Destination inspection companies to cease operations Sept 1
The Customs Division of the Ghana Revenue Authority (GRA) is to fully take over the operations of destination inspection companies (DICs) in the country by September 1, 2015.
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That follows the government’s communication to the World Customs Organisation (WCO) on its decision to scrap the operations of DICs, in line with plans to enhance the coordination of border management arrangements with other government agencies.
Destination inspection is a concept which was introduced to enhance customs functions as a stop-gap measure while waiting for reforms and modernisation.
Currently, there are five DICs operating in Ghana.
They are BIVAC International, Gateway Services Limited, Ghana Link Network Services, Webb Fontaine Ghana Limited and Inspection Control Service.
In Ghana, the concept of destination inspection was introduced by the government in 2000 to replace the pre-shipment inspection system which involved the inspection of imports before shipment from the country of supply.
Since then, DICs have been mandated to inspect imports at the country’s ports of clearance.
Defects in destination inspection
The acting Assistant Commissioner of the Communications and Public Affairs Department of the GRA, Mr Robert Mensah, who confirmed the decision to scrap the DICs, said destination inspection had not been intended to be a permanent measure due to the obvious defects associated with the scheme.
One of the defects, he said in an interview with the Daily Graphic, was the frustration of trade facilitation efforts by the government as a result of the non-uniformity in the cargo clearance procedure and inefficiency.
That was because the destination inspection system showed the absence of a harmonised risk management system among the various service providers, he said, adding that the scheme was more costly to operate than in-house operations.
Exit plan in place
Mr Mensah said Ghana announced its intention to scrap the DIC system at the Customs Directors-General of West and Central Africa Region meeting held in Abuja this month.
He said an exit plan was now in place and the Customs Division was fully prepared to take over its core responsibilities which had, in the past, been outsourced to private companies.
The take-over included the modernisation of customs system and automating all export and import processes to facilitate the movement of legitimate goods, he explained.
Taking cue from Nigeria
The WCO maintains that any country that wants to rely on contracting core customs services to private companies should as well disband its customs administration.
It holds the view that the practice usually results in a situation of lack of trust in the customs frontline and post-clearance capability.
Ghana, Mr Mensah said, was taking a cue from the Nigeria Customs Service (NCS) which had phased out the system of destination inspection through the adoption of a model which helped to simplify customs procedures, resulting in minimum physical inspection of cargo.
The system, which he said had reduced the clearance time and lowered the cost of doing business in Nigeria, had also saved Nigeria more than $25 million monthly in revenue loss.
Apart from blocking all the major areas of revenue leakage, the modernised system in Nigeria had improved revenue collection, he added.
Criticism
Since 2013, the operations of DICs have come under criticism for their arbitrary charges at the ports and work processes which importers claim cause congestions at the ports.
Some importers have claimed that the many interventions by the DICs, such as evaluation, reclassification and scanning discrepancies, are frustrating.
A former Commissioner of the Internal Revenue Service (IRS) now under the GRA, Major Daniel Ablorh-Quarcoo (retd), has been vociferous about the scrapping of the operations of DICs in Ghana.
He accused the companies of dampening the government’s efforts to mobilise tax resources and also reduce the cost of doing business in the country, as they charged fees for every work done.
In the 2013 Budget Statement, the Ministry of Finance directed the Customs Division of the GRA to take over destination inspection duties.
Since then, there have been back-and-forth moves to enable the division to take over the duties of DICs, but it says “it is now poised to take over its core responsibilities”.
