Dr. Mohammed Amin Adam
Dr. Mohammed Amin Adam, Minister of State at the Ministry of Finance has revealed that the collaboration between the Ghana Revenue Authority (GRA) and McKinsey resulted in an increase in revenue.
According to him, revenue increased from GH¢38 billion in 2018 to GH¢75.5 billion in 2022, a cumulative average of about 19% over the period in which McKinsey was engaged.
Responding to a series of questions on the floor of Parliament yesterday, the Minister said not only did McKinsey help the country increase its revenue, but the company also helped “lead a cultural shift and professionalism.”
He indicated that this included the use of enhanced performance appraisal and analytical tools, which will anchor significant improvement in revenue mobilization.
Dr. Amin Adam noted that revenue mobilization remains a challenge for the country, and pointed out, “Our tax-to GDP ratio averages 13%, which is lower than the average 18% for the sub-region.”
“Therefore, unlocking the full potential of our domestic revenue mobilization is one that is at the core of the President’s vision of a Ghana Beyond Aid,” he asserted.
The Minister explained that McKinsey was engaged to support the government’s efforts to increase tax revenues over the baseline of “17 percent year-on-year growth” and other interventions to increase efficiency and effective work culture.
“Mr. Speaker, the overarching target of 17 percent year-on-year growth was exceeded. Total revenue growth recorded was 28 percent year-on-year,” he intimated.
He said GRA’s total payment to McKinsey over the contract period of 2018-2022 was US$ 12.2million.
He, however, stated that despite these very good results, Ghana’s current tax-to-GDP ratio rose from 12.1% in 2016 to 13.8% by the end of 2022.
According to him, this means that the country’s revenue performance is still one of the lowest in the Sub-region.
“For context, our peer countries are collecting an average of 18% whilst OECD countries are achieving about 34%. There is evidence that Ghana has enormous capacity to double its tax revenue, and at the very minimum, be at par with our peers without introducing new taxes,” he asserted.
He told Parliament that the government was leveraging digitalization, including initiatives such as the E-Invoicing, E-VAT, E-Levy, Ghana.gov among others to expand the tax net, eliminate leakages and close the tax gap.
“Results from the pilot phase of the E-VAT and E-Invoicing, supplemented by physical monitoring by staff of GRA are truly revealing.
“The initial results have emboldened us to expand the coverage to other targeted entities. Mr. Speaker, the Government of His Excellency Nana Addo Dankwa Akufo-Addo is changing the narrative around mobilizing domestic revenue for development,” he said.
The Minister expressed his profound appreciation to Parliament for the strong partnership that resulted in the approval of the outstanding 2023 revenue bills on Friday, 31st March, 2023.
By Ernest Kofi Adu, Parliament House