Curbing illicit financial flows: researchers advocate strict law enforcement, enhanced data


…as Africa loses US$80bn annually

The surest way to curb illicit financial flows (IFF) and its repelling effect on the economy is to ensure strict enforcement of laws and quality data accessibility, researchers have advocated.

Following findings of a study that looked into illicit financial flows in the gold and cocoa value chains, the researchers concluded that they found varying levels of trade mispricing that encompassed both over-invoicing and undervaluation. They added that such crimes can be curbed if laws are strictly enforced.

Fred Dzanku, principal investigator, said they identified some evidence of IFF, but the magnitude is not as large as previously reported.  However, available data revealed that Africa loses US$80billion annually from illicit financial flows, which impedes the continent’s economic transformation.

While expressing confidence in Ghana’s ability to change the narrative with strict measures, he added that if the country can curb illicit flows, it might not need to borrow in order to develop as there will be more resources to fund its development.

Legal Researcher at the University of Ghana Law School, Jennifer Hall, noted that though available laws provide legal frameworks to detect IFF and prevent it through ensuring transparency, accountability and sanctioning violators while making way for sound facilitation of international cooperation, implementation of these laws and their operationalisation is a challenge.

She suggested the imposition of legal requirements for disclosure of information – price, quantity value – to ensure transparency and accountability.

“The Right to Information Act should be amended to specifically address the withholding of information that is vital to detecting illicit financial flows. There should be independent legal institutions/experts to address illicit financial flows,” she added.

Other researchers, including Abigail Tetteh Yankey, Department of Political Science, and post-doctoral researcher Angela Alu underscored the need to enhance data capabilities of different institutions involved in the production and export of these goods, and increased cooperation between different institutions in these sectors in order to harmonise the data collected.

Calls for more academia and industry collaborations were also made. They further stressed that effective political will is necessary to streamline the activities of formal and informal miners and encourage more lawful trading.

This, they agreed, is critical to determining that the right deals are made and the right contracts are signed, at a multi-stakeholder workshop titled ‘Curbing IFFs to finance development: results from a multidisciplinary research approach’.

Granting regulators autonomy

Bishop Akolgo-Integrated Social Development Centre (ISODEC), who doubles as a United Nations expert for IFF statistical measurement in Ghana, said government must first recognise there is a problem and strengthen institutions, the legal framework and grant autonomy to regulators in order to deal with IFFs.

He urged that a series of orientations be granted citizens and required institutions like the Economic and Organised Crime Office, Minerals Commission, Petroleum Commission, Customs Division of Ghana Revenue Authority and other regulators.

“More importantly, they need to work in a more coordinated and collaborative manner, share data and information – and then not allow the international corporations to take advantage of their lack of cooperation, so that we can secure natural resources and generate enough revenue to develop,” he said.

He further noted that every mining activity must be seen as an investment opportunity that can take or add to the economy, hence the necessary stakeholders must be adequately engaged to ascertain the benefits and negative impacts.

“We need to reorganise how we go about natural resources extraction. Every investment is a shock on the local and national economy, and so you have to prepare your citizens and businesses to be able to harvest the benefits and mitigate any negative effects. So, every mining activity must be seen as an investment opportunity and you must sit down with the investor and local businesses; and if it’s a community-based activity, the community is a stakeholder and must be involved so they discuss the benefits and negative impact so they can prepare themselves. Then you can use that to build the linkages between this activity and the economy,” he said.

Chief Executive Officer-Chamber of Mines, Sulemana Koney, said it is a good thing to attract direct foreign investors – but it is also important as a country to have a mindset that on the back of the DFI “we also grow our capacity, learn from them and own our space”.

He also opined that it is about time Ghanaians built capital to invest in the country’s resources and own them.

“It is important that we have a mindset change to have a situation where we also grow our own indigenous mining companies, so they can learn and work with the DFIs,” he said.

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