## tarea2025091-source-pdf ## Source details **Canonical URL:** [tarea2025091-source-pdf](https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025091-source-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2025/english/tarea2025091-source-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2025/english/tarea2025091-source-pdf.pdf.json) --- ### Preface — mission scope, leadership, stakeholders, and timing - Request from the authorities of Ghana dated February 17, 2023. - IMF interdepartmental (LEG/FAD/MCM) Governance Diagnostic mission visited Accra, Ghana from October 16 – 27, 2023; virtual scoping mission conducted between September 18 – 29, 2023. - Purpose: assess governance weaknesses and corruption vulnerabilities and help design an action plan with prioritized, sequenced recommendations in line with the IMF’s 2018 Framework for Enhanced Fund Engagement on Governance. - Financial support: Government of Switzerland/State Secretariat for Economic Affairs (SECO). - Mission led by Mr. Gomiluk Otokwala; team included staff from LEG, FAD, MCM, short-term expert Ms. Rachel Sigman, and remote support from Mr. David Robinson. - Principal stakeholders met: Chief Justice, some Supreme Court Justices, Attorney General, Minister for Justice, Deputy Minister of Finance (revenue), Governor and Deputy Governors of the Bank of Ghana, heads/senior staff of MoF, BoG, OSP, MoJ, GRA, PPA, FIC, SEC, NIC, GIPC, MRH, MoE, secretariats of statutory funds, RTIC, CHRAJ, Ghana Police Service. - Engagements with private sector, professional bodies, academia, civil society and international partners (World Bank, AfDB, EU, UNDP, USAID, UK High Commission, Embassy of France, GIZ, FCDO). - Timing: report reflects information gathered before and during October 2023 mission and in post-mission exchanges in 2024; does not reflect changes introduced by the new authorities taking office after December 2024 unless stated. ### Executive Summary — purpose, scope, methodology, and overall findings - Prepared at the request of, and in collaboration with, the Government of Ghana; authored by LEG, FAD and MCM IMF staff. - Diagnostic coverage: severity of corruption, anti-corruption framework, and sectoral vulnerabilities in: (i) AML/CFT regime; (ii) public financial management (budget credibility and arrears, procurement, statutory funds, public investment); (iv) revenue administration; (v) rule of law (judicial integrity, enforcement of contractual and property rights); and (vi) financial sector oversight. - Information gathering: virtual scoping (September 2023), in-person visit (October 2023), other outreach. - Overall finding: Corruption in Ghana is assessed as systemic and worsening despite reforms (Right to Information Act 2019; Public Procurement (Amendment) Act 2016; Borrowers and Lenders Act 2020; Anti-Money Laundering Act 2020; Banks and Specialized Deposit Taking Institutions Act 2016; Land Act 2020). - Perception indicators: - Transparency International CPI: score moved from 48 in 2014 to 43 in 2022. - Afrobarometer 2022: 77 percent of Ghanaians said corruption had increased "somewhat" or "a lot" over the past year (up from 53 percent in 2019 and 39 percent in 2017); only 6 percent said corruption had decreased. - Public financial management and weak budget credibility identified as root macro-critical governance weaknesses driving large expenditure arrears and corruption vulnerabilities. ### Severity of corruption, fiscal impact, and political economy - CHRAJ estimate: Ghana loses approximately GH¢13.5 billion annually to corruption (reported as US$ 1.1 billion in the source). - Reported estimate by Ghana’s finance minister (2022): Ghana was losing US$4 billion each year to corruption (reported). - Political economy observation: Ghana’s political system generates “huge rents for the winning party and their sponsors, without a cap on costs for the other party.” - Notable incidents and qualitative evidence: - Supreme Court (Occupy Ghana v Attorney General) recognized corruption, abuse of position and embezzlement as pervasive. - OSP investigation at GRA found Customs advance rulings and markdowns between 2017 and 2021 negatively impacted revenue collection. - Unconstitutional dismissal of the Auditor General in 2020 and resignation of the Special Prosecutor alleging interference underscore accountability problems. - Implementation challenge: deep, structural incentives (cultural norms, traditional authority deference, party financing practices) make reform politically sensitive and prone to vested interest resistance. ### Anti-corruption legal and institutional framework — strengths and core weaknesses - Primary statutes include: 1992 Constitution; Criminal Offenses Act; Anti-Money Laundering Act; Office of Special Prosecutor Act; Right to Information Act; CHRAJ Act; Public Office Holders (Declaration of Assets and Disqualification) Act; Public Procurement Act; Internal Audit Agency Act; National Audit Service Act; Whistleblower Act; Economic and Organised Crime Act; Mutual Legal Assistance Act. - International instruments: Party to UNCAC since 2007; AU Convention; ECOWAS Protocol on Fight against Corruption. - Key shortcomings: - Fragmentation and overlapping mandates among CHRAJ, OSP, EOCO and other agencies. - Weak independence and insufficient financial autonomy for many anti-corruption agencies. - Asset declaration and conflict-of-interest frameworks: limited coverage, long update cycles, lack of verification, non-publication of high-level declarations, and absence of sanctions/enforcement clarity. - Detection and enforcement gaps: low numbers of high-profile investigations/prosecutions, lengthy criminal processes, inadequate specialization of anti-corruption courts. - Operational implications for OSP: - OSP has legal powers but lacks sufficient resources, dedicated personnel, security of tenure safeguards in practice, and public guidelines for case prioritization. - Recommendation: ensure OSP independence, financial autonomy, publish operational policies, implement a Charging Code with evidential and public interest stages, record reasons for non-prosecution, and analyze casework data. ### AML/CFT findings and recommendations - NRA (August 2016): ML/TF risks assessed as high due to geographic location, cash-based economy, large informal sector, porous borders. - Most prevalent predicate crimes: fraud, theft, robbery, tax evasion, corruption, drug trafficking. - 2017 GIABA mutual evaluation: Ghana NC/PC on eight FATF Recommendations; low/moderate effectiveness on 10 of 11 immediate outcomes; referred to FATF ICRG; action plan agreed October 2018 and removed from ICRG scrutiny June 2021 after progress. - Effectiveness ratings (Immediate Outcomes): - IO1: Moderate; IO2: Substantial; IO3: Moderate; IO4: Low; IO5: Low; IO6: Moderate; IO7: Moderate; IO8: Low; IO9: Low; IO10: Low; IO11: Low. - Law/institutional reforms: Anti-Money Laundering Act 2020; Real Estate Agency Act 2020; Companies Act 2019 (beneficial ownership provisions). - FIC and supervision gaps: - FIC direct access to (nearly) all public databases but not to NIA (under review); member of EGMONT. - AML/CFT supervision units under-resourced: BoG AML Unit increased staff from 6 to 17 but supervises ~580 financial institutions; NIC staff 3 for 18 life insurers; SEC AML Unit increased from 1 to 4 supervising 126 institutions. - STR reporting: Banks STRs — 2019: 1214; 2020: 3512; 2021: 2942; 2022: 2886. Total STRs by sector: TOTAL 2019: 1230; 2020: 3524; 2021: 2973; 2022: 2946. - LEA requests to FIC (TOTAL): 2019: 190; 2020: 258; 2021: 259; 2022: 304. - Intelligence Reports (IR) disseminated to LEAs: 2019: 174; 2020: 302; 2021: 190; 2022: 72. - Key recommendations: - Increase DNFBP STR submissions and AML awareness. - Strengthen international cooperation: MLA, extradition, BO information exchange. - Increase LEAs’ use of financial intelligence and pursue confiscation as policy objective. - Address BO coverage and enforce sanctions for non-compliance with Companies Act BO obligations. - Reconsider FIC Board mandate to safeguard FIU operational independence (amend AML Act to limit Board decision powers). ### Public Financial Management — budget credibility, arrears, procurement, statutory funds, and public investment - Core finding: weak budget credibility is central, causing large expenditure arrears and corruption vulnerabilities. - Revenue shortfalls vs budget (GH¢ ‘000): - Tax revenue shortfall: 2018: 459,314; 2019: (369,218); 2020: 4,799,932; 2021: (698,257); Cumulative: 4,191,772. - Non-tax revenue shortfall: 2018: 1,523,530; 2019: 2,002,770; 2020: 6,467,028; 2021: 2,393,362; Cumulative: 12,386,690. - Total shortfall: 2018: 1,982,844; 2019: 1,633,553; 2020: 11,266,961; 2021: 1,695,105; Cumulative: 16,578,462. - Arrears: - Current stock equivalent to 6.3 percent of GDP in 2023. - Procurement vulnerabilities: - Sole sourcing and restricted tendering account for over 40 percent of procurement by value; combined single-source and restricted tendering averaged over 45 percent of total procurement by value since 2011 and exceeded 60 percent on two occasions (2011–2020 dataset referenced). - 2020 PPA approval rates: Restricted tendering requests approved: 98 percent; Sole source tendering requests approved: 96 percent. - Procurement irregularities and direct financial losses (GH₵): 2018: 6,823,337; 2019: 20,604,593; 2020: 10,667,174; 2021: 511,569; 2022: 14,254,724; Total 2018–22: 52,861,397. - GhanEPS (digital procurement): less than 1 percent of procurement took place through GhanEPS in 2022 despite mandatory circular; integration with GIFMIS planned. - Statutory funds: - In 2023, 17.5 percent of public revenue was budgeted for allocation to earmarked statutory funds. - Almost 20 separate Funds; around 40 percent of total earmarked expenditure is accounted for by four Funds. - In 2023, about 70 percent of the total budget of the Funds was for public investment. - Four largest Funds (Budget 2023 allocations): DACF GH¢4.5 bn; Health Fund GH¢2.5 bn; GETFund GH¢1.87 bn; Road Fund GH¢1 bn. - Audit findings for 2018–2022 uncovered a direct cost of irregularities of over GH¢ 440 million in the Funds sector. - Public Investment Management (PIM) weaknesses: - Inadequate project prioritization, failure to protect funding over project life cycle, arrears, delays and abandonment, and delivery of poor quality assets. - SOE PIM weaknesses: use of single source for 87 percent of projects in COCOBOD/COCOROADS portfolio; ECG contracts for meters valued at over US$140 million entered without adhering to Public Procurement Act. - Recommendations (selected): - Urgently implement Arrears Clearance and Prevention Strategy; publish criteria for sequencing arrears payments. - Ensure procurement is open and competitive; adopt stricter interpretation of exemptions; require GhanaEPS use; integrate GhanaEPS with GIFMIS. - Address governance shortcomings in statutory funds: follow procurement processes, monitor and fully vouch expenditure. - Ensure full implementation of PIM Regulations and quarterly monitoring of compliance by MDAs. ### Revenue Administration — GRA governance, digital transformation, discretionary powers, and TADAT results - Governance issues: - President appoints GRA Board Chair, Board members, Commissioner General and staff, exposing GRA to political influence and delays. - Section 17 of GRA Act limits GRA to three divisions; parliamentary action required to establish others. - During mission: many executive management lacked valid employment contracts; over 80 percent of 528-management staff due to retire within 10 years; many managers in acting positions. - CG’s performance contract is with the Minister and not with the Board. - Discretion and exemptions: - Broad discretionary powers in revenue laws create major revenue risk. - VAT Relief Purchase Orders (VRPO): GHS 1.1 billion issued in 2022 (7 percent increase from 2021); GHS 1.231 projected by end 2023 (12 percent increase from 2022). Authorities committed to eliminating VRPOs under MTRS. - Digital transformation: - Major projects: upgrade ICUMS; implement ITAS; refine GITMIS; reengineer business processes; introduce e-VAT; implement Data Warehouse (DW). - DW expected to enter production status from 2023. - ITAS procurement delayed as of October 2023; localization/deployment timeline: 18 –24 months for first phase; additional 12 months for annual/semi-annual taxes. - TRIPS legacy software still issues for corporation tax identification numbers. - TADAT (August 2023) results: - D scores accounted for 58 percent of all dimensions; only 13 percent of dimensions in line with international good practice. - 85 percent of taxpayer assistance indicators scored A or B; 85 percent of enforcing taxpayer obligations POAs had C and D ratings. - Data reliability problems led to many D scores. - Recommended reforms (excerpted): - Delegate HR authority, review HR policies, amend GRA Act to give Board and CG flexibility in structure, publish guidelines for discretionary powers, enforce Exemptions Act, develop Board Charter, make CG performance contract with Board, re-engineer and automate processes, fully establish Transformation Office, strengthen risk management and PCA practices. ### Rule of Law, judiciary integrity, digitization, and property rights - Perception and indicators: - CPIA rating on “transparency, accountability, and corruption in the public sector”: 3.5 out of 6. - 2023 WJP index rank on absence of corruption: 101st among 142 Countries. - Afrobarometer (2020): over 85 percent of Ghanaians believe judges and magistrates regularly engage in corrupt behavior. - Judicial automation and e-Justice: - As of end-July 2022: Judicial Service operated 385 courts; only 51 High Courts (13.50 percent) fully automated. - e-Justice had more than 31,000 users with 3016 users as lawyers; High Court dockets scanned: 3,500,000 processes as of 2021. - Challenges: inadequate digital infrastructure, connectivity gaps, high internet cost, technical glitches, and funding shortfalls; many courts still manual. - Case assignment and vulnerabilities: - Manual case assignment rests with registrars and supervising judges; intended e-justice automation aims to eliminate manual allocations. - Vulnerabilities: excessive caseload concentration, bribes, influence-buying, forum-shopping. - Land and property rights: - Total land area: 23 million hectares or 238,000 square km. - About 57 percent classified as “agricultural land area”; about 24.4 percent under cultivation. - Mean farm size less than 1.6 hectares; small farms (less than 10 hectares) account for at least 95 percent of cultivated land. - About 80 percent of land held under customary law (pluri-legal system). - Mortgage registration at Lands Commission can take up to four years and often requires unauthorized facilitation fees; collateral registry at BoG is largely automated and can be completed in minutes. - Rule of law recommendations (selected): - Finalize e-Justice project and prioritize court automation (Agency: MoJ; Judiciary; Timeframe: MT). - Undertake impartial public expenditure assessment for judiciary and Judicial Service (Agency: MoJ; Judiciary; Timeframe: MT). - Review bailiff resourcing and consider reinstating Land Tribunal to relieve Land Court backlog (Agency: MoJ; Judiciary; Ministry of Lands; Timeframe: LT). - Establish comprehensive digital land registry (Agency: Ministry of Lands; MoJ; Timeframe: LT). ### Financial sector oversight — BoG governance, supervisory capacity, and reform priorities - Banking sector metrics (end-December 2022): - Banks hold 93 percent of industry total assets; SDIs hold remaining 7 percent. - Banking sector assets to GDP: 37.5 percent (as of end 2022; noted in source as "3 7.5 percent" — interpreted as 37.5 percent in the source). - Ownership: 14 foreign banks account for 61.7 percent of assets; four government-majority banks account for 20.8 percent; five private local banks account for 17.5 percent. - Recent shocks and responses: - Domestic Debt Exchange Program (DDEP) launched December 2022, concluded September 2023; sharp impact on banks holding government securities; temporary regulatory reliefs applied; Ghana Financial Stability Fund started disbursing recapitalization funds to state-owned banks. - NPL ratio increasing since 2022. - Supervisory governance and integrity: - BoG Act (2002) and Amendment 2016 define mandate; Banks and SDI Act 2016 provides supervisory framework. - Governance concerns: BoG financial autonomy undermined by monetary financing since 2020 and participation in Gold-for-Oil program; Section 14 of Presidential Transition Act, 2012 can render Boards non-functional on transitions (Board absence reported for nine months). - Fit and Proper regime: since January 2018 BoG approved 532 board/senior management appointments and rejected 27. - Supervisory capacity and gaps: - Need adoption of Pillar 2 and Pillar 3 of Basel, liquidity requirements (LCR, NSFR), stronger follow-up on onsite inspections, integration of corporate governance assessment into risk-based supervision, and enhanced resources for supervision. - Integrity and ethics: Section 145 of Banks and SDI Act requires confidentiality; Office of Ethics and Internal Investigations reports to Governor. - Related-party transactions: legal coverage focuses on financial exposures but needs expansion to other transaction types. - Recommendations (selected): - Amend BoG Act to carve out BoG Board from Section 14 of Presidential Transition Act (Agency: MoF; BoG; Timeframe: MT). - Strengthen resources and capacity for supervision, adopt Pillar 2/3 and liquidity standards, expand related-party transaction coverage, and improve governance of public banks and SDIs. ### Institutional appointments, tenure, and financial autonomy across ACAs - Appointment powers: President appoints board members and heads of many anti-corruption/oversight agencies (OSP, RTIC, Auditor-General, NAS, IAA, PPA, FIC, EOCO) often "acting in consultation with the Council of State." - Tenure and removal: Special safeguards exist for Special Prosecutor, Deputy, Auditor-General, CHRAJ Commissioner and Deputies; many other board members/CEOs can be removed by the President, weakening independence. - Financial autonomy challenges: - From 2016-2023 agencies received an average of 51 percent of appropriated funds each year. - MoF clearance required for hiring and payments; agencies often cannot hire or execute budgets without MoF approval. - Supreme Court Brown v. Attorney-General (2010) recognized some protections for NAS/Auditor-General expenditures; Audit Service Regulations provided framework but primary law would be preferable. - Examples of safeguards vs undermining provisions provided in Annexes; identified need for a dedicated PFM framework for independent anti-corruption agencies. ### Priority recommendations and implementation timeframes (selected highlights) - Implementation timeframe classification: Immediate (up to 6 months), ST – Short Term (six to twelve months), MT- Medium Term (up to 24 months), LT – Long Term. - Anti-Corruption (ST/MT): - Strengthen financial autonomy of anti-corruption agencies by amending PFM Act. — Agency: MoF, MoJ — Timeframe: ST - Strengthen asset declaration system: require verification, publication and sanctions; expand coverage to beneficially owned assets of officials and families. — Agency: MoJ, CHRAJ, Auditor-General — Timeframe: ST - Clarify enforcement apparatus roles and sign MOUs for cooperation and intelligence sharing. — Agency: Attorney General — Timeframe: ST - Enact Conduct of Public Officers Bill to establish conflicts of interest framework. — Agency: Attorney General — Timeframe: ST - AML (MT): - Strengthen transparency of beneficial ownership information. — Agency: Attorney General — Timeframe: MT - Public Financial Management (ST/MT): - Ensure procurement is open and competitive; integrate GhanaEPS and GIFMIS; require GhanaEPS for fund release. — Agency: PPA, MoF — Timeframe: ST/MT - Implement Arrears Clearance and Prevention Strategy urgently. — Agency: MoF — Timeframe: ST - Revenue Administration (MT/ST): - Strengthen GRA governance through delegation, streamlining, legal reform, and Board oversight. — Agency: MoF, GRA — Timeframe: MT/ST - Implement revenue loss mitigation measures. — Agency: MoF — Timeframe: ST - Financial Sector Oversight (MT): - Strengthen prudential regulatory and supervisory framework, adopt Pillar 2/3 and liquidity requirements, enhance resources for BoG supervision. — Agency: BoG, MoF — Timeframe: MT - Rule of Law (MT/LT): - Complete e-Justice project and prioritize court automation to reduce corruption avenues and speed dispute settlement. — Agency: Attorney General, The Judiciary — Timeframe: MT ### Implementation context and program linkages - Recommendations intended to inform governance and anticorruption policy, legal and institutional reforms, and support measures under the Extended Credit Facility Arrangement for Ghana. - Diagnostic intended to support program priorities on public procurement, domestic arrears clearance strategy, anti-corruption, and revenue administration; link to Ghana’s Post Covid-19 Program for Economic Growth. *IMF Ghana - Technical Assistance Report (content reflects mission activities and findings as stated in the source).* ### PREFACE _______________________________________________________________________________________________ 7 ### PREFACE ### Mission request, scope, and timing - Request from the authorities of Ghana dated February 17, 2023. - IMF interdepartmental (LEG/FAD/MCM) Governance Diagnostic (GD) mission visited Accra, Ghana from October 16 – 27, 2023 to assess governance weaknesses and corruption vulnerabilities. - Purpose: help authorities design an action plan with specific prioritized, sequenced recommendations and structural reform to enhance transparency and accountability, prevent and combat corruption, in line with the IMF’s 2018 Framework for Enhanced Fund Engagement on Governance. - A virtual scoping mission preceded the in-person mission, conducted between September 18 – 29, 2023. - Financial support for the Governance Diagnostic was provided by the Government of Switzerland/State Secretariat for Economic Affairs (SECO). ### Mission leadership, team composition, and contributors - Mission led by Mr. Gomiluk Otokwala. - Team members: Mr. Ron Snipeliski, Ms. Rebecca Obare, Ms. Bonolo Namethe (all LEG); Mr. Thabo Letjama, Mr. Ed Hearne (both FAD); Mr. Ravi Mohan Periyakavil Ramakrishnan (MCM expert). - Remote support and drafting contribution from Mr. David Robinson. - Short-term expert: Ms. Rachel Sigman (knowledge and understanding of the context, political economy, and major governance weaknesses in Ghana). - Scoping mission team included: Mr. Gomiluk Otokwala (Mission Chief, LEG), Mr. David Robinson, Ms. Rebecca Obare, Ms. Bonolo Namethe (all LEG); Mr. Thabo Letjama, Mr. Ed Hearne, Mr. Eduardo Camero Godinez (FAD); and Mr. Ravi Mohan Periyakavil Ramakrishnan (MCM). ### Principal stakeholders and meetings - Senior judicial and government officials met: - Chief Justice of Ghana, some Supreme Court Justices. - Attorney General and Minister for Justice. - Deputy Minister of Finance in charge of revenue. - Governor and Deputy Governors of the Bank of Ghana (BoG). - Heads and senior staff of key ministries and agencies met, including: - Ministry of Finance, Bank of Ghana (BoG), Office of the Special Prosecutor (OSP), Ministry of Justice (MoJ), Ghana Revenue Authority (GRA), Public Procurement Authority (PPA), Financial Intelligence Centre (FIC), Securities and Exchange Commission (SEC), National Insurance Commission (NIC), Ghana Investment Promotion Center (GIPC), Ministry of Roads and Highways (MRH), Ministry of Education (MoE), secretariats of four statutory funds, Right to Information Commission (RTIC), Commission on Human Rights and Administrative Justice (CHRAJ), Ghana Police Service. - Engagements with private sector, professional bodies, academia, civil society, and international development partners: - Private sector examples: Association of Ghana Industries, Ecobank, Templars Law Firm, ENS Africa. - Professional bodies: Ghana Bar Association, Institute of Accountants. - Academia: Professor Raymond Atuguba, Dean of the Faculty of Law, University of Ghana. - Civil society organizations: Ghana Integrity Initiative, Corruption Watch Project, Ghana Anti-Corruption Coalition, Center for Democratic Development, Act Africa, Economic Governance Platform, and other coalition members. - International partners: World Bank, African Development Bank, EU Delegation in Ghana, UNDP, USAID, UK High Commission, Embassy of France, GIZ, FCDO. ### Acknowledgements and administrative support - Main point of contact for the Government of Ghana: Ms. Eva Mends (Chief Director, Ministry of Finance). - Mission acknowledges cooperation and support from numerous officials and staff, including Mr. Samuel Aggrey, Ms. Gifty Nyamekye, Mr. Adrian Osei-Antwi, Mr. Michael Baidoo, Ms. Baaba Nyarko. - IMF support and guidance from: Mr. Stephane Roudet (IMF Mission Chief for Ghana), Mr. Arthur Sode and the entire Ghana team, Mr. Leandro Medina (IMF Resident Representative for Ghana), Mr. Osa Ahinakwah (Local Economist), Ms. Alyss Ben-Smith, Ms. Alexandra Rajs (administrative assistance), and guidance from Mr. Emmanuel Mathias, Mr. Joel Turkewitz and Ms. Tina Burjaliani. ### Timing of information and political context - Report reflects information gathered before and during the October 2023 mission and in post-mission exchanges with the authorities in 2024. - At finalization of the report, a new government had taken office following the elections in December 2024; report content does not reflect changes introduced by the new authorities unless stated specifically. - In his inaugural address, the incoming President pledged a four-point agenda including “governance and constitutional reforms” and “accountability and the fight against corruption”. - The new administration’s manifesto (Resetting Ghana: Jobs. Accountability, Prosperity—NDC 2024 Manifesto) includes plans relevant to the report’s findings: - Scale up revenue mobilization by restructuring the GRA and reviewing the PFM Act and the Public Procurement Act to “plug leakages” and reduce corruption. - Investigate, prosecute and recover proceeds of corruption. - Implement “measures to curtail abuse of single-sourced and restricted tendering procurement”. - Enforce the assets declaration regime. - Support the Auditor-General to enforce surcharges to retrieve embezzled funds. - Enact a conflict-of-interest law for all government officials. - Strengthen the procurement legal framework to ensure greater transparency and to “prevent conflicts of interest and insider dealing by politically exposed persons in the award of contracts”. *IMF Ghana - Technical Assistance Report, Preface (content reflects mission activities and context as stated in the source).* ### Executive Summary ### Executive Summary ### Purpose, scope, and methodology - Prepared at the request of, and in collaboration with, the Government of Ghana, this report evaluates the strength of economic governance in Ghana, highlights important weaknesses and vulnerabilities and provides recommendations to address them. - Prepared by IMF staff from the Legal Department (LEG), Fiscal Affairs Department (FAD) and the Monetary and Capital Markets Department (MCM). - Diagnostic covers: assessment of the severity of corruption, the strength of the anti-corruption framework, and corruption vulnerabilities and governance weaknesses in: (i) the anti-money laundering regime; (ii) public financial management (budget credibility and arrears management, public procurement, governance of statutory funds, and public investment); (iv) revenue administration; (v) rule of law (judicial integrity, enforcement of contractual and property rights); and (vi) financial sector oversight. - Information gathering involved a virtual scoping mission in September 2023, a two-week in-person visit to Accra in October 2023 and other outreach. ### Overall findings on governance and corruption - Corruption in Ghana is assessed as systemic and worsening, despite decades of political stability and recent reforms. - Past and ongoing legal reforms include: Right to Information Act 2019; Public Procurement (Amendment) Act 2016; Borrowers and Lenders Act 2020; Anti-Money Laundering Act 2020; Banks and Specialized Deposit Taking Institutions Act 2016 and Bank of Ghana (Amendment) Act 2016; Land Act 2020. - Improvements in digital service delivery (revenue administration, procurement (GhanEPS), court system) have reduced some corruption vulnerabilities but significant weaknesses remain. - Transparency International Corruption Perception Index: Ghana moved from a score of 48 in 2014 to 43 in 2022. - Public opinion data collected by Afrobarometer in 2022 reflect worsening perceptions of corruption. ### Key sectoral vulnerabilities and governance weaknesses Public Financial Management (Section IV) - Recurrent problem of weak budget credibility is at the root of macro-critical governance weaknesses and has resulted in accumulation of large expenditure arrears. - Arrears create corruption vulnerabilities through discriminatory selection of creditors and payment order. - Procurement concerns: - Sole sourcing and restricted tendering account for over 40 percent of procurement by value. - Legal derogations to competitive procurement are weakly evidenced in practice. - The majority of requests to the procurement authority, the PPA, for restricted or sole source procurement are approved. - Statutory funds governance weaknesses include poor transparency and procedures for use of funds, absence of appropriate accountability structures, absence of competitive procurement, unclear decision-making structures, expenditure arrears, and poor value for money in investment spending. - In 2023, 17.5 percent of public revenue was budgeted for allocation to a set of earmarked, statutory funds. - Statutory funds are principal contributors to capital project abandonment; governance problems lead to severe erosion of value for money. - Public investment management shortcomings: inadequate prioritization of projects, failure to protect funding for approved projects over the life cycle, emergence of expenditure arrears, major delays and abandonment of projects, and delivery of poor quality or un-needed assets. Revenue Administration (Section V) - Domestic Taxes and Customs characterized by undocumented and outdated procedures, leaving decisions open to unfettered discretion of officials. - Manual processes remain in some cases: complex, inefficient, costly, and lack an effective audit trail. - GRA has not developed and published guidelines on exercising discretion provided in law. - Commissioner General (CG) powers: ability to reduce penalties imposed by officers on post clearance audits and to waive duties and taxes upon appeal filing, with unclear limits. - Lack of risk-based compliance management results in auditors selecting cases to audit, contrary to international good practice. - Weak audit performance monitoring and quality assurance increase corruption vulnerability. - Exemptions issuance (including VAT Purchase Relief Orders) remains a major vulnerability to corruption and fraud. - Appointment provisions for GRA executive management lack clear, merit-based, and transparent processes, making the organization vulnerable to undue political interference. Rule of Law and Property Rights (Section VI) - Property rights, especially over land, suffer from insecurity of title, conflicting claims and protracted dispute resolution; at least 70 per cent of land remain under customary land tenure. - Land administration is prone to abuse and vulnerable to corruption. - Judiciary: well established but concerns exist regarding judges’ independence, impartiality, and protection from external influence, including political interference. - Contract enforcement: undue delay and cost are major problems; there is a perception of judicial corruption. Anti-Money Laundering / Counter Financing of Terrorism (AML/CFT) (Section III) - Limited coordination among relevant agencies fighting corruption despite establishment of the AML/CFT Inter-Ministerial Committee. - Beneficial ownership (BO) information: Registrar of Companies collects basic and beneficial ownership information, but the BO registry is incomplete, especially for existing companies. - AML/CFT supervision units at BoG, SEC, NIC are significantly under-resourced relative to the number of institutions they must supervise. - Loopholes in governance of the Financial Intelligence Centre (FIC) and gaps in dissemination of suspicious transaction reports (STRs) to law-enforcement agencies. Financial Sector Oversight (Section VII) - Onsite supervisors’ assessment of corporate governance shows shortfalls against BoG directives. - Coverage of related party transactions needs expansion to cover all transaction types within remit beyond financial (credit) exposures. - Lack of skilled resources on bank boards, particularly in audit committees, risk committees, and as independent directors. - Public sector banks’ governance appears weaker than other banks, evidenced by weaker financial performance, lower capital levels and higher NPLs. Anti-corruption legal and institutional framework (Section II) - Asset declaration and conflicts of interest frameworks lack transparency mechanisms, coverage, adequate enforcement and verification; collected information is not shared with other agencies nor made publicly available. - Monitoring and auditing activities are not risk-based. - Inconsistent and ineffective use of legal tools to strengthen public sector accountability, such as Auditor-General’s surcharge powers. - Detection capabilities for corruption offences are weak, resulting in low numbers of cases received and processed by enforcement agencies. - Low levels of high-profile investigations and prosecutions, lengthy criminal processes, and inadequate specialization of anti-corruption courts. - Anticorruption framework hampered by fragmentation, overlaps in functions, insufficient independence, and lack of resources. Political economy and implementation challenges - Deep, structural, and resilient forces shape incentives and practices: cultural norms regarding wealth, strong deference to traditional authority institutions (affecting land rights), and political party financing practices that incentivize use of public authority to reward supporters and fund elections. - Observation: Ghana’s political system generates “huge rents for the winning party and their sponsors, without a cap on costs for the other party.” - Implementing deep governance reforms can unsettle powerful vested interests; reactions are unpredictable. - A new consensus is needed to dismantle impediments to macroeconomic stability and growth. ### Recommendations and reform priorities - Effective reform requires well-tailored and sequenced efforts, extensive outreach, willingness to challenge settled norms, and sustained engagement by local stakeholders and external partners. Priority recommendations (matrix of selected recommendations; Implementation Timeframe classification: Immediate (up to 6 months), ST – Short Term (six to twelve months), MT- Medium Term (may require up to 24 months)) - Anti-Corruption - Strengthen the financial autonomy of anti-corruption agencies by submitting to Parliament and approving amendments to the PFM Act as detailed in Table 2 (Section II). — Agency responsible: MoF, MoJ — Implementation Timeframe: Short Term (ST) - Strengthen the asset declaration system by submitting to Parliament and approving amendments to require verification, publication and sanction for detected irregularities, and to expand coverage to assets beneficially owned by officials and their families (see Table 2). — Agency responsible: MoJ, CHRAJ, Auditor-General — Implementation Timeframe: ST - Enhance the external audit function’s role in preventing and combatting corruption as detailed in Table 2 (Section II). — Agency responsible: Auditor General, Attorney General — Implementation Timeframe: ST - Clarify and properly demarcate the roles within the enforcement apparatus in Ghana and sign MOUs among agencies as to the basis on which they cooperate and how cases/files/intelligence are shared (Section II). — Agency responsible: Attorney General — Implementation Timeframe: ST - Establish the conflicts of interest framework by enacting the Conduct of Public Officers Bill in line with international standards and best practice (Section II). — Agency responsible: Attorney General — Implementation Timeframe: ST - AML - Strengthen transparency of beneficial ownership (BO) information (Section III). — Agency responsible: Attorney General — Implementation Timeframe: Medium-Term (MT) - Public Financial Management - Address governance vulnerabilities in the public procurement system. Ensure public procurement is open and competitive to the maximum extent possible (Section IV). — Agency responsible: PPA, MoF — Implementation Timeframe: MT - Revenue Administration - Strengthen the governance of the GRA including through delegation, streamlining processes and legal reform (Section V). — Agency responsible: MoF, GRA, MoF — Implementation Timeframe: MT - Implement revenue loss mitigation measures (Section V). — Agency responsible: MoF — Implementation Timeframe: Short Term (ST) - Strengthen GRA Board oversight (Section V). — Agency responsible: GRA, MoF — Implementation Timeframe: MT - Financial Sector Oversight - Adopt measures to strengthen financial sector oversight including through legal reform and strengthening prudential regulatory and supervisory framework which are closely related to governance aspects (Section VII). — Agency responsible: BOG, MoF — Implementation Timeframe: MT - Rule of Law - Complete the e-Justice project and prioritize the implementation of court automated systems, aimed at reducing avenues for corruption and speeding up dispute settlement (Section VI). — Agency responsible: Attorney General, The Judiciary — Implementation Timeframe: MT ### Implementation context and program linkages - Recommendations are intended to contribute to formulation of governance and anticorruption policies and programs, improvement of legal and institutional frameworks, and governance and anti-corruption reform measures in the context of the Extended Credit Facility Arrangement for Ghana. - Diagnostic will support program priorities on public procurement, the domestic arrears clearance strategy, anti-corruption, and revenue administration, and link to Ghana’s Post Covid-19 Program for Economic Growth. *IMF Ghana - Technical Assistance Report | Executive Summary* ### Section I. Severity of Corruption and Its Impact ### Section I. Severity of Corruption and Its Impact on Key State Functions ### Governance and political context - Ghana is described as "a country of 31 million people on the West African coast" with decades of political stability since its transition from military rule in 1992, including peaceful transfers of power. - The current political setup includes: - a two-party system; - a President who is both head of state and head of government; - a judicial branch with constitutional guarantees of independence; and - a single-chamber parliament. - The authorities view the political design as a "grand bargain" intended to keep the wheel of state functioning given Ghana’s history and composition. ### Recent economic shocks and fiscal vulnerabilities - After years of robust growth, Ghana was hit by external shocks, notably the Covid-19 pandemic, which exacerbated preexisting fiscal and debt vulnerabilities. - Consequences cited include: - a spiraling external debt service burden; - rapid depreciation of the cedi; and - surging inflation. - Ghana lost access to international and domestic financial markets and ultimately defaulted on external debt in December 2022. ### Governance weaknesses exacerbating the crisis - Weak governance prior to the crisis is identified as amplifying fiscal stress through: - high expenditure arrears stemming largely from low budget credibility and weak commitment control; - poor procurement controls in public contracting; and - low revenue collection resulting from inefficient revenue administration practices compounded by corruption. - The Commission on Human Rights and Administrative Justice (CHRAJ) has estimated that Ghana loses approximately GH¢13.5 billion annually to corruption (reported as US$ 1.1 billion in the source). ### Indicators and public perceptions of corruption - Third-party and perception-based indicators indicate corruption is a serious and growing challenge: - V-Dem country experts perceive a consistent worsening of executive bribery and corrupt exchanges since 2016 and an increasing frequency of executive embezzlement and misappropriation of public resources since 2019. - Transparency International’s Corruption Perception Index moved slightly downward from a score of 48 in 2014 to 43 in 2022. - Afrobarometer 2022 public opinion data: 77 percent of Ghanaians said the level of corruption had increased "somewhat" or "a lot" over the past year, up from 53 percent in 2019 and 39 percent in 2017; only six percent said the level of corruption had decreased. - Public trust is especially low in the police and judiciary, suggesting limited institutional avenues for accountability. ### Qualitative evidence and notable cases - Multiple reports document spending patterns and transgressions involving high-level officials and economic elites; at least one civil society organization pointed to recent government spending perceived as driven by political and personal benefit. - The Supreme Court case Occupy Ghana v Attorney General acknowledged that "corruption, abuse of position and embezzlement of public funds among others has become the bane of our governance structures" and called on accountability institutions to "protect the public purse from persons who intend to embark upon personal economic recovery programmes with the public funds." - Specific institutional incidents referenced: - An OSP investigation at the Ghana Revenue Authority (GRA) found evidence that, between 2017 and 2021, the Customs division engaged in customs advance rulings and markdown of benchmark values that negatively impacted revenue collection from import tariffs and taxes. - The unconstitutional dismissal of the Auditor General in 2020 (as per the Supreme Court decision) and the resignation of the Special Prosecutor (who alleged government interference with his decision-making) suggest significant accountability problems. ### Estimated fiscal losses attributed to corruption - CHRAJ estimate: approximately GH¢13.5 billion lost annually to corruption (US$ 1.1 billion as reported). - Reported estimate by Ghana’s finance minister (2022, according to many reports): Ghana was losing US$4 billion each year to corruption. ### Sectoral vulnerabilities and mechanisms of corruption - Public procurement: - Identified as the area most vulnerable to corruption, facilitating side payments, bribes, kickbacks, and non-enforcement of contract terms. - Reports suggest companies sometimes make large side payments "well into the millions of U.S. dollars" to elected and appointed officials to secure major contracts. - Secondary corrupt practices include the sale of contracts to third parties and "judgment debt" settlements awarded to contractors for government abrogation or non-payment of contracts. - A 20-year review estimates government payout of $358 million (GH¢1.9 billion in 2019) in judgment debts from 2000 to 2019. - The political system is observed to generate huge rents for the winning party and their sponsors, without a cap on costs for the other party. - Significant misappropriation cases cited in GYEEDA, GETfund, NSS, COCOBOD and others. - Natural resources and extractives: - Vulnerable to corruption due to easy access to rents from oil production and mining. - Concerns include (non)-enforcement of agreements with oil companies and corruption risk in mining licensing; anecdotal evidence also points to mismanagement and corruption in cocoa. - Reports by ACEP and PIAC document significant revenue losses due to non-enforcement of petroleum agreements, with political patronage enabling contract extensions for non-performing companies. - Banking and financial supervision: - In 2018, the Bank of Ghana revoked licenses of a number of banks suspected of "dissipating depositors’ funds and insider trading" and attributed bank failures to "weak risk management, poor corporate governance and non-compliance to professional rules and ethics by officials, including central bank supervisors." - Despite the BoG providing information to law enforcement, the mission reports there has been no prosecution of alleged perpetrators. ### Institutional capacity and accountability gaps - Internal accountability mechanisms (regulatory bodies, inspectorates, internal audit) lack adequate capacity and authority and are regularly circumvented by: - high degree of discretion afforded to senior officials; - extensive avenues for exerting informal influence on decision-making and application of regulations. - Major decisions (capital investments, high-value procurement, granting of concessions, marketing and payment of debt instruments, divestiture of state property) often occur through opaque processes at the highest level with limited oversight. - External accountability mechanisms (auditing, parliamentary oversight, prosecution through courts) have shown limited effectiveness: - absence of effective follow-up mechanisms for actions that waste public resources; - limited transparency; - incomplete insulation of independent anti-corruption institutions from political control; - external law enforcement relationships are sometimes non-functional, enabling officials to enjoy illicit profits outside the country. ### Summary observation on anti-corruption framework - Despite longstanding anti-corruption efforts, overlapping legal mandates and "rebadging" of institutions have produced a confusing and complex institutional arrangement that undermines effectiveness. - Example institutional history: - Serious Fraud Office (SFO) established in 1993 as a specialized investigative body. - Economic and Organized Crime Office (EOCO) Act 2010 repealed the SFO Act, 1993 and replaced the SFO with EOCO. - The recent creation of the Office of the Special Prosecutor (OSP) coexisting with other accountability agencies like CHRAJ has further complicated the anticorruption landscape. *IMF Ghana - Technical Assistance Report — Section I. Severity of Corruption and Its Impact* ### 15. Ghana has a relatively robust set of laws for preventing and fighting corruption. They ### 15. Ghana has a relatively robust set of laws for preventing and fighting corruption. ### Legal and regulatory framework - Primary statutes and instruments include: - the 1992 Constitution - the Criminal Offenses Act - the Anti-Money Laundering Act - the Office of Special Prosecutor Act - the Right to Information Act - the Commission on Human Rights and Administrative Justice Act - the Public Office Holders (Declaration of Assets and Disqualification) Act - the Public Procurement Act - the Internal Audit Agency Act - the National Audit Service Act - the Whistleblower Act - the Economic and Organised Crime Act - the Mutual Legal Assistance Act - The National Anti-Corruption Action Plan 2015-2024 is in place and is currently under evaluation in the context of a planned update. - International instruments: - Party to the United Nations Convention against Corruption (UNCAC) since 2007. - Party to the African Union Convention on Preventing and Combatting Corruption. - Party to the Economic Community of West African States (ECOWAS) Protocol on the Fight against Corruption. - Noted gaps: - Failure to adequately criminalize corrupt behavior, in particular bribery in the private sector, remains an important pending reform. - Full compliance with UNCAC is necessary to guarantee future effectiveness and shift public perception. ### Institutional arrangements - Key institutions and legal bases: - CHRAJ and the Auditor-General (together with the National Audit Service – NAS) are creatures of the 1992 Constitution. - The Office of the Special Prosecutor (OSP), the Right to Information Commission (RTIC), the Internal Audit Agency, the Public Procurement Authority (PPA), the Financial Intelligence Centre (FIC) and the Economic and Organised Crime Office (EOCO) were created and are regulated by Acts of Parliament. - Annex 1 (not reproduced here) lists anti-corruption mandates; Annex 2 (not reproduced here) describes governing bodies and top officials. - Prosecutorial authority: - The Constitution provides that the Attorney General alone has the ultimate power to initiate and conduct criminal proceedings (Art. 88). - The Constitution provides (Art. 88(4)) that “all offences prosecuted in the name of the Republic of Ghana shall be at the suit of the Attorney-General or any other person authorized by him in accordance with any law”. - Executive Orders can grant a legal fiat to carry out prosecutions on behalf of the Attorney General; legal precedent exists (Appointment of Public Prosecutors Instrument No. 4 of 1976). - As a legal matter, all agencies with power to prosecute derive their power ultimately from the AG. - Roles and limits of CHRAJ: - CHRAJ consolidates anti-corruption agency, ombudsman, and human rights commission functions. - Empowered to investigate: (i) alleged corruption, abuse of power and misappropriation of public monies; (ii) conflicts of interest; (iii) failure to declare or false declarations of assets; (iv) breaches of whistleblower protections. - Mandated to investigate alleged non-compliance with the Code of Conduct for Public Officers (Articles 218(b) and 287(1)). - CHRAJ does not have prosecutorial power; its measures lack direct enforcement and must be executed through court proceedings (Article 287(2); sections 7(d) and (f) and 18 of the CHRAJ Act). - EOCO: - Established in 1993 as a specialized agency to monitor and investigate economic and organized crimes. - On the authority of the Attorney-General, EOCO can prosecute these offences to recover proceeds of crime. - EOCO Act grants extended powers/functions to deal with serious offences involving financial and economic loss to Ghana or any State entity in which Ghana had a financial interest. - OSP: - Enacted by the Office of the Special Prosecutor Act in 2018. - Mandated to investigate and prosecute specific cases of corruption committed by public officers, politicians and individuals in the private sector. - Appointment process for the Special Prosecutor requires initial nomination by the Attorney General, agreement by the President, and submission to Parliament for approval via vetting by the Parliamentary Appointments Committee. - The OSP Act defines “corruption or corruption-related offenses” in section 79. - The OSP’s operational Board is established under Section 6 of the Act; Board members are appointed by the President in accordance with Article 70 of the Constitution. - Section 13(3) referenced regarding parliamentary approval of Special and Deputy Prosecutors. ### Operational imperatives for the OSP - Rapid and steadfast implementation of OSP operations is critical to: - demonstrate commitment to confronting corruption - build momentum for reform - First-order priorities: - Ensure the OSP has the necessary independence to deliver on its mandate. - Ensure the OSP has sufficient resources for effective operation. - Appoint a vigorous and independent chief prosecutor supported by highly qualified and experienced staff. - Independence requirements highlighted: - OSP must not only have, but be seen to have, meaningful operational independence from the executive. - Financial autonomy, adequate powers and security of tenure are ways to strengthen OSP independence. - The OSP should create and publish operational policies and an internal review mechanism to ensure consistency and enable possible external review. ### Key shortcomings of the anti-corruption framework - Core governance weaknesses affecting efficiency and effectiveness: - fragmentation and overlapping mandates - weak independence - lack of financial autonomy - lack of effective legal powers and tools to investigate, sanction and enforce findings ### Fragmentation and overlapping mandates - Creation over time of multiple institutions with similar mandates has produced: - confusion and overlapping mandates - split funding streams - Specific overlaps and issues: - CHRAJ’s corruption investigation and prevention functions overlap with the OSP’s. - CHRAJ investigates “corruption” (an abstract concept not defined in the legal framework) while OSP investigates “corruption or corruption-related offenses” clearly defined in section 79 of the OSP Act. - Lack of protocols or criteria for transferring matters between CHRAJ and OSP creates potential duplication and legal uncertainty. - Effective coexistence of criminal and administrative/civil enforcement requires clear legal delineation of scope and jurisdiction. - CHRAJ performs corruption prevention activities without a clear legal basis, encroaching on OSP’s prevention mandate; the two agencies do not coordinate these activities. - CHRAJ was designated as Ghana’s corruption prevention authority for purposes of the review of implementation of UNCAC. - Asset declaration enforcement: - Responsibility for enforcing compliance with asset declaration filing is vested in CHRAJ, while the filing itself is done with the Auditor-General, fragmenting a key prevention tool. - The World Bank recommended the same agency that collects asset declaration forms should also be responsible for imposing regulatory sanctions for infractions. - Where regulatory violations may indicate corruption, more extensive examination and investigatory powers may be required and could be entrusted to CHRAJ. - Recommendation: - A clear division of responsibility among OSP, the Attorney General’s Office, EOCO, the police, and CHRAJ is important for future effectiveness and should be reflected in relevant budget allocations. ### Weak independence - Appointment powers and safeguards: - The office of the President holds considerable power and discretion over appointment of heads of most anti-corruption institutions. - In seven out of eight anti-corruption agencies, the President appoints board members and heads either freely or “in consultation with the Council of State.” - The Council of State’s advice and opinions are not binding and its members hold office only until the end of the President’s term. - Fit and proper criteria for candidates are weak or nonexistent; requirements reference qualities like “moral character and proven integrity” and “relevant expertise.” - There are no rules providing for transparent appointment procedures. - Security of tenure and removal safeguards: - Only the Special Prosecutor and Deputy, the Auditor-General, and CHRAJ’s Commissioner and Deputy Commissioners enjoy legally (or constitutionally) established tenure periods and may only be removed for cause through a procedure involving a formal investigation conducted by another independent body. - Board members of the OSP, NAS, and the boards and CEOs/directors-general of FIC, RTIC, IAA and PPA may be removed by presidential decision. - Undue discretion and possible arbitrary removals are especially concerning where boards hold operational or regulatory powers (e.g., PPA, NAS). - Parliamentary approval: - Introduction of parliamentary approval for Special and Deputy Prosecutors is positive but may be insufficient without additional safeguards, given that presidents have secured legislative majorities from their own parties. - OSP operational independence concerns: - The 2017 OSP Act allows the Special Prosecutor to initiate and conduct criminal proceedings without seeking AG approval in each case (reflecting Art. 88(4)). - The operational Board, appointed by the President, can impact day-to-day operations even if it cannot impact prosecutorial charging decisions. - The first Prosecutor resigned citing government interference; OSP was created to assuage concerns about executive interference. - Judicial obstacles have hampered OSP effectiveness in some cases. ### Insufficient financial autonomy - International standards (e.g., the Jakarta Principles on Anti-Corruption Agencies) call for: - anti-corruption agencies with corruption prevention and/or enforcement functions to receive a budgetary allocation over which they have full management and control - supreme audit institutions to have financial and managerial/administrative autonomy and the availability of appropriate human, material, and monetary resources - The report highlights the need for financial autonomy as a key element to enhance effectiveness and outcomes of anti-corruption institutions. *IMF Ghana - Technical Assistance Report* ### 35. In Ghana, anti-corruption agencies’ financial autonomy is not protected by the legal ### 35. In Ghana, anti-corruption agencies’ financial autonomy is not protected by the legal framework. ### Legal protections and institutional autonomy - Most laws governing anti-corruption agencies state, in a general manner, that they are “not subject to the direction and control of any other person or authority,” but only isolated legal provisions support aspects of financial and operational autonomy, while other provisions directly undermine it. - The PFM legal framework treats independent institutions, including anti-corruption institutions, the same as all other government ministries and agencies, granting the Executive—through the MoF—considerable power and influence over management and execution of human and financial resources. - In practice, agencies cannot hire their staff or make payments without the MoF’s “clearance” and, in some cases, require Public Service Commission authorization for hiring. - The Supreme Court (Brown v. Attorney-General (2010)) recognized protections over the financial autonomy of the NAS (and the Auditor-General), ruling that the NAS administrative expenses (including salaries, allowances, pensions and gratuities) are not subject to the Executive’s budget policy directives, nor to reductions to estimates by the MoF before submission to Parliament; only Parliament has authority in certain circumstances to reject fundamentally unreasonable estimates. - After the decision, the Audit Service Board issued regulations (Sections 44-50 of the Audit Service Regulations) providing a comprehensive framework to safeguard the financial autonomy of the NAS and Auditor-General, which can be seen as good practice but should be established through acts of parliament (primary law). ### Budgetary allocations, disbursements, and operational impact - From 2016-2023 agencies received an average of 51 percent of the funds appropriated for them each year by Parliament. - Government explanation: “almost all MDAs do not get the full release of the amounts budgeted.” - Specific example: after the OSP was created in 2017, reasonable budgetary allocations were made in 2018 and 2019, but the mission understands the actual sums allocated were not in fact disbursed to the Office. - Successive administrations have fallen short in providing adequate financial support to existing anti-corruption institutions, undermining operational independence. - Agencies themselves have failed to provide necessary transparency concerning their operations. ### Insufficient legal powers of CHRAJ and other agencies - CHRAJ may only initiate corruption or other ethics/integrity-related investigations upon a formal complaint; it cannot initiate investigations of its own accord. - CHRAJ’s decisions are not binding; they are “purely investigative and educational in nature.” It can issue recommendations but has no adjudicative or self-enforcement powers, requiring legal action in court to seek remedies. - CHRAJ’s anti-corruption mandate extends only to a private individual alleged to be involved in bribery or corruption involving public officials and under investigation by the Commission; the mandate excludes private sector corruption. - The Supreme Court’s interpretation constrains the effectiveness of CHRAJ’s functions and powers. ### Corruption prevention functions — conflicts of interest and asset declarations - No comprehensive conflicts of interest legal framework exists in Ghana: - Chapter 24 of the Constitution defines conflicts of interest very generally, prohibits appointment of a person in the service of a public corporation as Chairman of its governing body, and establishes obligation and some requirements for filing asset declarations. - Missing elements recommended by international standards include regulation of actual, potential and apparent conflicts of interest; incompatibilities; influence peddling; gifts; favoritism; nepotism; use of confidential information; and “revolving doors.” - There is no clear and proportionate sanctions regime and enforcement mechanisms are weak; disciplinary measures are weak and enforcement is not by independent bodies. - A Conduct of Public Officers Bill is currently being considered in Parliament with the aim of upgrading the conflicts of interest and asset declaration legal framework; authorities are committed to pursuing passage of the bill into law. - Asset declaration framework gaps: - Article 286 of the Constitution and the Public Office Holders (Declaration of Assets and Disqualification) Act require declarations by a list of high-ranking and mid-level officials (section 4 and Schedule II of the Act) but exclude assets beneficially owned by public officers’ close family members. - Periodicity: declarations upon taking and leaving office are required, but the 4-year cycle for updating declarations is described as “exceptionally long” and ineffective in detecting corruption given Ghana’s high corruption risks. - Filing and verification: declarations are filed with the Auditor-General but CHRAJ is responsible for verification and sanctioning; applicable sanctions are uncertain. - No legal obligation or power for the Auditor-General or any authority to verify declarations, access other agencies’ information and data for verification, or to share declared information with other accountability institutions. - Asset declarations of high-level officials are not made public and there is no legal basis or regulations for developing an electronic platform for administering asset declarations. - There is no publicly available data on levels of compliance; CHRAJ annually reports on number of cases it receives and resolves for failure to declare assets. ### Transparency and access to information - Right to Information Act (2019) enacted; RTIC did not initiate operations until late 2021 and secondary regulations have yet to be issued. - Institutional coverage is incomplete and exemptions to disclosure are broad: - Definition of “public institution” is vague; unclear inclusion of Legislature, Judiciary, state-owned enterprises and other autonomous bodies. - Some exceptions unreasonably broad, e.g., denying access to information prepared for submission to the President, Vice-President or Cabinet. - Act includes a broad definition of “State Secret” (section 84) and a general 30-year classification period without declassification procedures. - Inclusion of an overriding “public interest” disclosure provision (Section 17) is consistent with good practice. - Proactive transparency requirements are weak: - Obligations limited to making “available to the public general information on governance” (section 2) and publishing a manual containing specified institutional information and contact details. - Sanctions for not complying with RTIC decisions may be imposed on institutions but not on individuals, limiting dissuasive effect. - All regulations associated with implementation are issued by the Minister of Information in consultation with the RTIC’s Board; draft regulations are currently being prepared. ### Audit, surcharge powers, and recoveries - Auditor-General performs transparent and impactful external audits and has a clear mandate with several independence and financial autonomy safeguards. - Coordination with other anti-corruption institutions needs strengthening; NAS is developing memoranda of understanding but timeframes for signing and implementation are uncertain. No data on number of cases referred to OSP or systematic follow-up. - Surcharge authority and use: - Auditor-General has had authority to issue surcharges for disallowed expenditures since 1992 (Article 187 of the 1992 Constitution). - After a 2017 Supreme Court decision (Occupy Ghana v. Attorney-General) clarifying obligation to issue surcharges and recover amounts, 112 surcharges totaling GH¢511,211,239.04 were issued for FYs 2017-2018. - Only one other surcharge was issued for 2021 for GH¢617,120.35. - The actual recovered amount is uncertain; Auditor-General opened an “Auditor General’s Recoveries Account” at the Bank of Ghana in June 2022 and reported that, as of 30 September 2022, a total of GH¢1,282,733.90 has been recovered into the account. - Near-null use of surcharge power between 2019-2022 was attributed to the need to further investigate detected expenditure irregularities and admissibility issues of evidence in court. - The Supreme Court decision established it is mandatory for the Attorney-General to ensure surcharge recovery actions be taken and the PFM Act provides for preparation of an annual report, but no such reports have been issued and there is no public information to assess performance or identify binding constraints. *IMF Ghana - Technical Assistance Report* ### 47. The government is taking steps to strengthen follow-up of audit recommendations, but ### 47. The government is taking steps to strengthen follow-up of audit recommendations, but ### Audit follow-up framework and current practice - The MoF issued the “Audit Recommendations Implementation and Follow-Up Instructions for Public Institutions”, providing guidance and procedural clarity for tracking and monitoring implementation of recommendations by both internal and external auditors. - Public institutions are required to prepare and forward to the MoF an annual statement on the status of implementation, but this document is not made public. (Section 88 PFM Act) - The “Status of Implementation Review Committee”, within the MoF, will oversee and report on audit follow-up activities. - The Minister of Finance is empowered to issue surcharges. (Section 97 PFM Act) - A PFM Compliance Desk will be operational in 2024 to assist with enforcement of surcharges and compliance. ### Findings on transparency and enforcement - Enforcement mechanisms exist (surcharge powers), but transparency is limited because annual implementation statements are not published. - Publication and clearer enforcement procedures are needed to make audit recommendations effective and accountable. - The Auditor-General’s capacity to document, enforce and collect surcharges faces legal and operational challenges that require clarifying reporting and action plans. ### Whistleblower protection - Ghana has a legal framework for whistleblower protection: original Act in 2006, and the Whistleblower (Amendment) Bill 2023. - The Act enables public-interest disclosure of unlawful or corrupt conduct and provides protection from reprisals. CHRAJ is responsible for implementing the whistleblower provisions. - Public sentiment: Afrobarometer Round 9 (2023) reports that 68.8 percent of Ghanaian citizens say ordinary people “risk retaliation or other negative consequences” if they report corruption. (This represents a 10percent increase over Round 8 (2020-21) responses.) - Public and civil service employees often feel compelled to stay silent or participate in corrupt acts for fear of being transferred to a less desirable post (reference to research by Sarah Brierley). ### Witness protection - The 2018 Witness Protection Act is comprehensive in substantive terms, but implementation effectiveness is unclear. - Recommendations to achieve the Act’s objectives: - Fully operationalize the Act. - Fully and independently fund the Witness Protection Agency. - Ensure prosecutors, judges, court staff and defense attorneys are familiar with the Act’s provisions to prevent unnecessary contesting or rejection of protective measures. ### Investigation, prosecution and sanctioning of corruption (OSP) - Under the 2017 Act, the OSP has adequate legal powers to gather intelligence, investigate and prosecute corruption-related criminality, but lacks sufficient resources, dedicated personnel and equipment. - Resourcing shortfalls include: significant staff shortages, lack of training in some respects, and lack of reliable access to modern sophisticated equipment and analytical tools. - Equality of arms concern: defendants in large corruption cases often have powerful defense teams with modern equipment and methods; OSP’s limited resources may determine case outcomes. - The OSP must be resourced sufficiently to access investigative and analytical equipment and training to investigate referred cases effectively. ### OSP performance and transparency gaps - Limited data is provided on the OSP website; unclear proportions of cases that are considered, investigated, and prosecuted, and how frequently the website is updated. - Successful high-level prosecutions are not common; complexity and sophistication of top-ranking suspects make evidence collection difficult and cases can take many years even in advanced jurisdictions. - Possible prioritization bias: available information suggests the majority of OSP investigations and prosecutions focus on defendants who do not occupy (or did not previously occupy) senior government positions. - Lack of public policy on case prioritization creates speculation; the OSP should establish and publish principles for case selection to ensure consistency and transparency. ### Analysis gap and recommended Charging Code - There is no clear and consistent policy at the OSP to determine when a case meets legal and evidential burdens to proceed to charge or is likely to result in conviction; a policy would ensure consistency and prevent premature prosecution. - Recommendation: create and implement a Charging Code for OSP Prosecutors consisting of a two-stage process: - Evidential stage: "Is there sufficient reliable and credible evidence to provide a realistic prospect of conviction?"—must consider likely defense arguments; a case failing this stage must not proceed. - Public interest stage: consider seven factors: a) How serious is the offense committed? b) What is the level of culpability of the suspect? c) What are the circumstances of, and harm caused to, the victim? d) What was the suspect’s age and maturity at the time of the offense? e) What is the impact on the community? f) Is prosecution a proportionate response? g) Do sources (e.g., informants) require protecting? - Operational requirements for OSP case management: 1) Record detailed reasons on the file jacket or within the case management system for cases not proceeding to charge, withdrawn, dismissed, or unsuccessful at trial. 2) Provide dedicated staff to build a back catalogue of data from concluded cases and appeals to capture the above data. 3) Analyze captured data for trends and patterns to reveal shortcomings in investigative or prosecutorial approaches and identify remedies (facilities, training, or consistency of approach). - Improve transparency by publishing publicly available principles and guidelines that shape OSP casework operations and decision-making without revealing sensitive case-related information. ### Mutual Legal Assistance and extradition - Ghana has a Mutual Legal Assistance framework: the Mutual Legal Assistance Act, two regional treaties concluded, but Ghana can provide assistance on the basis of an arrangement without a treaty. - The Ministry of Justice is the central authority for MLA requests; framework requires an application to Court to obtain permission to provide information to requesting States. - The Act contains detailed provisions across mutual legal assistance matters, but provisions concerning extradition in the context of corruption proceedings need to be strengthened. ### Key anticorruption recommendations (selected highlights from Table 2) - Consolidate and strengthen CHRAJ as Ghana’s central anti-corruption agency with clearer, focused mandate and powers to coordinate NACAP, lead prevention, investigate and sanction conflicts of interest, verify asset declarations, and investigate whistleblower breaches. Responsible: MoJ, CHRAJ, Parliament. Timeframe: ST. - Improve independence and financial autonomy of anti-corruption agencies; reform appointment and removal procedures; establish a dedicated PFM framework for independent anti-corruption agencies; ensure agencies receive full budgetary appropriations and can execute budgets without MoF approval. Responsible: Office of the President, MoJ, CHRAJ, Parliament, MoF. Timeframe: ST. - Enact Right to Information regulations and amend the Right to Information Act to expand institutional coverage (including SOEs, Judiciary, Parliament), remove overly broad exceptions, and introduce proactive transparency requirements. Responsible: RTIC, MoJ, Parliament. Timeframe: ST/MT. - Enact a Conduct of Public Officers Act to enhance conflicts of interest framework. Responsible: MoJ, CHRAJ, Parliament. Timeframe: ST. - Strengthen asset declaration system: make high-level asset declaration content public; require verification and sanctions for irregularities; include beneficial ownership by close family members; change filing frequency to every two years (instead of every four years); annually publish non-compliant or sanctioned officials; establish legal basis for an electronic asset declarations system. Responsible: MoJ, CHRAJ, Auditor-General, Parliament. Timeframe: ST. - Enhance internal and external audit roles: publish report on challenges faced by Auditor-General and Attorney-General for documentation, enforcement and collection of surcharges and a time-bound action plan; publish rules governing issuance of surcharges; amend Audit Service Act to allow Auditor-General to directly collect surcharged amounts in court without relying on Attorney-General; regularly publish institutions’ annual statements on status of implementation of audit recommendations (internal/external audit reports, Parliament decisions, Auditor-General’s Management letter pursuant to section 88 of the PFM Act). Responsible: Auditor-General, Attorney-General, MoJ, MoF. Timeframe: ST/MT. - Develop a National Anticorruption Strategy for 2025-2029 with inclusive consultation, clear objectives, responsibilities, management and oversight, and public reporting requirements. Responsible: MoJ (function transferred to CHRAJ). Timeframe: MT. - Operationalize and strengthen the witness protection scheme in accordance with Article 32 of UNCAC. Responsible: Ministry of Justice. Timeframe: MT. - Establish a criminal offence of bribery in the private sector in accordance with Article 21 of UNCAC. Responsible: Ministry of Justice. Timeframe: MT. - Provide for extradition in corruption-related offending in accordance with Article 44 of UNCAC. Responsible: Ministry of Justice. Timeframe: MT. - Draft and commit relevant parties to a memorandum of understanding on investigation and prosecution of corruption-related offences. Responsible: Ministry of Justice. Timeframe: MT. - Improve transparency of OSP operations through publicly available guidelines and principles shaping OSP decision-making. Responsible: OSP. Timeframe: MT. *IMF Ghana - Technical Assistance Report* ### 62. Ghana’s National Risk Assessment (NRA), ### Ghana’s National Risk Assessment (NRA) ### ML/TF risk environment and NRA findings - The NRA, published in August 2016, evaluated money laundering/terrorism financing (ML/TF) risks as high. - Factors increasing exposure: Ghana’s geographical location, predominantly cash-based economy, large informal sector, and porous land borders. - Most prevalent predicate crimes identified: fraud, theft, robbery, tax evasion, corruption, and drug trafficking. - The ML threat assessments of these crimes were rated as high. - Other predicate offences posing medium ML threats: human trafficking, migrant smuggling, organized crime, arms trafficking, counterfeiting of currency, counterfeiting and piracy of products, environmental crime, and forgery (NRA Annex 4). - Key sectors exposed to significant ML/TF risk: banks, bureaux de change, casinos, real estate developers/agents, and non-profit organizations. ### 2017 Mutual Evaluation (GIABA) — technical compliance and effectiveness - The 2017 mutual evaluation (ME) by GIABA assessed Ghana against FATF’s 40 Recommendations. - Ghana was rated non-compliant (NC) or partially compliant (PC) on eight of the FATF’s 40 Recommendations. - Ghana was rated low or moderate in terms of level of effectiveness on 10 of the 11 immediate outcomes when measured against FATF’s effectiveness methodology. - Ratings for Effectiveness (Immediate Outcomes): - Immediate Outcome 1 Risk and Coordination: Moderate Level of effectiveness - Immediate Outcome 2 International Cooperation: Substantial Level of effectiveness - Immediate Outcome 3 Supervision: Moderate Level of effectivess - Immediate Outcome 4 Preventive Measures: Low Level of effectiveness - Immediate Outcome 5 Legal Persons and Arrangements: Low Level of effectiveness - Immediate Outcome 6 Financial intelligence Units (FIU): Moderate Level of effectiveness - Immediate Outcome 7 Investigations: Moderate Level of effectiveness - Immediate Outcome 8 Confiscation: Low Level of effectiveness - Immediate Outcome 9 TF Investigation: Low Level of effectivess - Immediate Outcome 10 NPOs: Low Level of effectiveness - Immediate Outcome 11 Proliferation Financing: Low Level of effectiveness - Source: GIABA Website ### FATF ICRG engagement and technical compliance progress - Due to poor effectiveness ratings, Ghana was referred for enhanced scrutiny under FATF’s International Cooperation Review Group (ICRG). - FATF and Ghana agreed an action plan in October 2018. - Ghana addressed most strategic weaknesses and was removed from FATF ICRG scrutiny in June 2021. - Technical compliance improvements (re-ratings by GIABA): - Recommendation 16 (wire transfers): from partially compliant (PC) to largely compliant (LC) - Recommendation 17 (reliance on third parties): from PC to LC - Recommendation 33 (statistics): from PC to LC - Recommendation 35 (sanctions): from PC to compliant (C) - Other technical deficiencies remain work in progress. ### Legal and institutional reforms - Key legal reforms enacted: - Anti-Money Laundering Act of 2020 - Real Estate Agency Act of 2020 - Companies Act, 2019 with provisions on capturing beneficial ownership information - Institutional reform examples: - Office of Special Prosecutor (OSP) established in 2018 as a specialized independent anti-corruption institute (pursuant to United Nations Convention Against Corruption). - OSP is not currently adequately resourced in manpower and financial resources. - Number of alleged corruption-related cases disseminated by the FIC to law enforcement agencies is low relative to perceived corruption cases. ### Law enforcement and FIC activity — selected statistics - Table 4. Law Enforcement Agencies (LEA) Requests (Source: FIC) - LEAS 2019 2020 2021 2022 - NIB (National Investigation Bureau) 12 18 22 37 - CID (Police – Criminal Investigation Department) 114 89 66 57 - EOCO (Economic and Organised Crime Office) 50 73 35 122 - GRA (Ghana Revenue Authority) 9 43 112 32 - NACOC (Narcotics Control Commission) 1 4 1 2 - OSP (Office of Special prosecutor) 0 2 0 3 - NSCS (National Security Council Secretariat) 4 3 13 42 - OTHERS 0 26 10 9 - TOTAL 190 258 259 304 - Table 5. Intelligence Reports (IR) Disseminated to LEAs (Source: FIC) - 2019 2020 2021 2022 - IR to LEAs 174 302 190 72 - FIC access and capabilities: - The FIC has been granted direct access to (nearly) all public databases, greatly enhancing its analysis function. - The FIC does not have access to the National Identification Authority (NIA); this is under review. - The FIC is a member of EGMONT. ### AML/CFT supervisors — capacity and activity - General observations: - Financial sector supervisory authorities implement measures to identify and verify beneficial owners of FIs and are autonomous from interference. - The financial sector is generally subject to risk sensitive AML/CFT supervision. - Regulatory authorities have a wide range of administrative sanctions and remedial measures, but sanctions are rarely applied. - Supervisory bodies remain significantly understaffed, though AML/CFT supervision activities have been enhanced. - Specific supervisors: - Bank of Ghana (BoG): - Increased AML Unit staff from 6 to 17. - Introducing supervision technology (still being tested). - Responsible for AML/CFT supervision of approximately 580 financial institutions. - Unit remains significantly understaffed. - National Insurance Commission (NIC): - Conducting risk-based offsite and onsite AML supervision of their 18 life insurance companies. - Staff of 3. - Securities and Exchange Commission (SEC): - Increased AML Unit staff from 1 to 4. - Unit responsible for supervision of 126 institutions vulnerable to ML/TF risks. - Adopts risk-based approach and is conducting 10 onsite inspections every quarter. - Most offsite AML/CFT supervisory activities are done manually. - Self-Regulatory Bodies (SRBs) for DNFBPs: - Many SRBs (Institute of Chartered Accountants of Ghana, the General Legal Counsel, and other DNFBP supervisors) have just commenced AML/CFT supervisory activities. ### PEPs (Politically Exposed Persons) - All accountable institutions are required to identify, maintain records, and make periodic reports of PEP customers to the FIC. - Most AIs, except DNFBPs, implement preventive measures relating to PEPs, but improvement is required to ensure effective compliance. - Most FIs have measures for PEPs: customer onboarding processes, ongoing monitoring of relationships and transactions. - Some FIs have developed internal PEP lists and file reports on PEPs to the FIC; some subscribe to commercial databases. - Major challenges: - Identification of PEPs’ associates and close relatives across all FIs due to absence of a mechanism to enhance linkages of some relationships. - Some banks have challenges developing a PEP database that significantly covers all categories of PEPs. ### STR reporting and sectoral contributions - The FIC is the central agency for receipt, analysis, and dissemination of STRs and other required reports (cash transaction reports and wire transfer reports). - STRs from the large informal sector (DNFBPs) are few to none. - Table 6. STRs Distribution by Sectors (Source: FIC) - Year 2019 2020 2021 2022 - Banks 1214 3512 2942 2886 - NBFIs 4 0 23 35 - Capital Market Operators 1 0 1 0 - Insurance Companies 2 0 1 1 - DNFBPs 2 3 0 21 - Others 7 9 3 3 - TOTAL 1230 3524 2973 2946 ### Information exchange — foreign (selected) - Table 7: Information Exchange - Foreign - Year 2019 2020 2021 2022 - Spontaneous dissemination (SDs) 9 7 1 1 - Requested for information (RFI) 21 27 18 18 ### Key next steps and policy recommendations - a. Implement preventive measures including STRs: - Increase awareness of all AML/CFT stakeholders and implementation of all the FATF preventive measures. - Address the low STR submissions from DNFBPs to uncover corruption and trigger investigations. - b. Strengthen international cooperation: - Establish and implement effective laws and mechanisms for mutual legal assistance (MLA), extradition, and wider international cooperation. - Exchange beneficial ownership information of legal persons and arrangements; this is not yet fully established in Ghana. - c. Increase LEAs’ use of financial intelligence: - LEAs need to significantly increase use of financial intelligence to identify corruption and ML cases. - Convictions for corruption and confiscation of proceeds remain very low. - Authorities seldom prosecute standalone ML offences beyond self-laundering; weak DNFBP regulatory framework limits investigations of third-party facilitators. - Authorities do not actively pursue confiscation as a policy objective; capacity for financial investigations is limited. - Ghana’s legal framework prescribes management and disposal of assets by the Attorney General, but in practice assets are managed by investigating competent authorities that may lack capacity. - Challenges related to registration of Land collaterals. - d. Improve consistency at Customs Division of the GRA: - The GRA’s obligation to act on cross-border transportation of currency and bearer negotiable instruments needs greater consistency across entry and exit points to address low levels of confiscation. - e. Address beneficial ownership (BO) information challenges: - Registrar of companies should collaborate with financial institutions, DNFBPs, and LEAs to obtain and maintain accurate BO information. - Although the new Companies Act provides sanctions for legal persons that do not maintain or provide BO information, no legal entity has been sanctioned so far. - Sanctioning non-complying legal persons may strengthen the BO regime. - f. Align supervisors’ risk assessments with NRA outcomes: - AML/CFT supervisors’ sectoral and institutional risk assessments need to be informed by the NRA. - Supervision tools developed before the NRA must be fine-tuned to incorporate NRA findings (e.g., bribery and corruption identified in the 2018 NRA are not reflected in supervisory risk assessment tools). - Supervisors are revising risk assessment tools to include national identified risks. - g. Reconsider FIC Board mandate to ensure operational independence: - Section 9 of the AML Act establishes a governing Board whose composition and mandate raise concerns about FIC independence. - The Board’s role to “ensure implementation of policies necessary for the achievement of the objects of the Centre” and to ensure “efficient and effective performance” may allow decisions based on members’ organizational interests. - Section 11(1) states “A member of the Board has the same fiduciary relationship with the Centre and the same duty to act in good faith as a director of a company incorporated under the Companies Act, 2019 (Act 992).” This may compromise operational independence. - Recommendation: amend the AML Act to restrict the Board’s role to providing strategic advice and remove its ability to make decisions that could compromise the FIU’s operational independence. - h. Improve accuracy of data used to assess corruption risk in the national ML/TF risk assessment: - Investigations are fragmented across OSP, CID, and CHRAJ, making accurate statistics on investigations, prosecutions, and convictions difficult to gather. - Different agencies use different terminology for corruption charges (e.g., Police may charge theft rather than embezzlement). - i. Establish governing rules for trusts and BO access: - Authorities have not established legal or institutional framework to manage risks related to trusts, which remain governed by common law. - Ghana should establish a mechanism enabling AML/CFT and anti-corruption stakeholders to access accurate and up-to-date BO information. *IMF Ghana - Technical Assistance Report* ### 74. The mission has identified four areas of focus relating to governance of public financial ### The mission has identified four areas of focus relating to governance of public financial management in Ghana ### Budget Credibility and Expenditure Arrears - Core finding: Ghana has a recurrent problem of weak budget credibility, driving macro-critical governance weaknesses and expenditure arrears. - Revenue performance vs budget (GH¢ ‘000): - Tax revenue shortfall against budget by year: 2018: 459,314; 2019: (369,218); 2020: 4,799,932; 2021: (698,257); Cumulative: 4,191,772. - Non-tax revenue shortfall against budget by year: 2018: 1,523,530; 2019: 2,002,770; 2020: 6,467,028; 2021: 2,393,362; Cumulative: 12,386,690. - Total shortfall against budget by year: 2018: 1,982,844; 2019: 1,633,553; 2020: 11,266,961; 2021: 1,695,105; Cumulative: 16,578,462. - Additional numeric context (from analysis cited): - The cumulative underperformance of non-tax revenue was over GH¢12 bn over 2018-2021. - The cumulative underperformance of total tax revenue against the Budget profile was over GH¢16 bn between 2018 and 2021. - Arrears magnitude and persistence: - Current stock of arrears is equivalent to 6.3 percent of GDP in 2023. - Arrears accumulation is longstanding despite PFM reforms including a stronger PFM Act and GIFMIS. - Governance implications: - MDAs frequently commit in excess of available resources; over-commitment persists despite predictable funding shortfalls. - Expenditure arrears introduce administrative discretion into PFM, creating corruption vulnerabilities where officials prioritize payments and may be susceptible to bribes. - Arrears strategy and implementation: - An Arrears Clearance and Prevention Strategy was prepared in summer 2023 (not published at time of mission). - Strategy measures include: more rigorous application of PFM sanctions; tighter commitment controls; full alignment of quarterly allotments with cash forecasts; more comprehensive medium-term budgeting for investment projects; standardized contracting; extension of GIFMIS coverage. - Implementation status at mission time: Arrears Clearance Committee formed but had yet to meet; Terms of Reference not agreed; Ghana Audit Service had not yet checked all arrears prior to payment as planned; some progress on cash forecasting. - Recommendation (from mission analysis): - Urgent and full implementation of the Arrears Clearance and Prevention Strategy is imperative. - Major reforms of fiscal institutions and PFM processes are required to improve budget credibility, governance, and reduce corruption risk. ### Public Procurement - International context: Public procurement is highly vulnerable to corruption due to scale, complexity, close public–private interactions, and multiple stakeholders. - Procurement irregularities and direct financial losses (GH₵): - 2018: 6,823,337 - 2019: 20,604,593 - 2020: 10,667,174 - 2021: 511,569 - 2022: 14,254,724 - Total 2018–22: 52,861,397 - Major shortcomings observed: - Direct financial losses documented by successive Ghana Audit Service reports, including payments for goods/services not received and payments without supporting documents. - Frequent use of non-competitive procedures without appropriate PPA approval. - Large share of public expenditure executed through sole-source or restricted tendering, undermining value for money. - Extent of non-competitive procurement: - Combined value of single-source and restricted tendering has averaged over 45 percent of total procurement by value since 2011 and exceeded 60 percent on two occasions (2011–2020 dataset referenced). - Justification and approval practices: - Legal derogations exist (Public Procurement Act and Regulations) with six grounds for exemption, but in practice many derogations are weakly evidenced and often ratified ex-post without legal basis. - Examples from PPA annual report (high-level review) show single-source use for items such as blank certificates, vehicles, law firms, library books, sport complex construction, academic gown services, examination past papers, audits, data entry and printing, laptops. The mission notes difficulty seeing how these fall within statutory derogations. - Exemptions for publicly owned banks and SOEs under section 15 leave exempted entities without transparency or competitive procurement obligations and without a full public list of exemptions. - Approval rates (2020 PPA data): - Restricted tendering requests approved: 98 percent. - Sole source tendering requests approved: 96 percent. - Note: Some of these approvals occurred in January and February 2020, prior to Ghana’s first COVID-19 case. - Data transparency and analytics: - Latest published PPA report is for 2016; public disclosure of procurement trends and irregularities is limited. - PPA does not collect, analyze or publish number of bids per procurement, nor systematically share data with other accountability institutions. - Digital procurement portal (GhanEPS): - Functionality includes user registration, tender notification, tender preparation and submission, online tender evaluation, contract awarding, catalogue and framework agreement management, auctions and payments. - Less than 1 percent of procurement took place through GhanEPS in 2022 despite majority of procuring entities being trained. - PPA issued a recent circular making GhanEPS mandatory; take-up should be closely monitored and off-system procurement met with stiff sanctions. - Planned integration with GIFMIS should be prioritized. - Procurement-related corruption risks identified: - Over-use of direct award through sole sourcing exploitable by bidders or awarding officials. - Restricted bidding to a small set of operators risks price-fixing or cartel behavior. - Documented procurement irregularities (payment for undelivered goods/services) reflect governance failings. ### Governance of the Statutory Funds - Fiscal significance: - In 2023, 17.5 percent of public revenue was budgeted for allocation to a set of earmarked, statutory funds. - There are almost 20 separate Funds; around 40 percent of total earmarked expenditure is accounted for by four Funds. - In 2023, about 70 percent of the total budget of the Funds was for public investment. - Four largest Funds and Budget 2023 allocations: - District Assemblies Common Fund (DACF, Budget 2023, GH¢4.5 bn) — established 1993 to support municipal and district assemblies. - Health Fund (Budget 2023, GH¢2.5 bn) — established 2003 to support the Ghana National Health Insurance Scheme. - Ghana Educational Trust Fund (GETFund, Budget 2023 GH¢1.87 bn) — established 2000 to fund educational infrastructure and scholarships. - Road Fund (Budget 2023: GH¢1 bn) — established 1985 for maintenance, periodic maintenance and rehabilitation of public roads and support to Metropolitan, Municipal and District Assemblies for road functions. - Governance issues linked to budget credibility: - Funds’ planned budgets determined by formula in proportion to budgeted national revenue; revenue shortfalls lead to direct shortfalls in Fund allocations. - Allocations are not released by MoF in line with original timeframe or levels set out in the Budget. - Specific governance weaknesses in the largest Funds: - Poor transparency and procedures for use of funds. - Absence of appropriate accountability structures. - Absence of competitive procurement and unclear decision-making structures. - Expenditure arrears and poor value for money in investment spending. - Successive audits have highlighted persistent governance and management irregularities that remain unaddressed. - Audit findings and financial impact: - Under DACF, irregularities include unaccounted-for funds, misapplication of funds, breaches of procurement protocols, payment for services not supplied, abandoned and delayed projects, and completed projects not being used. - In the five-year period 2018-2022, audits uncovered a direct cost of irregularities of over GH¢ 440 million. *Source: IMF Ghana - Technical Assistance Report* ### 93. The statutory funds are principal contributors to capital project abandonment. Audits of ### The statutory funds are principal contributors to capital project abandonment ### Statutory funds and project non-completion - Audits of DACF have shown project delay and non-completion as persistent problems. Similar problems have arisen with GETFund and the Roads Fund. - Academic research: "one in three projects commenced by local governments in Ghana are never finished, accounting for 20 percent of available investment spending." - Governance problems are therefore leading to severe erosion of value for money. ### DACF: structure, governance weaknesses, and specific failures - Constitution provides for 5% of government revenue to be transferred to DACF. - Funding is allocated to 261 Districts in line with a formula approved by Parliament and Guidelines from MoF and MLGRD. - Shortfalls against budget and delays in release of funds present a governance weakness and undermine DACF budget credibility. - Funding disbursements to Districts are delayed and/or fall short of plans as a result of poor budget credibility and delayed release of funds by MoF. - Expenditure monitoring and control under DACF are inadequate: - Each assembly is required to provide a paper-based monthly monitoring report to the DACF Secretariat; the 261 reports are manually combined to inform a quarterly progress report. - This labor-intensive process has not resolved enduring problems with project delay and abandonment. - Inadequate commitment controls have contributed to governance shortcomings; the DACF Secretariat takes a passive role and general MoF commitment controls are inadequate. - Irregular governance practices under DACF: - Districts are party to contracts for service provision (including fumigation and sanitation), but payment is made by DACF Secretariat and deducted from Assemblies’ allocations without the requirement of certification that the services were actually provided. - Contracts were directly awarded to a service provider without a competitive procurement process. - Audit report example (2022): the contractor failed to supply 42 trucks and 157 containers or replace 34 broken-down trucks and 109 damaged containers. ### GETFund and Road Fund governance vulnerabilities - GETFund: - The “MPs Emergency Projects and Monitoring” allocation allows every member of parliament to allocate GH₵ 100,000 per annum to undertake projects in their constituency; this gives each MP total discretion over what projects to fund. - There are no documented procedures for the list of eligible expenditure or processes for prioritizing among competing uses of the funds. - In 2023 each MP received GH₵ 45,000 to “monitor” expenditure in this budget line; MPs are not required to report on the results of this monitoring and expenses incurred are not required to be vouched for—the full sum is paid directly to the MPs. - This level of local discretion, unregulated decision-making processes and absence of controls and transparency represents major governance weaknesses. - Road Fund: - The Road Fund has a number of corruption vulnerabilities and governance weaknesses, including fundamentally ad hoc project monitoring, a high rate of project non-completion and accumulated expenditure arrears. - The case for maintaining the Road Fund as a discrete entity, separate from the Ministry, does not stand up. ### Public investment management: systemic shortcomings and corruption risk - Public investment management is highly vulnerable to corruption risk, with particular implications for low-income countries where infrastructure investment represents a higher share of GDP. - Identified shortcomings in Ghana’s public investment management: - Absence of adequate prioritization of projects. - Failure to protect funding for approved projects over the life cycle. - Emergence of expenditure arrears. - Major delay and abandonment of projects. - Delivery of poor quality or un-needed assets. - Consequences and feedback effects: - Capital investment arrears lead to corruption vulnerabilities through discrimination in creditor payments and perception of corruption. - Potential contractors bid up contract prices to reflect a risk premium for non-payment or delayed payment, reducing value for money and increasing public cost. - Weaknesses interact over the investment life cycle (non-prioritization, non-competitive procurement, lack of multi-annual budgeting, high abandonment rates, sub-standard assets), producing loss of efficiency and heightened corruption risk. - Specific PIM-related points: - The Public Investment and Assets Division of the MoF is leading reform initiatives, including the development of the Consolidated Bank of Investment Projects to assist portfolio management and improve budget credibility and control. - Full implementation of the PIM Regulations is a priority; Article 11 mandates that no new projects be commenced without sufficient fiscal space to complete existing projects and non-compliance must be met with sanctions as provided in the Act. ### SOE public investment management weaknesses (Box 2) - COCOBOD / COCOROADS portfolio evidence: - Failure to prioritize projects and align project selection with funding availability. - Poor costing of projects leading to overruns ranging from 5 percent to 100 percent of initial estimate. - Use of single source, non-competitive process for 87 percent of projects. - Major weaknesses in monitoring and contract management. - Energy sector example: - The Electricity Company of Ghana (ECG) entered into 50 contracts for electricity meters to the value of over US$140 million without adhering to the Public Procurement Act. - Weaknesses in project budgeting were evident. ### Governance and organizational weaknesses at GRA (context for revenue administration) - Key governance issues limiting GRA performance and independence: - Under the GRA Act, the President appoints the Board of the GRA and its Chair, the Commissioner General (CG) and, in principle, all GRA staff—this exposes GRA to possible political influence and delays. - Section 17 of the GRA Act limits the GRA to three divisions, requiring parliamentary action to establish others—this creates rigidity and slows alignment of structure with strategy. - The current framework has resulted in delayed decision making, weak accountability for results, limited merit-based promotions, and many managers in acting positions. - Box 3: Major weaknesses in the GRA’s current governance framework: - During the mission, all members of the executive management did not have valid employment contracts and it was unclear when they will be issued. - Over 80 percent of the 528-management staff were due to retire within 10 years. - Many managers were in acting positions; turnover triggered by retirement was so high that little skill or experience is gained in the new acting positions. - Performance management arrangements were partly in place; issues reportedly caused by trade union resistance and delayed implementation. - The CG’s performance contract is with the Minister and not with the Board; it is not clear if the CG has a performance contract with each of the commissioners. - Promotions are still largely based on the length of time in the position and not by demonstrated performance. - There is lack of clarity on the relationship between the President, Minister, Board and the CG in the GRA governance framework. ### Recommendations on PFM (selected items from Table 10) - Budget Credibility and Expenditure Arrears 1. Improve budget credibility - Reconstitute a fiscal council to improve the quality of information, transparency and accuracy of budget forecasts - Establish appropriate fiscal rules to guide credible budget formulation - Initiate short-term measures to improve the accuracy of forecasts - Responsible: Ministry of Finance; Timeframe: ST 2. Expenditure Arrears Clearance - Publish the criteria for sequencing and prioritization of the payment of existing expenditure arrears - Expedite the review of outstanding claims - Responsible: Ministry of Finance, Ghana Audit Service; Timeframe: ST 3. Expenditure Arrears Prevention - Urgently implement all actions in the Arrears Prevention Strategy - Responsible: Ministry of Finance; Timeframe: ST - Public Procurement 4. Ensure public procurement is open and competitive to the maximum extent possible - Adopt new internal guidelines to apply more stringent interpretation of exemption conditions for sole source and restricted tendering - Progressively increase the share of public procurement by value being tendered competitively - Conduct all public procurement through GhanaEPS as a matter of course - Require use of GhanaEPS as a condition of release of funds for procured goods and services - Fully integrate GhanaEPS and GIFMIS - Responsible: Public Procurement Authority; Timeframe: ST / ST/MT - Statutory Funds Governance 5. Address governance shortcomings and corruption vulnerabilities in the Statutory Funds - In implementing the Strategy for Streamlining the Statutory Funds, ensure that: - Public Procurement processes are followed in full - Expenditure is adequately monitored and reported on - Expenditure is fully vouched and accounted for - Responsible: Ministry of Finance, Line Ministries, Fund Secretariats; Timeframe: MT - Public Investment Management 6. Improve the quality of investment project appraisal, selection and budgeting - As a matter of urgency, ensure full implementation of the PIM Regulations - Conduct quarterly monitoring of compliance with PIM Regulations by MDAs - Responsible: Ministry of Finance; Timeframe: ST *IMF Ghana - Technical Assistance Report* ### 111. The departures from good governance and administrative practice identified in the ### Departures from good governance and administrative practice identified in the GRA’s governance framework and practices ### Governance shortcomings and transformation impediments - The departures from good governance and administrative practice identified in the GRA’s governance framework and practices impede its transformation agenda. - Shortcomings mainly result from the conservative approach to establishing the GRA, particularly merging four existing institutions. - The formulation of the MTRS is an opportune time to holistically review all revenue laws and align them with modern standards; the authorities have committed to a comprehensive reform and have developed and published a medium-term revenue strategy (MTRS). ### Tax law risks, exemptions, and specific tax expenditures - Major revenue risk: breadth of discretion in application/enforcement of tax and other laws relating to tax liability; discretionary tax exemptions and other concessions could largely undermine increased revenues from MTRS measures. - The Exemptions Act is intended to limit revenue risk posed by exemptions; as noted in FAD September 2022, while the Exemptions Act strengthens governance and transparency relating to exemptions, no data was available to demonstrate that it has yet reduced the number and impact of tax exemptions. - VAT relief purchase orders (VRPO): - A total of GHS 1.1 billion was issued in 2022 (7 percent increase from 2021). - GHS 1.231 is projected to be issued by end 2023 (12 percent increase from 2022). - Authorities committed to eliminating VRPOs under the MTRS to eliminate this tax expenditure and close concomitant vulnerabilities to corruption. - Recommendation: GRA should take an inventory of discretionary powers from all revenue laws and develop—and publish—guidelines for their transparent and consistent application (Annex 6 summarizes major discretionary powers provided to the CG and revenue officers). - Tax treaties: prepare a formal Tax Treaty Policy to ensure good practice in negotiations, choice of treaty partners, and negotiation process to protect against negotiation of high-risk treaties. ### Board governance issues and clarity of roles - Need for clarity on respective roles of the Board, the Minister, and the Commissioner General (CG); overall effectiveness of the GRA depends on clarity of these roles. - Current issues: - The Act gives the Minister powers (e.g., directs the GRA on any function in relation to revenue, endorses and submits the annual budget to Parliament, oversees the Board) but is silent on the Minister’s oversight of the CG for administration and enforcement of the revenue laws. - CG has dual accountability: to the Minister for administration and enforcement of revenue laws and to the Board for administration and management of the GRA; this duality should be made explicit through regulation. - The GRA Act is silent on confidentiality of taxpayer information and prohibition of Board access to such information; good practice is to restrict access to officers who require information for their role in administration and enforcement. - The GRA may wish to consider a provision that completely prohibits Board access to confidential taxpayer information to strengthen credibility. - Section 5(2) of the GRA Act requires the Board to make recommendations to the Minister on tax policy, legislation, reform, treaties, exemptions, and concessions—creating a potential conflict of interest for the Board and exposing Board members, including private sector members, to sensitive government deliberations. - Recommendations: - Develop a Board Charter to: define inner workings (meetings, quorum, committees); establish guardrails on the Board’s reach; highlight oversight role in HR and other management functions; direct how information is shared and briefed; identify issues where the Board decides, where it needs information to drive strategy, and where it should not be involved. - Board should, at a minimum, meet annually with the Minister; consider an annual performance agreement between the Board and the Minister. - CG’s performance contract should be with the Board and not with the Minister. ### GRA’s digital transformation and use of technology - Rationale: Modern revenue administrations digitize and automate processes to improve efficiency, mitigate corruption risks, improve governance, and enhance stakeholder performance; automation reduces face-to-face interactions and enables internal controls, access controls, audit trails, automated risk assessments, and removal of personal influence. - Major digital projects included for MTRS: - (i) upgrading the integrated customs management system (ICUMS); - (ii) implementing an integrated tax administration system (ITAS); - (ii i) refinements to the current domestic taxes—Ghana integrated tax management information system (GITMIS); - (iv) reengineering business processes; - (v) introduction of e-VAT to make it quicker for non-compliant behavior to be detected; - (vi) implementing a data warehouse (DW). - Data warehouse (DW): - Analytics within the DW will generate new criteria to detect non-compliance. - The DW project would enter production status from 2023. - GITMIS and TRIPS issue: - GITMIS still suffers from retention of older TRIPS software to issue corporation tax identification numbers; TRIPS interfaces with Government’s corporation registration system to provide Taxpayer Identification Numbers. - Until TRIPS is decommissioned, gaps in GRA’s record of corporations established or de-registered may persist, impacting accuracy of the taxpayer database and downstream compliance. - ITAS procurement: - Procurement to replace GITMIS with ITAS suffered major delays and was still not finalized as of October 2023. - Normal localization and deployment timeline: 18 –24 months for the first phase (monthly taxes such as VAT and PAYEE) to be operational, with annual or semi-annual taxes requiring an additional 12 months. - Inclusion of a new e-VAT solution complicates delivery timetable. - Implementation risks and recommendations: - New software solutions can be extremely disruptive if not managed properly; manage ITAS like the ICUMS project with a dedicated GRA core team including business experts with BRP knowledge. - Weaknesses: lack of a substantive head for the Transformation Office and weak enforcement of GRA program management methodology pose a risk to successful ITAS implementation. - Cybersecurity: - Cybersecurity is a key requirement; ransomware and cyberattacks are an increasing risk. - Statistics cited: 80 percent of intrusions reported to be from email scams and 50 percent involving malicious software. - Recommendation: continue engaging appropriate external resources to conduct penetration testing of public facing services and internal security practices; upskill all staff. ### Exercising human resources (HR) and budget autonomy - Rationale: RAs are created to provide greater management autonomy to improve performance; HR autonomy includes control over job classifications and grading, staffing, recruitment and promotion and discipline, and sometimes remuneration. - GRA context and issues: - GRA’s ability to tailor HR framework to its needs is critical for aligning human capital needs with grading, promotion, recruitment, and compensation; Board-approved policies should incorporate private sector approaches. - The Public Services Commission (PSC) is involved in many key GRA HR decisions, adding rigidity and bureaucracy; PSC involvement includes interview and selection panels for certain positions, re-appointment, acting appointments, and promotion. - GRA behaves more like a regular government department than a body corporate, undermining the transformation agenda and threatening MTRS implementation. - Specific HR policy observations: - Promotions generally move from grade to grade after three to four years; “out-of-turn” promotions require PSC approval and are used rarely—this approach will not drive transformation and innovation. - Workforce demographics and risks: - AFRITAC-West 2 analysis in 2019 showed that over 75 percent of senior management was over 50 and would therefore be eligible to retire in the coming years; this human capital risk was not proactively managed. - Consequences: proliferation of acting appointments, short tenures in new posts, high management time spent on interview panels, and limited skill gain. - Existing mitigation efforts are nascent and not part of a coherent human capital risk mitigation strategy. - Procurement and procurement oversight: - The Central Tender Review Committee (CTRC) must approve procurement for goods and services quoted above the approving threshold set for GRA Procurement Committee (requirement of the procurement Act of 2016). - Approval thresholds by CTRC range from as little as above GHS0.2 to GHS15 million depending on category. - Low CTRC thresholds can result in majority of GRA procurement being approved by CTRC, creating significant delays with detrimental effect on reform progress. - Recommendation: strengthen autonomy in line with modern revenue administrations to improve performance. ### Organization structure - GRA is currently reviewing its organizational structure; the review work underway was not available for review. - Key elements of good organizational design suggested: - (i) insulating the revenue administration from undue influence in exercise of its mandate; - (ii) function-based design with separation of duties, appropriate staffing by workload, strong headquarters oversight and uniform field/office operations; - (iii) segmentation of taxpayer population by size (large, medium, small taxpayers); - (iv) establishment of internal audit and investigations departments. - Benefits of good organizational design: - Contributes to curbing corruption and improving organizational effectiveness; - Removes one-to-one relationships between taxpayers and officials; - Enables creation of effective processes to identify and curb corruption; - Focuses resources on highest risks to revenue collection; - Limits management layers to improve supervision, speed up decision-making, and provide appropriate span of control. *IMF Ghana - Technical Assistance Report* ### 138. The GRA’s current organizational structure needs review. A total of 13 organizational units ### 138. The GRA’s current organizational structure needs review. ### Organizational structure and governance - A total of 13 organizational units report to the CG. They include Tax Audit and Quality Assurance, Procurement, and International Tax Department. - It is unusual for these units to report to the CG; a span of control this wide is likely to divert the CG’s focus from high level and strategic priorities to operational issues. - The Transformation Office is absent in the current structure; it is not clear if this reflects management’s intention not to establish the office or to establish it at a lower level—both options detrimental to the GRA’s capacity to manage reforms, especially given the context of implementing the MTRS. - The GRA attempted an integration of the customs and Domestic taxes Revenue Division (DTRD) HQ functions, resulting in overall responsibility for customs or tax administration being shared between a few senior executives, making it more difficult to hold a single senior executive accountable for customs or tax performance. - A decision has been made to return the distinct HQ functions (called Policy and Planning) to both DTRD and Customs. ### Risk management - Taxpayer/trader failure to comply with customs and tax laws happens for various reasons including lack of understanding, mistakes in filing returns, and deliberate tax evasion; GRA must have effective and targeted strategies to minimize and address non-compliance risks. - An Enterprise Risk Management (ERM) Department has been created; an ERM framework has been developed and now approved. - A compliance improvement plan (CIP) is under development with Foreign and Commonwealth Development Office’s (FCDO) assistance, and a corporate risk register development has been started. - Risk champions have been named in every division and unit (including outstations) to begin cultural change toward risk-based decision-making. - The CG chairs a reinvigorated risk management committee that has identified a business continuity plan (currently under development) as a key priority. - Clarification needed: - The mandates of the ERM department and the risk units in Customs and DTRD will need to be clarified. - A corporate level risk unit should be responsible for the overall framework, policies and processes and lead on enterprise risks (e.g., destruction of premises, impact of civil unrest, pandemics). - DTRD and Customs should work within this framework but retain clear accountability for operational risk related to their core business; some risks will be shared and require careful coordination. - Current capacity issues: - Customs Risk Management (RM) Unit has developed its mandate statement, policy, and standard operating procedures (SOPs); formal endorsement by the CG is planned for the near future. - Numerous levels of compliance verification are imposed on low-risk shipments at the border, pointing to need for effective operational risk management. - Post clearance audit (PCA) has been in place for a while, but front line officers lack confidence that infractions can be identified after goods have left customs control. - In DTRD, there is no risk management unit; the risk management function is currently in the ERM department but remains nascent and not yet fully developed for DTRD to rely on. FAD advice is for this role to be moved back to DTRD to give the Commissioner full control of DTRD operations and help improve accountability for results. - Due to lack of a risk management process, auditors continue to select cases for audit, a major vulnerability to corruption and fraud. ### Customs operational performance - Ghana’s tax to GDP is 13.7 percent, which is lower than its peers and falls short of the “15 percent tipping point” required to sustain a country’s development and social spending needs. - Processes for clearance of commercial cargo at the border are cumbersome and inconsistent with trade facilitation objectives; numerous levels of review and inspection are performed regardless of the level of risk assigned to individual shipments. - Key issues in customs clearance (from FAD February 2023): - Common additional customs scrutiny after commercial goods have been released, with PCA “Post Event Officers” and preventive officers performing random document checks on goods that have been cleared without a clear basis for selection. - Reported significant rate of non-compliance due to high duty rates, although this is unsupported by enforcement results data. - High inspection rate, which is resource intensive, expensive to both the GRA and the taxpayer, and has a negative impact on the quality of inspections. - Current customs clearance process runs contrary to principles of international agreements including the WCO Revised Kyoto Convention (RKC) and the WTO Trade Facilitation Agreement (TFA); these embed principles of risk-based compliance verification and minimum intervention at point of arrival. - Penalties and SOPs: - The PCA Department has adopted the practice of applying the maximum penalty allowed in law, resulting in a considerable number of outstanding debts. - The Customs Act allows penalties of up to 300 percent of the duty and taxes evaded/owing; PCA officials apply the 300 percent maximum in all cases regardless of circumstances. - Recommendation: develop a graduated penalty scheme (subject to well-articulated parameters and SOPs) allowing officer discretion, and publish details of the penalty structure to align with the WTO-TFA. - Policies and Standard Operating Procedures (SOPs) are in place for most customs functions but have not been recently reviewed and are getting outdated; a review and creation of new SOPs is envisaged to ensure a streamlined, holistic approach. - Training and capacity: - Training and capacity development is a concern given evolution of customs business, increased use of automation, and evolving private sector practices. - Customs will be losing a number of experienced officers and managers to retirement; GRA should conduct a comprehensive skills gap analysis and develop a customs-wide training plan. ### Domestic taxes operational performance (TADAT findings) - A repeat Tax Administration Diagnostic Assessment Tool (TADAT) mission was carried out in August 2023. - TADAT assesses performance on major direct and indirect taxes critical to central government revenues, specifically: - (i) corporate income tax (CIT), - (ii) personal income tax (CIT), - (iii) domestic excise tax, focusing on registered taxpayers trading in goods/services that contribute at least 70 percent of the excise revenue by value, and - (iv) pay as you earn (PAYE). - Assessment structure: - The assessment is done by reference to nine performance outcome areas (POAs) with a set of 32-high-level indicators; a total of 55 indicators are used. - Dimensions are scored from A to D: A = in line with international good practice; B = a rung below international good practice; C = weak performance; D = performance below C or inadequate data to assess. - Key TADAT results for GRA: - For all dimensions, D scores accounted for 58 percent of all scores. - Only 13 percent of dimensions were in line with international good practice. - GRA showed relatively stronger performance on taxpayer assistance with A and B scores making 85 percent of total scores in indicators measuring this area. - 85 percent of all dimensions’ scores related to indicators on enforcing taxpayer obligations POAs had a C and D rating, reflecting weak performance in managing compliance and in attaining GRA’s goal of improving revenue performance. - Performance on dimensions related to upholding taxpayer rights and entitlements is weak, with 66 percent of dimensions scoring a C or a D. - Lack of data and data reliability have resulted in a D score for many dimensions—a hallmark of weak data governance and an urgent need to improve GRA data management practices. ### Conclusion and root causes - The diagnosis shows the urgent need for strengthening governance; many hallmarks of a tax system no longer fit for purpose require drastic reform to prevent collapse. - Adoption of the MTRS approach to reforming the Ghana tax system is a welcome development. - A root cause analysis is required to ensure interventions target root causes, not symptoms. Identified root causes include: - a restrictive GRA Act, - unclear relationship between key stakeholders in GRA governance (minister, board, CG), - absence of a board charter to clarify board roles, - inadequate autonomy afforded to GRA, - inadequate adoption of modern technologies to improve revenue administration, - weak compliance risk management, - need for streamlined and more effective management processes (including improving speed of decision-making, strengthening data governance), - need to entrench a culture of accountability for results (for example by all senior management signing performance contracts in support of the new performance management system being rolled out). ### Key recommendations (excerpted) - Governance framework: - Pursue delegation of HR authority from the President to the Minister, the Board and CG and minimize the role of the PSC in the GRA HR policies and processes. - Conduct a review of all HR policies to assess adequacy of autonomy and determine appropriateness to the transformation agenda. - Amend the GRA Act provisions related to organization structure to grant the Board and the CG flexibility in setting up the structure of the institution. - Revenue loss mitigation: - Review legislation and operational procedures to minimize discretion. - Where discretion is needed and cannot be removed, develop safeguards for its exercise and regularly report on its use. - Enforce issuance of exemptions to be only in line with provisions of the Exemptions Act. - Continue to eliminate ineffective exemptions and publish reports on cost and benefits of exemptions. - Board oversight: - Develop a board charter that includes precision on the Board’s role and develop a Board performance agreement with the Minister. - Amend the provisions of the GRA Act to make the Minister of Finance the appointing authority for the CG and on advice from the board following a transparent recruitment process. - Introduce in the law restrictions on Board access to confidential taxpayer information. - Operational effectiveness: - Re-engineer, document and automate GRA processes to enhance efficiency, transparency, consistent treatment of taxpayers and limit unguided discretion. - Clarify the Enterprise Risk Management department role to be an overall risk framework, with operational risk a matter for Customs and DTRD. - Fully establish the risk management functions and processes in Customs and in DTRD. - Complete development of the CIP to improve audit, taxpayer services, filing, payment and debt enforcement performance. - Fully establish the Transformation Office and appoint its head. *IMF Ghana - Technical Assistance Report* ### 158. However, many stubborn challenges remain. For example, the CPIA rating on “transparency, ### 158. However, many stubborn challenges remain. ### Judicial integrity and corruption indicators - CPIA rating on “transparency, accountability, and corruption in the public sector”: 3.5 out of 6 (same as 2014). - 2023 WJP index rank on absence of corruption: 101st among 142 Countries. - Freedom House (2023 Country Overview): judiciary has demonstrated greater impartiality in recent years but perceptions of corruption and bribery, and delays in dispensing justice, continue to pose challenges. - World Bank 2018 Systematic Country Diagnostic: noted rise of perceptions of corruption and a weakening rule of law; cited critical allegations of corruption among court staff, including judges and magistrates. - Bertelsmann Stiftung Country Report (2022): identified corruption and limited administrative capacity as the most significant challenges, exemplified by unduly lengthy legal procedures and sometimes incomprehensible verdicts. ### Implications for economic performance and investment - Significant weaknesses in the rule of law could hurt economic performance. - Investors, especially in agriculture, are deterred by an opaque and fragmented land titling system. - Ghana’s legal rules for contract enforcement and property rights are fairly robust by regional standards, but many vulnerabilities persist, including perceptions that the judiciary is not fully independent from the political party in power and inconsistent regulatory enforcement actions sometimes linked to party affiliation. - Complexity of various land tenure systems poses significant challenges for protection of property rights, resulting in protracted disputes that exacerbate corruption. ### Constitutional and institutional safeguards and vulnerabilities - Constitution (Article 127): guarantees independence of the judiciary; prohibits the President, Parliament or other state organs from interfering with judges, judicial officers, or the exercise of judicial power. - Judiciary expenses (including allowances, salaries and pensions): charged directly to the Consolidated Fund. - Judges enjoy immunity from liability with respect to performance of the judicial power. - Article 146 of the 1992 Constitution: provides a procedure for removal of Judges. - Concern: extensive reach of the President’s power of appointment, including lack of an upper limit on the number of Justices the President can appoint to the Supreme Court; calls for greater transparency in appointment processes. - Administrative vulnerability: Judicial Service organized into two bodies—the judiciary (judges) and the Judicial Service staff (day-to-day administration); Judicial Service budget (for administration) is almost always capped and frequently subjected to significant reductions by the Executive, affecting projects and court administration. ### Financial autonomy, automation, and operational constraints - Incomplete financial independence has impeded critical projects, chief among them automation of courts. - Some courts are automated, but they are far outnumbered by courts with analog processes. - Government’s 2019 World Bank-financed e-justice project: efforts to automate courts have predominantly failed due to lack of funding. - Current practices in some automated courts: - Notebooks still utilized for recording nearly all court related proceedings. - Litigants and lawyers must apply for records of proceedings and pay both official and unapproved fees. - Typists manually transcribe legal proceedings and oral arguments because recordings have proven unreliable. - Workload: judges may handle as many as 35 cases on certain days. - Proposal noted: allowing the judiciary to retain a greater share of internally generated funds (currently 30 percent is retained) could support financial autonomy and sustainability of the digitalization agenda. - Example of consequence: a judge issued a written order different from what had been read in open court due to lacking automation and reliable record keeping. ### Internal independence and case assignment risks - Constitutional provisions allow the Chief Justice to sit on/preside over cases at the High Court and the Court of Appeal; although not exercised, it could raise concerns about internal independence and potential conflicts of interest. - The Chief Justice’s overall role in assigning cases, including appeals, across all courts appears to be a vulnerability; internal guidelines to strengthen internal independence and protect judges from undue pressure are recommended. ### Integrity mechanisms and performance of oversight unit - Judiciary’s Public Complaints and Court Inspectorate Unit: - Established in 2003 to promote good governance, entrench anti-corruption, accountability and transparency in the Judicial Service. - Headed by a Justice of the Court of Appeal appointed by the Chief Justice; assisted by four other Justices of the High Court and administrative staff. - Petitions received in 2022/2023 increased by nearly 100 percent to 235 compared to 120 during 2021/2022. - Rate of resolving petitions improved to 99 percent during 2022/2023 compared to 95 percent during 2021/2022. - Table 12 (Public Complaints and Inspectorate Unit): - July 2021 – June 2022: Petitions Registered 120; Male 83 (69.21%); Female 22 (18.3%); Group/Entity 15 (12.5%); Petitions Resolved 114 (95%). - July 2022 – June 2023: Petitions Registered 235; Male 162 (69%); Female 49 (20.8%); Group/Entity 24 (10.2%); Petitions Resolved 232 (99%). - Challenges for the Unit: victims’ reluctance to report corruption for fear of retribution; lack of training or capacity building of staff; lack of anonymity in the process as complainants are required to disclose their identities. ### Codes, plans, and transparency measures - Judiciary actions include: - Establishment of Code of Conduct for Judges and Magistrates, and Code of Conduct for Staff of the Judicial Service. - Implementation of a medium-term Anti-Corruption Action Plan (2017-2019) to improve ethics among Judges and administrative Staff. - A Right to Information (RTI) Manual provides information available to the public and classes of information accessible from the Courts to regulate abuse of power. ### Corruption vulnerabilities and public perception - Reports and findings: - World Bank and Freedom House flagged concerns regarding bribery and corruption in the judiciary. - 2017–2019 Anti-Corruption Action Plan for the Judiciary and Judicial Service: recognizes judiciary compromised by corruption. - 2015 two-year investigative report by undercover journalist Anas Aremayaw Anas: unearthed widespread practices of bribe-taking among judges and magistrates, including at least seven High Court judges. - Afrobarometer (2020 survey): over 85 percent of Ghanaians believe that judges and magistrates regularly engage in corrupt behavior, second only to the police. - Common forms of corruption involving judges and magistrates: accepting bribes to expedite or delay judicial processes or to secure a favorable judicial decision. - The Chief Justice cautioned that the scale of judicial corruption may be exaggerated and noted a practice where middlemen purport to collect money on behalf of judges, often without judges’ knowledge or involvement. - Factor contributing to corruption among court officials: low salaries; Judicial Service Staff Association of Ghana (JUSAG) declared a nationwide strike in May 2023 over non-approval of reviewed salaries and allowances, causing courtroom closures. ### Court specialization and capacity constraints - Commercial Division of the High Court has primary jurisdiction over contractual disputes but specialized courts are sometimes not manned by specialized judges. - Judicial appointments and assignments to specialized courts are not necessarily based on specialized knowledge; judges trained as generalists are expected to master subjects through exposure and experience. - Judges assigned to specialized courts may later be re-assigned to other specialized courts after a few years to limit entrenchment and corruption, which can result in loss of expert knowledge. - Training to strengthen capacity is provided mainly through the training institute; staffing of specialized courts with non-expert judges is a major critique shared by practitioners. *IMF Ghana - Technical Assistance Report | Excerpt* ### 174. There are many challenges confronting attempts to digitize the judicial process. These ### tarea2025091-source-pdf - 174. There are many challenges confronting attempts to digitize the judicial process. These ### Digitization of the judiciary: progress, coverage, and challenges - Many challenges confront attempts to digitize the judicial process, including inadequate digital infrastructure, connectivity gaps, and the prohibitively high cost of internet access. - The e-justice project has only been rolled out to a few courts and has been temporarily shut down in other courts due to technical glitches; most judicial processes are still carried out manually (assessing and receiving fees, issuing deposit receipts, conduct of proceedings). - According to the 2022 Judicial Digest, the e-Justice project aims to enable court users to file and serve processes, assess fees and make online payments, reduce the cost of litigation and administrative time, eliminate “missing dockets”, and automatically assign cases to courts and judges. - As of end-July 2022: - The Judicial Service operated 385 courts nationwide, with 183 being District Courts, 75 as Circuit Courts, 120 as High Courts, 6 divisions of the Court of Appeal and the apex court, the Supreme Court. - Only 51 High Courts representing 13.50 percent had been fully automated. - Automation has principally occurred within the High Court, with less intervention at Circuit and District courts. - The e-justice system had more than 31,000 users with 3016 users categorized as lawyers. - Since 2020 the Judicial Service introduced a virtual court system to operate at selected Courts during court recess, supported by amendments to Ghana’s High Court (Civil Procedure) Rules, 2004, as amended. - As of 2021 the Judicial Service had scanned a total of 3,500,000 processes of all active dockets at the High Courts of Accra, forming the basis for e-dockets. ### Case assignment: vulnerabilities and intended automation - Except for the Supreme Court (where the Chief Justice empanels the court), there are no clear mechanisms or criteria for assigning cases in courts below the Supreme Court. - Under the Constitution, the Chief Justice: - Is the head of the judiciary and the Supreme Court, and also a member of the Court of Appeal and the High Court. - Has inherent power to assign and transfer judges and assign cases at all levels of court. - The e-justice system is intended to automate case allocation, eliminating manual allocations. - Until full implementation, manual case assignment will continue to rest mainly with court registrars, working with supervising judges under the Chief Justice. - Vulnerabilities of the manual system: - Susceptible to errors such as assigning an excessive number of cases to a single judge. - Prone to abuse and corruption: bribes and irregular payments are frequently exchanged; accusations of influence buying and forum shopping where lawyers and litigants request registrars to place matters before particular judges. - Potential loss of confidence in the integrity of the judiciary and interference in administration of justice. ### Judgment enforcement: resourcing and operational constraints - Judgment enforcement requires adequate resourcing to ensure decisions are respected and enforced. - Bailiffs, supervised by court registrars, are responsible for enforcing judgments. - As part of the Reform and Modernization Programme, service of court processes is privatized: officers of private companies serve processes paid for by court users, while other processes are served by court bailiffs. - Challenges impeding effective enforcement: - Understaffing of bailiffs who often handle a tremendous number of court dockets simultaneously. - In complex cases the number of lawyers may exceed 10, yet bailiffs are expected to serve all parties involved. - Bailiffs lack essential resources, particularly vehicles, hindering operations outside the city. - Reform emphasis: commit resources not only to dispute adjudication but also to the execution/enforcement phase. ### Protection of property rights: importance and assessment scope - The IMF’s Governance Framework assesses the security of property rights under the rule of law component. - Secure property rights and access to land are crucial for private sector development and job creation: they give confidence to invest in land, allow companies to borrow using land as collateral, and enable governments to collect property taxes. - The assessment covers: - The ability of potential investors and individuals to accumulate private property secured by clear laws. - The extent to which laws protect private property rights and are enforced by the state. - The likelihood that private property will be expropriated. ### Land tenure, usage, and legal complexity in Ghana - Ghana land statistics and farm structure: - Total land area: 23 million hectares or 238,000 square km. - About 57 percent of the land classified as “agricultural land area”. - About 24.4 percent of the total under cultivation. - Mean farm size in Ghana is less than 1.6 hectares. - Small farms (generally less than 10 hectares in size) account for at least 95 percent of cultivated land. - Ghana’s Constitution recognizes a pluri-legal land tenure system: - All public lands vested in the President on behalf of, and in trust for, the people of Ghana (Article 257(1)), but the definition of “public lands” is narrow. - About 80 percent of total land area is held under customary law and falls under jurisdiction of customary authorities (families, stools, kins). - Customary law complexity: - Customary law is largely unwritten; what constitutes customary law in a community is not always clear. - Northern Ghana: predominantly patrilineal inheritance; land controlled by chiefs and earth-priests — "skin lands". - Much of southern Ghana: matrilineal inheritance; land mainly controlled by chiefs — "stool lands". - Other parts: clan and family lands with patrilineal inheritance; clan/family heads exercise authority. - Article 36(8) of the Constitution: managers of public, stool, skin and family lands are fiduciaries obligated to discharge functions for the benefit of the people, stool, skin, or family concerned. - Ownership and leasing: - Non-citizens, including investors, cannot outrightly own land. - Article 266(4) of the Constitution: foreigners can lease land for a term of up to fifty years at any one time. ### Title, transactions, disputes, and impacts on mortgages and investment - Challenges in acquisition and defense of clear and secure title: - Accurate records often lacking for land acquired under customary law as transactions may be undocumented. - Land Act 2020 requires transfer of interest in land be evidenced in writing but allows an exception for oral grant under customary law (Section 36(h)), making it difficult to confirm the transferring party’s title. - Conflicting claims arise from good-faith transactions by multiple family parties, rival family sections, or fraudulent transfers by individuals falsely asserting authority. - Consequences: - Difficulty establishing title negatively impacts mortgage enforcement and creates opportunities for corrupt practices. - Easier to secure mortgages on statutory title than on customary title. - Lands Commission allows title searches but the process is protracted and fraught; reported maze of paperwork, missing files, inordinate delays, and uncertainty deters use of land as collateral. - UNODC 2022 Crime survey on Corruption in Ghana: prevalence of bribery in relation to the Lands Commission stood at 32.4 percent, compared with 22.3 percent within the judiciary. - Court congestion and disputes: - Land disputes outnumber other disputes in Ghanaian courts and are often protracted. - In May 2023 Ghana’s Supreme Court ruled on a 40-year land dispute. - Causes include limited digitization, lack of paper trail, conflicting judgments of the Land Court allocating the same parcel to different litigants, and incomplete mapping of lots. - The judiciary seeks assistance from the Lands Commission for site surveys and composite plans; judges need training on land-related issues due to persisting knowledge gaps. ### Legal reforms and procedural safeguards - Land Act, 2020 (Act 1036): - Aims to revise, harmonize and consolidate laws on land to ensure sustainable land administration and management, effective and efficient land tenure. - Codifies various interests in land that had been defined in judgments and academic literature. - To expedite registration and reduce Land Court backlogs, the Act provides that an action concerning any land or interest in land in a registration district shall not be commenced in any court unless the procedures for resolution of disputes under the Alternative Dispute Resolution Act, 2010 (Act 798) have been exhausted. - Section 13 provides sanctions for misconduct by land administrators to address fraud and corruption in customary land management. ### Mortgage registration process (Box summary) - Mortgages must be registered at the Lands Commission and the Registrar General’s Department. - Under the 2020 Borrowers and Lenders Act, mortgages also must be registered in the newly created collateral registry located at the Bank of Ghana (process largely automated and can be completed in minutes). - Registered mortgages have priority; order of registration determines priority of interest. - The mission was informed registration at the Lands Commission can take up to four years to complete and often requires paying unauthorized facilitation fees. - Typical steps described: - Conduct a search using a bar-coded site plan. - Obtain consent (who must consent depends on the nature of the interest; e.g., consent from the stool is required if it is stool land). - Stamping. - Plotting the land at the Lands Commission (which can take up to a year). - Lodging the documents at the Lands Commission. *Italic: IMF Ghana - Technical Assistance Report | extract focused on judiciary digitization, case assignment, judgment enforcement, and property rights issues.* ### 190. Reinstating the Land Tribunal could also prove helpful. According to authorities, relieving ### Reinstating the Land Tribunal could also prove helpful. According to authorities, relieving ### Land dispute adjudication and institutional measures - Reinstating a Land Tribunal, specifically tasked with handling preliminary issues, can relieve the workload of the Land Court. - The previously existing Tribunal: - Was led by a High Court Judge, supported by technical staff and officers. - Operated as a “quasi” court of first instance. - Ensured only unresolved and/or complex matters were referred to the High Court (the Land Court, the division of the High Court dealing with land disputes). ### Customary Land Secretariats and the Land Act - The Land Act provides for Customary Land Secretariats. - Institutional roles: - The Lands Commission is the central government agency charged with the administration of public lands. - An Office of the Administrator of Stool Lands manages land held under customary ownership. - Obligations and functions of Customary Land Secretariats: - A stool or skin, family or clan that owns land is required to establish a Customary Land Secretariat for management of its land, with support of the Lands Commission and the Administrator of Stool Lands. - The secretariat’s role includes, among others, to “record the interests and rights in land, and keep and maintain accurate and up to date records of land transactions” and perform other record keeping and verification functions. - Section 277 of the Land Act criminalizes: - falsification of land records; - fraudulent issuance or erasure of documents issued by the Lands Commission; - fraudulent removal of any other document filed with the Lands Commission; - fraudulent obliteration, mutilation or alteration of documents kept in the Lands Commission; - fraudulent deletion or alteration of the electronic records of the Lands Commission; - unlawful accesses or any other act that compromises the integrity of the records at the Lands Commission. ### Land Administration Project (LAP) reform phases and digital transformation - LAP-1 (with World Bank support) implemented from 2003 to 2011: - Reviewed land laws, carried out institutional reforms, and undertook pilots on a number of initiatives. - LAP-2 approved in 2011 to consolidate and complete reforms; reforms included: - Passage of the Lands Commission Act 2008 (Act 767) merging four land sector agencies into the Lands Commission and bringing title and deeds registries under one organizational unit (land registration division). - Decentralization of the deeds registry to all nine regional capitals. - Establishment and strengthening of 38 customary land secretariats to facilitate land management by traditional authorities and ascertainment and codification of customary land rights in 20 traditional areas. - Establishment of six (6) land courts in Greater Accra. - Establishment of a new 3 tier planning model for the country. - The World Bank’s Implementation Completion Report Review found LAP-2 repeated many earlier mistakes. - Government actions: - Embarking on a new project with support of a private investor focused on transforming manual processes into the digital environment. - Operations manual and implementation support referenced (ACL Secretariat; World Bank documents). ### Rule of Law Recommendations (Table 13 — Key items) - 1. Finalize the e-Justice project and prioritize implementation of court automated systems to reduce avenues for corruption and speed up dispute settlement. - Agency Responsible: MoJ; Judiciary - Implementation Timeframe: MT - 2. Undertake an impartial public expenditure assessment, with civil society participation, to analyze budgetary constraints faced by the judiciary and the Judicial Service, respectively. Assessment should include specific recommendations regarding: - a. outstanding critical projects vital to the administration of justice, and - b. salaries of Judicial Service personnel. - Agency Responsible: MoJ; Judiciary - Timeframe: MT - 3. Review the budgetary needs of bailiffs and ensure adequacy of resources for enforcement of court judgments. - Agency Responsible: MoJ; Judiciary - Timeframe: MT - 4. Establish guardrails to ensure internal independence within the judiciary and undertake a study on the need to reform powers of the Chief Justice over the Court of Appeal and various High Courts, including in the assignment of cases. - Agency Responsible: MoJ; Judiciary - Timeframe: LT - 5. Undertake a study of the adequacy of training programs for judges and Judicial Service personnel. - Agency Responsible: MoJ; Judiciary - Timeframe: LT - 6. Review the functioning of the Public Complaints and Court Inspectorate Unit (PCCIU) with a view to assessing the need to: - a. allow anonymous complaints, and - b. make its decisions accessible to the public. - Agency Responsible: Judiciary - Timeframe: ST - 7. Develop and publish a report on the government’s progress in implementing past and ongoing reforms related to Ghana’s Land Administration projects. - Agency Responsible: Ministry of Lands; MoF; MoJ - Timeframe: MT - 8. Establish a reliable, easily accessible, and comprehensive digital land registry. - Agency Responsible: Ministry of Lands; MoJ - Timeframe: LT - 9. Explore the possibility of reinstating the Land Tribunal to adjudicate preliminary land-related disputes, thereby alleviating backlogs in the Land Court. - Agency Responsible: MoJ; Judiciary; Ministry of Lands - Timeframe: LT ### Financial sector oversight — overview and key statistics - The governance diagnostic mission reviewed banking sector oversight against selected Basel Core Principles for Effective Banking Supervision (BCP). - AFRITAC West2 (AFW2) has provided regular technical assistance on banking regulation and supervision to the Bank of Ghana (BoG). - The IMF report (August 2021) indicated BoG has made good progress in upgrading institutional, regulatory and supervisory framework and encouraging digital payments. - Banking sector structure and metrics (as of end of December 2022): - Banks hold 93 percent of the industry’s total assets. - Specialized Deposit Taking Institutions (SDIs) hold the remaining 7 percent (including Savings & Loans, Finance Houses, Leasing and other companies, Rural Community Banks and Microfinance Institutions). - Banking Sector assets as a percentage to GDP is 3 7.5 percent (as of the end of 2022). - Ownership composition and asset shares: - 14 foreign banks cumulatively account for 61.7 percent of total banking sector assets. - Four banks with Government majority ownership account for 20.8 percent of total banking sector assets. - Five private local banks have 17.5 percent of total banking sector assets. - Resolution actions initiated by BoG since 2017 include revoking licenses, consolidation, and winding up of some banks. ### Key reforms in banking supervision and financial inclusion - Legal and regulatory framework: - Bank of Ghana Act (2002) and Bank of Ghana (Amendment) Act, 2016 articulate BoG’s mandate to regulate, supervise and direct banking and credit systems. - Banks and Specialized Deposit Taking Institutions Act, 2016 provides legal framework for regulating and supervising deposit taking institutions. - Capacity building and training: - BoG has progressed on key recommendations from the Training Needs Analysis (TNA) mission by AFW2 in 2021, and received further assistance in August 2022 for curriculum development and training design. - TNA recommended encouraging specialization by risk area for BSD staff after intermediate level training; management concurred, implementation scheduled appropriately. - Regulatory reforms and initiatives: - Adoption of Basel II/III requirements (especially Pillar 1), strengthening risk management systems in banks, and implementing risk-based supervision. - BoG significantly increased minimum capital requirements of banks. - Cyber and Information security directive issued to banks to mitigate cyber risk amid rapid growth of digital financial services. - Financial Sector Development and Inclusion Strategy aimed to reach 85 percent of the population with access to formal financial services by 2023. - Fintech and Innovations office (established May 2020) licences and oversees dedicated electronic money issuers, payment service providers (PSPs), closed loop payment products, payment support solutions and other emerging payment forms delivered by non-bank entities; it also develops policies to promote FinTech, innovation and interoperability in Ghana and has made substantial progress in digital banking and use of Suptech. ### Risks, vulnerabilities, and recent shocks - Ongoing governance vulnerabilities affecting the banking sector include compliance with BCP, related party transactions, and resilience of public banks. - Resource constraints limit effectiveness of banking supervision; shortage of human resources is a challenge. - Microprudential areas needing faster implementation: - Adoption of Pillar 2 and Pillar 3 of the Basel Framework. - Implementation of liquidity requirements introduced by Basel III, especially the LCR and NSFR. - Formulation and implementation of “exit strategies” to roll back regulatory relaxations and progress Basel reform in a calibrated manner. - Effective follow-up on onsite inspection reports to ensure compliance within timelines and closure of major observations. - RBS (risk-based supervision) process should encompass comprehensive assessment of corporate governance and AML/CFT related risks. - Domestic Debt Exchange Program (DDEP): - Launched December 2022 and concluded September 2023; converted domestic notes and bonds of the Government of Ghana and some agencies to newly issued bonds with lower present value. - DDEP had a sharp impact on the banking sector since government securities constituted a large share of several banks' assets. - Temporary regulatory relief measures were implemented to phase the DDEP impact on banks' and SDIs' balance sheets; without these reliefs, more banks would face deficiencies in regulatory indicators like CAR and would need to raise capital. - High bank profitability since the DDEP has helped restore some ratios. - Authorities designed a financial sector strengthening strategy to restore capital buffers within a three-year period; banks have designed individual recapitalization plans and started implementation. - The Ghana Financial Stability Fund, set up with World Bank assistance, has started to disburse funds to recapitalize state-owned banks. - The NPL ratio has been increasing since 2022, indicating deterioration in credit risk. ### Governance of the supervisory authority (Bank of Ghana) - Governance weaknesses in banking supervision (independence, accountability, transparency, resourcing, supervisory forbearance) can pose financial stability risks and create vulnerabilities to corruption. - Measures taken and remaining concerns: - Amendments to Bank of Ghana Act in 2016 and a new Board Charter enhance Board operational modalities and introduce a mechanism to monitor status of Board decisions. - Financial autonomy of BoG has been significantly undermined by monetary financing extended since 2020 and participation in government’s Gold-for-Oil program. - Proposed amendments to BoG Act envisage provisions for recapitalization of BoG, enforcing strict limits on monetary financing of the government, and carving out BoG from Section 14 in Presidential (Transition) Act, 2012. - Presidential Transition Act, 2012 (section 14) issue: - Under section 14, whenever there is a change in President, top political appointees, including directors of government owned entities, cease to function and Boards become non-functional. - This applied to BoG, and there was an instance where the Board was not in existence for a period of nine months. - The applicability of these provisions to BoG impinges on the Board’s autonomy, governance and operational freedom; an urgent solution is needed by amending the BoG Act as proposed in discussions with IMF Legal Department. - Mandate and internal decision-making: - Section 3(2) of the Banks and Specialized Deposit Taking Institutions Act, 2016 defines the banking supervision mandate consistent with BCP (CP1 EC2) objectives. - Issuance/modification of subordinate legislation (directives) follows a transparent and consultative process with exposure drafts made available on the Bank’s website and public comments analyzed and incorporated. - Internal supervisory decision-making involves unit head, office head, peer, department head, and top management reviews; Teammate+ supports these features and ORASS data assist examiners in determining KRIs. - The Governor, assisted by Deputy Governors, is practically the final authority for supervisory decisions; the BoG Act vests significant concentration of power in the Governor while two Deputy Governors are not decision–makers. - Compliance with onsite inspection reports is long pending in certain cases; timely closure of these is necessary from the perspective of good supervisory practices. *Italic: IMF Ghana - Technical Assistance Report* ### 208. The framework for safeguarding supervisors’ integrity is contained under section 145 of ### The framework for safeguarding supervisors’ integrity is contained under section 145 of ### Integrity framework and ethical safeguards - Section 145 of the Banks and Specialised Deposit Taking Institutions Act, 2016 requires staff to maintain confidentiality in respect of any information related to the affairs of Bank of Ghana or any of the regulated entities. - Staff are provided several guidelines to ensure adherence to ethical standards and staff sensitization programs are conducted. - The Office of Ethics and Internal Investigations, which reports to the Governor directly, is in charge of compliance in this regard. - A Code of Ethics is applicable to all employees; supervisory staff have a detailed standard of conduct. - The Chartered Institute of Bankers, Ghana has published “Ghana banking code of ethics and business conduct”. ### Corrective and sanctioning powers; appeal rights - Corrective and sanctioning powers of BoG are contained under various sections of the Banks and Specialised Deposit Taking Institutions Act, 2016. - Top executive management is the ultimate authority to take supervisory decisions to apply corrective and sanctioning measures and can also authorize exceptions, a power which can be abused. - There are no appeal procedures available to banks and other interested parties against supervisory actions and decisions in the Act. - For many of the penalties an upper limit is prescribed in the act, which is a constraining factor and needs to be revisited. ### Transparency, reporting, and accountability - The Bank of Ghana must transmit a copy of its annual accounts certified by the Auditor-General to the Minister of Finance within three months after the end of each financial year. - An annual report of the Board depicting its working in different areas is to be submitted to the Minister of Finance and published by the Bank. - The report on Trend and Progress of Banking Business gives a clear account of supervisory actions taken during the year and ensures transparency in the BoG’s role as supervisor. ### Licensing and change of control (process and capacity) - Banks and Specialized Deposit Taking Institutions Act, 2016 contains detailed licensing criteria for deposit taking institutions. - Applications are received through the online regulatory analytics surveillance system (ORASS) and detailed scrutiny is conducted by the Bank Supervision Department. - The procedure includes conducting a capital verification exercise to establish the source of funds, and assessing the suitability of banks’ major shareholders, including ultimate beneficial owners (UBO) and others that may exert significant influence. - Issues regarding the ascertainment of UBO in the licensing process are detailed under the section relating to AML/CFT. - Since 2018, eight applications for banking license have been received; seven licenses have been revoked as part of the banking sector clean up and one license has been surrendered as part of a voluntary winding up process. - The Banks and Specialized Deposit Taking Institutions Act has provisions for addressing share transfers in terms of controlling significant ownership; transparency in licensing and acquisition of shareholding is evident. - The finance minister/ministry does not have appellate authority over this area. The only appeal process in case a license is rejected is through an adjudicative panel to be set up by the Chief Justice (in line with section 140 of the Banks and Specialized Deposit Taking Institutions Act, 2016). - Licensing office staffing: 12 available staff and 8 vacancies — it is imperative to dedicate more resources to this area from a governance perspective. ### Corporate governance directives, assessments, and gaps - BoG issued the Corporate Governance Directive for banks and specialized deposit taking institutions in December 2018; followed by the Fit and Proper Persons Directive, 2019 and the Corporate Governance Disclosure Directive, 2022. - The Corporate Governance Directive includes key aspects of the Basel Corporate Governance Principles for Banks, 2015. - Onsite supervisors’ assessment of corporate governance against BoG directives and the corporate governance toolkit reveals shortfalls in many aspects — a vulnerability that has potential for corrupt practices. - Corporate governance assessment should be seamlessly integrated into the aggregate net risk score under risk-based supervision. - The RBS manual should include a comprehensive methodology for assessment of banks’ corporate governance practices and processes. - Capacity building programs, especially at the intermediate and advanced levels on a continuous basis, should equip supervisors with necessary skills in this area. ### Fit and Proper Persons regime - The Fit and Proper Persons Directive, 2019 describes criteria for assessing fitness and propriety of board members and senior management; the directive is comprehensive and the process is transparent. - BoG interviews individuals as part of the assessment process. - Since January 2018, BoG has approved 532 requests to approve the members of banks’ board and senior management and rejected 27 such requests during the same period. - Decisions are within the remit of BoG and the Finance Minister cannot overturn them. - Challenges: limited pool of specialist skilled members for Board Audit Committees and Risk Committees, and limited pool of independent directors — risk of adverse selection and vulnerabilities to corrupt practices. ### Disclosure requirements and international standards - Corporate governance disclosures are mandated by the Corporate Governance Disclosure Directive, 2022; banks make disclosures in their annual reports relating to compliance with corporate governance issues. - Pillar 3 disclosures under the Basel Framework are yet to be implemented and there is an urgent need to adopt this. ### Related party transactions - Related-party transactions, unless monitored and managed diligently, may be unfair, abusive, fraudulent, or associated with corruption. - The Banks and Specialised Deposit Taking Institutions Act, 2016 contains requirements for related-party transactions but provisions apply to financial exposure and do not cover all types of transactions (e.g., other dealings prescribed in BCP (CP20)). - There is an urgent need to expand coverage of related party transactions requirements to other types of transactions. - Identification of banks’ UBOs is very important from a related parties’ perspective. ### Public banks and Non-Banking Financial Institutions (governance risks) - Regulation and supervision of public banks must be handled with sensitivity given potential for corrupt practices. - The principle of “ownership neutrality” in regulation and supervision is in place, but governance standards in public banks are below par. - Compromises in credit underwriting standards have resulted in NPL levels on an upswing. - The Specialized Deposit Taking Institution (SDI) sector faces asset growth decline, solvency ratio turning negative, increase in NPL levels and profitability concerns. - Governance standards in many SDI segments leave scope for improvement and are prone to corruption. - Supervision of SDIs requires significant improvement; example: Rural and Community Banks’ onsite and offsite supervision is done by the ARB Apex Bank on behalf of BoG and their skill set is not up to the mark. ### Key recommendations (extracted from Table 14) - 1. Enhancing the role of BoG as banking supervisor in terms of governance. - a. Align BoG microprudential supervision framework with the Basel Framework by considering adoption of Pillar 2 and Pillar 3, liquidity requirements, , etc. - b. Strengthen resources available for supervision and embark upon a rigorous capacity development program of the supervisory staff. - c. Ensure amendments to the Bank of Ghana Act to carve out the BoG Board from Section 14 of the Presidential Transition Act, 2012. - d. Carry out amendments to the Banks and Specialized Deposit Taking Institutions Act to remove the upper ceiling on penalties. - Agency Responsible: MoF; Bank of Ghana - Implementation Timeframe: MT - 2. Strengthen prudential regulatory and supervisory framework related to governance. - a. Make supervisory assessment of corporate governance in banks an integral part of risk-based supervision. - b. Strengthen regulatory and supervisory framework to improve governance of banks’ credit risk management function. - c. Make compliance with onsite inspection reports comprehensive and time bound. - d. Rectify challenges regarding limited pool of specialist skilled members for Boards, Audit Committees and Risk Committees, and independent directors. - e. Enhance regulatory and supervisory framework for transactions with related parties. - Agency Responsible: Bank of Ghana - Implementation Timeframe: MT - 3. Supervision and regulation of public banks and Non-Banking Financial Institutions. - a. Enforce “ownership neutrality” in letter and spirit when framing regulatory policies and conducting supervision of public banks. - b. Strengthen resilience of public banks by reducing NPLs and improving governance standards. - c. Improve governance in the Non-Banking Financial Institutions sector. - Agency Responsible: Bank of Ghana; MoF - Implementation Timeframe: MT *IMF Ghana - Technical Assistance Report | 93–99* ### Section 7 of ### Section 7 of the CHRAJ Act ### Institutional composition and appointment processes (selected ACAs) - Office of Special Prosecutor (OSP) - Board composition: Special Prosecutor, Deputy Special Prosecutor, a representative of the Audit Service, Ghana Police Service, Economic and Organized Crime Office, Financial Intelligence Centre, CHRAJ, Minister for National Security, and one female representing CSOs. - Appointments: Made by the President in consultation with the Council of State. - Special Prosecutor and Special Deputy Prosecutor: - Nominated by Attorney-General, appointed by the President subject to the approval of the majority of members of Parliament. - Right to Information Commission (RIC) - Board composition: Chairperson, Deputy Chairperson, 4 other persons (including two women), and the Executive Secretary. - Appointments: All appointed by the President in consultation with Council of State. Executive Secretary appointed by the President. - Auditor-General / Audit Service - Auditor-General appointed by the President acting in consultation with the Council of State. - Audit Service Board: Chairman and 4 other members, the Auditor-General, and the Head of the Civil Service or his representative. All appointed by the President, acting in consultation with the Council of State. - Internal Audit Agency (IAA) - Internal Audit Board composition: Chairperson; Minister of Finance or representative; Minister for Local Government and Rural Development or representative; chairperson of the Public Services Commission or representative; Director-General of the Agency; two private sector members; two professional accountants each with not less than ten years experience nominated by Council of the Institute of Chartered Accountants (Ghana). - Director-General appointed by the President, acting in accordance with the advice of the governing council of the service concerned. - Public Procurement Authority (PPA) - Board composition: chairperson competent in public procurement, four public sector persons experienced in procurement, representative of Attorney General, three persons nominated by Minister of Finance (including one woman), three private sector persons (including a woman), and the CEO. - All appointed by the President acting in consultation with the Council of State. CEO appointed by the President. - Financial Intelligence Centre (FIC) - Board composition: one representative from MoF, National Security Council Secretariat, Bank of Ghana; one senior police officer nominated by Minister of Interior; the CEO; a state attorney nominated by Attorney General; one private sector person with accounting, banking or finance experience nominated by Minister of Finance. - President appoints a chairperson and all other members in consultation with the Council of State. CEO appointed by the President. - Economic and Organised Crime Office (EOCO) - Board composition: chairperson; Executive Director; representatives of Inspector-General of Police, Narcotics Control Board, Attorney-General’s Office, Ghana Revenue Authority; one lawyer in private practice with at least ten years experience nominated by Ghana Bar Association; one chartered accountant with at least ten years experience nominated by Institute of Chartered Accountants; one person with intelligence background nominated by Minister responsible for National Security. - All appointed by the President acting in consultation with the Council of State. Executive Director appointed by the President. ### Requirements for appointment and disqualification (selected ACAs) - OSP (Special Prosecutor and Deputy) - Required: possess relevant expertise on corruption and corruption related matters; be of high moral character and proven integrity. - May not be appointed if: - Owes allegiance to a country other than Ghana. - Has been declared bankrupt; is of unsound mind; convicted for a high crime under the constitution, treason, high treason, offense involving the security of the state, fraud, dishonesty or moral turpitude, or any other offense punishable by death or by a sentence of not less than 10 years. - Has been found by a report of the commission or committee of inquiry to be incompetent to hold public office, or acquired assets unlawfully, or defrauded the state or misused or abused the office, or willfully acted in a manner prejudicial to the interest of the state and the findings have not been set aside on appeal or judicial review. - FIC - No stated specific requirements but subject to security screening (sec 17). - IAA - President shall have regard to integrity, knowledge, expertise and experience, in particular knowledge relevant to functions of the Agency. - RIC - Appointments made having regard to the expertise of the person. - General note: Several entities list “No requirements” explicitly for certain appointments (Audit Service Board members, EOCO Board, PPA members, etc.). ### Security of tenure, terms, removal procedures (selected ACAs) - OSP - Board members hold office for 3 years and are eligible for one reappointment. - Special Prosecutor tenure: 7 years without reappointment. - Deputy tenure: 5 years with one reappointment. - Removal (Special Prosecutor and Deputy): for stated misbehavior or incompetence, incapacity by reason of infirmity of body or mind, willful violation of oath or oath of secrecy, conduct bringing or likely to bring OSP into disrepute, prejudice to economy or security of the state. - Removal procedure: A petition must be submitted to the President who within 7 days refers to the Chief Justice. The Chief Justice within 30 days determines whether there is a prima facie case. If so, within 14 days Chief Justice sets up a committee consisting of a chairperson, a lawyer of at least 15 years standing at the bar and one other person with expertise in investigations. The committee investigates and within 90 days makes a recommendation to the President through Chief Justice. The President must act in accordance with recommendation. - Board may be removed by declaration of vacancy by Minister of Justice for contravention of code of conduct, fiduciary duty breaches, absence from 3 consecutive meetings without sufficient cause, or failure to disclose conflict of interest. - RIC - Board members have 5-year term with one reappointment. - President may terminate appointment if member mentally or physically incapable, declared insolvent, engaged in gross misconduct, involved in actions that bring the Commission into disrepute, convicted of a serious offense or grossly incompetent. The President may only remove after allegation investigated and proven. - Executive Secretary holds office in terms and conditions specified in letter of appointment. - Auditor-General - Retires after attaining the age of sixty years. - May be engaged for limited periods not more than two years at a time but not exceeding five years in all, upon terms determined by the President acting in consultation with the Council of State. - Removal: only for stated misbehavior or incompetence or inability arising from infirmity of body or mind, under same procedure applicable to Justices of Superior Courts. - Audit Service Board members - Serve for 3 years with two reappointments. - Member (other than Auditor-General or Head of Civil Service) may be removed by the President, acting in accordance with advice of Council of State, for inability arising from infirmity or any other sufficient cause. A member ceases on reconstitution of Board. - IAA - Board members (other than ex-officio) hold office for 4 years, with two reappointments allowed. - No causes or procedures for removal established. - Director-General appointed on terms specified in letter of appointment. - PPA, FIC, EOCO - Board members generally serve for 4 years with one reappointment. - Members may be removed or have appointment revoked by the President (with consultation or advice of the Council of State in some cases) for inability to perform, infirmity, or other sufficient cause. - CEOs/Executive Directors hold office on terms and conditions specified in letter of appointment. ### Legal bases and constitutional provisions referenced - OSP: Sections 5, 12, 13, 15, 16 and 21 of Office of Special Prosecutor Act; OSP Administrative Regulations are not available for online consultation. - RIC: Sections 48, 49 and 55 of the Right to Information Act. - Auditor-General / Audit Service: Articles 70(1)(b) and 187, 189 of the Constitution and Section 10 of the State Audit Act. - Internal Audit Agency: Sections 2, 5, 8, 12 and 15 of Internal Audit Agency Act. - Public Procurement Authority: Sections 2, 4, 5 and 9 of Public Procurement Act. - FIC: Sections 7, 9, 12, 17 of the Anti-Money Laundering Act. - EOCO: Sections 4, 6 and 11 of the Economic and Organised Crime Act. - Constitution excerpts reproduced: - Article 70 (Appointments by President) including clause on acting in consultation with the Council of State. - Article 71 (Determination of certain emoluments) specifying salaries and allowances determination process. - Article 89 (The Council of State) composition and appointment tenure. - Article 91 (Other functions of the Council) obligation to give advice not later than thirty days. - Article 195 (Appointments of public officers) power vested in the President subject to governing council advice. ### Financial autonomy: safeguards and weakening provisions (Annex 4) - Examples of safeguards guaranteeing financial autonomy: - CHRAJ: Appointment of officers and other employees made by the Commission, acting in consultation with the Public Services Commission (Article 226 of the Constitution). - OSP: The salary of the Special Prosecutor shall not be varied to the disadvantage of the special prosecutor during the tenure of office (section 13(6) of the OSP Act). - Auditor-General: Salary and allowances, rights in respect of leave of absence, retiring award or retiring age shall not be varied to his disadvantage during tenure (Article 187 of the Constitution). - RTIC: Can operate through its own bank account (section 61 RTI Act). - CHRAJ: Its internal audit unit reports to the Auditor-General and not to the Internal Audit Agency (section 16(5) of the Internal Audit Agency Act). - Judiciary: Article 127 enshrines independence including for “financial administration” covering operation of banking facilities without interference, funds voted by Parliament or charged on the Consolidated Fund, and expenditures for which funds were voted or charged. - Examples of provisions that undermine financial autonomy: - OSP, RTIC, IAA and FIC: The President can appoint all staff of these institutions under Article 195 of the Constitution; the President may choose to delegate such authority to the boards although board members mostly belong to the Executive or are appointed by the President (sections 5 and 21 OSP Act, 57 Right to Information Act and 15 Internal Audit Agency Act, 21 AML Act). - OSP: Allowances for board members are approved by the Minister of Justice in consultation with MoF (section 12 OSP Act). - IAA: Members of the Board other than the Director-General shall be paid such allowances as the President in consultation with the Minister of Finance may approve (section 8 of the Internal Audit Agency Act). - RTIC, PPA, FIC and IAA: Their CEOs terms and conditions are specified in the presidential letter of appointment (Sections 55 of the Right to Information Act, 9 of the Public Procurement Act, 17 of the AML Act, and 12 of the Internal Audit Agency Act). - CHRAJ: Two members of parliament and an Attorney-General’s representative are members of the procurement committee responsible for approving public procurements between 100,000-1,000,000 cedis for goods and services, and 500,000-15,000,000 cedis for works (first and second schedules of the Public Procurement Act). *IMF Ghana - Technical Assistance Report | 100–108* ### Annex 5. Key Recent Legal Reforms on Anti-Money Laundering ### Annex 5. Key Recent Legal Reforms on Anti-Money Laundering ### Major legal reforms and provisions (Acts and key features) - Anti-Money Laundering Act 2020 (Act 1044) - strengthens the financial position of the Financial Intelligence Center (FIC) by requiring its operational budget to be funded by Parliamentary appropriations, the Ghana Revenue Authority (not exceeding two percent of the total revenue retained by the GRA), and by the Bank of Ghana upon consultation with the Minister and subject to the prior approval of Parliament (Section 23). - enhances the record keeping requirements including archiving records (Section 32 to 34). Going forward, the archiving provisions should be harmonized with those in the Evidence Act. - provides protection against civil or criminal liability of an accountable institution, including the directors, officers, and employees for breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision if the directors, officers or employees comply in good faith with the obligation to file a suspicious transaction report or provide other information to the FIC or other competent authorities (Section 44). - requires the appointment of AML reporting officers (AMLRO)/compliance officers at managerial level to monitor compliance with the Act (Section 50). - provides a wide range of administrative sanctions for AML/CFT supervisors (Section 53). - Banks and Specialised Deposit-Taking Institutions Act 2016 (Act 930) - introduced supervisors’ powers to impose administrative sanctions for infractions of AML/CFT requirements. - expanded the external auditors’ mandate to include AML/CFT. - Insurance Act 2021 (Act 1061) - introduces a mandate to enforce compliance of AML/CFT requirements (Section 3(f)). - requires adoption of a risk-sensitive approach in regulation & supervision (S. 4(b)). - requires approval for change in significant ownership or level of control (Section 122). - Real Estates Agency Act 2020 - establishes the regulating Council and Board for the real estate sector and sets regulations pertaining to real estate brokers and agents. - introduces market entry and record keeping regime, including an annual licensing requirement for real estate brokers or agents, fitness and probity tests for all agents, and establishment and maintenance of records. - includes a sanctioning regime and reporting mandates: the Council is mandated to submit an annual report of licensees as per section 21(6) and report on any anomalies regarding real estate transactions as per section 47(5)(c). - Companies Act (2019) - establishes the Office of Registrar of Companies as a central register for capturing basic and beneficial ownership (BO) data of legal persons. - Registrar has established a mechanism for collecting basic and beneficial ownership information of all incorporated companies, but has only collected the information of a portion of the existing companies. - Companies are required to notify the Registrar of any changes in their companies, including a change of directors, a change in the address of the registered office of the company and any amendment in the company’s regulating powers, within a period of 28 days. Existing companies only update their information when seeking other services from the Registrar. - The Registrar of Companies has allowed direct database access to relevant competent authorities, like the FIC, the Police, and other investigators. - Financial institutions can access beneficial ownership information at a fee through a portal on the Registrar’s website. - Definition excerpt included in source: - “Beneficial owner” means an individual (a) who directly or indirectly ultimately owns or exercises substantial control over a person or company; (b) who has a substantial economic interest in or receives substantial economic benefits from a company whether acting alone or together with other persons; (c) on whose behalf a transaction is conducted; or (d) who exercises significant control or influence over a legal person or legal arrangement through a formal or informal agreement. ### Implementation gaps and immediate harmonization need - Archiving provisions in Act 1044 (Section 32 to 34) should be harmonized with those in the Evidence Act. - Companies Register coverage gap: Registrar has collected BO information for only a portion of existing companies; existing companies often update only when seeking other services. - Access arrangements: - Direct database access granted to FIC, the Police, and other investigators. - Financial institutions access BO information at a fee via the Registrar’s portal. ### Governance weaknesses in GRA (summary of identified issues) - Appointment and delegation - The Constitution gives the President the power to appoint the Board chair, Board members, the Commissioner General, Commissioners, and GRA staff. It is noted that instruments of delegation could be executed to delegate the power to appoint Commissioners to the Board and other GRA staff to the Commissioner General. - Board composition and quorum - The Board comprises nine members, four of whom must be from the private sector. - The Board Chair may also be from the private sector, creating the possibility that private sector representation could be a majority of Board members. - Quorum for Board meetings is five members, so at any particular meeting a majority of attending members may be from the private sector. - Recommendation: GRA Act should be amended to avoid private sector members being a majority. - Experience and secrecy - The GRA Act should expressly state experience requirements for private sector Board members, such as experience in management, administration, law, finance, customs, or taxation. - While Board members may be subject to the secrecy rule in the RAA, it is preferable that a Board-specific secrecy rule is included in the GRA Act. - Clarify roles and responsibilities - The relationship between the Minister of Finance, the Board, and the Commissioner General should be clarified, including the Board’s role in revenue policy and revenue law formulation. - There should be a clear delineation of responsibilities so the Board is not involved in day-to-day operations (solely the Commissioner General’s responsibility). - The power to establish new divisions within the GRA should be with the Board and not Parliament to allow timely organizational changes. - Responsibilities across the Board and other parts of government (e.g., staffing and procurement) should be reviewed and clarified to preserve appropriate independence. - Funding - The funding of the GRA should be reviewed: GRA’s subvention must now finance both operating and capital expenditure, potentially limiting transformational changes. ### Examples of discretionary powers in revenue laws (Box 5) - Tax Administration - Granting of a tax incentive - Extensions of due dates for filing of tax declarations - Waiver of full duties and payment of 30 percent of taxes assessed on filing an objection and/or appeal. - Selection of a taxpayer for a tax audit - Remission of a penalty, interest or fine - Customs Administration - Waiver/exemption of customs duty/excise - Selection of goods subject to a "red channel" inspection - Selection of a trader for a post clearance audit - Application of penalties applied by PCA officers to make them proportionate with the offence - Remission of a penalty or fine ### Customs clearance process (pre-arrival and post-arrival steps) (Box 6) - Pre-arrival – electronic transmission: - Step 1: Processing of applications for exemptions and concessions - Step 2: Review for valuation - Step 3: Review for classification and origin - Step 4: Validation by approval officer of steps 2 and 3 - Post-arrival: - Step 1: 100 percent scanning of containers by port authority (images uploaded in ICUMS) - Step 2: Manifest matching (paper with pre-arrival) for all shipments – could trigger inspections. - Step 3: Documentary reviews of yellow and red referrals – could trigger inspections. - Step 4: Inspection of red referrals - Step 5: Release of goods or enforcement action *Source: Annex 5–8, tarea2025091-source-pdf - Annex 5. Key Recent Legal Reforms on Anti-Money Laundering* --- _Source: https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025091-source-pdf.pdf_