Ghana is losing millions of dollars in revenue from Chinese-owned industrial fishing fleet

Ghana is missing out on between 14.4 -23.7 million US dollars every year by issuing fishing licence fees and fines for trawlers that are far too low to fulfil their purpose, a new report by the Environmental Justice Foundation (EJF) has revealed. Licence fees are low compared with other countries in the region and insignificant considering that many trawlers operating in Ghana are beneficially owned by large, in some cases state-controlled, Chinese corporations, the report found. Fines given out for illegal fishing are often below even the minimum stipulated by Ghanaian law.

An estimated 90% of the Ghanaian trawl fleet is effectively owned by Chinese corporations, despite foreign ownership or control being banned. To circumvent the law, these corporations operate through local ‘front’ companies, using opaque corporate structures to import their vessels, register and obtain a licence to fish. The fact that these vessels are registered as Ghanaian seems to be the justification for low licence fees and fines well below the statutory minimum. However, information on true ownership reveals this is misguided, says the report.

Ghana is grossly undervaluing its fisheries in dealings with these Chinese fishing companies through intermediaries, the report says. Ghana’s licensing fees are substantially lower than other coastal states in the region, and comparisons suggest Ghana could generate an additional US$ 2.4-6.7 million every year by increasing its fees for foreign trawlers to similar levels to its neighbours.

Even with the 2020 increase in fees from US$ 35 to US$ 135 per gross register tonne per year, the annual licence fee for an average 200 GRT trawler was around US$ 30,000, compared to around US$ 119,000 per annum for a foreign trawler of this size operating in Guinea.

Meanwhile, a single state-owned Chinese company with trawl operations in Ghana reported an operating revenue of around US$ 164.5 million in 2019, receiving subsidies for the development of its overseas fishing operations of around US$3.0 million in that year.

Licensing revenues in Ghana are a tiny fraction of the value of catches landed by the industrial trawl fleet, the report highlights. Licence fees collected in 2018 represented just 0.4% of the landed value – excluding illegal and unreported catches, which are thought to be substantial. In Sierra Leone this was 7% and 10% in Liberia, figures that are still considered low.

Fines given out for illegal fishing and other infringements are also much too low, the report found. They regularly fail to meet the minimum sums laid out in Ghana’s own legislation and do not meet Ghana’s responsibilities under international law. Not only has this resulted in unrealised revenue of around US$12 million in 2015 and US$17 million in 2018, it is failing to deter such offences, the report says.

Trawlers have engaged in widespread illegal fishing in Ghana’s waters, failing to report huge catch volumes to the state and decimating the ‘small pelagic’ fish populations which are reserved for local communities.

As a result of the low level of transparency around vessel ownership, prosecutions fail to target the beneficial owners – often a much larger entity with a controlling interest in the vessel. Cases are generally heard through opaque out-of-court settlement processes, with fines imposed at well below the statutory minimum and in some cases going unpaid.

The report identified several cases of alleged illegal fishing in Ghana linked to a Chinese state-owned corporation in receipt of government subsidies, Shandong Zhonglu Oceanic Fisheries Co Ltd, and further cases of alleged illegal fishing linked to a second Chinese state-owned company, Shandong Ocean Fishery Development Corporation.

EJF’s Executive Director Steve Trent said: “There is a grave risk that Ghana’s fisheries will soon collapse, impacting the livelihoods of over 2.7 million Ghanaians. Safeguarding the country’s fisheries requires urgent intervention at high levels of government to introduce reforms that improve transparency, so it is clear who is benefiting from fishing access, what and how much they are fishing, how much they are paying and what these funds are used for. This failure to set reasonable fines and fees not only results in a considerable loss of revenue but presents a critical threat to the sustainability of the fishery and in doing so endangers national food security and countless livelihoods.”

By implementing the same fees as Guinea, Ghana could reduce trawler numbers from 75 to 10 vessels yet double the revenue generated through licensing fees in 2018, the report says. As well as increasing state revenue this would address the worrying over-capacity in the fleet, providing massive benefits to the country’s struggling small-scale fishery, which supports jobs and food security for millions of Ghanaians.

Read the report.

• The report also identified cases of apparent underreporting of vessel tonnage for trawlers operating in Ghana, further impacting licence fees received.
• Although an increase in the licence fee to US$200/GRT/annum was previously approved by cabinet and parliament, in 2020, industrial vessel operators successfully appealed for a reduction in the proposed licence fee to US$135/GRT/annum which has also been applied in 2021.
• A recent World Bank study found the annual licence fee revenue in Ghana was less than US$600,000 in 2017, while in Sierra Leone, with a similar number of trawlers, it was over US$7 million.
• The study identified eight Chinese companies that currently, or in the recent past, have beneficially owned industrial trawlers operating under the Ghanaian flag. Yet, for the purposes of licensing, the vessels are registered to numerous local companies. A total of 52 Ghanaian companies have held licences for trawl vessels since 2015.
• Nearly half of the local companies for which data were obtained reported an envisaged annual revenue on incorporation of less than US$1,000. In contrast, one state-owned Chinese fishing company reported operating revenue in Ghana of around US$31.3 million in 2019, receiving subsidies from the Chinese government for the development of its overseas fishing operations of around US$3.0 million in that year.
• Two companies were found to be particularly dominant in the sector: Dalian Mengxin Ocean Fishery Co. Ltd and Rongcheng Marine Fishery Co. Ltd. Together these companies accounted for 44% of licensed vessels at the end of 2019, each with a fleet of 15-20 bottom trawlers operating under the Ghanaian flag.
• There is a need to enhance accountability through parliamentary oversight of industrial fishing licences, as required by Ghana’s 1992 Constitution, and to effectively enforce the law governing the nationality of vessel ownership set out in the 2002 Fisheries Act.