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Business News Wed, 26 Jan 2022

US$8 billion lost in 6 years through illicit mining sector financial flows – ISSER report

New research conducted by the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana has shown that Ghana’s earnings from the export of commodities such as gold and cocoa were undervalued by US$8.3billion between 2011 and 2017.

The findings, which used 2011 constant prices as the base year for calculating the losses, also revealed that total estimated tax base erosion from the undervaluation of gold exports was US$2billion in the same period under review.

The research work, titled ‘Illicit Financial Flow Risks in Gold Trading: Risks and Policy Options for Ghana’, was sponsored by the Graduate Institute of Geneva, Centre on Conflict, Development and Peacebuilding, and the National Institute of Economic Research (NIER) among other international organisations.

Presenting the research findings, Senior Economics Researcher at the University of Ghana, Dr. Ama A. Ahene-Codjoe, said even though gold accounted for 96.4 percent of total earnings from mineral exports for Ghana in 2017, the country has lost more than it has gained in the last decade.

“Imagine how much Ghana’s tax to GDP ratio would have increased if these funds were not lost through illicit financial flows,” she lamented.

She disclosed that illicit financial flows represent a significant challenge for financing development to achieve the Sustainable Development Goals, making resource-rich developing countries poor.

Proffering some solutions to help solve the challenges, Dr. Ahene-Codjoe called for a more robust and reliable data gathering system to help state institutions police the export of Ghana’s mineral resources.

“We recommend an improvement in the data collection capacity of institutions engaged in the export of these commodities, such as the Customs Division of the Ghana Revenue Authority,” she said.

In addition, she advocated for greater cooperation among the various institutions in the revenue mobilisation sectors to reconcile all data gathered in the sector to help improve the skills of their staff, as well as tracking payments by national institutions.

“We must as a nation also provide these institutions with information and communication technology tools; especially computers, relevant software and access to critical databases, matching those of the private sector actors,” she stressed.

She also appealed for regulators to consider using research work published by ISSER as a means for risk-based selection of cases for Customs, tax and transfer pricing audits.

Suggesting more solutions, legal researcher, Adubea Jennifer Hall said there is a need for contextual data to better interpret the concept of mispricing gold in Ghana.

“Streamlining and simplification of processes for receiving and accounting for gold export revenue would include consolidation of the legal principles and procedures for tracking gold export revenue in Ghana,” she said.

She maintained that a compilation of the various provisions on gold export revenue and the development of a comprehensive manual that outlines all sources of revenue that specifically amount to gold export revenue must be pursued.

She further called for the education and training of primary officials in the minerals and mining sector on illicit financial flows threats in the gold sector, and methods of vigilance to help curb the menace.
Source: thebftonline.com