A missing link to the problem of Illicit financials flows (IFFs) is reliable, accurate and timely statistical data on the nature and level of IFFs in the sub-region.
Several UN studies and reports show IFFs cost developing countries heavily since it deprives them of needed revenue and foreign exchange and leads to great loss in investment, infrastructure, plant and equipment, and human capital.
In Ghana, estimates show that, illicit financial flows through trade mis-invoicing inflows and outflows and other such illegal activities amounted to US$10.98 billion (equivalent of GHc73.67billion) between 2000 and 2012, more than enough to wipe out a quarter of Ghana’s debt and/or finance the country’s critical infrastructure.
Mr. Edward Asuo Afram, Director of Economic Statistics at the Ghana Statistical Service (GSS) made these startling disclosures at the GSS-ISODEC training workshop on Illicit Financial Flows in Accra recently.
The training Workshop, scheduled from 24th – 28th April this year, is designed for participants from four West African Countries (Ghana, Liberia, Nigeria and Sierra Leone).
Afram told the participants that according to the United Nations General Assembly, in its 2014 Fundamental Principles of Official Statistics, the compilation of the IFFs is a technical, statistical activity to be based on statistical considerations only, in line with the Fundamental Principles of Official Statistics.
“As such, the GSS as the national statistical office stands ready to serve as the focal point for coordinating the compilation of SDG indicators and will provide leadership and coordinate the activities of the necessary stakeholders to measure IFFs”.
Mr. Afram noted that the 2030 Agenda identifies the reduction of IFFs as a priority area.
Illicit Financial Flows (IFFs) are organized through activities such as import trade overpricing, export trade underpricing, profit shifting, debt/asset shifting, money laundering, transfer pricing and transfer of wealth.
The Report of the High-Level Panel (HLP) on IFFs from Africa, chaired by former President Thabo Mbeki, endorsed by African Union Commission (AUC) in 2015, states that African countries lose between US$50 billion and US$80 billion annually through trade/commercial and tax illicit Financial Flows.
This is more than the flows of ODA [Official Development Assistance] coming into the country and more than FDI [Foreign Direct Investment] coming in as well. The problem of IFFs cause high leakages and loss of revenues with damaging implications like foregone social and economic spending, weakened institutions and policy distortions.
IFFs do not only hinder development prospects in our countries but also it reduces the countries’ ability to accumulate capital, service the debts and the ability to achieve the Social Development Goals (SDGs).
The IIFs menace has the potential to threaten a country’s political stability by eroding trust in public institutions, encouraging further criminal activity and deepening inequality and weakening social cohesion.
National circumstances dictate a comprehensive and tailored approach to produce reliable and granular IFF statistics and is the surest way to go.
The workshop seeks to upgrade participants’ knowledge in IFFs compilation methods and come up with additional training requirements for them to be abreast of issues on IFFs for yearly compilation and for future works.