The United Nations Office on Drugs and Crime, (UNODC) is partnering Nigerian Bureau of Statistics (NBS) to release new data on corruption and illicit financial flows (IFFs) in and out of Nigeria.
This is coming as Nigeria is rated seventh out of the 20 largest exporters of illicit funds worldwide, with a total figure of $129 billion from 2001 to 2010.
The Deputy Director, UNODC Country Office for Nigeria, Ms. Elisabeth Bayer, disclosed this on Thursday at the ongoing Technical Workshop on Defining, Estimating And Disseminating Statistics On Illicit Financial Flows In Nigeria And Consultations On Proposed Methodology organised in collaboration with the Ministry of Justice, Administration of Criminal Justice Monitoring Committee (ACJMC) and the United Nation Economic Commission for Africa (UNECA).
This is part of the proposed intervention by the Economic Commission for Africa (ECA) in supporting pilot countries in Africa to identify the indicators, to ascertain the volume scientifically/ statistically of IFFs in and out of Africa and to strategise collectively towards curbing this notorious phenomenon stalling the growth and development of Africa.
To this end, Bayer informed that, “UNODC is standing with NBS to release new data at the end of the year as there is a need for more methodological work to estimate the total amount of income generated by corruption and the IFF related to corruption that will show the portion transferred abroad.”
She noted that “every year, organized crime and trade with illegal goods generate billions of dollars of illicit financials flows (IFFs). Proceeds of crime are channeled abroad, often to safe havens, and are laundered and otherwise re-utilized.”
According to her, “this large-scale organized crime, and the illegal economy related to it weakens the state institutions, by fueling violence and corruption.”
She stated: “Examples of activities generating IFFs include tax and commercial practices (Tariff, taxation offenses, etc), theft-type activities and terrorism financing (e.g. robbery, kidnapping, trafficking in persons, etc), illegal markets ( drug trafficking, illegal arms, firearms trafficking, wildlife trafficking) and corruption (includes bribery, embezzlement, abuse of function, trading influence and illicit enrichment).”
“The risks and the harmful impact of IFFs has been recognized in the 2030 Agenda for Sustainable Development, under the Goal 16 ‘Peace, Justice and Strong Institutions’ under which a specific target (16.4) aims at a significant reduction of illicit financial flows and arms flows, as well the strengthening of recovery and return of stolen assets. In order to reach this goal, a specific indicator is to have a measurement of the ‘total value’ of IFFs.”
She stressed that “while this would be a useful tool to evaluate the overall scope of the problem and for advocacy purposes, its applicability in policy is limited. In addition, a more granular measurement of IFFs in line with a finer typology of IFFs would help to identify the main sources and channels of IFFs and guide the national and international interventions targeting them.”
Bayer further said, “in fact, there is a strong need to adjust these interventions against IFFs. Current approaches are based on simplified assumptions (for example, errors in international trade statistics equal IFFs) and focus only on one or two types of illegal flows such as trade mis-invoicing or profit shifting.”
“However, for a policy relevant and correct methodology, a disaggregated approach is needed. Such approach would require to focus on illegal activities that can generate IFFs, measure the monetary value in terms of generated revenues and profits and assess the related amounts that cross borders,” she disclosed.
Moreover, “the United Nations Department for Economic and Social Affairs also recommended to align the typology of IFFs with existing statistical frameworks and principles. Therefore, a typology of IFFs for statistical purposes should be exclusive, exhaustive and feasible.”
Also, “corruption and IFFs represent a serious threat to the rule of law as they erode the functioning of criminal justice systems and reduce state revenues. Indeed, IFFs originating in the legal economy – such as tax evasion, profit shifting, or trade mis-invoicing – divert potential resources for development, hamper structural transformation as well as sustainable economic growth. It is important to stress the transnational aspect of these prejudicial practices which are intimately linked to the transfer of large amounts of illicit money, a large proportion of which crosses borders.”
She added that, “some of the activities under corruption are considered ‘productive’ and ‘non-productive’ for example bribery can be seen as ‘a trade of service’ and considered productive. Bribery can also enter illegal markets and can be significant intermediate cost of illegal trafficking chains. In such cases, bribes can constitute IFFs.”
“Therefore, corruption and specifically bribery should be considered in the analysis of illegal markets. In 2017, with the support of UNODC, a survey conducted by the Nigerian Bureau of Statistics (NBS) found that 400 billion Nigerian Naira are spent on administrative and petty bribes each year.”
Also speaking, officer in charge of the Economic Governance and Finance Section at the UNECA, Allan Mukungu, explained that the problem in tracking illicit flows is that there are people who support resources going out of the country, and benefiting form illagal flows.
Mukungu informed that the UNECA is therefore working on institutions to ensure clarity around the flows, in terms of where they come from, how much they earn to enable proper tracking to bring the money Africa to finance development.
He said the UNECA is also studying the architecture, whithin the continent to identify gaps to help countries recover the money, which includes ensuring a legal framework that will help countries track illegal flows.
To this end, he called on Africans countries especially Nigeria to seek legal processes to enable offenders who ascond to another country, be brought to justice.
He also noted that progress is being from different from countries. According to him, some have countries have started tracking illegal flows and have recovered huge amounts while some have not made any efforts, as they are thinking about it.
“If we stop the money from leaving our country, then we can finance our own priorities, so that development is determined by Africans,” Mukungu said.
Mukungu noted the fact that Nigeria has been accorded the prime position of being the largest developing market in the sub-Saharan Africa and is therefore leading the process of this campaign by making it the first port of call of the experts on the Technical Mission of the United Nations.
“The Technical Mission is mainly direct engagement with the stakeholders in the country engaged directly in the advocacy, revenue generation, formulation of policy, regulation of institutions and enforcement of all aspects of illicit financial flows.
“The process commenced since September 02 with bilateral meetings with stakeholders and will continue till September 11, 2019, when the findings and agreed strategies of the stakeholders will be shared and validated.”
“This plenary session highlights the major steps/initiatives taken so far towards the implementation of the Thabo Mbeki High Level Panel on illicit Financial Flows in Nigeria and the challenges confronted by the Minis-fries, Departments and Agencies of the Federal Government”, he added.
Also speaking, the chairman of the independent corrupt practices and other related offences commission (ICPC), Prof. Bolaji Owasanoye, decribed as alarming the amount of money leaving Nigeria through illicit financial flows.
Owasanoye who was represented by the Head, Financial Intelligence Unit, ICPC, Michael Agboro, said Nigeria is amongst the African countries that have recorded massive outflows of illegal funds over the years.
The ICPC boss quoting Global Financial Integrity (GFI) stated that Nigeria lost $165 billion nearly 19 per cent of the total $854 billion outflow from Africa to the developed market-economy countries.
Owasanoye said the GFI further rated Nigeria seventh out of the 20 largest exporters of illicit funds worldwide, with a total figure of $129 billion from 2001 to 2010″
“These figures are alarming and frightening”, he said while noting that illicit flows has rid Nigeria of huge economic and social development.
He said, “we can see why we lack good roads, functional health, educational, rail systems, potable water, electricity, infrastructures. But have insecurity, unemployment and Nigeria is designated the world capital of poverty.”
