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Ghana Cracks Down on Trade Leakages: Government Takes Decisive Action to Stem $5.5 Billion Annual Loss

By Peter Bismark Kwofie
Opinion Ghana Cracks Down on Trade Leakages: Government Takes Decisive Action to Stem $5.5 Billion Annual Loss
TUE, 25 JUN 2024 LISTEN

The Ghanaian government is hitting the accelerator by rolling out a series of initiatives designed to supercharge the economy and ignite a manufacturing boom. This multi-faceted approach tackles various roadblocks, creating a fertile ground where businesses can blossom and contribute to national wealth.

One crucial area of focus is simplifying the business environment. The administration understands the need to remove unnecessary hurdles for manufacturers. Initiatives are underway to streamline regulations, cut bureaucratic red tape, and expedite business registration. This not only benefits existing businesses but also attracts new investment, both domestically and internationally.

The government is actively working with various sub-units like the Ghana Revenue Authority (GRA) to ensure a fair and transparent business landscape. A prime example is the recent destruction of seized illegal tobacco products. This decisive action by the GRA protects legitimate businesses by securing government revenue and dismantling unfair competition from smuggled goods. Companies that follow regulations and contribute taxes can now operate on a level playing field.

The benefits go beyond fairness. By curbing illicit trade, the government is demonstrating its commitment to protect its vital revenue streams, especially at a time when revenue is needed to boost other sectors of the economy. By fighting illicit trade, the Government is encouraging local and foreign investment by improving the business climate and safeguarding revenue that could be diverted to finance illegal activities and profit criminal networks. By protecting legitimate investors, the increased revenue generated from their business operations can then be strategically reinvested into the economy, fueling growth in crucial areas like infrastructure, education, and healthcare. This creates a virtuous cycle where a thriving business environment generates revenue that strengthens the very foundation for further economic success.

The government’s commitment extends beyond regulatory reform and tackling illicit activities. Initiatives are underway to create a more attractive investment environment, potentially including tax breaks for manufacturers, special economic zones, and affordable financing options. By offering these incentives, Ghana positions itself as a competitive destination for manufacturing businesses, leading to a potential surge in investment, job creation, and technological advancements within the sector.

It is worth noting that illicit trade undermines not only public health efforts but also siphons substantial revenue that could otherwise be invested in national development.

Illicit trade in Ghana is not a new phenomenon. It’s a long-standing challenge involving organized criminals. The problem ranges from non-declaration or under-declaration of goods to trafficking contraband and counterfeit products. Excisable products like cigarettes are prime targets due to the high profits they yield. These illicit activities harm businesses and pose significant risks and losses to developing countries like Ghana.

The 2022 Kantaer Report on illicit trade highlights a significant reduction in tax revenue – exceeding GH₵117 million between 2017 and 2023 due to illicit trade.

In the light of these developments, the recent interception and destruction of illicit tobacco products valued at GH₵7,951,238.39 marks a significant stride in Ghana’s fight against illicit trade. This operation, led by the Customs Division of the Ghana Revenue Authority (GRA), underscores the extensive measures being taken to curb illegal activities. However, these efforts need to be expanded and intensified.

Recognizing the global nature of the problem, Ghana isn’t tackling it alone. The Economic and Organized Crime Office (EOCO) is collaborating with international bodies such as the World Health Organization (WHO) and the Food and Drugs Authority (FDA). This partnership ensures compliance with international tobacco trade laws and fosters the development of effective law enforcement strategies to combat this criminal activity.

These measures, combined with recent actions like the destruction of seized illegal tobacco products, demonstrate Ghana’s firm commitment to eradicating illicit tobacco trade. By protecting public health, safeguarding tax revenue, and fostering a fair marketplace, Ghana’s multi-pronged approach has the potential to create a healthier and more prosperous future for all its citizens.

The Customs Excise and Preventive Service (CEPS) is also taking crucial steps. A comprehensive training session brought together representatives from various agencies, including the FDA, Ghana Standards Authority (GSA), the Ghana Police, the Ghana Army, and the Ghana Immigration and Narcotic Control Commission (NACOC). The workshop aimed to assess the full scope of the illicit cigarette trade in Ghana and develop effective countermeasures.

The collaboration resulted in a new public awareness campaign featuring T-shirts, posters, and advertisements to educate the public about the dangers of supporting the illegal cigarette market. The workshop also addressed the factors contributing to illicit trade: porous borders, limited resources for enforcement agencies, and connections with organized crime groups. Additionally, the rising cost of living and higher taxes on legitimate cigarettes were identified as pushing consumers towards cheaper, illicit alternatives.

It is imperative that the government rallies around the GRA and expands these efforts beyond tobacco to all other areas of illicit trade. This comprehensive approach will ensure that Ghana maximizes its revenue streams and strengthens its economy. By extending the crackdown to other sectors plagued by illicit trade, the government can further secure the nation's economic future and provide a safer, more prosperous environment for its citizens.

The government's current momentum must be maintained and amplified through initiatives, enhancing inter-agency cooperation, and intensifying public awareness campaigns, Ghana can build on its progress and continue to close the gaps that allow illicit trade to thrive. This will not only protect public health and legitimate businesses but also ensure that every Cedi of revenue is used for the nation's development. The time to act is now, and with collective effort, Ghana can seal the leakage for good.

By Peter Bismark Kwofie CEO/President Institute for Liberty & Policy Innovation- ILAPI.

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