Nigeria And Illicit Financial Flows: Stop The Bleeding!
A Civil Society Cluster groups drawn from different civil society organizations in Nigeria will on Tuesday, 8 December 2015 at Unity Fountain Ground, Maitama District, Abuja, starting 8.30am, hold a rally to commemorate the International Anti-Corruption Day.
The purpose of the rally, tagged #StoptheBleeding, is not only to create public awareness of the magnitude and socio-economic impacts of corruption but the broader issue of Illicit Financial Flows (IFFs) in Nigeria. IFFs are funds which circulate and exit the continent, which may or may not have been earned legally or illegally, without going through the appropriate revenue processes and routes and ultimately denying billions in revenue to the nearly empty Federal treasury.
If the metaphor aptly captures some essential truth that Nigeria is the “Open sore of the Continent (Africa)” like Wole Soyinka claims in his famous book of the same title, then, that sore is bleeding at an alarming rate and requires urgent surgical attention. The African Development Bank had estimated that Nigeria lost $83.3 billion between 1960 and 2011 to corruption. According to the Thabo Mbeki report on IFFs, Africa is losing over $50 billion dollars a year to IFFs and the bulk of that stems from Nigeria with the largest economy in Africa. Between 1970 and 2008, the cumulative amount lost by Nigeria to IFFs is $217.7 billion, which accounts for 30.5 percent and 79 percent of the entire share of IFFs for Africa and West Africa respectively.
Surprisingly, the largest source of this money comes not from corruption like many would have imagined but from intra-company trade or unfair commercial practices such as mis-invoicing, trade mispricing, tax evasion, offensive tax avoidance, money laundering, amongst others. The Mbeki report took great pain to stress that corruption accounts for 5 percent of these funds while commercial practices account for 65% of the money circulated through Double Taxation Treaties and spirited away from locations where the bulk of the money might be earned.
Literatures on IFFs have empirically demonstrated the development problems faced by countries with high incidence of IFFs. Generally, IFFs have the potential for lessening the capacity of developing countries, including Nigeria, to mobilise enough domestic capital for investment; complicate state indebtedness and dependency; inhibit economic growth through its erosion of investment; deter potential progress in the realm of human development and the realization of basic human rights; distort judicious allocation of public resources; and create a vicious cycle of corruption and all forms of illegal commercial activities.
Since the restoration of democracy in May 1999, despite huge resource base, Nigerians still yearn for good education and health facilities. Access to water is limited and poverty rate is increasing amidst high incidence of corruption and other forms of IFFs. Quantifying our lost in terms of its positive impact on the economy if not illicitly transferred, $217.7 billion lost to IFFs between 1970 and 2008 is sufficient to construct 870,000 standard schools in Nigeria at N50m each; construct 40,000 world class hospitals at N1b each; and provide clean water system for every street in Nigeria at N10m each.
We applaud the current administration’s commitment to tackling corruption, especially in the oil and gas sector. Nevertheless, it is important that the scope of engagement is broadened to ensure that multi-layered activities of perpetuators of IFFs are blocked and those culpable of such acts face the wrath of our laws. We thus call on the government to institutionalise the fight against corruption and other forms of IFFs in the country. Amongst necessary steps to be taken are: composition and inauguration of National Council on Public Procurement; enactment of Whistle Blower Act; and enhancement of the capacities of the anti-graft agencies by guaranteeing that they have financial and prosecutorial independence as well as security of tenure of office. The tax agencies also need to show great commitment and integrity in the delivery of their mandate by ensuring that gaps allowing taxes evasion and offensive avoidance are blocked.
As we celebrate the International Anti-Corruption Day, we call on the general public to join us at Unity Fountain Ground, Abuja, on the 8th December 2015 for the March against against Illicit Financial Flows from Nigeria.
Centre for Democracy and Development
Civil Society and Legislative Advocacy Centre
Civil Society Network Against Corruption
Tax Justice and Governance Platform
Publish What You Pay
Say No Campaign
Protest To Power Movement
Natural Resource Governance institute
Youth Initiative for Advocacy, Growth and Advancement