AfDB Seeks End To Illicit Financial Outflows From Nigeria | Independent Newspapers Limited
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AfDB Seeks End To Illicit Financial Outflows From Nigeria

Posted: Jul 11, 2015 at 12:35 am   /   by   /   comments (0)
Dr. Akinwumi Adesina

Dr. Akinwumi Adesina

African Development Bank (AfDB) has urged stakeholders to intensify efforts to chart a course for improving Domestic Resource Mobilisation (DRM) and develop a national compact against illicit financial flow out of Nigeria.

AfDB Country Director, Nigeria, Dr Ousmane Dore gave the charge in Abuja during  a keynote address he delivered at a “Multi- Stakeholders’ meeting on Illicit Financial Flows (IFFs) out of Nigeria”.

The meeting was organised by the Centre for Democracy and Development (CDD).

Dore said that sustained domestic resource mobilisation and utilisation was a sine qua non for driving sustainable broad-based economic growth, development and transformation.

He said, while Nigeria had embarked on milestone reforms aimed at improving the country’s DRM, large scale illicit financial flows out of the country still required urgent attention.

“Global Financial Integrity ranked Nigeria 7th among the top 10 highest illicit capital outflows in the developing world and first in Africa on the cumulative illicit capital outflows during 2001 to 2010.

“Some of the push factors in illicit capital flows include mainly issues like corruption perception indicators, the size of the underground economy and weak regulatory institutions,’’ Dore said.

He said AfDB recently commissioned a study entitled, “Nigeria: Illicit Financial Flows due to Trade Misinvoicing, 1960-2012”, with its report focused on trade misinvoicing.

According to him, Nigeria has for many decades experienced serious problems with trade misinvoicing in the form of over-invoicing of imports and under-invoicing of exports for the purpose of shifting money out of the country.

“Between 1960 and 2011, Nigeria experienced cumulative illicit financial outflows totalling 83.3 billion dollars or 5.6 per cent of total goods trade through trade misinvoicing only.

“Export under-invoicing takes the larger share of 44 billion dollars while the balance of 39.3 billion dollars was due to import over-invoicing,’’ he added.

Dore stressed the need for government to undertake critical tax reforms with focus on regulatory, institutional and legal issues, including reduction in complications in tax assessment, computation and collection.

He advised government to ensure proper sequencing of the reform efforts to increase success and unleash the high potential of pension and insurance funds for efficient and innovative use.

He stressed that the reforms should ensure a broader tax base and better tax conditions capable of harnessing untapped tax potential, especially through formalisation of informal sector activities rather than the taxpayers.

“The introduction of the Tax Identification Number is a very important step by the Federal Inland Revenue Service (FIRS) to improve tax administration.

“To further facilitate assessment and collection, it is important that the implementation of this strategy be further intensified for all taxpayers, individual and corporate.

“The reform would remain largely incomplete if attention is not given to existing tax legislation and regulations,’’ he said.

Dore also called for institutional capacity and infrastructure building for improved tax collection and management for revenue collection agencies, such FIRS and the Nigeria Customs Service.

The Country Director also said that the international community and Civil Society Organisations had complementary roles in ensuring an effective national compact against illicit financial flows.

Their roles according to him, include advocacy and awareness creation, widespread consultation with all relevant stakeholders, and technical and financial assistance.

He said AfDB was working with Nigeria and other African countries to strengthen capacities of domestic revenues and tax collecting institutions, supporting government tax reform policies and assisting private sector initiatives.

Mrs. Idayat Hassan, the Director of CDD, said illicit financial Flows (IFF) and the direct consequences posed by IFF had taken a huge toll on Nigeria and Africa.

Hassan said the recently released Thabo Mbeki Panel report on illicit financial flow out of Africa revealed that Africa was currently estimated to be losing more than 50 billion dollars annually in IFFs.

“Over the last 50 years, the continent is estimated to have lost over one trillion in IFFs, that amount is held to be equivalent to be the total amount of development assistance rendered Africa over the same period,’’ he said.

Hassan added that the Global Financial Integrity report also revealed that while IFFs from developing countries grew by at least 10.2 per cent annually over the decade ending 2009, outflows from Africa represented 22.3 per cent.

“They further showed that the amount of money lost could have settled Africa’s debts and even left a surplus enough to finance development.

Hassan said, “a further disaggregation of the Mbeki Panel report sees Nigeria topping the league with a cumulative of $217.7 billion dollars from 1970 to 2008 lost with over 90 per cent loss related to oil.

“An alternative spending analysis reveals that the lost resources can provide 870,000 schools at N50 million each, over 400,000 hospitals at N100 million,’’ he said.

The Director said what had become obvious was that all stakeholders needed to redirect their efforts to fighting IFFs in Nigeria.

Hassan said that the meeting was organised as part of the CDD’ initiative to stop the bleeding and ending illicit financial flows out of Africa, with focus on Nigeria.