By Christiana Ekpa
The House of Representatives yesterday directed its joint committees on finance, anti-corruption, financial crimes, banking and currency and insurance and actuarial matters to investigate the phenomenon of illicit.
Financial flows and appraise the federal government’s current policy framework to curb the continuous loss of Nigeria’s’ revenues to illicit financial flows.
This decision was consequent upon the adoption of a motion sponsored Hon. Ochiglegor Idagbo (PDP, Cross River) at the plenary.
Presenting the motion, Idagbo noted that the socio-economic development of Nigeria has deeply suffered due to the unabated cross-border financial dealings of the nation’s revenues resulting from Illicit Financial Flows (IFF).
He expressed concern that the Report of the Global Financial Integrity, 2014 showed that Nigeria lost a minimum of US$140 billion to illicit financial flows between 2000 and 2014, mainly to crude oil and commercial activities mispricing, thus Nigeria was ranked among the global top 30 countries having illicit financial outflows by dollar value and in 2015, a total of US$8.3 billion was involved in the Illicit financial outflows.
He informed that the Tax Justice Network and the International Monetary Fund (IMF) estimated that developing countries, including Nigeria, lose over US$200 billion per year to illicit financial flows as multinational corporations neglect, fail and/or refuse to pay taxes, despite generating substantial profits.
“Concerned that the incessant financial drain on the country’s economy by the illicit financial outflow continues to have negative implications for domestic resource, mobilisation and long-term economic growth and development, as approximately 5% of the IFF from Africa can be attributed to corruption, while the remaining 95% comes from commercial and criminal activities.
“Also concerned about statistics which show that the amount of revenues lost annually is more than the sums provided as development aid. “Observes that the net official Development Aid received by Nigeria in 2017 was US$3,358,790,000 and the United States Agency for International Development (USAID) has donated over US$526.7 million in humanitarian assistance to Nigeria and the Lake Chad Basin since 2017, yet neither of the aforementioned figures matches the estimated US$15 and US$18 billion Nigeria loses to IFFs annually hence Nigeria continues to struggle with growing inequality, poor infrastructure and lacking service delivery”, he stated.
The lawmaker explained that despite having at least 12 institutions and agencies responsible for tackling IFF and related crimes, Nigeria continues to be menaced by weak regulatory structures and complicity of other financial secrecy, among others.
He observed that global awareness has prompted governments to develop measures and policies such as the Organisation for Economic Co-operation and Development’s (OECD) and Common Reporting Standard (CRS) aimed at eradicating the perpetuation of IFF, and assist tax authorities track offshore holdings of taxpayers.
“Worried that an estimated 60% of IFF from Nigeria is predominantly committed by multinational corporations which continue to drive the cross-border siphoning of the country’s revenues to the direct and/or indirect benefit of foreign economies; “Also worried that international information sharing and domestication of relevant policies have become a global priority to ensure cross-border cooperation to tackle this global threat to national revenue generation and its negative economic and developmental impacts” Idagbo said “To ensure the domestication and implementation of the international legal framework, the Federal Inland Revenue Service (FIRS) published the Income Tax (Common Reporting Standard) Regulations, 2019, through which Nigeria aims to commence the implementation of a standardised automatic exchange of information to curb future revenue losses due to tax evasion; “Also aware that Nigeria is taking steps to curtail IFF, especially from tax evasion, billions of dollars have already been lost to IFF as 2014 Financial Stability Report from the Central Bank of Nigeria (CBN) estimated that 35% of illicit financial flows out of Nigeria could be attributed to oil bunkering;
“Further aware that the Oil Sector accounted for 95% of Nigeria’s foreign exchange earnings and 80% of Nigeria’s total budgetary revenue, it has become imperative to recover those funds to increase short-term national revenues, particularly to alleviate the pressures of the current COVID-19 pandemic, while
implementing a mechanism to prevent further IFFs; “Convinced that international best practices have shown that a carefully formulated funds and asset repatriation scheme could have multiple benefits for the country; “Also convinced that to foster the repatriation of Nigeria’s offshore funds, the Nigerian government could introduce an appealing, yet legally acceptable offshore repatriation framework, with legal and economic incentives to taxpayers and multinational corporations to repatriate such resources, which
could be used to boost Nigeria’s economic growth”.