Nigeria loses $77.7bn to illicit financial flows in 10 years — Report

By Yinka Kolawole

A new report by Global Financial Integrity (GFI), a United States-based think tank, has revealed that Nigeria lost a total of $77.7 billion to trade-related illicit financial flows (IFFs) over a period of 10 years, between 2013 and 2022.

IFFs refer to cross-border movements of money or value that are illegally earned, transferred, or utilized encompassing proceeds of crime, corruption, and practices like tax evasion.

In the report titled, “Trade-related Illicit Financial Flows in Africa, 2013-2022”, GFI noted that IFFs which occurred via trade mis-invoicing represent a formidable barrier to Africa’s inclusive growth and economic sovereignty, adding that the new report captured trade-related value gaps for all Sub-Saharan African nations between 2013 and 2022.

According to GFI, South Africa topped the list with an estimated $478.08 billion in cumulative trade value gaps with all trading partners, reflecting massive undeclared or mispriced transactions.

The report stated: “As a share of all sub-Saharan Africa, South Africa accounted for 42 per cent of the region’s cumulative trade-related IFFs, highlighting the high concentration of leakage among the region’s largest commodity exporter.

“A second tier of countries have also hemorrhaged significant sums. Nigeria (approximately $77.7 billion), Ghana (approximately $54.1 billion), Côte d’Ivoire (approximately $47.7 billion), and Kenya (approximately $47.5 billion) each accumulated tens of billions of dollars in trade value gaps over the period 2013-2022.”

The report also x-rayed top ten African countries’ cumulative trade value gap with advanced economies during the ten-year period with South also topping the bracket.

“South Africa emerges as the largest source of trade mis-invoicing with advanced economies, with an estimated $238.4 billion trade value gap in 2013-2022 (well ahead of Nigeria’s $29.7 billion in this subset). “South Africa’s top ranking in trade with developed countries underscores its extensive commerce with Europe, North America, and other advanced markets and suggests that substantial under-invoicing of exports or over-invoicing of imports is occurring in those channels (for example, in the export of precious metals or the import of high-value manufactured goods).

“Nigeria is the second-largest in absolute terms with advanced economy partners ($29.7 billion), reflecting primarily oil trade with destinations like the United States and EU.

“Other countries in the top 10 by cumulative trade value gap with advanced economies include Nigeria ($29.7 billion), Côte d’Ivoire ($24.6 billion), Ghana ($20.5 billion), Angola ($19.0 billion), Kenya ($14.2 billion), Madagascar ($11.1 billion), Cameroon ($9.8 billion), Gabon ($9.5 billion), and Senegal ($9.3 billion). This list is broadly similar to the all-partners list,” the GFI report stated.

On the implication of illicit outflows on development, GFI stated: “Every dollar siphoned out of African economies is a dollar not taxed or invested at home, directly reducing the resources available for public expenditure. For instance, tax revenue losses due to IFFs in Africa are estimated at around $17 billion per year.”

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