The Vice President of the International Police Organisation (Interpol), Mr. Garba Umar, has revealed that ‘hundreds of thousands of dollars are being laundered out of Nigeria every hour.’ He made the disclosure at the inauguration of a training workshop for academy personnel of the Economic and Financial Crimes Commission (EFCC) in Abuja. He also stated that Nigeria has become a transit country of illicit money laundering to other African countries and the world.
He cautioned that if the trend is not checked, and indeed stopped before such proceeds of crime get to the criminals, they ‘will enjoy the fruits of their crime, while the hard working and honest Nigerians pay the price of the crime.’ The warning should be heeded immediately, and all relevant agencies should work together to reduce illicit financial flows.
It is also sad that Nigeria’s banking sector accounted for an estimated $854billion of illicit cash flows in Africa between 1971 and 2009. This figure is said to be rising steadily at an average of 12 per cent in the last ten years, and has contributed to the present slow economic growth. Only recently, the International Monetary Fund (IMF) downgraded Nigeria’s economic projections for 2024 to 3.1 per cent from its earlier forecast of 3.3 per cent, citing rising inflationary headwinds and weak macroeconomic frameworks.
According to a recent study by Afrivest, Nigeria’s public debt stock may soon hit an all-time high of N130trillion by December this year as a result of illicit financial flows and other fiscal and monetary policy failures. This raises more concerns about Nigeria’s debt-to-domestic product ratio.
The Interpol revelation should serve as a wake-up call on the government and law enforcement agencies to curb the menace. No country can make sustainable progress with rising illicit cash flows. No doubt, the illicit financial flows pose a serious challenge to the economy. We advise the government to work with the Interpol to curtail the menace in Africa and globally. Let the Central Bank of Nigeria (CBN) tighten the security in the banking sector by deploying adequate technology. Illegal transactions should be reported to the EFCC and the National Drug Law Enforcement Agency (NDLEA).
The anti-graft agencies should learn more about transnational crimes affecting different regions, the modus operandi of the criminals; identify possible solutions through regular reviews of policing capacities. More investigations should be carried out on suspected illicit financial barons. Proper coordination is required to curtail illicit financial flows. The menace has impacted negatively on the economy and reduced revenue collection. It has also contributed to poor investment inflows and the escalation of poverty.
There are about 60 international tax havens and secret jurisdictions across the world, with thousands of disguised corporations, shell companies, anonymous trust accounts, fake charitable Foundations, money laundering and transfer pricing mechanism. This is a big threat to global economy. In 2015, the African Union (AU) panel stated that about $50billion illicit funds leave the African continent annually. Of this amount, the report showed that $2.5billion was as a result of illegal commercial activities. By 2022-2023, the loss amounted to $88billion annually. This represents 3.7 per cent of the continent’s Gross Domestic Product (GDP).
The Foreign Direct Investment (FDI) within the same period stood at only $48billion and $59billion, respectively. Nigeria also lost $157.5million between 2003 and 2013. An estimated $1.4trillion was reported to have left Africa between 1980 and 2009, the bulk of this amount, representing 70 per cent of the total capital flight is said to have come from Nigeria. The development has left Africa poorer.
This has been confirmed by the United Nations Conference on Trade and Development (UNCTAD). The report stated that the irony of Nigeria’s economic situation stems from the fact that the federal government has not been tackling illicit financial flows as it should and other corrupt practices in the Ministries, Departments and Agencies (MDAs). This has been attributed to weak public financial management system. This can possibly explain government’s dependence on excessive borrowing. The IMF and the World Bank reported that funds stolen from Nigeria could have provided for about 60 per cent of the revenue of the 2024 budget. Also, the Global Financial Integrity (GFI) in its recent report says that Nigerian banks have a share of the blame.
Reports from the Nigeria Extractive Industries Transparency Initiative (NEITI) have corroborated the humongous amount the country loses in capital flight as a result of money laundering activities. Let the government design new tactics to tackle illicit financial flows. Those who profit from illicit financial flows should not be allowed to ruin the economy.