Rigorously evaluating Ghana's customs valuation policy

Summary

In 2019, the Government of Ghana introduced a new customs policy which reduced the benchmark values used by the Ghana Revenue Authority (GRA) to process the taxes due on imports. This policy was intended to reduce smuggling, increase port competitiveness, and ultimately raise customs revenues. There was, however, concern among tax policymakers and administrators that it might reduce collections. Robustly assessing its impact was complicated by the difficulty of determining what would have happened to imports and revenues in the absence of the policy, and the political sensitivity of the reform.

TaxDev collaborated with the Ministry of Finance (MoF) and the Ghana Revenue Authority (GRA) to evaluate the policy using customs micro-data. The evidence informed policy debate and contributed to a partial reversal in the 2022 Budget and a full reversal in the 2023 Budget; at the time the reforms were estimated to raise 6.1 billion Cedis (£604.2 million) in additional revenues across 2023–24.

The policy challenge

The benchmark values discount policy, announced by the President of Ghana in April 2019, reduced the benchmark values used for imports by 50% for general goods and 30% for vehicles. Physical inspections were simultaneously reduced to streamline customs processes. The MoF worked with TaxDev to undertake an in-depth evaluation of the policy and its impacts on revenues.

Constructing a credible counterfactual — estimating what collections would have looked like without the reform — was particularly difficult because the policy applied to almost all imports. The political sensitivity of the reform added a further constraint, making it essential that any analysis was methodologically rigorous and had the buy-in of all key stakeholders before findings could meaningfully inform policy decisions.

The impact

Throughout 2021, TaxDev worked with the MoF and GRA to conduct an in-depth review of Ghana's customs tax system, analysing revenues in historical and international context and using micro-data from the Ghana Customs Management System to explore the drivers of revenue trends.

The analysis showed that the assessed value of Ghana's imports had historically remained relatively stable at 18–26% of GDP, comparable with regional peers. This fell sharply to 13% in 2019 and 10% in 2020, alongside a decline in the share of total tax revenue collected at ports from 42% in 2017 to 30% in 2019. The evidence indicated that the 2019 discount policy was the key driver of this decline: average assessed values and taxes paid per consignment fell substantially following the reform, conditional on observable import characteristics. While the absence of a clear counterfactual limited precise estimation, advanced modelling approaches were used to estimate an upper-bound revenue loss of around 3 billion Ghana Cedis (£450.6 million) in 2019.

In December 2021, TaxDev and the Tax Policy Unit (TPU) published a co-authored report — Customs revenue in Ghana: recent trends and their causes — setting out the main findings. TaxDev also supported pre-2022 budget analysis and validation workshops with the TPU and GRA, and led policy-costing exercises assessing the revenue impact of partially reversing the reform for selected commodities under multiple scenarios.

In November 2022, building on this work and parallel analysis of import VAT, the Ministry of Finance requested further support from TaxDev to cost a full reversal of the policy, which was implemented in the 2023 Budget. At the time, the reforms were estimated to raise over 6.1 billion Cedis (£604.2 million) in additional revenues across 2023–24.

Lessons and next steps

Several lessons emerge from Ghana's experience:

• Rigorous evaluation evidence can enable difficult policy decisions. The presence of independent and credible analysis strengthened the case for reform on a politically sensitive issue.
• Joint technical work between the Ministry of Finance and the Revenue Authority builds trust and ownership. Co-production with the TPU and GRA ensured institutional buy-in and enriched policy dialogue throughout the process.
• Innovation matters where counterfactuals are weak. Advanced modelling approaches allowed meaningful estimates despite data limitations and design constraints, demonstrating that rigorous evaluation is possible even in challenging circumstances.
• Training is gradual and cumulative. The project demonstrated the value of impact evaluation and improved government capacity to commission and use such evidence over time.

Looking ahead, TaxDev will continue to work in partnership with the MoF to build familiarity with evaluation methods and support it to commission, interpret, and use the analytical work. While complex evaluations are likely to remain externally commissioned for now, the MoF is better equipped to act as an informed user of evidence — providing a stronger foundation for systematic, evidence-based tax policymaking in Ghana.