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A new study has shed light on the alarming prevalence of Illicit Financial Flows (IFFs) along the supply chain of Gold Mining in Ghana, particularly during processing, transportation and marketing.
The study, titled “Mapping of Illicit Financial Flows Risks Along the Supply Chain of Gold Mining in Ghana” was conducted by the Integrated Social Development Centre (ISODEC), with support from the Global Financial Integrity (GFI) and NORAD.
The study was conducted in three Mining zones in Ghana including Talensi in the Upper East Region, Kenyasi in the Ahafo Region and Obuasi in the Ashanti Region.
The research specifically uncovers the evident strands of exploitation and the hidden knots and tangles that threaten the integrity and future prosperity of the gold mining industry. Furthermore, it highlights how the nation’s gold resources could be harnessed for sustainable development and economic integrity.
At an event in Accra to launch the Report, the Executive Director of ISODEC Mr Samson Danse, said the report marked a significant step forward in “our collective effort to enhance transparency, combat financial malpractices and promote sustainable development within the mining sector.”
Mr Danse noted that the risks associated with Illicit Financial Flows not only drain the nation of vital revenues but also weaken governance structure and hinder equitable resource management.
For him, the report comes at a time when bold action and partnerships are necessary to tackle such systemic issues ensuring that the wealth generated from the Ghana’s natural resources benefits all Ghanaians.
Presenting highlights of the Research, Mrs Charlotte Kpogli-Dzadey, the Project Lead and Policy Analyst at ISODEC noted that the study was conducted at a micro-level. Primary data on IFFs risk(s), their level of prevalence and institutions involved in the mining or extraction, processing, transportation and marketing and sales, were collected through field visits to the selected mining communities as mentioned above.
According to Mrs kpogli- Dzadey, the study reveals that corruption among government officials is widely perceived as a major driver of IFFs in the mining sector.
Mr Gichana, Mr Samson Danse and Mr Aryee launching the Report
She said, a substantial 66.23 percent of respondents believe that corruption contributes to these illicit activities “to a very large extent.” This, she noted underscores the systemic nature of corruption and its role in facilitating the illegal outflow of funds.
The study also found the influence of multinational mining companies in driving IFFs as another significant concern.
Mrs kpolgli-Dzardey explained that a majority of respondent’s i.e 74.03 percent view the role of these companies as “very significant,” highlighting the need for greater scrutiny and accountability in their operations. The practices of these corporations often exploit weak regulatory frameworks, exacerbating the problem of IFFs.
She said, at the mining or extraction stage, the key IFF Risks included trade mis-invoicing, false reporting of gold quantities, corruption.
At the processing stage, the key IFF Risks included Gold smuggling, misreporting of gold purity, trade mis-invoicing, and gold laundering.
At the transportation stage, key IFF risks include Gold smuggling, trade mis-invoicing, falsified transportation documents, and tax evasion.
Relative to policy recommendations at the extraction stage, the report emphasized the need for government adopt stringent monitoring and enforcement of royalty and tax payments, including regular auditing of mining operations, while integrating digital tools and automated systems for tracking ore extraction and production to improve accountability.
It also recommended the need to strengthen customs and trade verification procedures, including independent assay reports for precious metals to mitigate risks. It added that the implementing traceability systems for mineral processing, such as blockchain technology, will ensure transparency from the mines to markets. Governments should work with regional bodies to establish cross-border cooperation to address smuggling and underreporting.
“For the transportation stage, strengthening customs enforcement and using digital technologies such as GPS tracking for shipments of minerals can mitigate risks. Regional cooperation is necessary to harmonize border controls and customs protocols.”
A Mr Benjamin Aryee, who representing the Ministry of Lands and Natural Resources at the event commended ISODEC and its partners for coming out with such a report.
Mr Aryee emphasizes several key points to help address Ghana’s debt issue, stressing the importance of public disclosure regarding the ownership of companies involved in marketing, as knowing who owns these companies is crucial.
He supported the call for the implementation of an automated transaction monitoring system to track and optimize marketing efforts in real-time, while highlighting the need to strengthen anti-corruption measures and enforce penalties for those involved in illicit activities, including buyers and brokers.
“We need to strengthen anti-corruption measures and enforce penalties for buyers and brokers involved in illicit activities.”
On his part, GFI’s Policy Director-Africa, Mr Philip Nyakundi Gichana, stated that IFFs continue to be a major challenge across Africa, not just in Ghana but in countries like Kenya and Uganda as well.
Mr Gichana observed that despite efforts by nations, including Ghana, to implement reforms and policies aimed at curbing IFFs, the problem persists and has worsened.
Reports initially showed $50.1 billion lost to IFFs, but the latest report indicates a rise to $88.6 billion. This increase raises concerns about the effectiveness of current strategies. Possible reasons include weak enforcement, inconsistent implementation of policies, and loopholes in financial systems exploited by corrupt individuals and multinational corporations.
He extoled ISODEC for its persistence to ensure that Illicit Financial Flows are curbed.
Full Report can be found on www.isodec.org
By: Mohammed Suleman
