Involve the private sector in revenue collection – Financial analyst urges government

Kenneth Thompson, financial analyst and CEO of Dalex Finance

If the government wants to be effective in revenue mobilization, it should enlist the services of the private sector to partner with the Ghana Revenue Authority (GRA), urged the Managing Director of Dalex Finance Limited, Kenneth Thompson.

His comments are driven by the shortfall in domestic revenue which still leaves the government with no choice but to borrow, in part because the GRA lacks the capacity to effectively collect all the taxes in the system.

For Mr. Thompson, the private sector has proven beyond a reasonable doubt to be more efficient and effective than government in all areas where both operate. Therefore, utilizing the sector’s services in revenue mobilization efforts – as has been done in Nigeria – will help address the problem of revenue scarcity.

“It is a country where the private sector has shown that it is more efficient in allocating resources than the public sector. Think of all the areas in which the private sector has intervened – telecommunications, transport, hospitals, airlines, education and many others – it is the most effective. Any form of income, if you can use the private sector to facilitate it, use it.

“The private sector has shown that it is able to deliver results because the people involved have their skin in the game. They will ensure that there is a result. A good example is that Lagos was able to generate a substantial amount of revenue so as not to be dependent on the federal government; and he did it with the collaboration of the private sector,” he said in an interview with the B&FT.

Mr. Thompson added that if the country wants things to change, it needs to take a different approach; and also, he cannot use the same approach and expect change. “Some argue that the cost of private sector involvement is high; but it would be safer to collect 100 and give 25 than the other way around,” he added.

On International Customs Day recently observed in Accra, the GRA said it had set a tax target of GH¢80.3 billion for the revenue collection year 2022 – where Finance Minister Ken Ofori -Atta, assured in a statement that the Ministry will continue to support the various initiatives of the GRA on its digitization campaign to ensure effective and efficient mobilization of the necessary revenues.

Lack of income remains a scourge

The Minister of Finance, presenting the 2022 budget, indicated that there has been a drop in revenue due to the pandemic, but the country is trying to bounce back.

“Let me assure the House that we are working hard to quickly return to the pre-pandemic fiscal and debt trajectory. Fiscal policies implemented to provide relief during the pandemic have resulted in an increase in the total public debt.The situation has been aggravated by the sharp decline in revenue collection last year due to the pandemic.Total revenue in 2020 fell by GH¢11.93 billion – or 3.1% of GDP, while total expenditure increased by GH¢14.08 billion – or 3.7% of GDP,” he said.