Smuggled edible oils threatening local industry - Samuel Awonnea

Local edible oil producers are facing an “existential threat” from a surge of smuggled cooking oils flooding the market, according to the General Manager of Benso Oil Plantation PLC (BOPP), Samuel Avaala Awonnea.

Mr. Awonnea blames Togo’s free port system, which allows duty-free imports that are then smuggled into Ghana, unfairly competing with domestically produced goods. He also points to Togo’s high oil imports exceeding domestic consumption, suggesting re-export to neighbouring countries.

“You would see an influx of various brands of edible and cooking oils on our market. This has always been the case; but this time around, it is unprecedented for several reasons. One of them is that Togo operates a free port system, allowing many products to enter the sub-region through Togo, which is fine and part of free trade. However, what has changed is that this influx of edible oils is entering our market through unapproved routes, bypassing taxes and duties. These products appear cheaper but are unfairly competing with local products.

Over the past two years, this issue has worsened because Togo imports a lot of oil. Given their population, it is clear that much of it goes to the rest of West Africa. This is our most important and existential threat,” he lamented during a Facts Behind the Figures Session organised by the Ghana Stock Exchange (GSE).

Further exacerbating the problem is the diversion of trade from politically unstable regions like Niger and Burkina Faso, leading to a significant rise in untaxed imports entering Ghana.

“Recently, geopolitical tensions in Niger and Burkina Faso have made traders less comfortable in those regions, leaving Ghana as the only safe market. Consequently, many trucks from the North and Togo are bringing these oils into our market, exacerbating the problem,” he noted.

Mr. Awonnea said BOPP and related entities have conveyed their concerns to the relevant authorities, including the presidency, to address the issue, particularly to ensure that the import of such items only passes through the seaports and not land borders. He was, however, quick to acknowledge the ongoing challenge.

Data captured by the Observatory of Economic Complexity (OEC) reveals that despite a population of only 8.9 million, Togo ranked as the 35th largest importer of palm oil globally in 2022.

Palm oil was the 5th most imported product in Togo that year, with a total import value of US$343million. Indonesia and Malaysia were the primary sources of these imports, contributing US$172million and US$168million respectively. This dwarfs the import value from similarly-sized countries.

For comparison, Ghana, with a population that is more than 3.5 times that of Togo, imported US$202million in palm oil during the same period.

The BOPP General Manager’s claim was corroborated by the Greater Accra Chairman of the Association of Ghana Industries (AGI), Tsonam Cleanse Akpeloo, who said the situation has defied advocacy and related efforts.

“We continue to have a situation where our borders are weak and sometimes, even inferior products are smuggled into the country. Admittedly, some of them pay duties but because they are so cheap at source, it is still easier for them to sell it cheaper in our country; and all of these continue to weaken our local industries,” he said.

He noted that the conversation around increased industrialisation in light of the Africa Continental Free Trade Area (AfCFTA) would amount to nothing more than lip service if the borders are not strengthened and the food regulator does not become more stringent.

“We are able to use social media and other means to gather intel and stop some of these operations but we cannot do it all. This is what the authorities are meant to do,” he added.

The development is having a domino effect across the value chain. Ama (not her real name), a vendor of local dishes in Osu, said rising prices mean they have to choose the more affordable options on the market, even if their quality cannot be guaranteed.

“My brother, with the way things are now, we just have to make do with some unknown brands. We wouldn’t deliberately compromise the health of our customers but even a rice meal is becoming out of the reach of many; very few can even afford eggs. So across the board, we have to balance the quality and quantity of our inputs,” she explained.

On his part, Anthony Morrison, Chief Executive Officer of the Chamber of Agribusiness Ghana, said it would be difficult to remedy the situation if Ghana continues to maintain a high-tax regime at its ports while its next-door neighbour offers the opposite.

“While there are many things to be done, we cannot pretend that the taxes at our ports, compared to Lome’s, is not a factor,” he said.

Mr. Morrison added that with the import bill for edible oils approaching that of rice, chicken and sugar, as well as changing climatic conditions, more effort most be made to ramp up local production.

“But above all, we must see strong leadership to address these issues,” he insisted.