tourism levy in ghana

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This article also features in The Report: Ghana 2019 . Read more about this report and view purchase options in our online store.

Ghanaian tourism grows with increased visitors and new funding strategies

Ghana | Tourism

With significant potential to drive economic growth and job creation, the tourism sector is increasingly an area of focus for investment in Ghana. While the Bank of Ghana lists the sector as the fourth-highest foreign currency earner behind gold, cocoa and remittances, Ghana still has some way to go to become a destination of choice on the continent. In 2017 the sector contributed GHS12.58bn ($2.7bn), or 6.2%, to national GDP. A total of 1.3m international tourists visited the country that same year, representing a 6% increase compared to 2016. In terms of employment, the World Travel and Tourism Council reported that the sector supported 682,000 jobs, or 5.3% of total national employment, in 2017.

Priority Sector

The government regards tourism as one of the economic pillars for growth, job creation and diplomacy. In his 2018 speech addressing the nation, President Nana Akufo-Addo promised to support Ghana’s tourism sector with infrastructure investments. The 2019 budget demonstrated a commitment to achieving this goal by allocating GHS75m ($16.2m) to the Ministry of Tourism, Arts and Culture (MoTAC). President Akufo-Addo also highlighted the need to support capacity-building efforts to help the population learn skills relevant to the tourism and hospitality industry.

In April 2017 Catherine Afeku was appointed minister for tourism, arts and culture. She announced three priority areas for the ministry during her tenure: completing the Marine Drive Tourism Investment Project; stimulating the development of the creative arts industry; and hospitality training.

Marine Drive

The Marine Drive Tourism Investment Project is being carried out through a public-private partnership between the MoTAC, the Ghana Tourism Authority (GTA), and the Ghana Tourism Development Company. The project involves the development of some 97.5 ha of coastline in the Greater Accra Region, stretching from the Osu Castle to the Accra Arts Centre. The Marine Drive project has been over 60 years in the making, having been originally envisaged in 1963 by Ghana’s first president, Kwame Nkrumah.

Work on the project began in December 2017 and is expected to cost a total of around $1.5bn, though an anticipated completion date has not yet been set. When completed, it will be a mixed-use precinct with facilities including conference and exhibition centres, hotels, commercial offices, and a new complex for the MoTAC. It will also include a number of leisure and entertainment amenities, including a casino, as well as sporting facilities such as a beach soccer field and a golf course.

There is a strong environmental incentive to develop and fortify the area, given that it is located along a stretch of coastline that has been experiencing storm surges, which have caused significant soil erosion. To stop further erosion of the land, the construction will include measures to protect the shoreline. This is relevant for multiple areas, such as the popular Osu neighbourhood.

Arts & Hospitality

The government’s commitment to stimulating the development of the creative arts industry will be met in part through the construction of Akwaaba Hotels, a new hospitality chain geared towards leisure tourists. These hotels will be delivered as part of a public-private partnership and will feature designs that integrate Ghanaian handicrafts and artworks.

In terms of trazzining, the government will focus on building a pool of skilled people to take up jobs in the hospitality and tourism industry. This priority was first outlined in the ruling New Patriotic Party’s manifesto at the 2016 election. The administration has committed to furthering tourism sector education by developing five satellite hospitality training campuses across Ghana. The only government-funded hospitality training school, the Hotel Hospitality and Catering Training Institute, reopened in July 2018 following extensive upgrades and renovation work. The institute now offers practical training rooms, a career development office and stronger links to local industry leaders in order to enable faster job placements for graduates.

Regulation & Taxation

The GTA is the regulatory body for Ghana’s tourism sector. As such, the GTA is responsible for executing government policy in relation to tourism, including directing marketing and promotion. It also conducts research and collects data on the sector, and supports human resource development within the hospitality industry. While most national tourist sites, including national parks and cultural sites, are managed by the Forestry Commission of Ghana and local communities, the government has begun considering legislative changes that would put all national tourist sites under the management of the GTA.

A tourism development levy was introduced in Ghana in 2012, requiring all registered tourism operators to pay a tax equal to 1% of the price paid by customers for each service. The proceeds from the levy are deposited into the Tourism Development Fund, a vehicle administered by the GTA for reinvestment in the country’s tourism sector. In the six-year period between the levy’s introduction in early 2012 and December 2017, the GTA collected more than GHS39m ($8.4m) in revenue, GHS18m ($3.9m) of which has been used to repay bank loans for previous construction projects. The Tourism Development Fund has also financed ongoing projects, including the renovation in 2017 of safety and access facilities at Kintampo Waterfalls.

Marketing & Promotion

In late 2017 Akwasi Agyeman, the CEO of the GTA, announced a target of welcoming 1.5m tourist arrivals to the country for 2018. Agyeman also indicated a shift by the GTA towards more targeted and varied promotional campaigns, which would be customised to appeal to audiences in different countries.

In 2018 the MoTAC and the GTA announced several promotional activities. While these are primarily aimed at raising Ghana’s international profile as a destination, the country is also seeking to promote domestic tourism. In early 2018 the MoTAC secured a television broadcast licence from the country’s National Communications Authority. This will enable the ministry to launch a local television channel that will be focused on showcasing the country’s historical, cultural and natural sites, as well as promoting Ghanaian products. However, the channel’s programming remains under development, and an official launch date has not yet been set.

In late 2017 the GTA also selected 30 high-profile Ghanaians to serve as tourism ambassadors for the country. Two of these ambassadors – musician Daddy Lumba and actor Agya Koo – launched their own mobile media platforms in early 2018. Both of these platforms have a partial aim of promoting Ghana as a tourism destination.

In 2018 the GTA also began a formal promotion campaign in Nigeria, which is the largest economy in Africa and the third-highest source of visitors to Ghana. During the campaign launch in Lagos, GTA officials met with local tour operators and travel agents to promote Ghana’s potential as a beach and holiday destination.

To tap into new markets the GTA is also forming partnerships with niche interest and hobby groups in Europe. A partnership with the Royal Society for the Protection of Birds, Europe’s largest environmental protection membership group, was launched in 2018 to promote Ghana’s birdwatching attractions, which are among the most popular in West Africa.

The GTA has also been looking to attract more US tourists, who accounted for 12% – the highest percentage – of overseas visitors to Ghana between 2012 and 2017. This is largely due to the increasing popularity of heritage tours, with Ghana being a destination for US citizens of African descent wishing to connect with the culture of the continent. “Some 22% of tourism to Ghana is from North America, and we want to become the preferred West African destination for this demographic,” the GTA’s Agyeman told OBG. “Senegal is our main competitor, but Ghana being English speaking is a fundamental advantage.”

To gain a better understanding of the heritage market, the GTA has begun formalising agreements with US travel companies organising these tours. In December 2017 the GTA signed a memorandum of understanding with the Adinkra Group, a US-based travel and tourism company that designs and delivers cultural trips to Africa for a predominantly African-American customer base.

The first tour through this partnership, the Back2Africa Heritage Tour, took place in early 2018, bringing US travellers to Accra and other areas of the country for exposure to Ghanaian food, music and art. The GTA and the Adinkra Group also partnered on the release of a Back2Africa documentary, which follows a Washington DC-based go-go band as they tour Ghana on a journey to “connect with their ancestral roots through music.”

With a pipeline of new construction projects announced by both private hotel developers and the government, hotel room capacity in Ghana is set to increase significantly in the coming years. Much of the new hotel supply currently under construction will be located in the airport district of Accra, a part of the city that is rapidly expanding given its strategic location for travellers.

The multinational Kempinski Group expanded its footprint in Africa with the opening of the Kempinski Gold Coast, a 269-room five-star hotel in the centre of Accra, in 2016. In May 2018 Marriott International opened the Accra Marriott Hotel, which is located near Kotoka International Airport. The four-star facility has 208 rooms, three restaurants, meeting space and a business centre.

Additional accommodation capacity is being provided with the entry of the Ascott Limited, an international serviced residence owner-operator headquartered in Singapore. Its Accra locations are the company’s first on the African continent. The first of these is a 40-unit property called Kwarleyz Residence, which opened its doors in September 2018 in the airport district. The second location, a 220-unit property called Ascott 1 Oxford Street Accra, is set to open in 2019.

Grant Funding

In early 2018 the World Bank provided a $50m grant to the MoTAC. This has been used in part to finance empowerment and capacity-building trainings for women and youth, with a particular emphasis on creating small enterprises in the creative arts industry.

The World Bank funding has also gone toward the construction of Akwaaba Hotels, a new chain of affordable leisure hotels targeting domestic tourists. In January 2018 Afeku unveiled high-level plans for the development of the hotels in an interview with local news media, stating that they are being built to make tourist accommodation more accessible to Ghanaians. “We realised that hotel accommodation in the country is too expensive and is a deterrent to tourists,” she said in the interview. Afeku also stated that the MoTAC had already trademarked the Akwaaba Hotels brand, and added that construction of the hotels was expected to be financed through a public-private partnership model.

Transport Network

The Ministry of Roads and Highways in Ghana has the primary responsibility of building, upgrading and maintaining roads in the country, and developing a better road network is an integral part of building a vibrant tourism sector. Therefore, the MoTAC has been working to coordinate activities with the Ministry of Roads and Highways to ensure there is good access to the nation’s key sites. While the Ministry of Roads and Highways is responsible for the majority of expenditure on Ghana’s roads, funds earned from the GTA tourism development levy are also being used to carry out road expansions and upgrades.

In January 2018 the Ghana Civil Aviation Authority (GCAA) announced a plan to upgrade the airstrips in the country in an effort to improve infrastructure for air travel, thereby providing alternative access routes to some of the most notable tourist attractions. The GCAA indicated that it is planning to build new airstrips at locations including Axim, a coastal town in the south; Bolgatanga, a town in the north located on the border with Burkina Faso; and Cape Coast, the capital of the Central Region and home of the Cape Coast Castle, which is known for its role in the transatlantic slave trade.

Ghana has five airports located in the major cities of Accra, Kumasi, Ho, Tamale and Takoradi. In September 2018 a third terminal was opened at Accra’s Kokota International Airport. Completed at a cost of $250m, the terminal has the capacity to manage 1250 passengers per hour and up to 5m passengers per year. Initially, the terminal has six boarding gates and seven links.

Upgrading Kumasi

With a population of 1.5m, the southern city of Kumasi is the second-largest city in Ghana and the capital of the Ashanti Region. Because of its geographic location further inland from the national capital Accra, and within access of neighbouring Côte d’Ivoire, Kumasi is a key transit city for regional travellers, including cross-border and intercity traders. For this reason, it is home to an additional floating population of up to 500,000 people annually. The city also has a rich cultural heritage and hosts five major cultural festivals annually.

The Ashanti region more broadly is a key area for cocoa and gold production. To capitalise on the city’s location and rich history, the GTA in January 2018 announced its intention to upgrade infrastructure and facilities in Kumasi, with the aim of making it a more appealing tourism destination. Agyeman indicated that the government would provide investment opportunities and incentives for investors in Kumasi, though specific information on those plans has yet to be released. The regional government of Ashanti is advocating for a number of private development projects, including 32 ha of land provided by Otumfuo Osei Tutu II, the monarch of the Ashanti Region, for the development of luxury residences.

The government is committed to measures that will stimulate economic growth and job creation, and enhancing the reputation of the country’s tourism industry can help achieve these goals. Significant funding has therefore been committed to developing the sector through investments in infrastructure and skills development.

With hotel capacity set to increase and an increasingly prominent profile in international circles as a safe and investment-friendly destination, Ghana’s tourism sector looks on track to continue growth. For sustained development, however, Ghana must address some key infrastructure bottlenecks. Chief among these is the road network outside of the Greater Accra Region, which must be developed and expanded to improve access to other parts of the country. With a number of key developments under way, the timely and on-budget completion of these projects will be necessary to ensure that the country sees expected returns on its investments.

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Responsibilities of the Agency

→ The regulation of tourism enterprises namely accommodation, catering, travel and tour, and charter flight operations. → Promotion and marketing of tourism both in Ghana and abroad, including production of promotional materials. → Carrying out research and studies on trends in the tourism industry both at home and abroad to aid decision and policymaking. → Facilitating the development of tourist facilities and products. → Facilitating human resource development in the tourism industry for both the public and private sectors.

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→ Participating in both Local and International Fairs and Exhibitions. → Registration, inspection, licensing and classification of tourism enterprises. → Organization of Regional Tourism Awards, Chocolate Day Celebration, Kwahu Easter Paragliding Festival and other special events. → Licensing of accommodations, travel and tour operations, tourist sites and attractions, food and beverages establishments, etc. → Organization of tourism business forums and trade exhibitions in Ghana and abroad. GTA Website visitghana.com ghana.travel

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The Ashanti Regional office of the Ghana Tourism Authority (GTA) last Thursday closed six hospitality facilities in the region for the non-payment of the Tourism Levy contrary to Legislative Instrument (LI) 2185. It was part of a bigger exercise to clamp down on facilities that had defaulted in the payment of the Tourism Levy. About 20 facilities in the region owed the GTA over GH¢200,000 in levies they collected on its behalf. One of them owed GH¢29,338, the highest of the debts by a single company, for a period dating back to 2011. The amount owed were for the period up to June 2022. Exercise Briefing the press, the Ashanti Regional Manager of the GTA, Frederick Kyei-Rudolph, said most of the facilities had refused to remit the authority with the levies. He said all the facilities were given reminders but failed to heed to the request, and that the level of compliance with the payment of the levy in the region was not very encouraging. He said although the authority had licenced more than 700 hospitality facilities in the region to charge the levy, “we get about half of them regularly paying the levy on monthly basis”. He explained that the levy was not a tax charged on the facilities, but a levy paid by consumers, and expressed worry about how the facilities kept defaulting in the payment of the receipts they made to the authority. Mr Kyei-Rudolph said the owner of one of the facilities was a recalcitrant client who kept operating even though closure notices had been pasted on the doors of the facility. In all, six facilities out of the eight visited were closed down, with the other two making undertakings to pay their debt within two weeks after making part payment before the visit of the team. The Authority has earmarked 20 faculties in the region for the exercise which is expected to last for two days. Source: Graphic online

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What you need to know about the 1% tourism levy

Sitting comfortably at the restaurant area, we ordered for two bowls of fufu and two bottles of soft drink. After enjoying ourselves to the delicious meal, the attendants handed over a bill and we made payment.

Heaven knows what struck Huda as she just decided to glance through the receipt, only to see a charge of one per cent tourism development levy. Then we both became curious as to why we were taxed for eating or drinking water. 

We decided to get some education on the tourism levy and what it was meant for. Apparently, after the passage of the Tourism Act (Act 817) and the Legislative Regulations covering tourism trade, accommodation and catering, as well as the structure of the tourism authority and tourism levy, government set October 1, 2012, as the effective date to commence the collection of the Levy.

The one per cent levy is the cost payable by patrons of tourism entities, and this is expected to be the key source of finance for the Tourism Development Fund (TDF) and to add to the seed money that government is expected to provide for the Fund. 

The Fund is expected to provide the resources for the Ghana Tourism Authority (GTA) to market and promote the activities and services of players in the tourism industry in Ghana.

GTA, through the resources from the Fund, will facilitate capacity building for players in the industry and embark on market research and development of tourism infrastructure, tourism education, and training. 

“The TDF does not replace state funding for tourism but substantially supplements it, and could provide a multiplier effect, with more revenues from tourism providing funds for reinvestment to develop the sector.” 

The TDF’s aim is to “provide funding for tourism and tourism-related projects and programmes”. The GTA can determine which activities this can apply to on a case-by-case basis, including five main areas: marketing and promotion; capacity building, market research and the development of tourism infrastructure; development and promotion of other entrepreneurial activities within the sector; tourism export activities; and education and training.

The key source of finance for the TDF is the new tourism levy, a 1% tax on tourism enterprises. Other financing comes from government seed capital, donations and grants, money earned from the operation of projects financed by the TDF or other investments, and other cash allocated by the Ministry of Finance and Economic Planning.

In March 2015, the TDF Secretariate was officially inaugurated and launched a two-year process of field visits to all certified tourism enterprises in the country to implement the levy. By the end of this period, all hotels, restaurants, car renting services and catering centres were to be registered and make payments into the fund.

The levy also applies to tourist sites, tour operators, car rental companies, banqueting facilities, conferences, nightclubs, spas, cinemas, hostels traditional catering establishments, guest houses, serviced apartments, drinking bars and theatres. 

Mr Essah said since its establishment in 2012, to support the tourism industry in Ghana, the Fund had grown to an appreciable level and was currently doing very well, envisaging an amount of GH¢19.6 million in terms of revenue targets for 2023, despite the myriad of challenges it has encountered. 

He said, “in 2021 we budgeted GH¢15.1 million and we did GH¢15.18 million. In 2022, the target was GH¢16.95 million and as at the end of August, we have been able to achieve GH¢14.9 million. Indicating that we have about GH¢2 million to go for the year 2022.” 

“Looking at our average collection, it hoovers around GH¢1.7 million. So, all things being equal the remaining four months left we are looking at the range of a little over GH¢6 million. So, if we do GH¢6 million that is taking an average of 1.5 million per month for the remaining four months we should be able to do GH¢20.9 million for 2022,” he added. 

He said averagely there were a little over 4000 establishments contributing to the Fund but there were quite a number of them operating but have not availed themselves for licensing and certification, thus if they come on board, they would be able to exceed the target. 

He said the Act that established the Fund gave the GTA the power to do the collection and the Fund to be managed by the board of directors of the GTA with a representative from the Controller and Accountant General. 

Mr Essah said contribution into the Fund was done by patrons of tourism establishments, and not the establishments.  “These tourism establishments are only withholding agents who collect the money on behalf of government and later remit same through the Fund for the development of tourism in the country. 

He said the Act was also clear on who disburses the money or sits on the board, and so tourism establishments must abreast themselves with the Tourism Act 817 (2011), because that is exactly what the Authority does. 

However, some Trade Associations have expressed worry about how the fund is managed. The Ghana Hotels Association (GHA) expressed worry about the lack of a disbursement plan for the Fund in the Act. 

Mr Edward Ackah-Nyamike, President of the Association, said the Act empowers the GTA alone to have total control over the decision-making and management of the fund without the involvement of the private sector. 

He said the GHA had called for an amendment of the Act to involve the private sector in such major decisions and had drawn the attention of the Parliamentary Select Committee on Trade, Industry and Tourism.

“We want to ensure that the private sector has some control over the use of the funds and also has some members from the trade associations serve on the board instead of the president appointing members to serve on the board.”

He added that the GTA was doing very well using the money to do their work to help the industry, however, it was equally prudent for the trade associations to get support from the fund to help boost the private sector.

“Sometimes we have training needs which we believe we can easily organise and undertake; we do not get anything for that unless the GTA comes up and says it is organising a certain training for hotels or tour operators and then invite us.” 

Mr Seth Yeboah Ocran, President, Car Rental Association of Ghana (CRAG) said the idea behind the establishment of the Fund, was that of a Public Private Partnerships (PPP) one, however its management and disbursement have been left in the hands of the public sector. 

Mr Ocran said there was the need for an immediate amendment of the Act to include the private sector in the board that manages the Fund as well as in the disbursement of same. 

“In the spirit of PPP, the idea of the fund was brilliant, but some portions of the Act that established it must be amended to provide room for the private sector to be well represented on the board that manages its use and disbursement. There must be a Co-chairmanship position allocated to the private sector.” 

According to the President of CRAG, amending it would create a wider scope for its operations. “In collaboration with the private sector, we can expand the scope of how much money can be raised for the fund and how much will go into tourism activities such as research work, data collection.” 

He said the private sector had raised these concerns and currently a guide was being developed by the PPP steering committee, inaugurated by the sector Minister last year, to guide the operationalization of PPP within the sector as well as the fund.

Mr Ocran also stated that for the Fund to achieve its purpose, the GTA, as an implementing Agency of the Ministry, must ensure to enforce the rules by getting all tourism establishments registered for them to contribute to the Fund.

He said the GTA must create an even platform for all tourism establishments to operate. “All tourism establishments must be registered and charged accordingly and that is the only way to grow the fund and use it for its intended purpose.”

Mr Ocran stated that, because the regulator, that is the GTA was weak in enforcing the rules, most establishments had taken advantage of that and did not want to be associated with any Association within the sector.

“The GTA is, therefore, creating a disadvantage to companies registered with them. Customers will not come to me if I am registered with tourism levy and VAT and I am charging extra monies, they will rather go to someone who is not registered and has not added the charges hence is selling at cheaper prices.”

He noted that tourism establishments were not doing the right things because they knew the GTA was weak, saying, payment of the tourism levy into the TDF goes beyond the patrons of tourism establishments, because the regulator must ensure that the establishments where patrons would be visiting were registered and obliged to pay. 

“Before we can get standardization and professionalism, we must look at this again. Yes, it is the customer who is paying, but before going on to the market, every customer looks for where to get cheaper rates,” he added.

By Hafsa Obeng 

Source: GNA 

Black Sherif shortlisted for BBC1 xtra Hot 2023 Campaign

Electricity and water tariffs up by 29% and 8% for Q1 of 2023

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