In a move that has sent shockwaves through Ghana’s seafood industry, the government is set to impose a staggering 1,573 percent increase in import taxes on frozen seafood. This, the United States Department of Agriculture (USDA) warns that this exorbitant tax hike, equivalent to an upward adjustment from GH¢15 to approximately GH¢251 per metric tonne, could disrupt the supply chain and lead to a decline in fish availability within the local market.
Adding to the complexity of the situation, the taxes are expected to be paid in U.S. dollars, a currency currently in short supply within the Ghanaian economy. This additional strain on importers has made doing business in Ghana’s major port of Tema increasingly unattractive, especially given the prevailing economic circumstances.
The USDA’s second quarter foreign agricultural service report also highlights other challenges that could further impact seafood imports in the country. One such challenge is the elimination of the benchmark value discount policy, which has been a crucial factor in facilitating trade. Moreover, an increase in Value Added Tax (VAT) poses an additional burden on importers.
As a result of these tax measures, vessels are now opting to discharge their cargo at neighboring countries like Togo and Cote d’Ivoire, where goods can be transported across the border without incurring taxes. This circumvention strategy threatens to divert significant volumes of seafood imports away from Ghana, exacerbating the potential scarcity of fish in the local market.
Nevertheless, despite these tax hurdles, the allure of Ghana’s rapidly expanding hospitality industry, particularly the food services sub-sector, continues to make seafood imports an appealing prospect for traders. It is worth noting that Ghana heavily relies on imports to meet its fish and seafood demand. In 2022, the country imported approximately US$145 million worth of seafood, representing a 13 percent decrease compared to the previous year.
The top three seafood-supplying nations to Ghana in 2022 were Mauritania, China, and Morocco, with the Faroe Islands, Spain, Norway, South Korea, the Netherlands, Angola, and Singapore rounding out the top ten. Notably, the United States ranked as the 13th-largest supplier, witnessing a promising 42 percent growth in seafood exports to Ghana, valued at US$4.2 million in 2022, up from US$2.9 million in the previous year.
Ghanaian cuisine heavily relies on seafood, with the population consuming a significant amount of mackerel, sardines, and whiting/hake. Seafood serves as a vital source of animal protein, accounting for approximately 60 percent of protein intake in the country. Ghana’s per capita consumption rate of seafood stands at an impressive 26 kilograms, representing one of the highest rates of fish dependence for nutrition on the African continent.
The recent surge in U.S. seafood sales to Ghana faces an uncertain future due to the drastic tax increase proposed by the Ghanaian government. While these developments pose significant risks to sustained exports from the United States, a previous USDA report emphasized that the Ghanaian seafood market holds great potential for U.S. suppliers in the long run. However, realizing this potential would require a concerted effort to prioritize and boost domestic production, thus reducing the country’s reliance on imports.
As importers and traders brace for the repercussions of the tax hike, stakeholders across the seafood industry are anxiously waiting to see how Ghana’s supply chain and its relations with international partners, including the United States, evolve in the face of these formidable challenges.
Source: Norvanreports