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Illicit transfers hit N103tr in 15 years

By Kingsley Jeremiah (Abuja)
30 September 2020   |   4:30 am
As admitted by President Muhammadu Buhari, Nigeria is struggling with illicit financial flows (IFF) as successive budgets suffer setbacks in the last 15 years.

• Govt spends N63.22 trillion budget same period
• ‘How corruption in political appointments worsen illicit financial flows’

As admitted by President Muhammadu Buhari, Nigeria is struggling with illicit financial flows (IFF) as successive budgets suffer setbacks in the last 15 years.

Judging by the current exchange rate, the country’s cumulative budget, from 2004 to 2018, stood at about N60 trillion, while more than N103 trillion was stolen in illicit transfers.

President Buhari had told audience at the 74th United Nations General Assembly that his country lost $157.5 billion dollars to illicit financial flows between 2003 and 2012. But stakeholders, at different interactions with The Guardian, insisted that the flow has maintained steady increase to date.

In the face of the ravaging effects of COVID-19, United Nations (UN) had said curbing capital flight and illicit financial flows in Africa could generate new funds of up to $88.6 billion per year to respond to the COVID-19 crisis.

In 2004, about $1.680 billion was stolen from Nigeria. The figure rose sharply to $17.8 billion in 2005, stood at $19.6 billion in 2006 and was $19.3 billion in 2007. $24.1 billion was stolen in 2008;it was $26.3 billion in 2009 and $19.3 billion in 2010.

The leaks stood at $$18.3 billion in 2011; $4.9 billion in 2012; and $26.7 billion in 2013. From 2014 to 2018, the figure hovered around $18 billion to $20 billion, bringing average loss to $17,804 billion. The total IFFs in 15 years is $271 billion. If calculated based on the current exchange rate of N381 to one dollar, the losses stand at about N103 trillion.

In 2004, the country’s budget was some N1.19 trillion; in 2005, it was N1.6 trillion, it stood at N1.88 trillion in 2006, in 2007, it was N2.39 trillion, N2.74 trillion in 2008, N3.05 trillion in 2009 and in 2010 it stood at N4.4 trillion.

It was N4.7 trillion, N4.9 trillion, N4.99 trillion, N4.96 trillion, N4.4 trillion in 2011, 2012, 2013, 2014 and 2015 respectively before rising to N6.06 trillion in 2016. In 2017, it was N7.4tn and in 2018, stood at N8.6tn. This brought total budget to N63.22 trillion.

ANALYSIS from NEITI and the Partnership for African Social and Governance Research (PASGR) showed that the development, occurring mainly in the oil and gas sector, is witnessing steady increase.

PASGR had reported that the top five destinations of IFFs from Nigeria are United States (29.0 per cent), Spain (22.5 per cent), France (8.7 per cent), Japan (8.5 per cent), and Germany (7.7 per cent). Cumulatively, the countries accounted for 76.4 per cent of total illicit financial flows from Nigeria.

A number of Nigerians, mainly politicians and public servants, have been indicted of illegal transfer of funds out of the country. Just like the Panama papers, a US government’s Financial Crimes Enforcement Network (FinCEN) document included names of notable Nigerians.

Illicit financial flow is seen as a form of illegal capital flight that occurs when money is illegally earned, transferred, or spent. This development is however impossible without support from financial institutions, public servants and foreign countries.

The International Money Fund, World Bank, Central Bank of Nigeria and the Organisation for Economic Co-operation and Development have signed treaties and developed policies to address the menace but the flow still persists.

THE FinCen Files involving $2tn of transactions revealed this week had shown how some of the biggest banks have allowed criminals to move dirty money around the world.

Executive Director at Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa, does not believe that the efforts of government and global organisations are working. Musa said the current administration is also not doing enough despite much talk about corruption.

Musa also noted that key political actors claiming to be fighting corruption are clueless regarding the depth of illicit flows and ways to tackle it. When former heads of state and governments, former central bank governors, business and civil society leaders and prominent academics revealed an interim report by the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda, global leaders were blamed for not doing enough while world’s poor were being drained by tax abuse, corruption and financial crimes.

The initiative established by the 74th President of the UN General Assembly and the 75th President of the UN Economic and Social Council, showed that there is $500 billion losses to governments each year from profit-shifting enterprises; $7 trillion is currently private wealth hidden in haven countries, with 10 per cent of world GDP held offshore; there is still money laundering of around $1.6 trillion per year, or 2.7 per cent of global GDP.

NIGERIANS and their foreign collaborators are responsible for moving out the stolen funds, former Director General of the West African Institute for Financial and Economic Management, Prof. Akpan Ekpo told The Guardian.

Ekpo wants government to engage countries where IFFs are domiciled to cooperate in rejecting them and providing information to Nigerian authorities. He said that mounting pressure on the UN as well as developed and emerging economies could reduce IFFs.

Trade mis-invoicing was identified as one of the means for capital flight. Ekpo said it was necessary that those involved in detecting and tracking illicit financial flows be trained and retrained so that they could be ahead of culprits.

To him, the training should not only be restricted to detectives and intelligence officers, but should include those working in financial institutions. He suggested severe sanctions for those caught in the act.

Usual appointment into key positions in Nigeria has remained political, and not based on capacity utilisation. This development, according to Professor Wumi Iledare, Ghana National Petroleum Corporation’s Chair of Petroleum Economics at Institute of Oil and Gas Studies, University of Cape Coast, is a critical factor feeding the flow.He described this as personalised governance and the politicisation of professional appointments.

“Even promotions in the oil and gas institutions have politics written all over it. Subsequently, you have leakages in the sector in terms of flow,” Iledare said.

According to him, the current government lost the opportunity to institute corrective measures in 2015 and 2018. Segun Ajibola, Professor of Economics, Babcock University, linked the development to the increased modernisation and fusion of the global space, adding that Nigeria’s weak governance structure is aiding the menace.

“Such outflows are leakages from the domestic economy, thereby depleting available funds for developmental purposes. We need this administration to strengthen the institutional, legal/judicial and administrative structures in the country,” Ajibola stated.
DIRECTOR of the Centre for Democracy and Development (CDD), Idayat Hassan, said the country had no political will and capacity to fight IFF.

According to her, emphasis has been on combating corruption while funds stolen through corruption remained a tiny fraction of IFF out of the country.

“The country needs a framework, capacity and political will to address IFF. Beyond the oil sector, the IFF from the mining sector is a whole lot, Hassan stated.

An energy expert, Michael Faniran, sees crude oil theft as major source of IFF that must be urgently tackled. Citing figures from NEITI and Nigeria Natural Resource Charter (NNRC), Faniran said Nigeria lost about $41.9 billion to vandalism and theft of crude oil and refined products within 10 years (2009 to 2018).

At a time the country is struggling with dwindling revenue in a fragile economy, reducing oil theft should clearly be an urgent national priority, he said.

“With such amount of money in illicit flow out of Nigeria, it will not be difficult for such people to prosecute any security agenda against Nigeria as we can see in various security issues across the country,” Faniran said.