27 October, 2022Trade unions and civil society organizations want illicit financial flows (IFFs) to be curbed and replaced by trade and industrial policy models that promote sustainable development and that are financed by revenues from mining and the oil and gas sectors.
This was discussed at a regional workshop on IFFs in Accra, Ghana, 24-25 October, which was held with support from FES Ghana and attended by 30 participants from Ghana, Kenya, Liberia, South Africa, Tanzania, Togo, and Zambia.
The participants were from IndustriALL Global Union and Public Service International affiliates, ITUC-Africa, and civil society organizations that included the Alternative Information Development Centre, Oxfam, Tax Justice Network Africa, and Third World Network Africa. Officials from Ghana’s ministry of finance participated in the workshop.
Discussions stated that close to $88.6 billion leaves the African continent yearly destined for tax havens in Panama, British Virgin Islands, Seychelles, and other countries mainly for the benefit of developed countries.
This huge financial loss is enough to finance nearly 50 per cent of the costs required to meet Sustainable Development Goals targets. Experts at the workshop said this has been confirmed by UNCTAD research which states that IFFs are multiple times more than the foreign direct investment inflows into the continent.
Although the theme of the regional workshop was “Illicit financial flows in the gold mining sector in Ghana” it was mentioned that Ghana is not the only African country facing IFFs. Giving examples from case studies in Ghana, South Africa and other countries, the experts said IFFs often take the form of capital flight, tax evasion and avoidance, money laundering, concealing of assets, and commercial malpractices like mis-invoicing of trade shipments, and transfer pricing.
Criminal activities that include illegal markets, corruption, and theft for terrorism financing are also forms of IFFs. According to research, IFFs continue to drain much needed revenue from developing countries in Sub Saharan Africa that could otherwise be used to eradicate poverty, create decent jobs, reduce the high levels of unemployment, and contribute to industrialization.
Additionally, the workshop discussed the importance of using the African Mining Vision (AMV), which outlines how mineral resources can be used for economic development, as one of the instruments to curb IFFs alongside other mineral governance initiatives. However, the AMV has not been domesticated by most countries with only Lesotho having developed a national mining vision. Most countries were also not enforcing their minerals and mining laws, and this allowed multinational companies to ignore tax and infrastructural development commitments in their mining licences.
Sani Baba, regional secretary, Public Service International and Arab Countries said:
“The current economic situation in Ghana, especially high inflation, and a depreciating currency, is taking a toll on workers and citizens. Government should take drastic measures, some of which include reducing the amount of tax incentives to multinational companies to raise adequate revenue to invest in health, education and infrastructure, and limit outsourcing of labour in the mining sector.”
“Greater participation and collaboration of key stakeholders in the gold and other mining sectors to clamp down on illicit financial flows and ensure the effective mobilisation of domestic revenue towards sustainable socio-economic development is required in Ghana. The strategies that we need must include the formalization of artisanal and small-scale mining through the creating of legal frameworks, beneficiation of minerals, including the refining of gold bars as this will create jobs and maximise returns on mineral wealth,” said Abdul-Moomin Gbana, the general secretary of the Ghana Mine Workers Union. He further emphasized the importance of the participation of local industries and an industrial policy framework that supported linkages to ensure value addition and the creation of decent jobs.
Glen Mpufane, IndustriALL director for mining says:
“Illicit financial flows is a scourge on the continent that deprive much needed economic benefit and development of the host country and it must be exposed for what it is, an act of criminality. A continental and regional campaign is needed to stop it. The lost revenue could be used to ensure that trade and industrial policies address sustainable mining that benefits resource-rich African countries, and policies that include clauses on environmental protection, human rights, workers’ rights, and the rights of communities in the mining areas. The export of raw materials should also be replaced by value addition of the minerals on the supply chains as this creates and supports manufacturing industries.”