• UN Comtrade data shows that the European Union exported over $275 million worth of vehicles to Ghana in the last five years. “Many of these vehicles are comparable to those we consider end-of-life vehicles.”

• With an estimated 40% of Accra’s air pollution concentrations related to vehicle transport emissions, Accra’s yearly concentration of air pollution was 11 times higher than the WHO air quality standard as of 2020.

• Ghana’s local regulators; the Ghana Road Safety Authority, and the Ghana Standards Authority do not currently have any scientific specifications and emissions standards for auto spare parts exported to the country.

ACCRA, Ghana — In the bustling market of Abossey Okai in Accra, Ghana, one will find a vast array of imported auto parts from Europe and other parts of the world. The market is known for its wide variety of auto spare parts, including both new and used parts, and is a popular destination for those looking to repair or upgrade their vehicles.

However, the importation of end-of-life vehicles and used auto parts from Europe to the market is not only putting lives at risk but also contributing to significant environmental pollution in Ghana.

Robert Dumevo, a mechanic who runs his shop at Lapaz, a suburb of Accra, recounts how he narrowly escaped death on the N1 motorway in Accra. He had replaced a broken exhaust pipe on a client’s Hyundai Sonata, unaware that the replaced part was also faulty and resulted in the vehicle catching fire during a test drive.

“I was driving a ticking time bomb. My lungs were engulfed in smoke, and I struggled to breathe. I realized there was trouble when I tried to escape but my seat belt got jammed. I could feel the fire under my feet,” Robert recalled with some hint of trepidation.

Robert blames “unscrupulous spare part dealers” at Abossey Okai, Accra’s largest hub of spare parts importers, where he bought the replacement part.

“When you buy a used spare part at Abossey Okai, you cannot tell if it is fake, sub-standard, or faulty. Some businessmen are involved in the selling of sub-standard spare parts making it difficult to do our work,” he explained. (https://jardinefoods.com/)

Abossey Okai – A morgue for used car parts and end-of-life (ELVs) vehicles from Europe

Clement Boateng, the chairman of the Abossey Okai Spare Parts Dealers Association, admitted that the prevalence of sub-standard auto parts ending up in vehicles and causing safety and environmental issues stems from the nature of auto parts imported from abroad. “Most of the second-hand auto parts dealers import parts from salvaged and end-of-life vehicles,” Clement revealed.

There are “over 15,000 shops” at Abossey Okai, with over fifty-five percent engaged in the import of used auto spare parts from abroad, he said adding, “when importing used auto parts, you must be there for physical inspection or have a trusted client. Otherwise, you will stay in Ghana, and they will load a thrash of auto parts containers to you.”

The used automobile parts and vehicle industry is one of the biggest in Europe and West Africa. Data provided by the Dutch Environment and Transport Inspectorate (ILT), shows that “Europe exports over a million light-duty vehicles” to Africa annually. UN Comtrade data shows that the European Union has exported over $275 million worth of vehicles to Ghana in the last five years with Germany being the biggest exporter.

“Many of these vehicles are comparable to those we consider end-of-life vehicles,” ILT notes, bringing into question the nature of port inspections that take place in Europe before export.

Frank Duru, is a car exporter with several years of experience based in Germany. He explained that there are instances when an official car inspection before export is replaced by a personal glance of approval.

“A few of them [vehicles] do not have the roadworthiness certificate, but we see they are in good condition,” he disclosed.

“Neither the exporting nor importing countries have minimum requirements in place to ensure that only quality used vehicles are traded,” said Veronica Ruiz Stannah, an expert on transportation at the United Nations Environment Programme.

This allows for a lot of used cars and car parts in poor conditions to pass inspections at European harbors and depart for West Africa, where they create substantial safety, environmental and health problems for people like Robert.

Response to trade of ELVs and used spare parts in Europe and Ghana

In 2020, ILT conducted a study on the European export of used vehicles to West Africa. The study revealed that 80 percent of 280,000 vehicles exported to West Africa from the Netherlands were “old and below the Euro 4/IV emission standard,” and often lacked requisite “roadworthiness certification.”

The study also noted that the trend was not entirely different among other European markets such as Germany, Belgium and France, Netherlands, and Italy.

Marietta Harjono, a coordinating specialist at the Human Environment and Transport Inspectorate (ILT) of the Netherlands, explained that, at the harbours, inspectors can stop the “worst vehicles, when they are waste or hazardous waste,” after conducting checks with customs officials.

She however stressed that, while a lot of the used cars may not be categorized as waste, they might still not be appropriate for export.

ILT in a 2021 proposal to the European Commission (EC) on the revision of EU regulation on end-of-life vehicles concluded that “environmental and health problems will arise in case third countries lack a proper system for handling vehicles that reach their end-of-life situation and become waste.”

The European Commission is currently in the process of revising its directive on end-of-life vehicles (ELVs), but it remains uncertain if a “cross-border aspect” will be included in the final regulation to end the export of  ELVs to places like Ghana and Nigeria according to the ILT.

The EC did not respond to questions about ELVs and used spare parts ending up in places like Ghana.

Despite the health and environmental problems caused by end-of-life automobile parts and vehicles from Europe, Ghana’s local regulators; the Ghana Road Safety Authority, and the Ghana Standards Authority do not currently have any scientific specifications and emissions standards for auto spare parts exported to the country.

Head of Regulation, Inspection, and Compliance at the Ghana Road Safety Authority, Kwame Koduah Atuahene told iWatch Africa that his authority and the Ghana Standards Authority (GSA) are engaged in a conversation “to ensure that spare parts imports at least meet some conformity test and standards.”

The Ghana Standards Authority in a written response as part of this investigation also noted that: “The GSA does not have a written policy specific to vehicle spare parts. The Authority is currently pursuing the development of national standards for replacement parts (spare parts).”

Meanwhile, in 2002, Ghana introduced a regulation that made the import of vehicles over ten years more costly by imposing penalties.

Emissions, Health and Environmental Problems

In spite of this regulation, it is typical to encounter many cars releasing thick exhaust fumes while driving through Ghana’s capital, Accra, – a health hazard for many pedestrians, street hawkers, and shop owners resulting in thousands of deaths annually.

Accra’s air pollution is considered critical as around 16 percent of the air is severely polluted and unhealthy, with an additional 30 percent unhealthy for sensitive groups, such as people with asthma according to the Air Quality Index.

At an event to mark the International Day of Clean Air Blue Skies last September, Dr. Francis Chisaka Kasolo, the World Health Organisation Representative to Ghana noted that air pollution was the biggest environmental risk responsible for premature deaths from heart attacks, stroke, and respiratory diseases in the country.

With an estimated 40% of Accra’s air pollution concentrations related to vehicle transport emissions, its yearly concentration of air pollution was 11 times higher than the WHO air quality standard as of 2020.

The country imports about 100,000 vehicles per year, 90 percent of which are used vehicles.  Most of the cars currently used in Ghana are Euro 1 and 2, meaning that they are the most pollutant according to the EU emission standards.

So far, officials in Ghana have failed to implement legislation passed in 2020 that aims to completely ban the import of vehicles older than 10 years.

Daniel Essel, Deputy Director at the Ministry of Transport in Ghana, during a session at COP27, praised the legislation but failed to mention that the government had chosen not to implement it, raising issues about commitment of Ghanaian officials to addressing concerns related to ELVs and used car parts.

“Policymakers in Ghana are not doing enough to curtail used vehicle consumption and, to that end, reduce the harms – crashes, pollution, etc. – that come with it,” says Festival Godwin Boateng, a Ph.D. researcher at the Center for Sustainable Urban Development at Columbia Climate School in New York.

Way Forward

To safeguard the environment and public safety, Dr. Boateng insists that any ban on ELVs in Ghana should be couched as part of broader policies such as investments to make public transport, walking and cycling cleaner, safer and affordable as well as investments in city planning and minibus electrification.

For a regional solution, the ILT recommends that “African governments agree as much as possible to harmonised or regional import standards for used vehicles. Whether it is on maximum age, minimum euro class, maximum mileage, proof of roadworthiness and or condition of the vehicles at export.”

Robert narrowly avoided a fatal outcome but unfortunately, thousands including the environment bear the consequences of years of ineffective policies on the import of ELVs and used car parts.

Until the necessary actions are taken, Robert believes that “many people will continue to perish each year” through no fault of their own.

Report by Gideon Sarpong, Additional reporting by Raluca Besliu, Daniel Abugre Anyorigya and Elfredah Kevin-Alerechi.

This investigation was supported by Journalismfund.eu.

The post Exporting Hazard: The dark side of European used cars and parts trade in Ghana appeared first on iWatch Africa.

The Environmental Justice Foundation (EJF), an NGO that monitors economic and environmental abuses, has blamed the depletion of Ghana’s fish stocks on over-fishing by Chinese-owned trawlers that use Ghanaian front companies to obtain fishing  licences.

“Any further decline would be catastrophic and have huge socio-economic costs,” warned Steve Trent, EJF’s chief executive.

The foundation estimates that  90% of fishing vessels operating  in Ghana’s territorial waters are effectively owned by Chinese companies.

The investigation revealed that Chinese-owned Shandong Zhonglu Oceanic Fisheries Company has set up three front companies holding five fishing licences acquired from Ghana’s Ministry of Fisheries and Aquaculture.

Such opaque ownership arrangements have significantly reduced Ghana’s fish stocks, draining the economy of an estimated US$50-million a year.

The investigation highlighted the failure of government officials in Ghana to take significant action to deal with legal violations.

In June 2021, the European Union issued a warning  to Ghana for what it described as the country’s failure to impose, “effective sanctions on vessels engaging in or supporting illegal, unregulated and unreported fishing activities”.

Several years of calls for reform by  civil society actors, academics and the EU have yielded very little result, according to Francis Adam, the President of the Central Region Fishermen Association.

“The current minister and previous officials have not shown enough commitment to dealing with Chinese involvement in the fishing sector and the impact on local fishers,” Adam said.

The Fisheries Minister Hawa Koomson, who is responsible for protecting fisheries in Ghana, failed to respond to several letters from the investigators seeking information or comment about findings of this investigation.

A hidden Chinese fleet?

Shandong Zhonglu Oceanic Fisheries Company, is a publicly traded Chinese company which revealed in its 2014 annual report that it uses a “special purpose vehicle” to exercise control over a number of Ghanaian-registered companies.

The company, headed by Lu Lianxing, a member of the Communist Party of China, has its principal place of business at Qingdao in China’s Shandong province.

In its 2019 annual report, the company disclosed that it had a 100 percent stake in the following companies in Ghana: Laif Fisheries Company, Zhong Gha Foods Company and Africa Star Fisheries. It also described these companies as “significant foreign operating entities”.

A review of the Ghana’s 2021 licensed fishing vessels revealed that three of the companies owned by Shandong have obtained licences to operate five tuna vessels in the country.

They are listed as follows:

Source: Ministry of Fisheries, Ghana Licensed Vessels 2021

Documents obtained from Ghana’s Registrar of Companies showed that Africa Star Fisheries was not registered in the country as at November 2021. Despite this, the ministry has granted it a fishing licence.

The documents also show that Shandong-registered Afko Fisheries is registered in Ghana to six entities and persons but make no mention of Shandong itself.

 Source: Registrar General Ghana, 2021

LAIF Fisheries, which is also owned and controlled by Shandong is registered and owned by two entities in Ghana:  Industrial Finance (Africa) House and Shandong Zhonglu Hiayan Ocean.

Despite several requests for comment by email and on the phone, neither Shandong nor its subsidiaries in Ghana responded.

The investigation also showed that Ghana’s Fishery Ministry granted fishing licences to the companies listed below last year, while there was no evidence at the Registrar of Companies that they were registered.

Source: 2021 Licensed Vessels, Fisheries Ministry, Ghana

The Principal State Attorney in the Registrar’s office, Afua Sarpong, explained that, “any evidence of company registration documents held by these companies may be brought to the attention of the Registrar General for authentication”.

Fisheries expert Trent said section 47 of Ghana’s Fisheries Act stipulates that at least 50 percent of the beneficial ownership or control of tuna fishing vessels must be held by the Ghanaian government, a citizen of Ghana or Ghanaian public corporation, and have its principal place of business in Ghana.

He added: “Given that the vessels appear to be operating under the flag of Ghana, if they listed are as suspected as being beneficially owned in the majority by Chinese state/corporate actors, … either the vessels did not declare their true beneficial ownership, or the Ministry of Fisheries and Aquaculture Development contravened the Fisheries Act by granting the vessels authorisation (to operate).”

“The new 2019 Companies Act clarifies the definition of a beneficial owner, showing clearly that the way Chinese fishing corporations are using Ghanaian front companies is illegal,” he said.

A spokesperson for the Ghana Industrial Trawlers Association, Kate Ansah, argued that trawl vessel owners in Ghana go into “hire purchase agreements with Chinese owners”.

However, she insisted that the Ghanaian-registered tuna companies are allowed to go into partnerships.

Kofi Agbogah, a fisheries expert and director of coastal governance NGO Hen Mpoano, said Ghanaian subsidiary companies acquire licences directly from the Ministry of Fisheries “through opaque and phony arrangements”, while the vessels are “manned (operated) by Chinese owners”

“This is illegal,” he added.

Loss of revenue

The lack of transparency which allows Chinese companies to set up opaque corporate structures and work through Ghanaian fronts to obtain licences to fish is thought to deprive Ghana of up to $23.7 million a year in tax revenue.

Illegal fishing linked to opaque ownership structures also has severe impact on Ghana’s “small pelagic” fish populations, as sardinella numbers are  already on the brink of collapse, with catches crashing by 80% over the past 20 years.

Adam commented that he had worked in the fishing industry for more than three decades, but that “the last decade has been most challenging due to dramatic reduction in our catches as a result of the influx of foreign vessels”.

China’s influence

The World Bank has estimated that incomes of artisanal fishers in West Africa have fallen by 40 percent over the past decade, plunging thousands of fishers and their dependents into abject poverty.

This raises important questions about why officials at Ghana’s Ministry of Fisheries and Aquaculture have failed to take any urgent action to deal with the perpetrators and the beneficiaries of these illegal practices.

The World Bank has also raised concerns about the Ghana government’s “weak commitment to reducing the industrial segment’s fishing capacity (in favour of small artisanal fishers)”,as agreed under a 2012 moratorium.

The bank noted that the government is “highly influenced by forces within the industrial segment” and reiterated that “foreign-owned vessels being allowed to register in Ghana under beneficial ownership arrangements were not being investigated”.

In the past, the Ghanaian government has taken a soft stance against alleged legal violations by Chinese companies, in what is seen as a trade-off for Chinese development aid.

In 2019, the government dropped the prosecution of a well-known Chinese national, Aisha Huang, who was found to be openly engaged in illegal mining in the country and opted to deport her.

A senior government minister Yaw Osafo Maafo, explained that Huang had not faced the full rigours of the law because of huge Chinese investments in the  country.

State investment data show that the number of Chinese projects and investments in Ghana has rapidly accelerated over the past two decades. China is currently Ghana’s primary source of foreign direct investment, as well as its principal trading partner and infrastructure financier.

Michael Addaney, a Ghanaian researcher and lecturer at the Department of Planning and Sustainability at the University of Energy and Natural Resources remarked that “while China claims it is prioritising environmental sustainability in Africa, the extractive projects initiated by its private sector do not align with this stated goal”.

These projects, he argued, “serve China’s broader interests and often create environmental consequences and problematic debt”.

Trent complained that in a country where close to 25 percent of the population live below the poverty line, “Ghana’s valuable fisheries resources are being sold off for negligible returns to foreign operators in breach of the law”.

 “The minister must immediately resolve the issue of over-capacity in Ghanaian waters in line with scientific advice so as to counter the collapse, or near-collapse, of fish populations in the country.”

“A red card (EU import ban) for the country is a realistic prospect should Ghana be deemed to make insufficient progress.”

…………………….

Reporting and writing by Gideon Sarpong. Daniel Abugre Anyorigya contributed to this report.

This is part of a series on environmental crime in Africa, supported by the Global Initiative Against Transnational Organized Crime, the Henry Nxumalo Foundation and Oxpeckers Investigative Environmental Journalism.

The post Chinese-owned vessels ‘threaten Ghana’s fishing industry’ appeared first on iWatch Africa.

1. China’s trespassing vessels and the economic impact on Ghana’s fisheries sector   
2. How Big Tech’s Content Moderation Policies Could Jeopardize Users in Authoritarian Regimes
3. Garbage Out, Garbage In: How Europe’s e-waste problem is a burden on Africa
4. Transforming climate finance for debt-distressed economies during COVID-19
5. EC proposed Carbon Border Adjustment mechanism: Key considerations for Least Developed Countries
6. Ocean-Climate Nexus: A Blue-Carbon Pathway for West African States
7. The New Censorship: Why Protecting Journalists Online from Harassment is Critical to Press Freedom
8. Ghana given ‘Yellow Card’ by the European Commission following iWatch’s investigation on illegal fishing
9. How the illicit trade in small arms and light weapons (SALWs) is fueling conflicts in West Africa
10. Gideon Sarpong writes: Ghanaian women journalists face threats, abuse in carrying out mandate

Follow @iwatchafrica

The post READ: iWatch Africa’s Top 10 Reports in 2021 appeared first on iWatch Africa.

COVID-19 has greatly exacerbated debt vulnerabilities in EMDEs at a time when many countries are expected to scale up investment in climate related programs.

So far, 54 per cent of low-income countries are deemed to be in debt distress or at high risk of debt distress as of December 2020, a trend likely to continue into 2022.

In Ghana for example, the government plans to spend GHC35.8 billion (49.5 per cent) of its expected total revenue of GHC72.4 billion on servicing loan interests, while the Nigerian government has planned to spend ₦3.12 trillion (40 per cent) of the expected total revenue of ₦ 7.89 trillion on debt financing for 2021.

Faced with such a constrained fiscal space, developing countries have only a few options available. EMDEs need to focus on designing sustainable models of climate financing, especially aimed at accelerating and fully integrating climate-aligned structural change at the private sector.

Climate mainstreaming in the private financial sector

The broader private financial system in EMDEs, including commercial banks, investment banks, insurance companies and micro-finance institutions can make a huge contribution when it comes to meeting the net zero goals by 2050.

The private financial sector in developing countries must aggressively align their lending portfolios with the Paris Agreement, building on the joint statement at the recent Finance in Common Summit of all public development banks.

So far, although many countries in sub-Saharan Africa have begun to integrate climate change policies into national development plans at the public level, very little has been done at the private financial level.

National governments should play a more active role in the various dimensions of Article 2.1c implementation through coordination, harmonisation and regulation. Governments should work closely with the private sector to set minimum rules that all players must follow.

At present, in EMDEs, 80 per cent of infrastructure investment is mostly publicly financed; private investment in infrastructure has stagnated over the past decade and amounts to less than $100 billion annually. The private financial sector must step up Paris-aligned infrastructure investments to reduce the pressure on public finance.

Debt-for-climate swap

Poverty is increasing for the first time in more than two decades, and levels of food insecurity is likely to double as a result of the deep economic consequences of COVID-19 (with as many as 265 million people pushed to the brink of starvation).

According to the 2020 Brooking Institute report, developing countries will be asked to pay $865 billion in debt service on medium and long-term debt in 2021 (of which $346 billion is owed or guaranteed by governments).

While the G20 decision to extend the Debt Service Suspension Initiative until the end of 2021 is welcomed, a permanent resolution of the debt issue is urgently needed—one which is fair, progressive and equitable, different from the structure of the HIPC Initiative in the 1990s.

The idea of a “debt-for-climate” swap was first conceived during the 1980s by the then Deputy Vice President of the World Wildlife Fund, Thomas Lovejoy, in the wake of the Latin American debt crisis.

Debt-for-climate swap is one option with unrealised potential that could be deployed further to reduce carbon emissions and promote different forms of sustainable finance, as well as to reinforce climate resilience. This could focus on countries that are able to service their debt and would be willing to redirect the debt service cash flows into mutually agreed climate initiatives in exchange for reduction or forgiveness of the debt.

The global pandemic implications for climate finance are immense, which is why it is important to deploy all available tools to build back better and meet the goals of the Paris Agreement.

Extension of the $100 billion climate fund

The commitment by developed countries to jointly mobilise $100 billion in climate finance by 2020 to support developing countries is at the heart of the Paris Agreement. But a report by the Independent Expert Group on Climate Finance has noted that the $100 billion target has not been reached, which means that there must be a renewed push beyond 2020.

Coupled with failure to meet the $100 billion climate target, Oxfam has also reported that only around 20 per cent of reported public climate finance was estimated to be grants, compared to 80 per cent reported as loans and other non-grant instruments; of all reported climate finance, an estimated 40 per cent was non-concessional.

According to Oxfam, this is harming the economies of least developed countries by contributing to rising—and in many countries, unsustainable—debt levels.

A credible plan to improve climate financing to EMDEs would be essential to an agreement at COP26.

The following key considerations could guide discussions at COP26 in November:

• Debt-for-climate swaps should be considered a part key part of climate financing and counted as such, while governments in developed nations and actors in private bond markets should be encouraged to take a critical look at debt forgiveness programs aligned with Paris objectives.
• Developed countries should commit to significantly increase climate finance to EMDEs particularly concessionary and grant based support.
• There should be a renewed effort to increase financing for adaptation programs with a minimum of 50 per cent of their overall public climate finance contribution.
• Finally, there must be increased transparency when it comes to disclosure of the terms of loans and other instruments being used to provide climate finance by developed countries.

The path for climate finance post-2020 should be truly transformational: it should incorporate climate-aligned debt relief initiatives, accelerate grant-based finance and improve global accounting standards for all donors.

This was first published by the European University Institute, based in Florence, Italy

Gideon Sarpong is a Policy Leader Fellow at the School of Transnational Governance, European University Institute, Florence, Italy. He is also a co-founder of iWatch Africa. His research interests include climate finance, ocean climate policy and internet governance.

The post Transforming climate finance for debt-distressed economies during COVID-19 appeared first on iWatch Africa.

This year-long initiative seeks to influence policy decisions at the highest level of governance in Ghana and across the sub-region and will be a combination of virtual meetings and physical summits.

The theme for the maiden edition is; ‘’Navigating some critical sectors in 2021’ with guests sharing their expectations for the new year.

Co-founder of iWatch Africa, Gideon Sarpong believes that the dialogue series, “will be an important vehicle for talking through critical issues facing the region and finding areas of convergence for development.”

“I expect that these dialogue series would be an immersive experience with an end goal of designing practical blueprints across several domains for sustainable development,” he added.

The launch will be a virtual session and it is open to the public:

iWatch Africa is inviting you to the launch of its Policy Dialogue Series.

Topic: Navigating some critical sectors in 2021

Time: Saturday, January 16, 2021 02:00 PM GMT

Join Zoom Meeting

https://us02web.zoom.us/j/89608831830?pwd=N3p2TVlYV0k0cW90TDBkQ3YwZ0JEUT09

Meeting ID: 896 0883 1830

Passcode: 257197

Source: iWatch Africa | Follow @iwatchafrica

The post iWatch Africa to launch its 2021 ‘Policy Dialogue Series’ on Saturday, Jan 16 appeared first on iWatch Africa.

GIJN is an international association of organizations that
produce and support investigative journalism globally. GIJN holds conferences,
conducts trainings, helps and provides consulting for journalists from all
around the world. It was founded in 2003, from a gathering of more than 300
investigative journalists and has then grown to more than 138 member
organizations in 62 countries.

iWatch Africa on the other hand is a non-governmental media
and policy organization with considerable national repute and significance. We
have carved a niche in Ghana’s policy and journalism environment for putting
out objective, fact-based and independent assessment on many issues.

iWatch’s work focuses on digital rights, trans-national organized crime, human rights abuse, climate change and ocean conservation and overall government  performance in Africa.

iWatch Africa is delighted to become a member of GIJN and our team of journalists are committed to working with GIJN to help strengthen the impact of investigative journalism around the world.

Source: iWatch Africa

(Xanax/a>)

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In April 2019, Shell released four reports that showed the company paid over $6 billion to the Nigerian government in 2018 in taxes and royalties. Oil and gas accounts for65 percent of total revenue to the Nigerian government.

Yet, other multinational tech companies, such as Google and Facebook, operating legally across Africa, pay substantially lower taxes as a result of obsolete tax rules. A three month investigation by Ghana’s Gideon Sarpong and Nigeria’s Olivia Ndubuisi based on interviews with dozens of experts, tax officials, court records and company documents also established that Facebook had not paid any direct taxes in Ghana and Nigeria since it began operations over a decade ago despite having over 22 million active users in both countries.

Charles Edosomwan, chief Strategist at Teksightedge Ltd, a digital communications agency based in Lagos, said that Google, Facebook and other tech giants operating in Nigeria are not far behind Shell as case studies in how multinationals reap significant financial rewards from the country without appropriate taxation.

“If the country isn’t gaining much from multinational tech companies in terms of taxation, then what’s the difference between Shell and what they did in Ogoniland and Google?” Edosomwan asked himself in a recent interview.

Edosomwan explained that every single Nigerian on the Google platform is money that the company is making everywhere because it can raise over $100m from advertisers based on its users around the world. If there are 30 million Nigerians on Facebook, Instagram and WhatsApp, he said, Facebook should pay the country a 100 dollars a year per individual. That’s the tax they should pay.

What is that figure of the tax they should pay based on? I asked.

“They make that much from impressions. Why will they not give 10% of money they make from every Nigerian eyeball by way of impressions. For example, assuming that Google makes $100 billion off impressions on their platforms in Nigeria every year and pays 10% to the government as tax, that is $10 billion.” Edosomwan said that under his proposal, Google would pay enough taxes in Nigeria to solve the problem of dwindling revenue and borrowing to fund the budget.

Digital Economic Boom & Tax Challenges

In 2018, Alphabet (Google’s parent company) made over $40bn total revenue in the Africa, Europe and Middle East region (EMEA). Alphabet does not provide a country by country breakdown of revenue in these regions making full analysis difficult. In Ghana, digital advertising is “becoming very popular with a lot of internet users and businesses,” said Mr. William Ansah, CEO of Origin 8 a leading advertising company in West Africa.

Ansah currently spends close to 30 percent of his annual budget on digital advertisement, according to the figures he provided. Although Mr. Ansah spends a significant portion of his budget on Google and Facebook ads, he has never been to the Google office in Ghana. Mr. Ansah is insistent “Google should also pay their share of taxes on profits made in the region.”

Google, is one of the world’s 10 most profitable companies, as well as the  highest ranked platform in Ghana according to popular ranking website Alexa, yet Google goes to extraordinary lengths to minimize its physical presence in the country.

The company’s office at the airport residential area neighborhood of Accra, sits inside a plain, white and blue two-storey building. The paintwork is peeling on the building’s street address. Google, whose parent company made more than $160 billion in global revenue in 2019, doesn’t even own the building – it is shared with other businesses with much lower public profile.

On a recent day in February, a front desk employee defended Google’s decision not to advertise its physical presence, saying the company had the right to choose what logos — or not — it displayed outside its office.

One woman who reporters saw leaving the building said she had no idea Google was based inside and was there to visit an entirely different company.

In an ongoing court case in Ghana involving lawyer George Agyemang Sarpong, Google Ghana and Google INC, the Ghana subsidiary goes to great lengths to contend that it is not the “owner of the search engine www.google.com.gh, does not operate or control the search engine and that its business is different from Google INC,” according to court filings obtained as part of this investigation. This is significant because monies spent by the likes of Origin 8 on the Google platform are currently “served by Google Ireland Ltd” according to billing information about ads on the Google platform in Ghana.

Rowland Kissi, law lecturer at the University of Professional Studies, Accra has described Google Ghana’s defense as, “clever attempt” by the business to shirk all “future liability of the platform” should the court rule in their favor. He agreed with the court’s initial reasoning that “the distinction regarding who is responsible for material appearing on www.google.com.gh, Google’s search engine operating in Ghana, is not so clear as to absolve the first defendant (Google Ghana) from blame before trial.”

Google Ghana describes itself publicly as simply an “AI research facility.” In court documents, however, the company admitted that its business is to “provide sales and operational support for services provided by other legal entities…”

Mr. Abdallah Ali-Nakyea, a leading tax lawyer, said that the case should interest Ghana’s revenue authority. As long as the “government can establish that Google Ghana is an agent of Google INC, the state could compel it to pay all relevant taxes including income taxes and withholding taxes,” he added.

Google Ghana did not respond to a request for comment on this investigation. Sarpong declined to comment for this story citing the ongoing litigation.  

Digitization and technology are increasingly playing bigger roles in the economies of Nigeria, Ghana and other African nations. According to a 2018 PricewaterhouseCoopers (PwC) report, Nigeria witnessed an average of 30% year-on-year growth in internet advertisement in the last five years, with a projected internet advertising spending of $125m in the entertainment and media industry in 2020.

The challenge has been taxing the so-called “digital economy” and ensuring that the disruption is contributing to revenue mobilization for African countries. 

“Existing tax systems tend to determine tax consequences on the basis of where the taxpayer is physically located,” said Ghana’s Deputy Commissioner of Large Taxpayer Office, Edward A. Gyamerah.

“The advent of modern telecommunication and the spread of digitization, the ability to effectively engage in substantial business activities in a country without a fixed place of business there, or to conclude contracts remotely through technological means with no involvement of individual employees or dependent agents, raises questions about the continuing suitability of existing Permanent Establishment or nexus rules,” he added.

The current rules argue that a company is taxable on its business profits only if it has a physical footprint in a resident jurisdiction.

Facebook and Google

In 2019, Facebook made over $6 billion in revenue from what it labels “rest of the world,” which includes Africa, Latin America and the Middle East. Apart from South Africa where Facebook is expected to pay direct taxes because of its physical presence and a change of tax laws by the South African government, the remaining 53 countries on the continent will unlikely receive any direct tax payments.

The 2018 PwC report estimated that the South Africa’s 2019 change in tax laws “could raise up to R4.4 billion ($290m) a year” from companies like Google and Facebook. This figure is close to Ghana’s average yearly spending on its flagship free senior high school education. What South Africa will likely earn from new taxes on tech giants would also match the 2016/2017 financial year Internally Generated Revenue of Oyo, a state in south west Nigeria.

A Facebook company spokesperson, Kezia Anim-Addo, said in an email: “Facebook pays all taxes required by law in the countries in which we operate (where we have offices), and we will continue to comply with our obligations.” 

Facebook has no physical presence in Ghana and Nigeria and does not provide country by country report of its revenue from Africa. For residents of Ghana and Nigeria who purchase Facebook advertisements online, the revenue is also billed in Ireland, which has been described by the EU parliament as a tax haven. 

Investigations into the tax affairs of popular multinationals such as Facebook and Google are important to understand the cost to the public, says Alex Ezenagu, Professor of Taxation and commercial Law at Hamad Bin Khalifa University Qatar.

‘‘There is the issue of Inter taxpayer equity,” Ezenagu said. “If the businesses don’t pay tax, the burden is shifted to either small businesses or low income earners because the revenue deficit would have to be met one way or another.”

Ezenagu said that the gap in revenue in Nigeria, for example, may cause the government to increase other taxes, such as value added tax, which increased from 5 to 7.5% in January. “When multinationals don’t pay tax, you are taxed more as a person.”

This erosion of potential taxes means that developing countries are unable to receive the revenue they require to fund their development, said Suleiman Yahaya, senior tax expert at Andersen Tax.

“If you deny any country their tax revenue,” Yahaya said, “it reduces what is available to be spent on Government projects which could be on education; capital projects etc. so the impact is on critical investments.

“There is a ripple effect where revenues are low and cannot meet the government’s plans and they go into borrowing with attendant consequences” Yahaya concluded.

Slipping the tax net

Facebook’s practice of routing overseas profits to low-tax countries is common among major tech companies, which have faced criticisms around the world for not paying enough in taxes.

Several tech giants make use of the ‘Double Irish with a Dutch Sandwich’ tax avoidance scheme to route profits to low or no tax jurisdiction. The technique involves sending profits to one Irish company, then to a Dutch company and finally to a second Irish firm established in a tax haven such as Bermuda.

Google, has over the years been accused of developing a similar sophisticated approach in the use of tax havens to avoid payments of taxes and profit shifting. This is how Google has managed to slip the tax net over the years.

According to documents filed at the Dutch Chamber of Commerce in December 2018, Google moved $22.7bn through a Dutch shell company to Bermuda in 2017. The amount channeled through Google Netherlands Holdings BV was about $4bn more than in 2016, the documents showed.

The subsidiary in the Netherlands is used to shift revenue from royalties earned outside the US to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax.

Executive Secretary of the African Tax Administration Forum, Logan Wort, who was interviewed at the sidelines of the Pan-African Conference on IFFs and Taxation in Nairobi, explained that the practice where digital companies “strip out their profit before they then declare their profit and then pay a vastly reduced tax” is a “huge disadvantage” to brick and mortar companies who must comply with local tax laws.

Actions by the Nigerian and Ghanaian governments:

A source at Nigeria’s Tax Authority, FIRS, who did not wish to be named, said that Nigeria’s government is “tightening” tax laws to take further action.

“Many countries did not foresee the digital economy and its ability to generate income without a physical presence which was why tax laws didn’t cover them,” the source said.

The FIRS source said that Nigeria’s Finance Act, signed into law January 2020 has expanded provisions to shift the country’s focus from physical presence to ‘significant economic presence’.

Yahaya Suleiman at Andersen Tax says this move is in alignment with global best practices.

“The Finance minister has said Nigeria has a revenue challenge,” Suleiman said. “The government sought to look at provisions that tighten the noose a bit to see where and how to increase our tax receipts.” 

In Ghana, digital taxation discussions are slowly gaining momentum among policy makers. Deputy Commissioner of Large Taxpayer Office, Edward A. Gyamerah in a June 2019 presentation insisted that current rules must be revised to cover the digital economy and deal with companies that don’t have traditional brick-and-mortar office presences in the country.

A top government official at the Ministry of Finance who was not authorized to speak publicly also stated that, “from the taxation policy point of view, the government has not paid a lot attention to digital taxation.” He blamed the “complexity of developing robust infrastructure to assess e-commerce activity in the country” as a major reason for the government inaction. He however insisted that, “digital taxation is key focus in the medium to long term tax strategy” with a broad digital tax policy expected to be announced in 2020. Until these are done, he believes that, “Google and Facebook will pay close to nothing in Ghana.”

International Effort to deal with digital tax and profit shifting

In parallel with the unilateral effort by various governments to address the tax challenges as the global economy becomes highly digitalized, the OECD is seeking to develop an international consensus on digital taxation.

In October 2019, the OECD in their 18-page framework plan titled ‘Unified Approach’ admitted that, “in a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence.” 

“The current rules dating back to the 1920s are no longer sufficient to ensure a fair allocation of taxing rights in an increasingly globalised world,” the statement read. 

“We can’t be an island,” the FIRS source said. “The tech giants have their countries represented there in the OECD, so Nigeria needs to be at the table too leveraging the OECD. If you aren’t on the table, then you’re on the menu.”

Tax expert and Executive Director of nonprofit advocacy group, the Global Alliance for Tax Justice Dereje Alemayehu, described the OECD as a “partisan organization” that lacks the “mandate to determine routes for international taxation.”  

“This is a process in which there is no accountability and transparency. Developing countries have no possibility of challenging positions of governments or negotiators participating in the process. It is led by a very powerful OECD secretariat which is not fulfilling the criteria of being neutral among the negotiating positions to facilitate inter-governmental negotiations,” Dr. Dereje explained.

A paper published by five leading tax experts representing various interest groups around the world in February, 2020 re-emphasized Dereje’s argument. The experts argued that ”the opaque OECD negotiations behind closed doors, served by a Secretariat accountable to only OECD members, is simply not the way forward on finding global consensus on such an important issue.” Pascal Saint-Amans, OECD’s director of the centre for tax policy and administration disagrees and says, “reaching a multilateral solution at the OECD is the best way to address the current tax challenges.”

The experts have called for the creation of an international tax commission at the United Nations to bring developing countries into the fold.

Experts said: “Losing hundreds of billions in revenue while staring at the climate emergency and implementation of SDGs is unacceptable, it is time for developing countries to prioritise the issue.

Reporting and writing by Gideon Sarpong (Ghana) and Olivia Ndubuisi (Nigeria).

This article was developed with the support of the Money Trail Project (www.money-trail.org).”

The post How multinational tech companies exploit tax laws and shift profit: a focus on Ghana and Nigeria appeared first on iWatch Africa.

Airbus, has confessed to paying bribes in Ghana and other countries between 2011 and 2015 in a corruption investigation of its business deals dating back more than a decade.

UK court documents reviewed by iWatch Africa show that Europe’s largest plane maker has been fined 3 billion pounds for greasing the palms of public officials and fixers over a string of hidden payments as part of a pattern of worldwide corruption to facilitate the sales of its wares.

Below is a step by step guide on details of the scheme that cost the Ghanaian taxpayer 3.9 million euros.

1. The unnamed government Official 1 was a key decision-maker in respect of the government of Ghana aircraft orders between 2009 to 2015.

2. The unnamed Intermediary 5 is a UK national born in Ghana. He migrated to the United Kingdom as a young child and lost touch with his Ghanaian family until the late 1990s. He had no prior experience or expertise in the aerospace industry. A “CV” provided to Airbus in 2011 listed his employment before 2009 as an events manager for a local authority, director of a football merchandising company and facilities manager for an estate management business.

3. Intermediary 5 was assisted in his Airbus work by two other UK nationals: Intermediary 6 and Intermediary 7(both unnamed). The two have no aerospace experience or expertise. A CV that Intermediary 6 provided to Airbus in 2011 listed his 2009 employment as a UK television Actor and Film Director. Intermediary 7 was also a former UK television actor.

4. Contact between Airbus and the Government of Ghana about aircraft sales began in June 2009 following an expression of interest by the Government of Ghana. By August 2009, a senior Airbus employee reported that he was in touch with Government Official 1 and ‘his team’.

5. Airbus employee 16 (unnamed) was the Spanish salesperson responsible for handling all the Ghana transactions.

6. On December 7, 2009, a company of Intermediary 5 and 6 (named Company D) was incorporated in Ghana. The company’s profile submitted by Intermediary 6 to Airbus in June 2011 stated that Intermediary 5 and Intermediary 6 were its directors.  A company of the same name was incorporated in the UK in February 2010. Company D was the corporate vehicle through which Intermediary 5 and his associates provided services to Airbus.

7. Using another intermediary company (intermediary 8) Airbus paid €3,850,115 to Company D as consultation fees for the first two aircraft. It, however, failed to an extra €1,675,000, it promised to pay Company D for the third aircraft.

8. From 2009, Intermediary 5 and his associates worked on the sales to the Government of Ghana without any written consultant agreement. This included liaison with Government Official 1 regarding the potential Airbus C-295 sale.

9. In January 2011, Government Official 1, intermediaries 5 and 6 met in London. It was at this meeting that Airbus C-295 was agreed upon as the most suitable aircraft for the Government of Ghana’s needs. This was reported to Airbus.

10. By April 2011 Airbus employee 16 reported to his Airbus colleagues that the deal was close to being finalised. Airbus employee 16 then asked Intermediary 5 and Intermediary 6 to transmit a letter to Government Official 1 and explain a possible delay. Airbus employee 16 also asked them to secure meetings with the Ghanaian Ministry of Defence and Ministry of Finance.

11. Company D submitted a formal business partnership (BP) application in May 2011. On July 8, 2011, Intermediary 6 sent a senior Airbus employee 15 a ‘[Company D] update’. He reported that he had just returned from Ghana “having had very productive meetings with all parties.

12. Following the May 2011, BP application, Airbus commissioned an external due diligence report on Company D. The resulting report dated September 302011 identified Intermediary 5 as a shareholder and the possibility that he was a close relative of Government Official 1.

13. The external due diligence report raised concerns that there was a risk of nonconformity with the  Organisation for Economic Co-operation and Development (OECD) Convention, which set corporate governance benchmarks to reduce global corruption.

14. On 3 August 2011, Airbus’ Spanish Defence Subsidiary and the government of Ghana signed a purchase agreement for the sale of the two C-295 aircraft.

15. The consultant agreement between Intermediary 8 and Airbus was dated 20 March 2012 but said to be effective from January 1, 2010.

16. The agreement provided for a percentage commission fee of the net total amount received by Airbus under any commercial contract with the Government of Ghana for C-295 aircraft.

17. Between March 2012 and February 2014, Airbus paid Intermediary 8 a total of €3,909,756.85, a sum over the agreed commission amount as per the ECA declaration (€3,001,718.15).

18 . Between 10 April 2012 and 31 July 2013 Intermediary 8 paid €3,850,115 to Company D. Intermediary 8 retained about €60,000.

19. Between 2012 and 2013 Airbus attempted to arrange the sale of two further C295 aircraft to an Irish aircraft finance leasing company for onward use by the government of Ghana.

20. The first two military aircraft arrived in Ghana on November 17, 2011, and March 19, 2012

21. After the failure of this lease campaign, the government of Ghana decided to purchase a third C-295 direct from Airbus. This arrived on December 4, 2015, but company D did not benefit financially from it as Airbus refused to pay the promised kickback.

By Gideon Sarpong | iWatch Africa

The post A step by step account of how Airbus paid bribes to Ghanaian officials appeared first on iWatch Africa.

The aircrafts were procured from Dutch firm Airbus SE, which has been found guilty in shady deals in some countries across the globe.

Investigations by the Serious Fraud Office (SFO) in the UK led to the exposé.

Fines were imposed by the Royal Courts of Justice in its landmark judgement on Friday.

The SFO focused its investigations on not only Airbus but its
partners in South Korea, Indonesia, Sri Lanka, Malaysia, Taiwan, Ghana,
Colombia and Mexico.

“In brief, persons associated with Airbus, not exclusively its employees, offered very substantial sums of money by way of bribes to third parties in order to secure the purchase of aircraft, by civil airline companies, in counts 1to 4,” the approved judgement sighted by iWatch Africa indicated.

In the case of Ghana, it involved the government between July 1, 2011 and June 1, 2015.

“Between 2009 and 2015 an Airbus defence company engaged Intermediary
5, a close relative of a high ranking elected Ghanaian Government
official (Government Official 1) as its BP in respect of the proposed
sale of three military transport aircraft to the Government of Ghana.

“A number of Airbus employees knew that Intermediary 5 was a close
relative of Government Official 1, who was a key decision maker in
respect of the proposed sales.

“A number of Airbus employees made or promised success-based commission payments of approximately €5 million to Intermediary 5.

“False documentation was created by or with the agreement of Airbus employees in order to support and disguise these payments.

“The payments were intended to induce or reward “improper favour” by Government Official 1 towards Airbus.

“Payments were eventually stopped due to the arrangement failing the
due diligence processes required by the Liquidation Committee.”

While the first deal was under the presidency of the late John Evans Atta Mills, the second deal was under the presidency of John Dramani Mahama.

This will be a big blow to the former President Mahama who is seeking the mandate of Ghanaians in the December 2020 elections.

Over €29 million is expected to be received from fines against Airbus in the case involving Ghana.

The conduct is said to be a criminal violation of the International Traffic in Arms Regulations (ITAR) regulations.

• Read full judgement here

By Gideon Sarpong | iWatch Africa

(www.sanjaytaxpro.com)

The post Ex President Mills-Mahama gov’t cited in major corruption scandal involving Airbus appeared first on iWatch Africa.

The clean-up exercise which began in August 2017 has resulted in the revocation of the licenses of 9 universal banks, 347 microfinance companies, 39 microcredit companies, 15 savings and loans companies, 8 finance house companies, and 2 non-bank institutions, costing tax payers in Ghana over GHc20 billion.

As part of its effort to restore confidence in the banking and specialized deposit-taking sectors, the BoG embarked on the clean-up exercise three years ago to address issues concerning insolvent financial institutions whose continued existence posed risks to the interest of depositors.

The over 6000 direct jobs lost is a conservative estimate which does not take into account temporary and indirect jobs lost during this period. iWatch Africa expects that the direct jobs lost together with the general cost to the nation will see an increase before the close of the year.

Direct Jobs Lost

GCB Bank sacked over 420 workers after absorbing UT, Capital banks:

The GCB Bank sacked over 400 after it absorbed the UT Bank and the Capital Bank its Deputy Managing Director in charge of Finance, Mr. Socrates Affram told reporters in February 2018.

In total, he said, the bank had to lay off 420 staff out of the 850 it inherited from the two banks.

“Between UT and capital, we had regular staff of about 850 from day one and we worked with this number until February 2018 and that was when we pruned it down to 550 due to the rationalisation of the branches,” he explained.

“We assumed 53 branches and we settled on 22 so about 300 staff had to leave. About 120 also had to leave later because their documents did not meet our requirements,” he added.

First Atlantic Bank laid off over 100 after merger with Energy Bank

Over 100 workers of First Atlantic Bank lost their jobs in 2018 following the decision by the new owners to restructure after the merger with Energy Commercial Bank.

The redundancy as was reported then by Graphic Online was as a result of duplication of roles after the merger.

Consolidated Bank laid off over 1700 employees

Following the merger of five banks after BoG investigations revealed that they were insolvent, the newly formed bank, Consolidated Bank announced that it had laid off 1700 employees in 2018.

Out of the number, 700 were mobile bankers of the erstwhile BEIGE Bank, while 1,000 were former employees of the Royal Bank, the Construction Bank, uniBank and the Sovereign Bank who were transferred to the CBG under a purchase and assumption (P&A) agreement approved by the Bank of Ghana (BoG) on August 1.

Microfinance shutdown: Over 2000 people lost their jobs

Over 2000 permanent staff of the collapsed Microfinance Companies have lost their jobs, Executive director of the Ghana Microfinance Institution Network, Yaw Gyamfi, has revealed.

This comes after the Bank of Ghana revoked the licenses of 347 insolvent microfinance companies due to liquidity challenges.

Speaking on Starr FM in June 2019, Mr. Gyamfi revealed that the number is likely to be higher if temporary staff are added to the total number of people likely to lose their jobs due to the action by the Central Bank.

Over 2,000 staff of collapsed savings & loans companies expected to lose their jobs

The Executive Secretary of the Ghana Association of Savings and Loans Companies (GHASALC), Tweneboah Kodua Boakye also revealed that over 2,000 employees of the 15 Savings and Loans Companies whose licenses were revoked on August 16 are expected to lose their jobs.

“We are looking at employees in excess of 2,000. That is for the 15 savings and loans companies on the list,” he made this known on the Citi Eyewitness News. (https://miedemaproduce.com/

Mr. Aboagye further pointed out that the revocation was expected since a number of institutions were battling with challenges.

Cost of financial sector clean up to hit GH¢21 bn by end of year

Meanwhile, the cost of the ongoing financial sector cleanup is likely to reach GH¢21 billion by close of this year, according to figures by Finance Minister, Ken Ofori-Atta.

The Finance Minister projected during the Mid-year Budget Review presentation that it is likely that the cleanup could reach $3 to $4 billion dollars by end of this year.

This is equivalent to GH¢21 billion using the Bank of Ghana’s dollar transaction rate for commercial banks.

The huge cost of the financial sector clean-up is raising concerns about whether the general approach to the financial sector clean-up was sound.

It is also uncertain whether the appointed Receivers will be able to recover the costs from owners and directors of the liquidated financial institutions.

Meanwhile, the projected GH¢21 billion is likely to increase further by the end of this year.

Court Cases and Convictions

The receivers of Defunct banks (uniBank Ghana Ltd, the UT Bank, the Capital Bank, the Royal Bank, the Construction Bank, the Beige Bank and the Heritage Bank) have started legal proceedings against 50 directors and shareholders for their roles in the collapse of the banks but have so far failed to secure any convictions.

A Special Investigative Team (SIT) set up to probe financial crimes in the country has also referred many dockets on some members of staff of the defunct banks to the Attorney-General’s Office for advice and possible prosecution.

The receivers, Messrs Nii Amanor Dodoo of KPMG, Vish Ashiagbor and Eric Nana Nipah, both of PricewaterhouseCoopers (PwC), are also pursuing 31,000 customers of the failed banks to recover more than GH¢10 billion in loans and advances.

Many Ghanaians have expressed worry that failure of the State to hold the directors and shareholders of these defunct financial institutions accountable will embolden others which may ultimately result in similar schemes in the future.

Read Also: Ghana’s Banking Crisis: How Ex-President Mahama’s brother GHC302M debt collapsed UT Bank

Meanwhile, the Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, speaking at the Ghana CEO Summit in May called for the establishment of special courts to hasten the pace of the loan recovery process and bring finality to the many cases brought against some directors and shareholders of the defunct financial institutions.

“In my opinion, designating special courts and judges to adjudicate matters relating to specific issues arising out of the bank resolutions and revocation of licences, given the public interest and the enforcement of collateral agreements, will help speed up the process.

“Without an efficient judicial system that is prepared to deal with cases in a swift and decisive manner, all the work done in sanitising the banking system will not yield the desired results and expected outcomes,” Dr. Addison stated.

Report by Gideon Sarpong | iWatch Africa |
Follow @gideonsarpong

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