The United Nations Conference on Trade and Development has released a report decrying the illicit financial flows from Africa, saying Nigeria accounted for 80 per cent capital flight from West Africa and 46 per cent from the entire continent.
The UNCTAD’s Economic Development in Africa 2020 Report, released on September 29 is titled, ‘Tackling illicit financial flows for sustainable development in Africa.’
The UNCTAD report stated that capital flight, which captures trade imbalances and tax evasion, for example between 2013 and 2015 stood at $88.6bn on average in Africa, with Nigeria having the largest share of $41bn; Egypt $17.5bn and South Africa $14.1bn.
The report said, “High levels of illicit financial flows, as shown by the prevalence of mis-invoicing and capital flight, indicate that many African governments do not benefit from a significant portion of their international trade transactions and experience significant losses in capital and foreign exchange.
“In Africa, illicit financial flows linked to the export of primary extractive resources were estimated as being as high as $40 billion in 2015 and $278 billion (cumulative) over the past decade. Capital flight, which captures trade mis-invoicing and other balance-of-payment transactions, was estimated at $88.6 billion, on average, during 2013–2015 or around 3.7 per cent of African Gross Domestic Product.
“Nigeria has the largest economy in Africa and is the main oil producer. By 2015, following a significant drop in oil prices, Nigeria was facing one of the worst economic crises in its history. Nigeria accounts for an estimated 46 per cent of the capital flight on the continent, based on average estimates for 2013 and 2015, and 80 per cent of the capital flight in Western Africa.
“In 2013, estimated capital flight peaked at $45.5 billion, or roughly $264 per capita. Capital flight in Nigeria increased to roughly 8.8 per cent of GDP in 2013 and, in 2015, despite some reduction mainly due to declining oil prices, capital flight remained a significant problem.”
The UNCTAD report identified corruption and money laundering as some of the other causes of capital flight in the continent while calling for more government regulations.
It added, “There is ample evidence of the two-way relationship between corruption proceeds and origins of illicit financial flows. On one hand, corruption facilitates money-laundering and on the other hand, money-laundering makes grand corruption possible and profitable.
Nigeria is among the most active countries in recovering stolen assets and engaging with multilateral stakeholders. Practical steps taken by the government to address IFFs include the signing of bilateral agreements with Switzerland, the United Arab Emirates, the United Kingdom and the United States for the return of stolen assets, with the expectation that such bilateral agreements will act as a disincentive to the sending of illicit funds from Nigeria to these countries.”