Ghana is losing an estimated US$9 billion every year due to corruption, tax evasion, smuggling, and inefficiencies in critical sectors, a situation experts warn is crippling national development and eroding public trust in government institutions.
At a recent public dialogue on revenue leakages, Professor Isaac Boadi, Dean of the Faculty of Accounting and Finance at the University of Professional Studies, Accra (UPSA), presented stark evidence of the nation’s fiscal hemorrhage. He called for immediate and comprehensive structural reforms to combat what he described as Ghana’s most significant threat to economic stability.
“Ghana is not broke; we are bleeding. Our fight is not about political parties—it is Ghana against corruption. Until we win this battle, our fiscal stability will remain precarious,” Prof. Boadi emphasized.
The Sources of Losses
Prof. Boadi’s analysis revealed that the country’s annual losses—approximately US$9.02 billion—stem from several key areas:
Tax Inefficiencies and Evasion: The Ghana Revenue Authority (GRA) is estimated to lose US$3 billion annually, equivalent to 30% of its potential collections. High-net-worth individuals and foreign corporations exploit loopholes in tax laws, depriving the nation of vital revenue.
Customs Corruption: Under-invoicing and port malpractices cost the state US$515 million annually, according to a 2023 World Bank report.
Natural Resource Mismanagement: The gold mining sector alone accounted for a staggering US$2 billion in lost taxes and royalties in 2022. Approximately 60% of small-scale miners evade taxes, while opaque contracts in the oil and gas industry led to US$1.5 billion in unaccounted revenues in 2023.
Forestry Sector Losses: Illegal logging costs the state US$250 million annually, highlighting the urgent need for better regulation and enforcement.
Informal Economy: Weak tax compliance in the informal sector, which employs 80% of Ghana’s workforce, leads to estimated annual losses of US$15.6 million.
Prof. Boadi noted that these losses collectively represent missed opportunities to fund critical services such as education and healthcare. “These figures are not just numbers; they symbolize unbuilt schools, untreated illnesses, and deferred dreams. Every cedi lost is a chance to change someone’s life, wasted,” he lamented.
Other Bleeding Sectors
The Ports and Harbours Authority loses US$250 million annually through undervalued imports and collusion. Similarly, the public procurement process bleeds US$170 million yearly due to inflated contracts and unaccounted expenditures.
Root Causes of the Crisis
Prof. Boadi attributed the fiscal hemorrhage to four primary factors:
1. Weak Enforcement: A lack of stringent measures allows corruption to thrive.
2. Outdated Systems: Manual processes and inefficient systems leave room for exploitation.
3. Institutional Corruption: Entrenched practices among elites and corporations perpetuate the problem.
4. Lack of Transparency: Limited public oversight fosters an environment of unaccountability.
“These systemic loopholes are exploited by both domestic and foreign actors. Without reform, the cycle of corruption will continue,” he warned.
The Path to Reform
To address these challenges, Prof. Boadi advocated for a multi-faceted approach:
Digitalisation: Fully automating revenue collection systems to minimize human interference and corruption opportunities.
Strict Sanctions: Instituting severe penalties for individuals and entities found guilty of corrupt practices.
Transparency: Enhancing public oversight and accountability measures.
Formalising the Informal Sector: Bringing informal businesses into the tax net through supportive policies.
“The solutions are clear, but they demand courage and unity from all stakeholders—government, private sector, and civil society alike. Silence is no longer an option,” Prof. Boadi asserted.
Signs of Progress
Despite the daunting statistics, Prof. Boadi acknowledged some progress. Ghana’s tax-to-GDP ratio increased to 15.9% in 2024, a modest improvement. However, he stressed that meaningful change requires accelerating institutional reforms.
“The question is not whether we can solve this problem. It is whether we are ready to confront it with the urgency and honesty it demands,” he concluded.
This call to action serves as a stark reminder of the urgent need to address Ghana’s revenue leakages to secure a sustainable future for the nation.
Story by: Mercy Addai Turkson #ahotoronline.com
