Transit goods diverted for home consumption

BY: Maclean Kwofi
Some people are taking advantage of the country’s transit regime to divert goods meant for landlocked countries into the economy
Some people are taking advantage of the country’s transit regime to divert goods meant for landlocked countries into the economy

Unscrupulous firms and individuals are taking undue advantage of the porous borders to divert transit goods back into the country and in the process, outwit paying the relevant import duties to the state.

A report on the menace by the Customs Division of the Ghana Revenue Authority (GRA) showed that between January and September this year alone, GH¢2.36 million worth of transit goods were converted into home consumption.

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The diversion of the goods is normally done through unapproved routes, the report said.

This meant that although the goods were meant for landlocked countries and were, therefore, not subjected to Ghana’s import duty regime at the ports, they were sold in the open market, earning the owners whopping profits but losses in taxes to the state.

The diverted goods also out-competed local substitutes in the area of price due to the non-payment of import duties which makes it possible for them to be priced relatively cheaper.

Implications


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Further analyses of the customs data by the GRAPHIC BUSINESS shows that the country loses an average of GH¢139,060.47 monthly to the practice, which is also undermining domestic industries.

In an interview, the Chief Executive Officer (CEO) of the Association of Ghana Industries (AGI), Mr Seth Twum-Akwaboah, denounced the practice as bad for industry and called for relevant measures to stop it.

He explained that the diversion gave the companies and personalities involved undue advantage of selling their goods cheaper on the local market than that of their competitors, which are paying the right duties.

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This creates an unfair environment for competition, he said.

It also puts the local industry in danger as efforts by the government to boost their capacity would yield no results, Mr Twum-Akwaboah told the paper on October 30.

“The implication of the diversion is that importers engaged in such activities are able to sell at a cheaper cost.

“Because they are not paying duties, their cost is cheaper and they can price lower. This is unfair, especially for goods that have local competitors,” he said.

As a result, he said apart from the fact that the government was losing revenue from these malpractices, he stated that industry also paid the bigger price with the influx of cheaper goods.

Solutions

To stop the infractions in the transit regime, the report stated that customs will now use benchmark values to value transit goods.

It will also impose penalties on drivers who overstay the stipulated period, as well as improve daily exchange of information among customs offices internally.

The rest were coordination of border regulations with the Ghana Community Network Services Limited (GCNet).

Although welcoming, the CEO of AGI said the measures were not that comprehensive enough to address the challenges identified in the transit regime.

“What is happening rather requires serious effort from our revenue agencies. We need to have the necessary monitoring mechanisms in place to ensure that goods are successfully transited.

“There should also be strong punitive measures.

These malpractices are criminal so we think they should be prosecuted when arrested in order to serve as a deterrent to others,” Mr Akwaboah.

Other challenges

Beyond the diversion of goods into the open market, the report highlighted the non-routing of transit declarations from the Customs offices of departure, the non-closure of exited transactions by Customs officers at the exit stations, the non-communication of monitoring devices and unstable network as some of the major challenges the transit regime encounter on a daily basis.

The transit regime is one of the cornerstones of regional economic integration.

It enables goods to move freely within the sub-region. — GB