The Ghana Port and harbor authority risks missing its revenue targets this year. Following a leaked internal memo summoning stakeholders for a crisis meeting, it’s now becoming known that operations at the port are almost grinding to a halt.
In the memo, the port authority notes a decline in cargo from June 2022 spilling into the first quarter of 2023. The worrying trend prompted officials to call on industry players to deliberate on the way forward.
According to Samson Asaki, Executive Secretary, of the Importers and Exporters Association of Ghana, traffic at the port fell from 1.5 million metric tons in 2021 to 1.2 million metric tons in 2022. This signifies a 25 percent decrease in a year that the world trade was on a steady rebound.
Among the reasons cited include clearance charges. As of January 2023, the proposed 2.5 percent VAT came into effect raising VAT to 15 percent. Importers have also decried the 2 percent import levy they pay. In addition, the 3 newly passed revenue bills will add more weight to the already elongated tax sheet importers have to contend with.
“Clearing containers at the port is not expensive anymore. It is exorbitant! Clearing a consumer goods container cost 7400 dollars last year. Currently, the same container costs up to 18,500 dollars to clear. Clearing Uber cars was roughly 1300 dollars but now it costs at least 3700 dollars. At this rate, importers panic at the thought of clearing charges. We should brace for a shortage of goods by June or July if the trend continues,” Asaki notes.
The turmoil for traders at the Ghanaian port is a double-edged sword. According to Dr. Joseph Obeng, the president of the Ghana Union of Traders Association, the expense at the port is setting up competitor regional ports as alternatives. Further, Dr. Obeng notes that the levies are forcing some traders to opt for smuggling goods into the country.
“While the clearing charge is 6.8 percent in Ghana, it’s only 1.5 percent in Togo. We are in competition with such ports and such rates. Why wouldn’t Ghanaian traders and landlocked countries opt to clear goods at the port of Togo?”
Dr. Obeng states that affordability at the port will reduce smuggling cases due to higher compliance. Disputing claims that levies are meant to protect local production by encouraging manufacturing, Dr. Obeng says trade and ease of distribution are the drivers of a thriving manufacturing sector.
The woes at the port have had an impact on the general economy in the most unexpected way. Due to reduced importation by traders, the pressure on the dollar has eased. In the past month, the cedi has appreciated by 13.95 percent to the dollar from 12.55 to 10.80. economist Joe Jackson among other things attributes the appreciation to reduced demand for the dollar by traders.
Now, experts fear that the economy will likely contract this year and the IMF bailout will only act as a buffer against further depreciation rather than inject back vibrancy.