CNB News – Below is a comprehensive review of the Illicit Financing and Its Repercussion on Nigeria Economy by Emmanuel Ehijile
President Muhammedu Buhari at the 74th United Nations General Assembly in New York, calls on other African leaders to seek pragmatic ideas on how to strengthen anti- corruption institutions in order to reduce illicit financial flows.
Developing Countries and indeed Africa is lossing massive volume of wealth through illicit financial flows (IFFs) estimated at $ 1.1 trillion annually as at 2013 while Nigeria contributing 30 per cent yearly. These new form of Imperialism increased poverty and under- development in the Continent. According to Council for International Development, IFFs is the transfer of illegally earned assets or the hiding of legally earned asset to facilitate illegal tax evasion.
Organization for Economic Cooperation and Development (OECD), postulated that, there is a consensus that IFFs not only surpass official development assistance but even the sum of those aid flows and Foreign Direct Investment. Switzerland alone have repatriated over $ 723 million to Nigeria in the past 10 year. Despite, that Nigeria is still in abject poverty, Infrastructural deficit, High Foreign Debt, financing Budget deficit, High level of illiteracy and others. The nation still in a lamentable Ocean especially, Structural changes possess a formidable threat to National Development.
The government must intervene speedily to save the nation from gross illicit financial flow out from the nation. Absence of data on asset recovery is an impediment to recovery stolen funds. IFFs threaten Globalization movement due to Multinational Corporation excesses – Trade Mispricing, Tax Avoidance, Money Laundry, Piracy and human trafficking. Massive illicit economies facilitate a Shadow Financial System.None of the ill-gotten wealth invested in local banks in order to avoid detection.
How illicit economy effect economic development.
The major hindrance to Nigeria industrialization over the decade due to illicit financial flows;
- illegal oil and mineral exploitation contributing 92.9 per cent and estimated at $217billion flowed out between 1970 and 2008. Nigeria was losing an estimated 100 000 – 250 000 bpd.
- Threat on National Security; Illicit Arms Smuggling endanger National Security with the trends of Terrorism financing is a core component of IFFs while Kidnaping and Piracy through the Gulf of Guinea estimated about $2 billion annually.
- Drain on Foreign Reserves; foreign exchange stock from being drastically drawn down.
- Counterfeit and Substandard goods
- Human Trafficking; Nigeria’s that were smuggling out of the country estimated 3.4 million are crossed the globe; the modern neo colonialism.
- Lack of Good Governance and Institutional failure; According to Nigeria Extractive Industries Transparency and Trust Africa said Nigeria losses between $15 and $18 billion to IFFs annually. Undermines the effectiveness and legitimacy of governments, compromising ability to support sustainable development.
- Discourage legimate investment; it’s distort competition and siphoned of resources away from productive investment.
- Increase Socio-economic infrastructural deficit
- Lack of transparency and accountability and poor is the major source of IFFs which breeds corruption.
Nigeria government signed a Memorandum of Understanding (MoU) with Switzerland and World Bank to repatriate $ 321 million of recovered Assets . Western Countries constitute a Safe Heaven for illicit financial flows for corruption Public Officials and Multinational Corporations; Multinational corporations must be transparency and accountable to public by declaring – Annual Profits , losses and tax returns Because, illicit flows contribute about 10 per cent of Europe GDP. Recently, money laundering dwarf aids real estates of the Arab economy. Existing bilateral agreement between Nigeria and other countries for the repatriation of our National wealth must be strictly adhered too.
The Dependency theories of the Western nations have collapse Africa economies, the total IFFs can pay up the entire African Foreign Debts. Investing in technology to enhance efficiency of Economic and Financial Crimes Commission and related institutions in fast tricking Economic crimes and in gathering Data’s.
The Federal Ministry of Finance, Budget and National Planning in synergize with Ministry of Justice initiate strategies policy inter-linkage including Regulation and supervision of financial institutions, Reform the tax system, Criminal justice, Governments and public administration corrosive integrity and Enabling transparency in international corporation arrangements. The estimated amount of money laundered globally in 2009, 2.7 per cent of global GDP.
Government must initiate Strategic policies whereby money looted are invested into critical national industries – Kaduna Textile, Nigeria Sugar Company ,National Refineries , National Steel Asset, Nigeria Railway and Others. Reviving ill Health, Educational system and Social infrastructure development will tremendously have a massive multiplier effect to the economy.
Nevertheless, Global advocate in line with identified ways of mitigating illicit financial flows are implement the existing global governance, transparency and accountability, investment in technology and cyber security and institutional reforms. In achieving this, Government must with collaboration civil societies in curbing imperialism.
EMIANA EMMANUEL EHIJELE