Some Ghanaians have lived beyond their expensive patient waiting for something better to be done by successive to correct increasing situation of corruption and illegality in the country under the cover of partisan politics.
A number of concerned and worried over the years have called for military rule to replace the adversaries of democracy which many Africans think it has been the bane of our development as a continent.
Kwaku Sika, a member of ‘Stop the Bleeding Now’ campaign has reiterated the same tone saying that, we need to revert to military rule instead of the ‘nuisance’ and ‘nonsense’ democracy.
“I think the best way to tackle corruption is to abolish the so call democracy and activate military rule.”
He said, he now agree to an article he once read, which said, “There are more corruption within the civil service than in politics.”
Many Ghanaians who spoke to Economy Times agree to this. They have come to realized that, the politicians connive with them (civil and public servant) to loot the state. “It’s you scratch my back, I scratch your back”, they said.
Kwaku Sika noted that, the boldness to sanction wrongdoers is missing. “Missing because, everybody knows somebody. So anyone who tries to fight it is seen as an enemy.”
“Just use the happenings at sports ministry as an example.”
Some journalists go the extra mile to expose corrupt activities, but how many are been addressed adequately?
To Theophilus Agbeko, the moral dictates is now in the hands of uncharacteristic elements while individuals and institutions swings like a pendulum on where to take into pocket, sad and painful, all because the financial and economic sins are bigger than AFRICA NOW.
“With me, it’s a bad attitude and bad economic move however not surprised…. We are joking we have no better destination to reach. I tell you, because nepotism and partisan had taken over the real reality of real economic variables that will shoot us forward as a better state or Nation.”
He further said, “During the campaign season, people were advocating for change, I agree we needed change. Change not because it demands a change of government. All I think is a change of attitude, and we are good to go.”
Also, the subject of illicit financial wand corruption was high on the agenda at the 3rd ATAF ICTA in Abuja.
The ATAF ICTA brings together all the Commissioners-General of Africa and tax Administrators from Africa sharing very practical ways to handle revenue leakages, illicit financial flows, taxation of multinational enterprises etc as a lesson so their counterparts can apply them in their countries.
However, a senior journalist with the Daily Crusading Guide, Adu Koranteng voiced out that, some financial, economic and investigative journalists must be sponsored to participate in capacity building training and workshops where they can enhance knowledge and their understanding certain technicalities in various areas of the economy which the scrupulous citizens use take advantage at the blind sight of the entire citizens.
He said, this can help equip journalist to dive deeper with foresight, knowledge and understanding into areas where corruption and illicit financial flow activities normal take place.
In his presentation at the conference in Abuja on the topic “IMPACT OF ILLICIT FINANCIAL FLOWS FROM WEST AFRICAN COUNTRIES ON DOMESTIC REVENUE MOBILISATION AND DEVELOPMENT”, Mr Abdallah Ali Nakyea explained that, “illicit financial flows (IFFs) refer to money that is ‘illegally earned, transferred, or utilized. The monies which are moved across borders originate from three major sources: corruption, criminal activity, and cross border tax evasion.”
He also explained other related acts, such as trade mispricing, which he said, is the deliberate over-invoicing of imports or under-invoicing of exports by entities in a country, usually for the purpose of avoiding paying tax or levies in that country.
He gave a statistics which showed that, among the sub-regions in Africa, West Africa is the highest recorder of illicit financial flows with 38 percent of the total IFFs from Africa within the period 1970 to 2008.
North Africa is second with 28 percent, Southern Africa follows with 13 percent, Eastern Africa recorded 11 percent and Central Africa recorded the least with 10 percent.
In value, the illicit financial flow within the sub Saharan Africa within the period 2003 to 2012 which was US$528.9 billion, was higher than the total Overseas Development Assistance (ODA) of US$348.2 billion as well as the total Foreign Direct Investment (FDI) of US$248.1 billion as against total Growth Domestic Product (GDP) of US$9,565.4 billion.
The figures tells how some scrupulous people are duping the entire West African region which includes Ghana.
The tax expert further explained some of the key sources of Illicit Financial Flows. Notable among them, he said is; money laundering, that is, disguising the flow of funds through commercial financial transactions.
They also, included, Tax Evasion – developing countries have tax systems that are weak as well as containing quite a number of tax incentives that are subject of abuse and misuse.In Ghana, the natural resources sector is one significant area of concern in this regard. Imports and exports also show such IFF tendencies, through over-invoicing and under-invoicing, and bribery and corruption.
The three causes of IFFs from Africa are categorized and rated as: Commercial activities (60%-65%), which arise primarily from business-related activities; Criminal activities (30%-35%) e.g. drug trafficking and smuggling and Corruption (3%) e.g. bribery and embezzlement.
Also, the key sources of IFF through Trade Mispricing are: Commercial transactions – Multinational Enterprises (MNEs) exhibit more tax evasion tendencies by using transfer pricing as well as offshore branches and subsidiaries mostly located in tax havens.
Transfer Pricing – International trade is the dominant activity by multinationals, hence the need to have very robust transfer pricing regulations to check any abuse by way of trade mispricing.
Most of our countries either have weak transfer pricing regulations or none at all.
For those countries that have the TP regulations, the lack capacity by way of technical expertise leaves them weak in negotiations with MNEs who have TP Experts at the negotiation table.
The economic cost of fraudulent trade invoicing in five African countries amounted to US$14.4 billion in revenue from 2001 to 2011.
The tax authorities in the five countries studied by Global Financial Integrity (GFI) – Ghana, Kenya, Mozambique, Tanzania and Uganda – lacked the trade, tax and deals data to curb the illicit flows.
Over- and under-invoicing in the five countries facilitated the illegal inflows or outflows of more than US$60 billion during the 10 year period.
Ghana had more than US$14 billion in mis-stated invoices over the entire 10-year period, equivalent to 6.6 percent of its gross domestic product.
Further in the case of Ghana, ACEP in its February 2015 report on Illicit Financial Flows and the Extractive Industry in Ghana indicated that cumulative gross illicit flows from trade mis-invoicing amounted to US$14.39 billion over the ten year period 2002 to 2011.
They again indicated that if the period is taken from 1960 to 2012 then the IFFs through trade mis-invoicing amounts to US$40 billion.
ACEP, also estimated that, IFFs from illegal mining in Ghana in 2013 to be about US$1.7 billion.
In the midst these horrible pictures being painted by the figures, Mr Ali Nakyea touched on the Switzerland’s imports of gold from Ghana in 2016 alone amounted to $2billion which was never accounted for. The question is what statistics does Ghana’s data on exports of gold to Switzerland reveal?
Looking at the impact of IFFs from Africa on West African States, the tax expert said: IFFs drain hard currency reserves, heighten inflation, cancel investment, undermine trade, worsen poverty, and widen income gaps; reduce tax revenue for the provision of public services such as health, education etc.; reduce forex resources thereby inhibiting growth and the ability of nations to invest in infrastructure and businesses; and IFF beneficiaries grow wealthier and are able to exercise greater influence over the polity within the states they operate. This can curtail the ability of governments to pass transformative policies.
The development impact are as follows: When monies are moved out, economies do not benefit from the multiplier effects of the domestic use of such resources, whether for consumption or investment; Such lost opportunities impact negatively on growth and ultimately on job creation in Africa; Economic profits on activities performed in West Africa are illicitly transferred out of West African countries, reinvestment and the related expansion by companies are not taking place in West Africa; and Reduced tax earnings resulting from hiding taxable funds has a direct effect on the provision of public services such as schools, clinics, sanitation, security, water and social protection.
Also, the impact on Weak Governance & Regulatory Structure includes: Weak institutions and inadequate regulatory environment; People and corporations behind IFFs often compromise state officials and institutions; Multinational corporations engage in base erosion and profit-shifting activities, so the bulk of the tax burden as a result falls on small and medium scale enterprises and individual taxpayers; and Reduced ability of governments to provide social services but also as a result of the resentment of corruption arising from IFFs.
He further suggested some solutions for consideration by the tax administrators. They included: The need to design a real time model that can monitor imports to avert trade mis-pricing.
The Customs Valuation Units should be resourced to build data on import prices of various import destinations; The need for training of Customs Officers to understand and operate the systems to be designed; The need to further strengthen rules and regulations on transfer pricing as well as ring fencing for the extractive industries; and the need for a transfer pricing database to guide revenue officers in the determination of arm’s length transactions to avert transfer pricing abuse.
Furthermore, there is the need to: check collusion between clearing agents and customs officials of revenue authorities; keep a database of importers and exporters which will be subject to review to “weed” out dubious ones engaged in trade mispricing; With the greater potential for abuse, trade transactions with secrecy jurisdictions should be treated with the highest level of scrutiny by customs and law enforcement officials; and More research, developments and training of government regulatory personnel from the relevant sector ministries and agencies should be encouraged and better equipment provided to assist them in the detection of trade mis-invoicing.
Source: Adnan Adams Mohammed