Illicit financial outflows have continued to dog Nigeria’s economy, as recent reports indicate that the country lost an astonishing $140 billion (about N224 trillion) to the problem between 2002 and 2011.This latest disclosure was made by the Director General of the Securities and Exchange Commission (SEC), Ms. Arunma Oteh. The illegal movement of such a huge sum out of the country is capable of undermining our fledgling democracy and economy, if the illegal activity is not immediately checked.
The SEC boss who made the disclosure at the recent Second Annual Business Integrity Lecture organised by the Convention on Business Integrity, in Lagos, said the outflows constitute a major obstacle to economic growth. Nigeria is ranked in the top ten bracket of countries in the world with illicit financial outflows. We also top the inglorious list among African countries, with an estimated $10 billion loss annually.
A breakdown of the illicit financial outflows shows that the shady transactions are in form of money laundering, tax evasion, oil bunkering, transfer pricing, drug trade, embezzlement and sundry corrupt practices. Although the statistics were not specific on how much Nigeria lost to each of the illegal activities, the scope of the loss is instructive.
It is ironic that while the country continues to be ravaged by poverty, unstable electricity supply, insecurity, unemployment, infrastructure decay, debt overhang and other socio-economic problems, funds are being illegally moved out of the country. The danger in the undocumented and shady movement of these funds is that they may be used to fund terrorism both locally and abroad.
For instance, it has been speculated that the Boko Haram terrorist group had, between 2006 and 2011,received over $70 million, through money laundering, oil bunkering, kidnapping and illicit drug trade. Currently, Boko Haram is listed as the “seventh richest terror organisation in the world”, according to a recent report by the USA-based organisation, Global Financial Integrity.
It is alarming that illicit cash outflow from Nigeria is growing steadily at a disturbing average of 12 percent within the years covered by report quoted by the SEC Director General. Also shocking is the report that many organisations operating in Nigeria, including multinationals, are doing next to nothing to tackle illegal fund movements. In fact, some of them have been fingered as collaborators on the illicit activity.
This report is even more disheartening when it is considererd that these illegal funds are fifteen times higher than the Federal annual budget since the inception of the present democratic dispensation. The sum involved could be used to transform the economy and provide the much needed security and infrastructure in the country.
There are many factors responsible for this unpatriotic act. They include corruption, a factor the World Economic Forum (WEF) has identified as the “second most problematic factor” in doing business in Nigeria. Greed and bad leadership, resulting in poor governance, have also made matters worse.
How can illicit financial outflow be minimised, if it cannot be stopped? To check this trend, government and the various institutions charged with checking illicit cash flows must stiffen and enforce the sanctions on defaulters. No country can continue in this way without undermining its corporate existence. It is high time government found the political will to check corruption and illicit fund transfers.
In the same vein, corporate organisations such as banks should adhere to the code of ethics for fund transfers. Let them do the right thing and eschew shady transactions, no matter how profitable. A robust corporate governance has become mandatory for all corporate organisations in the country.
We also urge the National Assembly to strengthen all anti-graft laws and prescribe such stiff punishment for offenders that will make illicit fund transfers a big risk. In these times of insecurity, all hands must be on deck so that terrorist groups will not have access to slush funds with which they could destabilise the country. This is a serious problem that needs urgent attention.
