The Institute of Statistical Social and Economic Research (ISSER) warns that the government’s ‘Gold for Oil’ policy, designed to tackle the foreign exchange demands of oil importers, is susceptible to Illicit Financial Flows (IFF).
Dr. Fred Dzanku, Principal Investigator (PI) for ISSER, disclosed that an initial investigation by ISSER uncovered risks in the policy, stemming from the lack of parliamentary oversight, absence of a legal foundation, and the absence of pricing regulations. These factors, he asserted, create opportunities for illicit financial flows.
Furthermore, Dr. Dzanku highlighted the ambiguity surrounding the gold’s refinery status before sale, opening avenues for mispricing and undervaluation when exchanged for oil.
The absence of a criteria framework for selecting suppliers and buyers, he argued, raises concerns about the transparency of the transactions, as crucial details such as suppliers, buyers, value, and pricing mechanisms remain undisclosed.
This revelation came to light during the presentation of a report on the risks of illicit financial flows in Ghana’s Gold for Oil (G40) policy. The report scrutinized the legal, economic, and governance aspects of the Gold for Oil policy, initiated on January 15, 2023, to address challenges faced by oil importers in accessing foreign exchange and counteract persistent fuel price hikes.
According to the World Bank, illicit financial flows involve the cross-border movement of capital associated with illegal activities, causing governments worldwide to lose between $500 billion and $600 billion annually in tax revenues, with an estimated $1.6 trillion lost to money laundering.
Experts revealed that Ghana experienced cumulative gross illicit flows of $14.39 billion over a decade (2012-2021) due to mis-invoicing, while illicit outflows through export under-invoicing amounted to $5.11 billion.
To rectify institutional shortcomings in the policy, Dr. Dzanku urged the government to clarify gold valuation, address regulatory gaps, and disclose pricing mechanisms. He emphasized the importance of regulations and pricing policies for transparency, calling for legal requirements for entities such as the Precious Minerals Marketing Company (PMMC) and the Bank of Ghana in the transaction process.
The event included a panel discussion with participants from the extractive industry and the IFF ecosystem. Mr. Sulemana Koney, CEO of the Chamber of Mines, criticized inconsistent data reporting on IFFs and advocated for improved data collection. Bishop Akologo, a United Nations Expert, recommended educational programs for citizens on IFFs and emphasized the need for coordinated efforts among regulatory agencies in the extractive sector to prevent exploitation by multinational companies.