Ghana can finance its own development if illicit financial flows are stopped – ISODEC
According to ISODEC, Ghana and other African countries lost huge sums of money annually through illicit financial outflows that could otherwise be used to finance development on the continent.
Dr Steve Manteaw, the Coordinator of Campaigns at ISODEC, referring to estimates published by a group of civil society organisations in the Honest Accounts, said Africa lost an estimated $41.3 billion in financial outflows annually, more than the total development aid that came to the continent.
The civil society organisations include ISODEC, Global Justice Now, and Jubilee Debt Campaign.
Speaking at a media soiree in Accra on Illicit Financial Flows (IFFs) in Ghana, Dr Manteaw said global losses through IFFs stood at $500 billion annually.
“The main conduits for these losses are trade mis-invoicing, corruption, and profit shifting in projects and trade deals where companies move profits from their subsidiaries in higher tax countries where the real economic activity takes place to other subsidiaries in tax havens,” he said.
Presenting highlights of a study undertaken by ISODEC on the issue of trade mis-pricing in Ghana, Dr Manteaw said the study found that Ghana’s export to the European Union (EU) was undervalued by an estimated €2.7 billion during the 13-year period between 2000 and 2012; being 14 per cent of the total value of export to the EU.
The analysis, which used data from EUROSTAT for trade with the EU, also found that Ghana’s import from the EU within the period was overvalued at €2.8 billion; 14 per cent of the total import from the EU.
An analysis of United States (US) merchandise trade database for US-Ghana trade also found that Ghana’s exports to the US within the period was undervalued at an estimated $633 million, which represents 21 per cent of total value of export to the US, while Ghana’s imports from the US were overvalued by an estimated $573 million; eight percent of total imports from the US.
Dr Manteaw noted that an experiment conducted by ISODEC by importing and clearing some items (video cameras, microphone/speakers, and projectors) also revealed that the items were undervalued, costing the nation a total of $101, 781.20 in unpaid taxes.
He called for greater coordination among the various divisions, departments and units of the Ghana Revenue Authority (GRA) in order to improve efficiency and information sharing.
“It will be necessary to consider the introduction of IT-mediated solution such as a kind of intranet that links up the various divisions, departments and units, and help them to monitor in real time the transactions that take place in a day,” he said.
Dr Manteaw recommended that the planned enactment of the Fiscal Responsibility Act or any future amendment of the fiscal responsibility provisions in the Public Financial Management Act contain severe sanctions for the violation of constitutional provisions in respect of tax waivers.
He called on Ghana to design, implement, monitor and evaluate a real-time model for tracking and eliminating trade mis-pricing in commodities.