Editorial: Cracking down on illicit financial flows can avoid aid-dependence

The African Union’s High Representative for Silencing the Guns, Dr. Ibn Chambas, is calling for Ghana and other African nations to crack down on illicit financial flows (IFFs) to reduce reliance on donor aid.

Dr. Chambas notes that Africa loses more than US$60billion annually to illicit transactions – an amount equivalent to the continent’s total donor inflows in 2023. Ghana alone loses about US$3billion each year through tax evasion, under-invoicing and unauthorised transfers.

“Why go to the IMF for loans with harsh conditions when we can mobilise similar funds domestically by tackling IFFs?” He went on to add that: “Aid dependency is not a development strategy”.

He spoke virtually at the ‘Governance Forum on Elections and Governance in Ghana: Managing for Results’ – and noted that Ghana’s Economic and Organised Crime Office (EOCO) found that between 2018 and 2020 US$1.8billion was illegally transferred abroad without records.

Another US$1.5billion in gold exports went unreported by mining companies during the same period, worsening the country’s fiscal challenges.

These discussions align with the just-ended Ghana National Economic Dialogue, held recently on March 3–4. Consequently, Dr. Chambas called for tighter Customs enforcement, improved transparency in the extractive sector and better utilisation of regional trade frameworks like the African Continental Free Trade Area (AfCFTA) to boost revenue retention.

He particularly stressed the need for greater accountability in governance, urging policymakers to ensure campaign promises are backed by clear funding plans and implementation benchmarks. A key issue highlighted at the forum was Ghana’s struggle to implement campaign promises effectively.

Given economic headwinds, tightening financial oversight and reducing illicit flows could ease fiscal pressures and fund critical infrastructure and social programmes without resorting to external borrowing, Dr. Chambas stated.

This is partially why, we believe, President John Dramani Mahama has advocated increased indigenous participation in exploitating the country’s natural resources as part of a broader strategy to revive the economy and reduce reliance on foreign entities.

Multinational companies dominate Ghana’s gold and oil industries, accounting for nearly 70 percent of  total merchandise exports. This means that revenue generated from these sectors does not fully benefit the Ghanaian economy.

“Ghana must earn more from its natural resource endowment in order to play a role in prosperity for all.”

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