Nigeria, others lose $50b to illicit financial flows

• Published date: 19 January 2023
• Publication title: Nigeria - The Nation

Nigeria and the rest of Africa suffer an extensive loss of finances estimated up to $50 billion annually through Illicit Financial Flows (IFF) or 'Illicit Capital Flight, an African Union(AU)'s report has said.

United Nations Conference on Trade and Development (UNCTAD) estimates trade mis-invoicing at between $30billion and $ 52 billion per annum, while capital flight is valued at $88.6 billion per annum.

According to AU, member nations are facing the challenges of raising tax revenues.

The Union attributed this to tax evasion and avoidance, complexity of the international tax architecture, tax incentives, international tax competition, and complexity of taxing natural resources along the value chain.

In addition, the Union noted that tax administrations, which lack necessary capacity to collect and administer revenue, as well as societal tax morale represent crucial factors which might limit the ability of governments to increase revenue collection.

Although Africa has been relying on external funding (i.e. concessional loans, aids and grants) to fund most of the development projects needed to uplift the continent and lives of its citizens, the union indicated thatseveral recent studies conclude that IFFs represent twice the amount of official development assistance (ODA) that Africa receives.

Some of the negative effects of IFFs, it noted that were the depletion of foreign exchange reserves, reduced tax collection, cancellation of investment flows and increased poverty.

In fact, it added that Domestic Resource Mobilization (DRM) and IFFs are...