoire. This seemed to have helped for a little while and the political situation in Cote d’Ivoire also curtailed the smuggling to some extent.

Due to increased high prices of food most of Ghana’s neighbours, including Cote d’Ivoire, took further steps to protect its citizens by further reducing duties and taxes – a situation that created an even bigger tariff differential and a bigger incentive for criminal activities.

With the return to stability in Cote d’Ivoire it looks as if the smuggling has suddenly increased to unprecedented levels and that it is “business as usual” with no steps from the GoG of Ghana to intervene and act decisively.

If this can not be controlled on our borders there must surely be other steps that can and should be taken, such as banning rice imports from any other point than via Ghana’s ports and harbours.

Why must rice be imported from a country who does not even have a rice industry? The problem and solution is so clear yet once again there is silence and inaction from the authorities.

Must one read something sinister between the lines? At some stage rumours and allegations were running wild about the involvement of people in very high places in the smuggling of rice via Cote d’Ivoire. Although these were never proven, one has no other option than to wonder how much truth there is behind these rumours and allegations.

The ugly and unchecked smuggling of rice via Cote d’Ivoire is hurting Ghana and indeed Ghanaians in more than one way and it is time for the authorities to address this issue once and for all by not trying to treat the symptoms but by eradicating the cause.

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