State Loses ?300bn Thru Textile Smuggling

- Textile workers ready to take to streets

The textile industry, one of the economic sectors that has attracted the President's Special Initiative (PSI) is said to be witnessing one of its lowest fortunes, losing ?300 billion in revenue in 2002 through smuggling and under-invoicing.

At a recent workshop in Accra, the revenue agencies governing board, which made this startling disclosure, hinted at the likelihood of even higher loss this year.

To show how low the once vibrant industry has sunk, it was revealed that total local production, which peaked at 130 million metres per annum in the 70's, has dropped to under 39 million metres currently.

The trend has resulted in the reduction of the labour force from 25,000 to fewer than 3,000 now.

The problem of under-invoicing in Ghana derived from the existence of high import duties, laxity in the performance of the valuation and monitoring functions of the destination inspection agencies as well as ineffective customs activities at the country's frontiers, the board further disclosed.

It said the adverse effects on the economy had been many and varied. As a result of under-invoicing, there were rampant contraband goods dumped on the markets.

This killed local competition and did not give any protection to the manufacturing sector, because the smuggled goods sold cheaper than the locally produced ones.

The local industries were therefore unable to take advantage of the Golden Age of Business paradigm and the improvement in the economy - Under-invoicing of imports also resulted in lower tax payments and lower selling price of goods the board stated. Issues that came up include reduction of import duty on goods such as raw materials of those items, namely printed fabric, which are prone to under-invoicing, dumping and smuggling.

It was recommended that CEPS should be strengthened, revamped and its personnel trained well to improve productivity. Immediate temporary restriction should be imposed on all finished printed textile goods imported to Ghana. Importation of textile raw materials should be allowed to promote local value addition and employment generation.

Importation should be only through restricted and approved entry points, such as the airport, seaports at Tema and Takoradi and must be only in 20-foot containers.

Imported goods without documentation should be seized at the points of sale and the judiciary system encouraged to be supportive of measures to curtail under-invoicing, smuggling and dumping.

World Trade Organisation (WTO) documents sighted by The Chronicle indicated that member countries might restrict importation of imports temporarily if their domestic industries were injured or threatened with injury caused by a surge in imports.

This action, it said, was temporarily in force in Nigeria and it was recommended that there must be continued checks and seizure of textiles registered in Ghana being printed and sneaked in from duty-free neighbouring countries.

A suggestion was also made for the restriction to remain in force until the prohibition of imports removed the elements of individual judgement of CEPS officers who could easily be influenced and under the WTO rules, such restrictions may last up to four years.

The immediate repercussions were that Ghana would lose its AGOA status if smuggling could not be controlled and create large-scale unemployment following the layoff of textile workers by the existing mills.

At a meeting held on September 9, this year, anti-smuggling of textiles task force members stated that they had kept surveillance on the principal suspect, a Chinese man.

The meeting attended mainly by representatives of the security agencies, CEPS, Immigration, BNI and Trade and Industry Ministry, the textile industries called for support from the textile companies.

Deputy Minister of Trade Kwadwo Afram Asiedu who chaired the meeting indicated that the formation of the inter-agency committee and the task force demonstrated the importance his ministry attached to addressing the issue of smuggling and the proposition of mitigating strategies.

Mr. E. Noi Hanson of the anti-smuggling task force told the meeting that extensive surveillance had been carried out on the Chinese.

He requested for a vehicle and other logistical support to enable him and the task force to travel to Lom?, Togo, to ascertain the extent of infiltration by smugglers and to enable him to consolidate activities of the task force with those of other high-ranking officials in Lom?.

Information gathered by The Chronicle has it that all these requests were provided including levy of the textile companies.

The Ghana Textile Printing (GTP), Akosombo Textile Limited (ATL) and Ghana Textile Manufacturing Company (GTMC) were tasked to release money for the exercise.

GTP and ATL, according to reliable sources, paid ?10 million each but the GTMC refused to pay because its chief executive, Mr. Pao said it was a waste of resources since the agencies were already aware of the main suspect who was being shielded.

The source stated that the security agencies knew where they could pick the Chinese but were turning a blind eye to the report.

When reached the general secretary of Ghana Federation of Labour, Abraham Koomson, said that he was becoming suspicious that there were some top brass behind the Chinese man.

According to him, everything needed for the security agencies to trace the source of the smuggling and flooding of the markets with inferior textiles bearing ATL and GTP logos had been done.

He further stated that the frustration was forcing the textile workers to go onto the streets to protest against the government's inability to protect the industry.

A few months ago The Chronicle came out with a finding that certain individuals have been importing into Ghana finished textile products with the ATL logo.

These products are of inferior quality and sell cheap on the markets destroying the local products.