SOO Annex I_TATFP Ghana.pdf

DISCLAIMER

This document is made possible by the support of the American people through the United States Agency for International Development (USAID). Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the United States government.

TRADE AFRICA: TRADE FACILITATION

PROJECT - GHANA

FINAL REPORT

Leadership in Public Financial Management II

(LPFM II)

CONTENTS

ACRONYMS

EXECUTIVE SUMMARY 1

INTRODUCTION 4

PART 1: IMPLEMENTING THE WTO TRADE FACILITATION AGREEMENT7

ARTICLES 1.3: PUBLICATION AND AVAILABILITY OF INFORMATION

(ENQUIRY POINT) 7

ARTICLES 1.4: PUBLICATION AND AVAILABILITY OF INFORMATION

(NOTIFICATIONS) 9

ARTICLES 6.1 AND 6.2: TRADE-RELATED FEES AND CHARGES

(GENERAL AND SPECIFIC) 10

ARTICLE 7.4 RISK MANAGEMENT 13

ARTICLE 8.1: BORDER AGENCY COOPERATION 15

PART II: OTHER GHANA PRIORITIES 17

STRENGTHENING GHANA’S EXPORT-IMPORT BANK 17

GHANA’S MEDIUM TERM REVENUE POLICY 18

MINISTRY OF FINANCE RISK MANAGEMENT AND RISK REGISTER 19

LESSONS LEARNED 21

CONCLUSION 24

ANNEX A: GHANA NATIONAL TRADE FACILITATION COMMITTEE

REPRESENTATION 25

ANNEX B: GHANA TFA SUPPORT PROGRAM DASHBOARD 26

ANNEX C: PROJECT DELIVERABLES 28

ACRONYMS

ABAS Activity-Based Accounting System EP Enquiry Point EPA Environmental Protection Agency GEXIM Ghana Import Export Bank FDA Food and Drug Authority GEPA Ghana Export Promotion Authority GIB Ghana Institute of Bankers GoG Government of Ghana GRA – Customs Ghana Revenue Authority – Customs Division GSA Ghana Standards Authority IT Information Technology LPFM II Leadership in Public Financial Management II MDA Ministries Departments and Agencies MoF Ministry of Finance MoFA Ministry of Food and Agriculture MoT Ministry of Transport MOTI Ministry of Trade and Industry NTFC National Trade Facilitation Committee PPRSD Plant Protection and Regulatory Services Directorate TATFP Trade Africa: Trade Facilitation Project TFA Trade Facilitation Agreement TFEP Trade Facilitation Enquiry Point USAID United States Agency for International Development VSD Veterinary Services Directorate WTO World Trade Organization

| TATFP GHANA FINAL REPORT USAID.GOV

EXECUTIVE SUMMARY

International trade holds great promise to empower USAID partner countries to build sustainable, private sector driven economies as a part of their journey to self-reliance. Ghana is a prime example, building off the long history of productive diplomatic and economic cooperation between the United States and Ghana. In recognition of this potential, USAID launched the Ghana Trade Africa: Trade Facilitation Project (TATFP) in 2016 as a part of the wider Trade Africa initiative, which sought to increase internal and regional trade within Africa, and expand trade and economic ties between Africa and the United States.

Ghana TATFP supported the Government of Ghana (GoG) on the implementation of its commitments under the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA).

More specifically the project addressed the following four TFA Articles:

• Article 1: Publication and Availability of Information (Enquiry Points and Notifications).

Ghana TATFP worked closely with the Ministry of Trade and Industry (MOTI) as well as other relevant Ministries, Departments, and Agencies (MDAs) through Ghana’s National Trade Facilitation Committee (NTFC) to examine and design an effective enquiry point system to serve its trading community. The Trade Facilitation Enquiry Point (TFEP) Ghana was launched in mid-2018 and has significantly improved the transparency of information regarding trade processes and procedures. In addition, the project also assisted MOTI to understand and develop protocols to fulfil its function to notify the WTO on implementation of the TFA.

• Article 6: Trade-Related Fees and Charges. Ghana TATFP conducted a series of studies to analyze the fees that Ghana was imposing on trade to ensure the fee structure and administration met the WTO requirements and helped Ghana maximize its competitiveness.

This analysis was later expanded to include non-tariff costs and shipping lines fees and charges.

Further, to inform the policy reform process, the project quantified the potential effects of reductions in trade fees and charges on domestic consumer prices, trade, and government revenues. These reports generated a significant level of support from the government counterparts. As a result, the project supported a multi-agency training for activity-based accounting systems to enable Ghana authorities to adjust fees and bring charges in line with existing services provided at borders, thus working to bring Ghana into compliance with WTO requirements.

• Article 7.4: Customs Risk Management. Ghana TATFP delivered a rapid assessment of Ghana’s risk management system, which included recommendations that could be implemented in the short, medium, and longer term, with a particular focus on meeting risk management requirements of Article 7.4 of the TFA. On the basis of this assessment, the project provided a series of trainings to GRA-Customs and to MDAs working at the border as well as private sector actors on appropriate implementation of risk management procedures. The project further supported a GRA-Customs working group to produce a draft GRA-Customs risk

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management policy that complies with the WTO TFA Article 7.4, and reflects Ghana’s operating context.

• Article 8: Border Agency Cooperation and Joint Inspections. Ghana TATFP partnered with GRA-Customs to undertake a rapid assessment of their joint border controls and procedures, with a focus on the inspections directives at the Kotoka International Airport (KIA), Tema, Takoradi and Aflao ports of entry. The review was timely as it coincided with Executive Directives mandating joint inspections by border agencies to streamline the clearance process.

This assessment occurred after the government deadline to implement the Executive Directives and identified opportunities to simplify processes and reduce redundant procedures among key border agencies, as well as gaps in coverage to strengthen compliance with the TFA.

While TFA implementation represented the core of Ghana TATFP activities, the project also responded to windows of opportunity and requests from USAID/Ghana and the Government of Ghana to help move the needle on a set of high priority economic policy reforms:

• Support to Ghana’s Export-Import Bank (GEXIM). TATFP worked with GEXIM to develop tools for credit scoring, credit monitoring, and improving collaboration among Government of Ghana SME support programs. The project complemented these tools with targeted trainings to support their implementation, and to share best practices for engaging SMEs, and improving their capacity to engage in international markets.

• Development of a Medium Term Revenue Policy (MTRP) for the Ministry of Finance.

Ghana TATFP developed a comprehensive MTRP to identify options for the MoF to meet its medium-term (3-5 years) revenue goals. The analysis also aimed to create a basis to encourage policy dialogue between the Government of Ghana and key stakeholders within the business community and civil society regarding the government’s commitment to improve revenue generation to achieve national development objectives.

• Development of a Risk Register Template for the Ministry of Finance. TATFP worked with the MoF to build its capacity in risk management and to meet its relevant legal obligations under section 7 (sub section 2) of the Public Financial Management Act of 2016 (ACT 921). The TATFP team assessed major risks faced by 15 divisions and units of the MoF, and on the basis of these risks, developed a risk register to categorize the risks by type and priority, and explain proper actions to take to address these risks. Additionally, the TATFP facilitated a workshop to train over 40 MoF officials on identified risks and the living risk register. This activity was a foundational step for a comprehensive risk management system, to help MoF identify and manage the key risks it faces by providing visibility on these risks and organizing them in a structured manner.

Using a whole of government approach, these activities were effective in enhancing the transparency of information related to border management, fees and charges, improving the efficiency of Customs’ processes and procedures, equipping GEXIM to better fulfil its mandate, and improving the government of Ghana’s strategic approach to domestic resource mobilization and risk management.

The Ghana TATFP is grateful to its many partners in Government, the private sector, and civil society, and the project is proud to have supported the US and Ghana’s strong economic partnership.

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INTRODUCTION

For more than a decade, Ghana has been on a strong growth trajectory, with GDP growth averaging 7.3 percent between 2008 and 2017, and GDP per capita increasing by almost 50 percent over this period. Ghana’s economy is quite trade dependent, with trade (imports plus exports) representing 90.6 percent of GDP in Ghana in 2017, compared with an average of 58.7 percent for Sub-Saharan Africa as a whole. This trade, however, is dominated by a few commodities and the benefits of trade are not evenly distributed. Improving trade facilitation, and thus bringing more small and medium sized businesses into the global economy, will be a critical component of enabling more inclusive private sector led growth for Ghana going forward. This movement from AID to trade, in turn, will put Ghana solidly on the path to self-reliance.

Ghana has demonstrated its commitment to trade liberalization and regional economic integration through its ratification of the WTO Trade Facilitation Agreement (TFA), which entered into force on February 22nd, 2017. The implementation of this Agreement should allow Ghanaian traders to participate more fully in global value chains and increase the competitiveness of Ghanaian goods in domestic, regional and global markets, including the United States.

PROJECT BACKGROUND

The USAID Trade Africa: Trade Facilitation Project in Ghana operated from August 2016 through October 2018. Ghana is a key player in the U.S. Government’s Trade Africa initiative, developed to promote internal and regional trade within Africa and expand economic ties between Africa and the United States. The initiative facilitates trade and investment through targeted technical assistance, including capacity building for trade facilitation and meeting obligations under the TFA. Through an initial assessment in early 2016, LPFM II identified and validated TFA priorities with the Government of Ghana (GoG) and USAID and submitted a work plan. A project team was fielded in Ghana in August 2016 to implement the bilateral buy-in Trade Africa: Trade Facilitation Project (TATFP). The Ghana TATFP, under USAID’s Leadership in Public Financial Management (LPFM) II project, began implementation in August 2016 and completed activities on October 31, 2018.

GHANA TATFP OBJECTIVES AND APPROACH

To help support the operationalization of improved trade facilitation in Ghana, the USAID TATFP was designed to assist the GoG in meeting its obligations under the TFA. By doing so Ghana will simplify procedures for importation, exportation and transit of goods and reduce the cost and time of doing business across borders.

“On behalf of the Minister of Trade and Industry, management and staff we applaud TATFP for the excellent work done”.

The Honorable Deputy Minister of Trade and Industry, Responsible for Trade

From the beginning, the project employed a whole of government approach, which included establishing a close working relationship with Ghana’s National Trade Facilitation Committee (NTFC) under the leadership of the Ministry of Trade and Industry (MOTI). TATFP’s key counterparts include Ghana’s Ministry of Trade and Industry (MOTI), Ministry of Finance (MoF) and its agency, the Ghana Revenue Authority (GRA) – Customs Division. By working closely with the NTFC, TATFP coordinated activities with over twenty of Ghana’s Ministries, Departments and Agencies (MDAs), as well as key private sector associations, on trade facilitation and border management issues. Annex A provides a list of Ghana’s NTFC membership.

Ghana’s NTFC is an obligation under the TFA and Ghana TATFP worked to strengthen the committee by regularly supporting technical working groups and bringing together GoG representatives, as well as development partner representatives and private sector organizations to discuss progress on WTO TFA implementation, updates on Ghana’s Trade Facilitation events and policy, and Ghana’s Trade Facilitation Roadmap 2018 – 2022.

TATFP was also responsive to demand driven requests from the GoG and priorities from USAID/Ghana. Project activities were constantly assessed and adapted to ensure that the approaches taken were appropriate to the operating environment of Ghana, sensitive to political considerations, and informed by what was and was not working well. In addition, while supporting the implementation of the TFA was TATFP’s primary objective, the project took on additional tasks related to domestic resource mobilization and improving risk management tools and approaches in MoF based on evolving needs and priorities.

GHANA TATFP RESULTS

In just over two years, the TATFP either built upon and/or supported the development of new mechanisms for inter-agency communications; drafted research reports and developed recommendations and tools for the GoG; organized dissemination and launch events on policies and agreements; and aided in the coordination of development partner activities.

Technical assistance provided by Ghana TATFP has resulted in increased compliance with the TFA, including the framework for a sustainable path forward for Ghana’s NTFC. The TATFP also provided direct capacity building support to MOTI, MoF, GRA – Customs and GEXIM, enabling these authorities to better develop policies and internal practices to enhance Ghana’s competitiveness in the region and improve relationships with Ghana’s trading partners. A sample of TATFP results is shown in the graphic to the right.

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REPORT STRUCTURE

The remainder of this report provides details on each of the individual workstreams supported under TATFP. The report begins with the four workstreams related to the implementation of TFA articles, including:

• Article 1: Publication and Availability of Information (Enquiry Points and Notifications)

• Article 6: Trade-Related Fees and Charges

• Article 7: Customs Risk Management

• Article 8: Border Agency Cooperation and Joint Inspection

The second set of workstreams are those that responded to windows of opportunity and requests from USAID/Ghana and the GoG to support high priority economic policy reforms, including:

• Support to Ghana’s Export-Import Bank

• Development of a Medium Term Revenue Policy (MTRP) for the MoF

• Development of a Risk Register Template for the MoF

For each of these workstreams, the report details the challenges the TATFP activities were designed to address, the approach undertaken, and the results achieved. The final two sections reflect on lessons learned and conclusions drawn from the implementation of the activity that might inform future similar programming.

PART 1: IMPLEMENTING THE WTO TRADE

FACILITATION AGREEMENT

ARTICLES 1.3: PUBLICATION AND AVAILABILITY OF

INFORMATION (ENQUIRY POINT)

WTO TFA Article 1.3 requires WTO members to establish or maintain one or more enquiry points “within its available resources” to respond to “reasonable” questions about trade-related matters, including requests for required forms and documents. Enquiry points are available to the public and other WTO members, shall respond within a “reasonable” period of time and should not charge fees for responding to basic enquiries. WTO TFA Article 1.4 requires WTO members to identify a point of contact within a government authority to be responsible for facilitating communications to/from the WTO Committee on Trade Facilitation.

CHALLENGE

Trading communities in developing and developed countries frequently highlight delays caused by unavailable or incomplete information when moving goods across borders. Establishing a point of contact where stakeholders can send queries regarding trade related matters increases transparency and predictability in Ghana’s trading environment by ensuring the flow of information among relevant stakeholders. In Ghana, a 2016 assessment identified an absence of a widely accessible public enquiry point in Ghana where the domestic and international trading community could easily obtain information related to Ghana’s import, export and transit information from trade related MDAs. Several MDAs (including MOTI, EPA, MOFA, specifically PPRSD and VSD and GRA-Customs Division) maintained both formal and informal enquiry mechanisms, but there was a lack of coordination, oversight, and trained human resources.

ACTIVITY DESCRIPTION

Ghana TATFP worked closely with MOTI as well as other relevant MDAs through Ghana’s NTFC to examine and agree on an enquiry point(s) that would best suit Ghana’s situation and serve its trading community. A needs assessment of MOTI’s and relevant MDA’s capabilities, inclusive of equipment needs, was carried out before procuring services to design the Trade Facilitation Enquiry Point (TFEP). Finally, training materials were produced and training provided to MOTI, as well as the relevant MDAs, on the administration and operation of the TFEP system.

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RESULTS

Ghana’s NTFC working group selected a hybrid enquiry point; that is, a centralized coordinating body responds to enquiries, serving a conduit of information, and transmitting information to and from other relevant MDAs when necessary. The working group also determined that the enquiry point would be in the form of an online solution that would be housed within MOTI and accessed via MOTI’s rebranded website. This provides easy access by traders and other interested parties. Dedicated MOTI staff would also available respond and facilitate queries in person if needed.

To ensure the sustainability of the TFEP the MOTI decided to host the TFEP on the GoG’s server infrastructure and MDA’s signed a protocol of multi-agency collaboration to ensure expectations around dedicated staffing, efficient communication procedures and reasonable enquiry response times were adhered to. The multi-agency protocol of collaboration was signed by the Deputy Minister of Trade and Industry and the Chief Executive Officers of the relevant MDAs. The Trade Facilitation Enquiry Point (TFEP) Ghana was launched in mid-2018 and can be accessed at www.moti.gov.gh/tfep/.

“I am happy to announce that through strong partnership with the Ministry of Trade and Industry, as well as other Ministries, Departments and Agencies (MDAs) involved in the clearance process, Ghana has officially launched its multi-agency WTO Trade Facilitation Enquiry Point… This will have broad development benefits and promote regional integration, investment and exports.”

Acting Mission Director Steven Hendrix http://www.moti.gov.gh/tfep/

ARTICLES 1.4: PUBLICATION AND AVAILABILITY OF

INFORMATION (NOTIFICATIONS)

TFA Article 1.4 regulates communications to/from the WTO Committee on Trade Facilitation and requires WTO members to provide a point of contact within the government authority responsible for WTO notifications. Through the notification point, the member will provide the Committee with the names of the official publications and addresses where trade related information can be found, including the trade facilitation enquiry point.

CHALLENGE

Transparency and communications are very important elements of the TFA, and WTO Agreements incorporate mechanisms to ensure that all WTO members are able to respond to requests for information from the WTO as well as inform members about trade related measures. The TFA includes special and differential treatment (SDT) measures, which links a country’s ability to implement the TFA with its capacity to do so. While Ghana has submitted an initial notification to the WTO on TFA provisions where it does not require technical assistance (Category A), it still needs to designate provisions where Ghana: 1) requires a transitional period of time to implement after the Agreement enters into force (Category B); and 2) requires technical assistance and capacity building support from donors to be able to meet those TFA obligations (Category C). The challenge for most developing and least developed countries is that they cannot change their notifications to needing more support after they have officially submitted designation to the WTO.

While Ghana has received support from UNCTAD to determine their Category B and C measures, they still have yet to officially notify the WTO Committee on Trade Facilitation.

ACTIVITY

The TATFP assisted the Government of Ghana in first identifying the Ministry of Trade and Industry (MOTI) as the National Notification Authority, including the selection of contact representatives from MOTI to be responsible for notifications. Ghana TATFP then worked closely with the established NTFC Technical Working Group to identify not only the steps relevant to notify the establishment of the trade facilitation enquiry point, but also to review and validate the Category B and C measures.

RESULTS

After the NTFC agreed that MOTI would be the TFA notification authority, there remained 2-3 notifications for the NTFC to work on. The first is simply notifying the WTO that MOTI will be the notification authority. The next two notifications include informing WTO members of Ghana’s TFEP, once it is launched (See Article 1.3 above) as well as submitting TFA Categories B and C notifications, including the recommended implementation dates. The NTFC reviewed and validated UNCTAD’s recommendations for the categorization that would require additional assistance to implement, as well as included indicative timelines for implementation (and important element of

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the notification process to the WTO). The next step for MOTI, as the TFA Notification Authority, is to officially notify the WTO Committee on Trade Facilitation of its TFEP and Category B and C provisions.

ARTICLES 6.1 AND 6.2: TRADE-RELATED FEES AND CHARGES

(GENERAL AND SPECIFIC)

WTO TFA Articles 6.1 and 6.2 require WTO members to publish information about fees and charges that government authorities levy on or in connection with imports, exports, and goods in transit; publish new and/or amended fees in an adequate amount of time prior to entry into force;

and periodically review fees and charges and amend them as needed. Fees and charges should be based on actual services rendered with the specific import/export operation; and, second, the fees and charges are not required to be linked to a specific import or export operation if they are levied for services that are connected to customs processing of goods.

CHALLENGE

Implementing TFA Article 6 is a challenge for many developing countries as government revenue to fund various policies and sector programs are often collected at ports of entry/exit on imports and exports, as is the case in Ghana. This is commonly practiced due to challenges associated with domestic tax administration and mobilization. In Ghana, fees proposed by the MoF have to be approved by Parliament, and sometimes fees and charges are levied without proposer consultation with other stakeholders (e.g., other border agencies or the private sector), and these stakeholders are only informed after the fees and charges are in place. User charges and fees appear to be used for raising government revenue in general and therefore have a fiscal character prohibited by the General Agreement on Tariffs and Trade (GATT) Article VIII.1(a) and are calculated on the basis of ad valorem which may be a violation of GATT Article VIII.1(a). The traders question the transparency of the myriad of fees and charges as the government has not published a consolidated document detailing a list of charges and fees.

ACTIVITY DESCRIPTION

Partnered with MOTI, as well as the NTFC, Ghana TATFP supported a number of activities relevant to trade-related fees and charges in Ghana. These activities are as follows:

ACTIVITIES OBJECTIVES DATE(S)

1. Trade-related Fees and Charges Study

As trade fees are limited under adherence to TFA Article 6, the TATFP helped the Government of Ghana analyze the fees that Ghana was imposing on trade to ensure the fee structure and administration met the WTO requirements and help Ghana maximize its competitiveness. To publically disseminate the findings of the report, a release event was held in July 2017 with over 150 attendees to discuss existing trade-related fees and charges

June 2017

2. Update to the Original Fees and Charges Study

Over a year after the original study, the TATFP produced an update to the original report to determine what fees had changed or been amended, and if any processes related to the cost of trade had similarly been altered

October

3. Activity-Based Accounting Training As requested based on discussions in the original fees and charges report, a multi-agency training for activity-based accounting systems was delivered to Government of Ghana officials to enable Ghana authorities to adjust fees and bring charges in line with existing services provided at borders

April 2018

4. Economic Impact Analysis of Ghana’s Trade-related Fees and Charges

Also born out of the original fees and charges study, the TATFP conducted a comprehensive Economic Impact Analysis of Ghana’s trade-related fees and charges, focusing on quantifying the effect of reductions in trade fees and charges on domestic consumer prices, trade, and government revenues

July 2018

5. Non-Tariff Costs Study Based on findings from both the fees and charges study and the Economic Impact Analysis that tariff and non-tariff costs have a negative impact on Ghana’s overall trade, the TATFP reviewed Ghana’s non-tariff barriers (NTB) to determine what constitutes the most trade impeding NTBs impacting Ghana’s exporters and importers

September

6. Shipping Lines’ Fees and Charges Reports

To evaluate the cost of local shipping line agents’ fees and charges associated with agents’ destinations, the TATFP produced a report on the legitimacy of these fees and how they are calculated.

Following this report, the TATFP later also delivered a corresponding international comparative analysis between Ghana’s destination charges for liner agents compared with several other international ports

March 2018, October

RESULTS

Ghana TATFP undertook a comprehensive review of all trade related charges and fees in connection to the release and clearance of goods, which included a number of short and medium term recommendations. However, the interest and feedback from the GoG, and in particular MOTI, generated several related and sequenced interventions designed to arm the GoG with data and information needed to support policy and regulatory reform decisions. At this time, MOTI also requested that TATFP conduct an assessment and subsequent comparative analysis of the destination charges that local shipping line agent impose on trade, particularly containerized imports.

First, the review of Ghana’s trade related fees and charges revealed that some GoG’s fees and charges do not all align with the cost of services and may be higher than the cost of rendering such services. Some fees were also charged without an associated service, indicating that they are apparently levied for revenue generation. The report also found that a standardized process to periodically review Ghana’s fees and charges was not firmly in place, and noted that alongside multiple payments for official services, there were also payments for unofficial facilitation fees.

Ghana TATFP worked with MOTI and MDA’s to implement a number of the reports near term recommendations, which included training on activity based accounting and implementing risk based management systems (see Article 7.4).

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The activity based accounting systems (ABAS) training was designed to build the internal capacity of MoF, MOTI and MDAs who have a role in regulating trade. The training aimed to better prepare MDAs with the capabilities to adjust fees to align those fees with the cost of providing services at the border. This training will help increase transparency by highlighting the importance of publishing all fees and charges related to trade, including how fees are determined. The training also emphasized the importance of periodic reviews to ensure all fees are reviewed regularly with the goal of reducing fees. TATFP organized one-on-one tutorials as a follow up to the training to review and provide feedback on MDAs’ application of ABAS. The conclusion of this activity revealed that further collaboration and training is required in order for the GoG to establish concrete review timelines and compliance with Article 6.

Another recommendation from the initial fees and charges report was to analyze the economic impact of the fees and charges imposed at the border to quantify the effect of reductions in trade fees and charges on domestic consumer prices, trade, and government revenues. Ghana TATFP worked with MOTI to identify ten import products and ten exports products, which were selected based on their strategic importance (value, volume, high risk, etc.) to Ghana. Data was gathered from the MoF, GRA-Customs and international databases. Additional data was collected via stakeholder meetings in Ghana.

The analysis found that trade fees and charges across the ten products averaged about 2 percent of the import price, and about 0.2 percent of the total export price. As such, fees and charges make up a very small proportion of the trade costs in Ghana, both for imports and exports. Similarly, there was very little estimated impact on the domestic prices of imported products and on the export prices. It is important to note that in the case of exports, Ghana is a price taker in the world market for almost all commodities included in the analysis with the exception of cashew nuts (where Ghanaian exports constituted 38 percent of the world’s imports in 2016) and yams (where, according to 2016 data, one-tenth of world’s imports were from Ghana).

Interestingly, the analysis discovered that lower non-tariff costs (NTCs) will result in greater international trade for Ghana. Further, lower trade costs have a trickle-down effect on prices of inputs, intermediary and final products. This results in lower prices for consumers, and improved competitiveness of Ghana’s exports. The economic impact analysis recommended that the GoG target the reduction of non-tariff costs in order to reap the benefits of not just increased international trade, export competitiveness, and lower domestic prices, but also increased government revenues. With this understanding, MOTI requested additional support to help identify and better understand the main NTCs impeding Ghana’s trade.

Before the completion of the project, Ghana TATFP was able to survey the most trade impeding NTCs that impact Ghana’s exporters and importers and identify steps to address those costs. The recommendations will help reduce the NTCs that impact the import and export of goods, which include channeling permits for export and import through a single agency and introducing a risk management system that would allow border authorities to focus inspections on high-risk shipments, while allowing low risk shipments to pass through in a streamlined manner.

Adding to the above body of research, training, and recommendations, and at the request of MOTI, Ghana TATFP also conducted an assessment and subsequent comparative analysis of the destination charges that local shipping line agent impose on trade, focusing on fee transparency by evaluating the scope of destination fees and identifying practices from both the liner agents and regulators that could be improved. The analysis examined the structure and applicability of destination charges in Ghana, assessed their rationale and compatibility with international best practice, and presented the potential impacts on the overall transport and trade costs in the country. This will help to ensure fees are legitimate and traders are fully aware of the applicable fees and charges when importing, exporting and transiting in Ghana.

A little more than one year after the initial review of Ghana’s fees and charges, Ghana TATFP conducted a rapid update of the initial assessment to document any changes to imposed fees and charges, payment processes, and trader sentiment. A number of changes at Ghana’s borders had also taken place; primarily, the Executive Directives on joint inspections and paperless ports – which sought to reduce clearance times through coordination amongst regulatory agencies and aim to strengthen electronic clearance processes – have been under implementation since September 2017. Thus, the rapid assessment included both stakeholder interviews and import and export consignment data tracking and analysis at the ports of Tema, Aflao and Kotoka International Airport (KIA) to measure how many fees, charges, and ‘unofficial’ payments were transacted during import, export and transit processes.

Across the board, MDAs did not report any significant changes. However, MoF was in the process of having discussions with MDAs and relevant stakeholders to review fees and charges for inclusion in the 2019 budget (subject to Parliamentary approval). All MDAs were therefore found to be charging the pre-2018 rates for fees and charges. Importantly, all of the MDAs who participated in the TATFP trainings on ABAS for service provision indicated that they were using the training to build out their proposals for the 2019 budget and imposed fees. Additionally, MoF also indicated they were developing guidelines to standardize the methodology for costing fees and charges by MDAs in line with activity based accounting systems, and that this is expected to be completed by the end of 2018. MDAs were also instructed by the MoF that new fees will not be accepted unless adequate stakeholder consultation has been conducted.

ARTICLE 7.4 RISK MANAGEMENT

TFA Article 7.4 states that each member shall maintain a risk management system specifically for customs control (and other relevant border authorities) in connection with import, export, and transit of goods. It limits unjustifiable discrimination of certain goods, focuses controls on high risk goods, expedites the release of low risk goods, and instructs WTO Members to use appropriate selectivity criteria. Adherence to TFA Article 7.4 reduces delays in the clearance of goods while also strengthening the controls applied on cargo and goods.

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CHALLENGE

Risk management comprises an important element of a country’s cargo clearance process. Effective risk management at the border supports the facilitation of trade, encourages compliance by traders, and can reduce the time and cost of doing business – not only for traders, but also for governments. The TFA outlines how governments should establish or strengthen risk management systems that can be used by Customs administrations and other border management agencies active in the clearance process to determine which imports, exports or transit transactions should be subject to controls and the scale and type of those controls. In Ghana, risk management was reconsidered as a priority in 2017, as the Presidential Administration announced new clearances and mandates for customs officials to reduce wait times and improve operational efficiencies.

ACTIVITY

In November 2017, Ghana TATFP partnered with the Ghana Revenue Authority – Customs Division (GRA-Customs) on a number of interventions designed to identify gaps in its risk management system and make specific recommendations on how to address those gaps over the short, medium, and long-term. The project produced a rapid assessment on customs risk management to determine the priority items for improving Customs related risk management procedures. Ghana TATFP, along with GRA-Customs, coordinated with other development partners (DANIDA, GIZ, Global Alliance for Trade Facilitation, IMF, etc.) working on risk management issues by sharing the results of the rapid assessment and coordinating on follow up training to GRA-Customs and MDA’s on risk management issues. Because Ghana TATFP’s period of performance was ending in October 2018, the project was able to provide technical assistance to GRA-Customs in the development of a Risk Management Policy, one of the recommendations from the rapid assessment.

RESULTS

Ghana TATFP delivered a rapid assessment of Ghana’s risk management system, which included recommendations that could be implemented in the short, medium, and longer term. Conclusions from the rapid assessment found that Ghana was not in full alignment with the specifications of the World Customs Organization (WCO) and the requirements of Article 7.4 of the WTO TFA. It also found that risk management within GRA-Customs is often conducted informally, without regular documentation in the GRA-Customs automated systems; GRA-Customs’ organizational structure does not directly address risk management, by way of a Customs- specific formalized unit, nor with specified roles and responsibilities; and that GRA-Customs does not have a risk management policy, nor related standard operating procedures (SOPs) or a comprehensive Customs risk management implementation plan. The assessment highlighted that current risk management approaches were constraining the trading environment. For example, 76 percent of declarations are routed for physical examination and/or scanning, yet less than 2 percent of inspections yielded non-compliant findings. Additionally, 100 percent of declarations undergo paperless document review, which is not based on risk selectivity. The findings indicated that not only are current risk management practices costly, time consuming and potentially ineffective, but also that there is a need to increase the capacity within GRA-Customs to implement a risk management.

Through a training provided directly to GRA-Customs officers working on risk management in July 2018, TATFP highlighted the need for GRA-Customs to 1) develop a GRA-Customs risk management policy; 2) encourage a multi-agency approach to risk management at the border; 3) advance AEO and PCA mechanisms within GRA-Customs; 4) build capacity for GRA-Customs officers; and 5) raise awareness for trading public on compliance. A second risk management workshop also in July 2018 then targeted MDA’s and private sector to build a better understanding on the importance of risk management vis-à-vis the TFA. This workshop also highlighted the cross-cutting risks that MDAs face in clearing goods. Many of the participants identified that their organization attempted to implement risk management measures within their respective clearance processes, but that more capacity building and technical assistance support is needed to implement a holistic and whole of government approach that would link up with GRA-Customs.

In August 2018, through extensive consultations and facilitated exercises, a GRA-Customs working group, produced a draft GRA-Customs risk management policy which complies with the WTO TFA Article 7.4, and reflects Ghana’s operating context. The draft policy includes 1) the development of a GRA-Customs Risk Management Steering Committee and Risk Management Department under the Customs Commissioner; and 2) policy statements that encourage informed compliance with Customs and related law, facilitate legitimate trade, and strengthen Customs capacities to respond to relevant legal infractions; and, 3) a RM Department organizational structure chart with clearly defined and distinguished reporting lines and units within. The draft risk management policy is an important step to formalizing risk management functions in a structured way within GRA-Customs.

ARTICLE 8.1: BORDER AGENCY COOPERATION

WTO TFA Article 8.1 requires each WTO member to ensure that its authorities and agencies responsible for border controls and procedures (e.g., inspections) dealing with the importation, exportation, and transit of goods, cooperate with one another and coordinate in order to facilitate trade. Article 8 highlights the need for border agencies to collaborate in order to streamline processes and reduce duplication at the border.

CHALLENGE

Since 2017, the Government of Ghana (GoG) issued multiple Executive Directives pertaining to the customs clearance process that focus on the need to facilitate trade, encourage economic development, and decrease the cost of doing business. Previously, responsible border authorities (e.g., agriculture, food and drug, standards, etc.) were scheduling and conducting physical examinations of goods separately, which caused delays and redundancies in the clearance and release of goods (e.g., multiple un-stuffing of containers), costing time and money to traders. In late 2017, Ghana issued an Executive Directive that called for the alignment of procedures and formalities for cargo examinations by establishing a joint inspections mechanism for relevant border

LPFM II / USAID

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agencies. The joint inspections mechanism, which was eventually integrated into Ghana’s National Single Window as the Joint Inspections Management Information System (JIMIS), notified relevant MDAs of incoming goods to allow their approval or request for inspection as necessary. The Executive Directive set a target date (September 2017) to implement 100 percent joint inspections.

The short-turnaround time meant that there was some confusion in the run-up to meeting the deadline for the Government’s goals.

ACTIVITY DESCRIPTION

TATFP partnered with GRA-Customs to undertake a rapid assessment to review Ghana’s implementation of the joint inspections directive at the Kotoka International Airport (KIA), Tema, Takoradi and Aflao ports of entry. The aim was to highlight operational realities of current joint inspections procedures and make recommendations towards simplifying processes and reducing redundant procedures among key border agencies, and to identify gaps in coverage and address those gaps to strengthen compliance with the TFA. The timing of the assessment also overlapped with the announcement of the revised joint inspections Executive Directives to reduce the number of agencies receiving JIMIS notifications from 16 to 3.

RESULTS

The assessment distinguished between the joint inspections process from September 2017 to July 2018 and from July 2018-onwards. A key finding from the stakeholder consultations elaborated the confusion that resulted from the (lack of) communications related to the roll-out of the Executive Directives on joint inspections. During the initial implementation period, the JIMIS system would send notifications to 16 regulatory authorities (MDAs), and this faced obstacles because there were no corresponding standard operating procedures (SOPs) that informed the procedures and ensured alignment between the MDAs involved. Moreover, the electronic JIMIS system faced issues with its integration with the single window systems as well as with flexibility in terms of reflecting on-the-ground realities of customs clearance procedures.

In July 2018, the revised directive, which instructed that the JIMIS would be reducing the number of border management agencies that received notifications on joint inspections from 16 to 3, was met with the same confusion by MDAs and the trading public primarily due to the lack of extensive communication with all stakeholders before the directive was released. In light of this development and taking the entire joint inspections process into account, Ghana TATFP recommended that MOTI and GRA-Customs work to improve border clearance efficiencies by 1) arranging, facilitating and overseeing a technical working group to develop comprehensive SOPs for the joint inspections process; 2) conducting an in-depth time release study of joint inspections process to identify specific areas of concern in the process, such as notification times or issues with the Single Window system;

and, 3) developing key performance indicators and an evaluation process for the joint inspections process. At the time of Ghana TATFP’s conclusion, the joint inspections had seen some improvements because of increased awareness by MDAs and trading public. There was also a move to share SOPs with stakeholders so that everyone was operating off of the same methodology.

PART II: OTHER GHANA PRIORITIES

STRENGTHENING GHANA’S EXPORT-IMPORT BANK

Ghana’s Export-Import Bank (GEXIM) was established in March of 2016 under the Ghana Export Import Bank Bill passed through Ghanaian Parliament. GEXIM was designed to support the strategic position of Ghana as an export-led economy and promote the acceleration of Ghana’s goal for achieving and more diversified economy and become more economic shock resistant. Ghana had previously created a number of institutions and initiatives that reflected the intended support to the export sector that GEXIM would focus on, including the Ghana Export Promotion Authority (GEPA), the Export Finance Company Limited (EFCL), the Eximguaranty Company Limited (ECL), and the Export Development and Agricultural Investment Fund (EDAIF). Ghana’s Export Import Bank served to consolidate the EFCL, the ECL, and the EDAIF into one organization designed to be the key driver of Ghana’s export activities.

CHALLENGE

Despite the government’s steps to better promote exports, under the previous segmented activities key elements of the export chain were missing. Ghana’s export financing institutions were unable to make a meaningful impact on the export sector because of poor capitalization and a vague definition of their mandates, and Ghana lacked a mandated institution to serve as the leader for the facilitation of cross-border commercial involvement of Ghanaian companies. In 2016, Ghana was an active target market for several EXIMs and Development banks. Without a reciprocal agenda, Ghana was at risk of becoming loan and import dependent. As such, Ghana’s Export-Import needed to develop the policies and authority to lead the facilitation of Ghanaian companies and represent Ghana’s national export interests. As a conglomeration of different institutions, the Government of Ghana wanted to ensure that GEXIM had the capacity support necessary to achieve its institutional goals.

ACTIVITY

To assess where Ghana TATFP could be most valuable to GEXIM, the project carried out an initial scoping mission in October 2017. Through stakeholder meetings with EXIM leadership and key division staff, the scoping mission identified three target areas: the need to develop sustainable credit policies and procedures; the need to address a deficit in risk management culture and training; and the need to support the Bank’s strategic engagement with their current and prospective small and medium enterprise (SME) clients. TATFP’s support to GEXIM was delivered in three phases to address the identified areas for technical assistance. The first phase focused on developing and socializing effective credit policies and procedures. The second phase involved the design and introduction of a comprehensive risk management framework that could be operationalized by GEXIM. The third phase provided strategic support to GEXIM’s SME division that would enable them to provide free training and enhanced relationship management to their current and prospective SME clients.

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In April 2018, the TATFP initiated a sustainable credit policy and procedures activity undertaken by a credit and lending expert. The recommendations, reports and tools served to support improving, refining and strengthening EXIMs credit analysis and assessments, credit appraisals, as well as existing procedures and templates. In May 2018, TATFP then initiated support to improve GEXIM’s internal risk management framework. Because of stakeholder engagement and related observations, the TATFP developed recommendations for improvement to the Bank’s risk management framework, including credit monitoring and recovery activities. The observations and recommendations were presented to EXIM directors and general managers, many of whom participated in the targeted risk management training. In June 2018, TATFP targeted the development of training materials, as well as holding a train-the-trainer program and stakeholder engagement with GEXIM staff to strengthen GoG service provision to current and prospective SME clients. This included several trainings on engaging SMEs in Trade, and the development of a SME online guidebook hosted by GEXIM.

RESULT

Critical sectors of the Ghana Export-Import Bank were provided with tangible tools for specific credit scoring, credit monitoring, and improving collaboration among Government of Ghana SME support programs. Subsequent targeted trainings on the use of these tools and on best practices for engaging SMEs were delivered to GEXIM staff and other GoG officials to provide more sustainable capacity building. With recommendations for credit policies and procedures, credit monitoring and problem loan workout, internal risk management framework, and SME strategic engagement validated by GEXIM leadership, GEXIM possesses international best practices for strengthening its support offerings, and serving as the institutional leader for better promoting exportation in Ghana.

GHANA’S MEDIUM TERM REVENUE POLICY

In March of 2018, a Domestic Revenue Mobilization Needs Analysis was conducted in Ghana to identify reform areas that were of interest to the…