Commentary: Need To Dismantle Safe Havens For Looted Funds In Nigeria

The recent alarm raised by the chairman of the Independent Corrupt Practices and other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye, that Nigeria accounts for over 4 trillion naira that Africa loses to Illicit Financial Flows (IFFs), has underscored the urgent need to tackle the challenge. The amount represents 20 percent of the estimated 50 billion dollars that the continent loses, and about 30 percent of the current federal budget.

IFF is a form of illegal capital flight that occurs when money is improperly earned, transferred or spent. In most cases, such funds have no trace in the record books of the country of origin and the earnings are not repatriated to the country from where they were taken.

Owasanoye’s revelation is contained in the African Union (AU) Report on illicit financial flows, which estimated that Africa is currently losing nearly 50 billion dollars through profit shifting by multinational corporations, with Nigeria accounting for the lion’s share. This has also confirmed the Global Financial Integrity Group’s report that Nigeria accounted for 858 billion dollars illicit crash between 1971 and 2009. The report had listed illicit drug courier, illegal fuel exports and oil bunkering for the large number of the loss.

For decades, Nigeria has topped the list of African countries on IFFs transactions. President Muhammadu Buhari had, in September 2019, disclosed that Nigeria lost an estimated 157 billion dollars to illicit financial transactions between 2003 and 2012. Based on the current exchange rate, this will amount to over 48 trillion naira, which is more than Nigeria’s budgets from 2015 to 2020, and close to Nigeria’s debt stock put at 36 trillion naira.

This is a worrisome development that may harm the economy, hamper budget implementation and general development of the country, if it is not promptly checked. In 2015, a study by Africa Union (AU) panel, led by a former South African President, Thabo Mbeki, estimated that over 50 billion dollars illicit funds left the continent annually, thereby stunting Africa’s development.

At his address to one of the United Nations General Assemblies, President Buhari 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. That call is still relevant today. The campaign to stop illicit financial transfers has not been so effective. There is need therefore, to strengthen good practices on asset recovery and return.

We urge the government, relevant agencies and financial institutions to concertedly check the rising cases of illicit financial flows. A report released by the Nigerian Extractive Industries Transparency Initiative (NEITI) and Trust Africa indicated that Nigeria loses about 5.5 trillion naira yearly to illicit financial flows. Over 92 percent of the crime is reportedly committed in the oil and gas sector. NETT’s revelation was corroborated by a United Nations report that between 1980 and 2009, about 1.4 trillion dollars illicit funds left Africa. This is about half of the continent’s Gross Domestic Product (GDP).

Similarly, the Economic Commission for Africa (ECA) reported that the USA accounted for 29 percent of illicit financial flows from Nigeria, Spain’s 22.5 percent, France 8.7 percent, Germany 7.7 percent and Japans 8.5 percent. Altogether, the five countries 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 elite, smugglers of commodities and others who swindle the country through trade mis-invoicing tax evasion and trade under pricing.

Therefore, we call on the anti-graft agencies and other relevant security agencies to jointly tackle the menace. This has become necessary considering the reports that terrorist groups, such as Boko Haram received over 70 million dollars between 2005 and 2011. The amount may have increased by now. Above all, let the regulatory authorities monitor the banks and other financial institutions against illicit money transfers. The National Assembly should also enact stricter laws against illicit financial flows.

WRITTEN BY PROF. ANTHONY EZE

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