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Nigeria has reportedly been adjudged as a major transit route for illicit financial flows in Africa. A recent ranking on money laundering and terror financing by Basel Institute of Governance, Switzerland, ranked Nigeria 17th out of 128 countries in the world. This represents a score of 6.77 out of 10. Nigeria remains a high risk to terrorist attacks. According to the report, countries with high risk of Money Laundering and Terrorist Financing (ML/TF) are believed to suffer from high risks of environmental crimes.
This is why Nigeria and 16 other countries in Africa have recently agreed to jointly curtail money laundering and terrorism funding in the region. The action plan was the outcome of the Financial Intelligence Units meeting in Abuja. The affected countries are Benin Republic, Burkina Faso, Cape Verde, Comoros, Cote d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Sao Tome and Principe, Senegal, Sierra Leone and Togo.
These countries have agreed to provide effective solutions to check terrorism funding and the proliferation of illegal weapons in the region. About 80 per cent of the funds available in these countries is outside the banking system. The Secretary to the Government of the Federation, Boss Mustapha, says that terrorism activities have been boosted through multiple sources of funding available at both local and international fronts. Therefore, strong and effective regional measures have become expedient to tackle the scourge. Not long ago, the Chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye, raised the alarm that Nigeria accounts for about $10 billion (over N4trillion) that the African continent loses to illicit financial flows.
The $10billion represents 20 per cent of the estimated $50billion loss to Africa. The African Union (AU) has estimated that the continent is currently losing about $50billion through profit shifting by multinational corporations, with Nigeria accounting for the lion share. The Global Financial Integrity Group revealed that Nigeria accounted for a total $858billion illicit cash between 1971 and 2009.
Illicit drug courier, illegal fuel exports and oil bunkering accounted for the higher percentage of the loss. It is unfortunate that Nigeria has topped the list of nations in Africa in IFFs transactions. In September 2019, President Muhammadu Buhari disclosed that Nigeria lost an estimated $157.5billion to illicit financial transactions between 2003 and 2012. The development can weaken the economy and cripple budget implementation and general development of the country if it is not checked. In 2015, a study by African Union Panel led by former South Africa President, Thabo Mbeki, estimated that over $50billion illicit funds left the continent annually, thereby stunting Africa’s development. Sadly, there is insufficient campaign to stop the menace. The scourge must be tackled by the government, relevant agencies and financial institutions.
The Nigeria Extractive Industries Transparency Initiative (NEITI) and Trust Africa point out that Nigeria loses between $15billion and $18billion or N5.5trillion annually to illicit financial flows. Over 92 per cent of illicit fund is reportedly committed in the oil and gas sector. NEITI’s report 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).
Also, a group known as Partnership for African Social and Governance Research (PASGR) recently disclosed that oil-exporting countries like Nigeria and Angola are vulnerable to illicit financial transfers. The report came at a time when the Economic Commission for Africa (ECA) reported that the US accounted for 29 per cent of illicit financial flows from Nigeria, Spain 22.5 per cent, France 8.7 per cent, Germany 7.7 per cent, and Japan 8.5 per cent.
In all, the five countries contributed 76.4 per cent of total illicit financial flows from Nigeria and other countries in the sub-region from 1970 to 2002. The figures have since increased since terrorism has worsened. All countries in the sub-region must jointly wage a war against illicit funds. The ICPC, EFCC and relevant security agencies should work together to contain illicit financial transactions.
This has become more urgent in view of widespread terrorism financing. For instance, the terrorist group, Boko Haram, reportedly received over $70 million between 2005 and 2011. The amount may have more than doubled by now. The banking system must be sanitized as a way of checking illicit funds transfers. The National Assembly should enact stricter laws against illicit financial flows. This has become necessary because financial institutions have become more vulnerable to illicit financial transactions.
