Posted: Monday 19th May 2014 at 15:15 pm

Trade Misinvoicing Costs Ghana $3.86m

Tom Cardamone, Managing Director of Global Financial Integrity (GFI)

Tom Cardamone, Managing Director of Global Financial Integrity (GFI)



Tom Cardamone, Managing Director of Global Financial Integrity (GFI)

Government lost revenue of $3.86 billion between 2002 and 2011, representing an average of $368 million a year, due to trade misinvoicing.

A report released by Global Financial Integrity (GFI), a Washington DC-based research and advocacy organization, said Ghana’s tax loss amounted to about 11 percent of total government revenue during the 10-year period as a result of the trade misinvoicing activities.

Trade misinvoicing is the intentional misstating of the value, quantity, or composition of goods on customs declaration forms and invoices usually for tax evasion or money-laundering purposes.

The report said gross illicit outflows in Ghana roughly equaled its official development assistance.

The report, sponsored by the Danish foreign ministry, also looked at four other African countries-Uganda, Mozambique, Kenya and Tanzania.

It revealed that the over-invoicing and under-invoicing of trade transactions allowed at least $60.8 billion to be illegally taken into or out of the five countries between 2002 and 2011.

The report said Ghana, Kenya, Mozambique, Tanzania and Uganda have all experienced significant economic growth in recent years.

However, it said the wealth remains concentrated in the hands of a very few and has not trickled down to the average citizens and the very poor, who often lack basic services.

It said the revenues that the governments lost due to misinvoiced trade and illicit money flows could help fill these gaps.

Brian LeBlanc, co-author of the report said, ‘The problem lies in a lack of transparency and poor data reporting.’

Mogens Jensen, Danish Minister for Trade and Development Cooperation said, ‘It is deeply disconcerting that illicit financial flows are taking such a serious toll on the economies of Ghana, Kenya, Mozambique, Tanzania and Uganda.

‘Denmark has for several years supported Ghana, Kenya, Mozambique, Tanzania, and Uganda in fighting poverty and promoting economic growth and job creation.

‘These efforts are clearly at risk of being undermined by fraudulent trade transactions, which rob the people of these countries of funds that could otherwise have been used for investments in infrastructure, schools, hospitals and other much needed public services.’

He was of the view that the study would help the governments in their efforts to curb illicit financial flows.’

The GFI report analyzed the policy environment in each of the five countries, and provided general policy recommendations, as well as specific suggestions tailored to the circumstances in each nation.

It recommended greater transparency in domestic and international financial transactions, and greater cooperation between developed and developing countries to shut down the channels through which illicit money flows.

By Cephas Larbi
 
 
 
 

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