Editorial: Ghana’s illicit financial flows top US$54.1bn!

An estimated US$54.1billion was lost to illicit financial flows (IFFs) over the last decade, placing the country third among the top-10 most affected nations in sub-Saharan Africa.

Largely driven by trade misinvoicing and money laundering, the loss represents one of the most severe capital leakages on the African continent and continues to undermine domestic revenue mobilisation and development financing.

These findings are contained in a report by Washington-based think-tank Global Financial Integrity (GFI) titled ‘Trade-Related Illicit Financial Flows in Africa, 2013–2022’.

It estimates that the total trade value gap across sub-Saharan Africa reached US$152.9billion in 2022, with no country in the region making meaningful progress on curbing such losses during the period.

Trade misinvoicing – the deliberate under- or over-statement of values on Customs invoices – was identified as the dominant channel for illicit capital flight. The report shows that approximately 28 percent of Ghana’s total trade value was affected by misinvoicing over the decade, exceeding a regional average of 24 percent.

Illicit outflows increased from US$4.7billion in 2013 to a peak of over US$9billion for 2021 before easing to US$6billion in 2022. Therefore, the country’s cumulative losses trail only South Africa and Nigeria – firmly placing the country among the three most affected economies in the region.

GFI notes illicit financial flows represent a formidable barrier to Africa’s inclusive growth and economic sovereignty.

In trade with advanced economies, South Africa recorded the largest trade value gap at         US$238.4billion – far ahead of Nigeria’s US$29.7billion. Côte d’Ivoire followed with                   US$24.6billion, Ghana at US$20.5billion and Angola with US$19billion.

South Africa tops the continental list with US$478.1billion in cumulative trade value gaps, accounting for 42 percent of all trade-related IFFs in sub-Saharan Africa. Nigeria ranks second with US$77.7billion, followed by Ghana (US$54.1billion), Côte d’Ivoire (US$47.7billion) and Kenya (US$47.5billion).

The report warns that high IFFs have severe implications for public services and human development. Countries with elevated illicit outflows spend, on average, 25 percent less on health and 58 percent less on education than peers with lower losses.

The billions lost annually in Ghana translate directly into funding gaps for schools, hospitals and critical infrastructure while increasing reliance on borrowing.

 

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