Checking illicit financial flows

Based on the Central Bank (CBN) interbank exchange rate of N306 to one dollar, the $157.5billion will be N48trillion. The amount is more than Nigeria’s total budgets from 2015 to 2020, and almost twice the country’s debt stock put at N25trillion as at August 2019. Illicit financial flows are a form of illegal capital flight that occurs when money is illegally earned, transferred or spent, especially as the money disappears from any record in the country of origin.

This monumental financial loss could cause incalculable harm to the economy, cripple budget implementation and general development of the country if it is not stopped. Last year, President Buhari expressed dismay that a 2015 study by an African Union panel led by former South Africa President, Thabo Mbeki, estimated that $50billion illicit funds leave the continent annually, thereby stunting Africa’s development.

Also, at his maiden address to the 70th General Assembly of the United Nations in 2015, the President urged world leaders to strengthen mechanisms for dismantling safe havens for proceeds of looted public funds and to return the assets to their countries of origin.

This time around, his focus on what Nigeria has lost to illicit financial flows within a nine-year period (2003-2012) is understandable. It came amid huge revenue shortfalls to fund public services and alleviate crushing poverty in the land. According to the Global Financial Integrity Report, Nigeria’s yearly stolen fund is worth over 60 percent of its annual budget. This is despite the present administration’s anti-corruption drive.

We agree with President Buhari that there is still a lack of sufficient campaigns to stop illicit financial transfers in Africa. At the same time, there is a need to strengthen good practices on asset recovery and return, irrespective of millions of dollars said to have been recovered in the last five years of the administration.

Nevertheless, the challenge of illicit financial flows is a huge task that the government, relevant agencies, and financial institutions must join hands to stop. A report released early this year by the Nigeria Extractive Industries Transparency Initiative (NEITI) and Trust Africa,  indicated that Nigeria lost between $15billion and $18billion yearly to illicit financial flows. Over 92 percent of the crime is reportedly committed in the oil and gas sector.

NEITI’s revelation has been corroborated by a United Nations report that between 1980 and 2009, about $1.4trillion illicit funds left Africa. This represents about half of the continent’s  Gross Domestic Product(GDP).

In another report, the Partnership for African Social and Governance Research (PASGR) notes that oil-exporting countries like Nigeria are vulnerable to illicit financial transfers. This has come at a time when the Economic Commission for Africa (ECA) reported that the United States accounted for 29 percent of illicit financial flows from Nigeria, Spain 22.5 percent, France 8.7 percent, Germany 7.7 percent, and Japan, 8.5 percent.

Altogether, the five countries are reported to have contributed 76.4 percent of total illicit financial flows from Nigeria from 1970 to 2008. The report blamed the massive illegal transfers to multinational oil firms, public office-holders, the elites, smugglers of commodities and others who swindle the country through trade mis-invoicing, tax evasion, and trade under-pricing. Therefore, we urge all African countries to come up with a workable framework to tackle illicit financial flows on the continent.

This has been reposted from https://www.sunnewsonline.com/checking-illicit-financial-flows/