By: Soliu Ayatullahi
Absence of transparency has been identified as the major facilitator of illicit financial flows in Nigeria, research has shown.
Nigeria leads other resource-rich African economies with the outflow, put at US$ 217.7 billion, or 30.5 per cent of the total.
The Global Financial Integrity group, had in 2015, ranked Nigeria as one of the 10 largest countries for illicit financial flows in the world estimating that about US$15.7 billion of illicit funds go through our system annually.
This prompted Nigeria’s antigraft body to continuously decry how corrupt leaders and their foreign accomplices and multinational companies promote illicit financial flow in Nigeria.
“The situation we have seen in Nigeria is that corrupt government officials and their private sector collaborators use fronts and ownership structures that do not provide sufficient information about the true identities of the natural persons behind the title to hide illicit money and transfer same to safe havens in foreign jurisdictions,” the Nigeria’s Economic and Financial Crimes Commission chairman, AbdulRasheed Bawa stated in June 2021.
The problem of illicit financial flows is not only about anonymity but also on the lack of transparency on the part of the countries where these monies are stashed.
In Nigeria we see a case in which influential officials used their positions to pilfer government resources and extract maximum rent from the country’s mineral resources with minimum or no benefit to the citizens. In practical terms, billions of dollars are lost annually in royalties and fees for licenses which politically connected individuals appropriate to themselves using fronts and secret ownership arrangements. This deprives millions of Nigeria huge amounts of monies needed for development.
According to a June 2021 report by the Independent Corrupt Practices and Other Related Offences Commision (ICPC) – another anti graft agency in Nigeria, diversion of public budget in the expenditure side of revenue, direct looting of treasury, illicit financial flows (IFFs), tax evasion, misapplication of funds, deliberate elephant projects, and contract and procurement abuse have huge implication for development.
The report added that without development, there can be no peace or security and without peace and security, development is a mirage. Massive investment in infrastructure – which IFFs affects mostly – is the route to development.
Illicit financial flows explained
Illicit financial flows (IFFs) are movements of money and assets across borders which are illegal in source, transfer or use, according to the report entitled “Tackling illicit financial flows for sustainable development in Africa”.
These outflows include illicit capital flight, tax and commercial practices like mis-invoicing of trade shipments and criminal activities such as illegal markets, corruption or theft.
Move to curb flow
Antigraft bodies in Nigeria had meanwhile called for a multifaceted approach in addressing illicit financial flows and adoption of the 2030 Agenda (FACTI Panel) which provides path to financial integrity for sustainable development, showing how to redirect the resources lost from illicit flows to finance the implementation of the 2030 agenda and the achievement of the SDGs.
For ICPC, the country needs strong institutions and systems to fight corruption and Illicit Financial Flows.
The body stated that the solution to corruption, economic and security problems bedeviling Nigeria lies in building strong institutions and systems with active collaboration from state and non-state actors, according to its titled “Governance, Corruption, Rule of Law and Security in Africa”.
Calls for reversal of illicit financial flows
Due to the effect of IFFs on Nigeria’s development, anti corruption czars in the country have called on Sub-Saharan African Countries to reverse illicit financial flows and prioritise asset recoveries towards minimising the menace of corruption in the region.
The bodies called for the utilisation of proceeds from recovered assets to tackle the problem of poverty in the sub-region.
Delivering a paper titled: “Understanding the Common African Position on Asset Recovery (CAPAR)” in early July, the Nigeria’s ICPC boss said Africa could not eradicate poverty or meet Sustainable Development Goal (SDG) without prioritising asset recovery and domestic resource mobilisation.
“The sure way to diminish corruption is to improve domestic resource mobilisation in the region and also to reverse illicit financial flows. It would be a dream to assume that we would achieve it without meeting the basic results that have been set for basic mobilization,” he said.
‘Fight against IFFs in Nigeria non-negotiable’ – Nigerian leader
For the Nigerian President Muhammadu Buhari, fighting corruption and Illicit Financial Flows (IFFs) in Nigeria is non-negotiable.
The ruler of the most populous African country told Thabo Mbeki, former President of the Republic of South Africa and Chair of the AU/ECA High-Level Panel on Illicit Financial Flows from Africa during the latter visit to his country in 2019.
The visit also saw the Chair call upon the President in his capacity as the AU Anti Corruption Champion to lead the efforts to engage action from other AU Member States towards tackling IFFs at the national, regional and continental level.
In his remarks to the MDAs, Mbeki recalled the 2015 Special Declaration to address IFFs, which was a realization by African leaders of the excessive losses due to illicit outflows.
“The view was that the continent was losing resources which should have been available for its development to these illicit outflows,” he said.
Abubakar Malami, Attorney General of the Federation (AGF) for his part elaborated on Nigeria’s efforts to implement strategies to curb corruption and reduce IFFs.
“We have taken major multidimensional policy decisions relating to institutions, legislations…and above all, recognizing the need for international collaboration as it relates to the fight against corruption and the minimization of illicit financial flows”.