Addressing revenue shortfalls
To address the perennial challenge of revenue shortfall, it will be necessary for government to replicate modern technologies such as the Electronic Metering Management System (EMMS) solution across all sectors of the economy to plug revenue leakages as has been done in the petroleum sector, Managing Director of Strategic Mobilisation Ghana Ltd (SML), Christian Tetteh Sottie, has said.
His comments come on the back of the successful implementation of the new digital system for monitoring and auditing of the petroleum liftings end-to-end by SML in the country’s petroleum sector which has subsequently increased the volume of petroleum products by 752.4 million litres, generating a tax component of more than GH¢1 billion to the Ghana Revenue Authority (GRA) in a space of just 10 months.
For Mr. Sottie, given the impressive performance of the EMMS solution, which has the strong backing of the Finance Minister, Ken Ofori-Atta, the nation stands to benefit a lot if the system is adopted in other sectors where revenue leakages are suspected.
“Leakages are not good for the economy because it goes to enrich individuals and deprives government the needed revenue for development. So once you plug leakages, revenue increases and we [SML] will be willing to assist in whichever way we will be called upon.
We all want to see government getting more revenue and our lives will be made easier. People demand government to build roads, hospitals, provide water, among other needs. But all these things take money to do and as a developing country, we don’t have the resources to be able to do everything. If we take our national budget, every year we have a budget deficit and it means that each time we borrow money to run the budget. So we need more revenue and one way to do this is to plug the leakages,” he said in an interview with the B&FT.
He further stated that his outfit is currently in the process of replicating the modern technology in bonded warehouses (a customs-controlled warehouse for the retention of imported goods until the duty owed is paid) across the country so as to halt suspected leakages there.
“As we speak, we are developing a system for bonded warehouses where it is suspected that there are leakages. The same system can be expanded to that area. So we have done feasibility studies on over 300 warehouses and we are waiting for the go ahead for it to take off,” he said.
He added that the finance minister has expressed satisfaction about the work SML has done with the EMMS and wants it to be extended across many sectors of the economy so as to save government the revenues that are usually diverted into private pockets.
Comparative data gathered by the National Petroleum Authority (NPA) against the data gathered by the SML shows astronomic increment in volumes of fuel discharged at the various storage centres. For example, while the NPA data shows an increase in volumes of just 2 percent in March 2019 and March 2020, the SML system shows an increase of 31 percent in March 2020 and March 2021.
Similarly, between December 2018 and December 2019, the NPA recorded 0.8 percent increment in volumes while the SML system also recorded 21.2 percent increment in volumes in December 2019 and December 2020.
Pandemic-related expenditure increases need for more domestic revenue
The coronavirus disease has increased government’s need for domestic revenue as the pandemic-related expenditure has significantly widened the budget deficit to 11.7 percent, missing its target by 0.3 percentage point.
Government has targeted to raise some GH¢72.4 billion in revenue for this year after achieving the revised target for last year despite reduced economic activity stemming from the impact of the coronavirus pandemic on the economy.
The GH¢72.4 billion target also signals government’s confidence of a rebound of economic activity, especially when it exceeded the revised target of GH¢53.7 billion in 2020 from the original target of GH¢67 billion following the pandemic’s impact on the economy. It is therefore imperative, Mr. Sottie adds, that all holes are plugged to prevent the diversion of state funds into private purses.