Ghana lost some 19.5 billion dollars to illicit financial flow between 2000 and 2016 from trade mis-invoicing alone.
the annual average loss within the last 17 years is estimated at 1.15 billion dollars that’s according to the economic commission for Africa.
this was disclosed at a media sensitization on illicit financial flow organized by the media foundation for west Africa in Accra
Africa’s quest for development and structural transformation requires massive financial investments and significant upgrading of its infrastructure, technological transfer, innovation, agricultural productivity and human capital development.
The rich natural resource endowment of the continent could potentially finance a greater part of the most needed investments in the region.
Yet, African countries especially those in the Sub-Saharan African, SSA, region do not reap the full benefits from their natural resource wealth.
A greater chunk of resources from the region is being lost through illicit financial outflows, IFF, that is, money that ends up benefiting a few local and foreign elites rather than the general population.
This often takes the form of corruption, illegal exploitation, and tax evasion.
During the period of sustained economic growth in SSA, the pace of illicit flows from the region also accelerated relative to previous decades.
Available evidence suggested that there is a statistically significant positive relationship between oil exports and illicit financial flows.
For each extra dollar in oil exports, an additional 11 to 26 cents leaves the country as illicit capital flight.
A study by the International Monetary Fund, IMF in 2000, observed that faster economic expansion with rising income levels can actually drive capital flight if growth is not accompanied by genuine economic reform and better governance.
Some analysts attribute this to the low levels of transparency and high corruption in the natural resource sectors.
Illicit Financial Flows, IFF, refers to illegal movements of money or capital from one country to another that are illegally earned, transferred, and utilized.
The Global Financial Integrity, GFI classifies this movement as an illicit flow when funds are illegally earned, transferred, and/or utilized across an international border.
Some examples of illicit financial flows might include:
- A drug cartel using trade-based money laundering techniques to mix legal money from the sale of used cars with illegal money from drug sales;
- An importer using trade mis-invoicing to evade customs duties, value-added tax, or income taxes;
- A corrupt public official using an anonymous shell company to transfer dirty money to a bank account in the United States;
- A human trafficker carrying a briefcase of cash across the border and depositing it in a foreign bank; or
- A member of a terrorist organization wiring money from one region to an operative in another.
GFI estimates that the annual value of trade-related IFFs in and out of developing countries has amounted to, on average, about 20 percent of the value of their total trade with advanced economies.
Ghana is among the hardest hit countries in Sub-Saharan Africa.
Available statistics showed gross IFF across all sectors; mineral, manufacturing, import and export, among other resources.
In the mineral sector, for example, gold worth 1.8 billion dollars were exported out of the country in 2019 without any trace.
Earlier in 2018, ten companies were said to have exported 1.1 billion dollar-worth of gold out of the country illegally.
The Ghana Revenue Authority in 2020 admitted that more than 2,000 export and import companies were involved in illicit financial flow or money laundering.
The list goes on.
The Accra media forum on the role of the media in the fight against illicit financial flow, in Ghana, was to whip up interest in reportage on IFF.
Various resource persons from the Precious Minerals Marketing Company, PMMC, Media Foundation for West Africa, MFWA, Financial Intelligence Centre, FIC, Illicit financial flow unit of the Ministry of Finance and Economic Planning, MFEP, Ghana Statistical Service, GSS, Civil Society Platform on oil and Gas, University of Ghana Business School and the media, were on hand to lay bare the situation.
An accountable governance lead at Oxfam Ghana, Mohammed Mohamad, noted, blocking illicit financial flow is key for financial autonomy in Africa.
An investigative journalist and managing editor for Ghana business news, Emmanuel Dogbevi, urged journalists to expose corrupt and illicit financial flows.
By Peter Quao Adattor
