Report: Nigeria Lost $77.7bn to Illicit Financial Flows in 10 Years

Ndubuisi Francis in Abuja

Nigeria lost a total of $77.7 billion to trade-related illicit financial flows (IFFs) between 2013 and 2022 (a period of 10 years), a new report by Global Financial Integrity (GFI) has revealed.

GFI is a renowned United States-based think tank focused on tracking illicit financial flows, corruption, illicit trade and money laundering.

In a new report titled, “Trade-related Illicit Financial Flows in Africa, 2013-2022”, GFI noted that IFFs represent a formidable barrier to Africa’s inclusive growth and economic sovereignty, adding that the new report captured trade-related value gaps for all Sub-Saharan African nations between 2013 and 2022.

According to the report, IFFs occurred via trade misinvoicing, with South Africa alone accounting for a dominant share of Africa’s trade-related IFFs over 2013–2022.

South Africa topped the list with an estimated $478.08 billion in cumulative trade value gaps with all trading partners, reflecting massive undeclared or mispriced  transactions.

As a share of all Sub-Saharan Africa, South Africa accounted for 42 per cent of the region’s cumulative trade-related IFFs, highlighting the high concentration of leakage among the region’s largest commodity exporter.

“A second tier of countries have also hemorrhaged significant sums. Nigeria (approximately US$77.7 billion), Ghana (approximately US$54.1 billion), Côte d’Ivoire (approximately US$47.7 billion), and Kenya (approximately US$47.5 billion) each accumulated tens of billions of dollars in trade value gaps over the period 2013–2022.

“Côte d’Ivoire and Ghana are major exporters of commodities (such as cocoa, gold, and oil), and their high IFF figures

suggest substantial misinvoicing in those export industries.

“Nigeria, despite being the continent’s largest economy and oil producer, shows a somewhat lower cumulative gap (≈$77.7 billion) than South Africa possibly due to differences in trade structure or improved scrutiny in recent years.

“Still, Nigeria’s capital flight remains among the highest in Africa, consistent with longstanding concerns about oil-sector IFFs and money laundering,” the report stated.

It observed that Kenya’s sizeable aggregate gap (over $47.4 billion) was notable given its more diversified economy, adding that it likely reflects Nairobi’s role as an East African trade hub, “with misinvoicing occurring in both imports (e.g. undervalued goods to evade customs duties) and exports.”

Zambia at $35.8 billion,  Angola ($35.4 billion), Senegal ($25.5 billion), Tanzania ($35.5 billion), and Ethiopia ($24.6 billion) are among the top ten Sub-Saharan African countries with the highest IFFs between 2013 and 2022.

The report also x-rayed top ten African countries’ cumulative trade value gap with advanced economies during the ten-year  period with South also topping the bracket.

“South Africa emerges as the largest source of trade misinvoicing with advanced economies, with an estimated $238.4 billion trade value gap in 2013–2022 (well ahead of Nigeria’s $29.7 billion in this subset). “South Africa’s top ranking in trade with developed countries underscores its extensive commerce with Europe, North America, and other advanced markets and suggests that substantial under-invoicing of exports or over-invoicing of imports is occurring in those channels (for example, in the export of precious metals or the import of high-value manufactured goods).

“Nigeria is the second-largest in absolute terms with advanced economy partners ($29.7 billion), reflecting primarily oil trade with destinations like the United States and EU.

“Other countries in the top 10 by cumulative trade value gap with advanced economies include Nigeria ($29.7 billion), Côte d’Ivoire ($24.6 billion), Ghana ($20.5 billion), Angola ($19.0 billion), Kenya ($14.2 billion), Madagascar ($11.1 billion), Cameroon ($9.8 billion), Gabon ($9.5 billion), and Senegal ($9.3 billion). This list is broadly similar to the all-partners list,” the GFI report stated