Ghana loses $40m from rice smuggling

Ghana is said to be losing an estimated $40 million annually as a result of rice smuggled into the country.

Estimates compiled by the Food and Beverages Association of Ghana, for presentation to the Ministry of Trade, indicate that 100,000 metric tonnes out of the 350,000 metric tonnes of rice imported into the country are smuggled in, causing the country the millions of dollars in tax revenue.

The resort to the smuggling of rice is attributed to the high duty and other tariffs being implemented at Ghana’s ports as against the country’s West African neighbours.

In that smuggling adventure, Elubo, Debiso, Nkrankwanta, Dadieso and Enchi border areas are the most frequently used to bring in the 100,000 metric tonnes; 75,000 metric tonnes of which are described as high value perfumed rice.

The finding of the association, made up of about 20 local entrepreneurs, also revealed that rice sales for 2010 dropped by 25 per cent.

It also noted that duty on imported rice in Cote d’Ivoire was 12.5 per cent with no Valued Added Tax (VAT), while “on the contrary, importers in Ghana have to pay 20 per cent customs duty in addition to 12.5 per cent VAT and 2.5 per cent National Health Insurance Levy (NHIL) in addition to other levies, all totalling 40 per cent.

“So the inherent difference of 22.5 per cent in the landing cost of imported rice in the respective countries works to the advantage of the traders involved in the smuggling,” they added.

They explained that there was a difference to the tune of GH¢7 between a 25kg bag of smuggled perfumed rice and the legally imported one.

According to them, the traders involved in the trade were able to manage the direct cost by manipulating the duty at the Ghana-Cote d’Ivoire border, hence the difference of GH¢7 per bag.

The players said there was also an under-declaration of customs duty to the tune of 50 per cent.

Citing high value perfumed rice as an example, they noted that the CIF price of Thai perfumed rice was $950 per metric tonne and customs duty of 20 per cent amounting to $190 per metric tonne, whereas duty paid at the Ghana-Cote d’Ivoire border was $95 per metric tonne.

They explained that the loss of revenue to the Ghana government on account of VAT on 75,000 metric tonnes was $6,412,500 annually while customs duty on the same quantum of imports was $7,125,000 annually, bringing the total loss of revenue on perfumed rice alone to $13.5 million.

They said the fear was that international prices of rice had started rising in the last four weeks, which was likely to promote more smuggling into the country, stressing that “rice prices have increased from an average of about $800 to $900 in the last four weeks”.
Source: Daily Graphic

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