Journalists Join ISODEC To Deepen Fight Against Illicit Financial Flows

Journalists and writers of the extractive sector in Ghana have declared support towards the campaign to save Ghana the 1.4 billion dollars that spill off annually through illicit financial flows.

Global losses through Illicit Financial Flows stood at 500 billion dollars annually whiles Africa loses 50 billion dollars annually.

The Integrated Social Development Centre (ISODEC) in collaboration with the Tax Justice Network has joined the global campaign to launch the “Stop the Bleeding” campaign in Ghana to fight against illicit financial flows on the Africa Union Day (AU).

Speaking at a news conference to launch, Vitus A. Azeem, Chairman of the Tax Justice Coalition and Executive Director of the Centre for Budget Advocacy-Ghana said, whiles we are encouraged by the expressed commitment and efforts by African governments, under the auspices of the AU to fight illicit financial flows, we are nevertheless, concerned about the fact that , in spite of the commitments, huge amounts of potential tax revenue continue to be lost through high levels of IFFs especially from the extractive sectors as well as through commodity trading.

He noted that one of the most notable finding of the High Level Panel survey shows that illicit outflows from Africa are large and increasing at an alarming rate of 20.2percent per year.

The report observed that the independence of African economies on natural resources extraction make them particularly vulnerable to IFFs and singling out the issue of weak national and regional capacities as a major obstacle in efforts to curb illicit outflows.

Mr. Vitus Azeem indicated that by undermining domestic resource mobilization, illicit outflows create independence on outside resources thereby undermining national sovereignty and creating vulnerability to unfair conditionalities tied to development assistance, foreign loans and aid.

He added that the dependency on various forms of foreign capital ranging from official development assistance, public and private equity loans and philanthropic support in Africa is not sustainable, especially given the fact that it has become highly unpredictable in terms of sequencing and also amounts committed.

Mr. Azeem noted that it often results in additional crippling capital outflows from the continent.

“For instance, according to the Health Poverty Action, 21 billion dollars leaves the continent annually in debt payments for mostly loans contracted under unfavorable conditions,” he stated.

He intimated that Illicit financial flows are a mere symptom of a much bigger structural problem of unjust economic and power relations between Africa and the developed world that has historically impoverished Africa and enriched the West.

According to him, if one looks at structural causes, it becomes clear that illicit flows are more than a matter of transparency in the limited sense of corporate organizations disclosing what they pay to the state by way of taxes, royalties and other fees and the state declaring these payments in national accounts.

Mr. Azeem emphasized that illicit financial flows occupy a very important place in terms of advocacy actions for Africa’s development road map.

“For instance, Agenda 2063 and ongoing processes such as the Financing for Development and the post 2015 Sustainable Development Agenda prioritize tackling illicit financial flows however, there is yet no coherent continental framework for tackling the menace,” he intimated.

Mr. Azeem call on government to address the challenge posed by data scarcity and support tax authorities within the various sub-regions to work towards the creation of a common database that will eventually lead to the establishment of a continent-wide database on trade in goods and services and shared by all countries in the continent.

He urged government to give fresh impetus to Ghana’s public sector reform programme to focus on institutional collaboration and automatic exchange of information among related entities.

According to him, Government must give better effect to the exercise of Parliamentary oversight to curb circumstances that undermine its own processes and to properly scrutinize and vet contracts in the interest of the citizen and stop the bleeding of the state.

He added that Government must strengthen the Financial Intelligence Centre and EOCO to conduct or collaborate with other institutions to undertake researches into IFF phenomena in Ghana and produce recommendations for appropriate actions.

Mr. Azeem called on Government to strengthen its interest in petroleum operations with the addition of Petroleum Commission in the Joint Management Committee (JCM) to reinforce government interest.

He urged government to government to design, implement and monitor a real-time customs and trade system in commodities and Benchmark Costing in Petroleum.

Mr. Azeem lastly stressed on the need for a shift in the taxation of minerals away from a profit-based system towards a production-base tax system like increasing the royalty rate so as to enable the country earn more revenues from the sector.

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