GHANA— Various stakeholders in the Ghanaian cocoa sector have urged the government to offer tax incentives for SME cocoa processors to stimulate growth and improve returns to farmers.
Cocoa stakeholders shared these sentiments at a recent roundtable on tax regulation in the cocoa sector held in Accra. The stakeholders faulted the government’s handling of the sale and production of cocoa in the country, describing the current climate as punitive, promoting inequality to the detriment of small and medium-sized companies engaged in the sector.
The Ghanaian government was particularly blamed for the indirect taxes imposed on industry players. According to the stakeholders, these indirect taxes have a negative effect on prices, production, and overall growth of the cocoa sector.
Joseph Okyere Osei, Project Officer at SEND Ghana, said, “Even though cocoa farmers are tax exempted, some numerous indirect taxes such as production tax, valued added tax imposed on these companies, have dire consequences on them and are unable to thrive as compared to the free zones.”
“When it comes to value addition in the cocoa area, there are a lot of small companies that are coming up trying to enter that space, but because of numerous taxes, production tax, Value Added Tax, that are stamped on companies, they are not able to thrive.”
Act 1984 PNDCL 81 was also faulted for hindering SME cocoa processors from directly purchasing beans from farmers before value addition. The stakeholders revealed this regulation significantly stifles the farmers, making them less competitive in the local and international markets.
The Act established COCOBOD but also limited the cocoa farmer’s market to the board, with regulations and tax requirements discouraging the sale of cocoa beans to other players.
Osei particularly faulted the 35% import duty imposed on SME cocoa processors in Ghana for buying cocoa beans from brokers instead of COCOBOD. He described the import duty as punitive and disincentivizing to engage in the cocoa sector. A review would address the income gap experienced by farmers and a net positive effect on locally produced cocoa products.
The stakeholders encouraged the Ghanaian government to prioritize SME cocoa processors in terms of tax exemptions and deliberate policy regulations to enable them to compete with Ivory Coast and other international players to help them expand.
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