Ghana incurs an annual loss of $1.4 billion due to illicit financial flows, primarily driven by tax evasion and inadequate enforcement measures. Experts urge for systemic reforms to retain resources crucial for national development. The issue is part of a larger continental trend, with Africa losing $89 billion annually, emphasizing an urgent need for action.
Ghana experiences an alarming annual loss of approximately $1.4 billion due to illicit financial flows, severely hindering its developmental progress. The Tax Justice Network Africa (TJNA) identifies that tax evasion, excessive tax exemptions, and inefficiencies within the tax system significantly contribute to this loss.
At a recent summit hosted by the African Parliamentary Network on Illicit Financial Flows and Taxation, experts discussed the detrimental impact of these financial leaks on Ghana and the broader African economy. Francis Kairu, the Strategic Programmes Director at TJNA, emphasized the role of multinational corporations and inadequate tax enforcement in exacerbating revenue losses.
Kairu articulated that, “Our governments must also acknowledge that the problem is a major issue, and I think the biggest challenge in our generation now is the issue of illicit financial flow.” He stressed that Ghana, rich in natural resources and a substantial population, suffers greatly from the activities of multinationals, leading to annual losses exceeding $1.4 billion.
Broadening this analysis, a report by the United Nations Conference on Trade and Development (UNCTAD) suggests that illicit financial flows drain nearly $89 billion from Africa each year. The report identifies Africa as a “net creditor to the world,” signifying that while the continent is dependent on foreign aid, it simultaneously experiences greater losses from capital flight and tax evasion.
Experts indicate that a significant portion of these financial losses is due to the export of commodities such as gold and diamonds, where companies frequently under-declare export values to evade taxes. Additionally, allegations of falsifying financial records and manipulating transfer pricing practices to relocate profits to lower-tax jurisdictions exacerbate the situation.
For Ghana, these ongoing losses lead to increased debt and budget deficits, critically undermining its capacity to finance vital services, including education and healthcare. While discussions on policy reform are ongoing, stakeholders advocate for stringent tax laws and improved enforcement to retain Ghana’s wealth domestically.
The challenge of combating illicit financial flows transcends economic implications; it represents a struggle for national sovereignty, sustainable development, and equitable financial practices. The pressing question remains: how long will Ghana endure substantial financial losses before effective measures are implemented?
In summary, Ghana’s loss of $1.4 billion annually due to illicit financial flows poses a serious threat to its economic stability and developmental efforts. The influence of multinational corporations and weak tax enforcement exacerbates the challenge. Furthermore, broader consequences are evident across the African continent, highlighting the pressing need for reform. The fight against these financial outflows is intrinsically linked to national sovereignty and sustainable development, necessitating urgent action from policymakers.
Original Source: www.ghanaweb.com
