Ghana Losing Billions Annually Due to Illicit Financial Flows, Says Economist

Journalists in Ghana have been urged to take the lead in advocacy efforts and citizen mobilisation to combat Illicit Financial Flows (IFFs) and promote increased investment in the country. IFFs refer to the illegal transfer or movement of money across borders, which violate both national and international laws. These financial flows encompass a variety of activities, including corruption, illegal mining, money laundering, tax evasion, trade mispricing, and financing of conflicts.

The impact of IFFs on economies is profound, as they significantly hinder the ability of nations to generate revenue necessary for sustainable development. This, in turn, leads to increased borrowing and a growing gap between the wealthy and the poor, where only a few benefit from the illegal activities, while the rest of the population suffers.

Economist Dr. Bishop Akologo stressed that Ghana is losing billions of dollars every year due to illicit financial flows. These losses stem from corruption, bribery, poor investment practices, and improper contract dealings. The economic consequences are severe, as these activities present significant challenges to Ghana’s development and financial governance.

For instance, the Global Financial Integrity report indicated that in 2015 alone, Ghana lost over $3 billion due to IFFs in trade mispricing. This was from a total of $9 billion in imports and exports with developed countries. Dr. Akologo highlighted that these illicit flows rob the country of much-needed resources for development, noting, “We could have built schools, hospitals, and roads with these stolen funds, but instead, they have been lost, contributing to underdevelopment and deepening inequality in the country.”

During a two-day workshop in Bolgatanga for journalists in the Upper East Region, Dr. Akologo outlined how journalists can contribute to the fight against IFFs. The workshop, organized by the Media Foundation for West Africa (MFWA) with support from Oxfam and the Ministry of Foreign Affairs of Denmark, aimed to enhance the understanding of IFFs and provide journalists with the necessary tools to report on these illegal financial activities. The goal was also to equip journalists with the skills to track and report on government policies and actions aimed at reducing IFFs in the country.

Dr. Akologo pointed to several areas where illicit financial flows are most pronounced, such as over- and under-invoicing in trade, which leads to significant financial losses. According to the report, Ghana lost $758 million through import over-invoicing, $722 million through under-invoicing of imports, and $1.6 billion through export under-invoicing. These illegal practices undermine the country’s economy and its ability to mobilise revenue effectively.

Dr. Akologo called on journalists to use their platform to build awareness about IFFs, stressing the importance of independent and data-driven reporting. He stated that journalists should be well-equipped to analyze these issues critically and raise public awareness, which in turn could mobilise citizens to demand accountability from government officials and other duty-bearers. This, he argued, would put pressure on policymakers to conduct due diligence on all investments and ensure the country gets the maximum value for its resources.

The economist also highlighted that illicit financial flows are particularly evident in the natural resources sector, especially in mining. He called for a review of mining contracts to ensure Ghana benefits adequately from its vast natural resources, rather than allowing illegal activities to deprive the nation of its rightful share.

Mr. Benaiah Nii Addo, the Executive Director of Green Tax Youth Africa, echoed Dr. Akologo’s sentiments, pointing out that tax evasion and injustice were significant contributors to IFFs. He called for stronger political will to expand the tax base through a fair and efficient tax system that would encourage individuals and corporations to fulfill their tax obligations.

Mr. William Nlanjerbor Jalulah, a Programme Officer at MFWA, expressed confidence that the training would help bridge the knowledge gap on IFFs among journalists, sparking their interest in investigative reporting on these financial crimes. He concluded by saying, “Independent, data-driven journalism will expose IFFs and tax manipulations while addressing inequalities in the country.”

The workshop thus aimed not only to educate journalists on the scale and impact of illicit financial flows in Ghana but also to empower them to become active players in advocating for better financial governance and transparency. Through informed and dedicated reporting, journalists can significantly contribute to efforts aimed at curbing the detrimental effects of IFFs and improving the country’s financial landscape.