Nigeria and other African countries lose about $50 billion yearly to illicit financial flows, Minister of Finance and Coordinating Minister of the Economy Ngozi Okonjo-Iweala has said.
The minister spoke in Washington DC, United States at the on-going International Monetary Fund (IMF) and the World Bank Group meetings. She said the bulk of the transfers was effected “through tax evasion, transfer pricing; meaning that their profits are exported to jurisdictions where they pay less taxes, so we can’t tax this.”
She also accused those involved of engaging in “mixed pricing over-invoicing and under-invoicing of goods and services that they bring into our countries, as well as corrupting our officials and the likes in the continent.”
To address the menace, she said a group of African countries approached the IMF and the World Bank for assistance. She said the African Finance Ministers constituted a panel, chaired by former South African President Thabo Mbeki which looked into the matter. “Its findings revealed that almost $50billion a year is expropriated or disappeared from Africa, illegally.”
Mrs Okonjo-Iweala said all the African Finance Ministers requested for help from World Bank and the IMF to interface with the receiving countries and build capacity to track and stop this illegal transfers of the continent’s wealth.
The ministers are seeking the engagement of the Bank and the Fund for the requisite training and skills required to deal with this type of crime, she added.
Mrs. Okonjo-Iweala, who is at the meeting with the Acting Governor of the Central Bank of Nigeria CBN), Dr. Sarah Alade, Director, Budget Office, Dr. Bright Okogu, Director-General, Debt Management Office (DMO), Dr. Abraham Nwankwo and other senior officials including, Dr. Ahmed Mansur, said the economic developments in the United States and Europe, have thrust upon Nigeria the need to adopt certain measures to protect the economy.
“The biggest focus about these meetings is looking at the global recovery , looking at a group of countries and what needs to be done for them to either strengthen their position and make sure that whatever the circumstance, they are able to prevail and come out with a strong economy.
“The other issue is that the recovery is on, but the one in the Euro-Zone is quite fragile. The reason for the fragility may be what looks to be an extended period of low inflation, which is not a good thing because it means that demands for goods and services is suppressed, and there’s even a fear of deflation, of fallen prices in Europe, as it happened in Japan.”
The implication, she argued, is that if these countries in Europe continue to suffer from a period of low pricing, internal demand for goods and services will be low, meaning that the rate of recovery for those economies will be either slower or reversed.
According to her, of greater concern to Nigeria is the tapering that is taking place in the US that has to do with the phasing out of liquidity being pumped into the economy. She warned that the development has very serious implications for Nigeria’s economy and its impact on portfolio flows, as well as bonds in the European market.
She said the varied global economic developments have place on Nigeria the need to continue to improve on her economic buffers, “because (what) they are telling us in the Euro-zone (is that) they are not sure which direction it is going. In our case, that means we have to build our reserves, shore up our Excess Crude. We have to maintain very solid macro framework, because of our ties to the Euro-zone, in case something happens there. We are already doing that, we just need to emphasise that we must continue doing that.”
On job creation, Mrs. Okonjo-Iweala said the World Bank and the IMF have agreed to create a Social Protection Programme to address the issue of growth and job creation for Nigeria and some other developing countries at the bottom end of the development ladder.
She said Nigeria came into the spring meetings, well prepared. “We just announced our rebased Gross Domestic Products (GDP), and this was very favourably accepted and looked upon, particularly when the institutions themselves participated, especially in the quality control. The rebase is stronger, it was well received; it elicited a lot of interest among participants and also private sector people who came to say they were interested in investing,” she said.
She said Blumberg Green, a global investment firm, is willing to invest $250million in grain storage facility in the country, adding that the firm has already sent a team to the country that is working with the Minister of Agriculture.
“They want to make Nigeria the hub for grain storage and cold storage in Africa for agriculture logistics, and they want to invest $250million. They have their team, but the fact that we have the largest economy in Africa, is making them feel that this may be the place to make the hub.”
