The vulnerability of the Nigerian oil and gas sector has made it a haven for Illicit Financial Flows (IFFS), contributing a whopping 92.9percent of the total amount of IFFs in the country, according to a report presented in Abuja, Wednesday.
Of this figure, oil bunkering is said to account for about 35percent while commercial transactions by multinationals operating in the country’s oil and gas sector – using tax evasion, money laundering and transfer pricing – account for more than 60percent of Nigeria’s IFFs, the report which referenced a 2017 research by Trust Africa, noted.
The report titled ‘Averting Illicit Financial Flows in Nigeria’s Extractive Industry’, was commissioned by the Nigerian Extractive Industries Transparency Initiative (NEITI) and compiled by DataPro, with support from Trust Africa.
Presenting the report to stakeholders in Abuja, Mr. Abimbola Adeseyoju, also noted that Nigeria accounted for 30.5percent of all illicit financial flows from Africa between 1970 and 2008, according to findings by the High Level Panel (HLP) of the African Union Commission/United Nations Economic Commission for Africa (AUC/ECA).
The AUC/ECA report estimates that Nigeria lost about $217 billion to illicit financial flows within the period.
Reiterating the severe impact IFFs has had on the Nigerian economy, Adeseyoju who cited various case studies of IFFs in Nigeria, said it has contributed to draining the country’s external reserves, reduced tax collection, worsened inflation and widened income gaps.
The report listed monolithic economy, high political influence, dominance of government bureaucracy, high level of bribery and corruption, technical and structural complexity as well as the cash based nature of the nation’s economy as enablers that has left the country more vulnerable to IFFs.
Speaking at the event, Executive Secretary of NEIT, Mr. Waziri Adio, said it was worrisome that latest figures estimate that African countries lose between $50 to $60 billion annually, with Nigeria accounting for 30 percent of the loss.
“Focusing narrowly on what’s paid and received is a slice of the pie, we must go beyond looking at how much companies paid, to look at how much they should have paid, that’s where IFFs come in,” Adio said.
Adio added that Nigeria must focus on how to reduce IFFs to the barest minimum, if not eliminate it totally, in order to ensure that resources from oil and gas sector serve Nigerians.