18 January 2013

Ghana: Has Agricultural Smuggling Stopped in Ghana? - From Food Security Ghana

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Over the past few years periodic reports of food smuggling both to and from Ghana surfaced in the media. Most of these reports surfaced after the smuggling activities were exposed especially by investigative reporter Anas Aremeyaw Anas (Anas) and other media such as the Daily Guide.

Anas is famous for utilising his anonymity as a tool in his investigation arsenal. He is a multimedia journalist who specializes in print media and documentaries and Anas focuses on issues of human rights and anti-corruption in Ghana and sub-saharan Africa.

In May 2009 reports started circulating of massive rice smuggling from the Ivory Coast on the Western borders of Ghana.

Many initially played the smuggling down down as yet another prank by an overzealous journalist, but the evidence was far more damning than could simply be swept under the carpet. Audio-visual evidence of smuggling transactions showed the voluntary connivance of uniformed public officials in smuggling transactions involving convoys of truck-loads of rice shipped into Ghana - free of tax and free of VAT.

At some stage it was estimated that close to 150,000 (which translates into about six million bags) metric tonnes of smuggled rice found its way through the borders onto Ghana markets each year, and there was every indication that this had gone on for several years.

Analysts estimated the loss in revenue to government to be in excess of US$40 million, although this figure was denied by CEPS (Customs Excise & Preventive Service). The fact remains that the loss indeed ran into millions of dollars.

The primary reason for these smuggling operations were laid at the door of Ghana's trade policies. At the time of the exposure import duties on basic foodstuff such as rice were at a level of 37% compared to import duties in the Ivory Coast of 12.5% - a 25.5% differential.

It will be remembered that the government scrapped the 20% import duties in 2008 during the 2007 - 08 food crisis to support consumers, but these duties were reintroduced in 2009, a step questioned by many based on the fact that the world food crisis was far from over.

The government of Ghana took a long time to respond to the alleged smuggling activities and a commission of inquiry by CEPS was only ordered towards the latter parts of 2009 or early 2010.

Steps were taken by the authorities and some arrests were made towards the end of 2010.

The question remains if the smuggling activities of rice has really been curtailed as the tariff differential between imports into Ghana and the Ivory Coast remain at an all time high. In December 2012 the Customs Division of the Ghana Revenue Authority acknowledged that certain smuggling activities still occur at Ghana's borders.

In 2010 Anas exposed the smuggling of cocoa from Ghana to the Ivory Coast by international trading companies operating in Ghana, including Armajaro (Ghana) Limited, Transroyal Ghana Limited and Diaby Limited.

Armajaro Ghana is one of the largest global buyers of Ghanaian cocoa beans. Armajaro Ghana's involvement in Ghana is on two levels; its subsidiary acts as a Licensed Buying Company, which purchases cocoa upcountry from farmers for the sale to the Cocoa Marketing Company (CMC), while Armajaro Ghana is a major buyer of cocoa from CMC for export.

Armajaro, Diabe and Transroyal were subsequently banned from doing business in Ghana but after appeals to the GCB (COCOBOD) the countrywide ban on Armajaro was lifted.

This issue raised its head again in 2012 during the election when the opposition NPP party tried to use it as an issue to discredit President John Dramani Mahama based on the fact that "used his position and influence to help in lifting the ban placed on the company from purchasing cocoa in Ghana".

In a comprehensive interview with Radio Ghana on Thursday, 4 November 2010, then Vice President John Dramani Mahama denied a report by the Sunday Times of the United Kingdom that he "intervened" to get a ban on trading in Ghana by British cocoa buying company, Armajaro, lifted.

President Mahama was, however, exonerated by COCOBOD from allegations that he interfered in the lifting of a ban placed on licensed cocoa buying companies, especially, Armajaro (Ghana) Limited, from operating in the western corridor of Ghana.

The question once again, as is the case with the smuggling of rice, is if the smuggling of cocoa by companies such as Armajaro or other parties have in fact been stopped?

In September 2012 the Ministry of Food and Agriculture (MoFA) confirmed the smuggling of subsidised fertiliser across the Northern border into Burkina Faso.

According to reports the government is subsidising 176,000 tonnes of fertiliser for non-cocoa crops in the 2012/13 planting season at a cost of GHc120.3 million, up by more than 50% from last season due to rising costs. The subsidy, which covers crops including cotton, rice and maize, cuts the price farmers pay per bag by more than 40%.

Ghana has one of the lowest fertiliser application rates per hectare in Africa, and the subsidies - in the four years since the programme began - have boosted the rate of application from 8kg/hectare to 10kg/hectare.

But the lower price has encouraged smuggling of the commodity through the northern border points and therefore seriously jeopardises the efforts to improve agricultural productivity in Ghana.

According to MoFA they possess the skills to combat smuggling and the onus is on the regional and district security councils to devise strategies to curb the incidence.

To date it is not certain whether steps taken by the authorities had any meaningful impact to curtail these activities.

The question therefore remains to what extent the authorities in Ghana has taken action and what measures have been put in place to try and stop the smuggling of not only agricultural goods, but smuggling in general.

Besides for the negative impact smuggling has on government revenues that are so necessary to ensure development in Ghana, smuggling also distorts markets and affects legitimate business in a seriously negative way.

Besides for the negative impact smuggling has on government revenues that are so necessary to ensure development in Ghana, smuggling also distorts markets and affects legitimate business in a seriously negative way.

Is it not time that the Government of Ghana institutes a special task force to investigate the real state of smuggling in Ghana and to devise a comprehensive plan to combat this menace?

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