By Kemi Adetola, Nigerian CEO Magazine
Illicit financial flows (IFFs) remain one of the most pressing challenges undermining Nigeria’s economic development. At the recently concluded National Conference on Illicit Financial Flows, organised by the Federal Inland Revenue Service (FIRS) in Abuja, Professor Bolaji Owasanoye, SAN, Coordinating Director of the Proceeds of Crime Management and Illicit Financial Flows Coordination Directorate, explained why tackling IFFs is critical to Nigeria’s future.
The Economic Impact of IFFs
According to Owasanoye, tax revenue is the most reliable source of funding for government programmes. Yet, Nigeria loses billions annually through illicit financial flows. While corruption and criminal transactions account for about 30% of these losses, commercial transactions—often disguised as legitimate—are responsible for over 60%. Multinational corporations, through practices such as falsified invoicing and transfer pricing, significantly reduce taxable profits, depriving the government of much-needed revenue.
“The conference was designed to bring attention to these issues,” Owasanoye noted, “and to encourage collaboration among agencies to reduce revenue losses to IFFs.”
Closing the Knowledge Gap
One of the biggest challenges in addressing IFFs is the lack of accurate data. Nigeria has been active in international frameworks such as the OECD’s Base Erosion and Profit Shifting (BEPS) initiative, yet precise figures on losses remain elusive. The FIRS is implementing measures like the National Single Window (NSW) project to improve data collection and inter-agency collaboration.
Legal Frameworks and Enforcement
Existing laws, including the Money Laundering (Prohibition) Act 2022, provide tools to combat illicit flows, but gaps remain. Aggressive tax avoidance and falsification of trade records are not fully addressed by current legislation. Owasanoye stressed that FIRS is not just a tax authority but also a law enforcement agency with prosecutorial powers. While the Service has adopted a customer-centric approach, it retains the ability to enforce compliance when necessary.
The Role of Media and International Partnerships
Highlighting the importance of investigative journalism, Owasanoye pointed to global examples like the Panama Papers in exposing hidden financial practices. He emphasised that Nigerian journalists must be partners in the fight against IFFs. Internationally, Nigeria has been commended for its proactive stance, particularly in taxing digital transactions, and continues to play a leading role in UN and AU discussions on multilateral tax treaties.
Professional Accountability
Owasanoye also flagged the role of professionals—lawyers, accountants, auditors, and real estate developers—as facilitators of money laundering. He called for stronger self-regulation within professional bodies, noting that resistance from institutions like the Nigerian Bar Association (NBA) sends the wrong message.
Looking Ahead
Ultimately, the conference underscored the need for stronger collaboration, better data, and legislative reforms to close loopholes. “If the world does not deal with illicit financial flows,” Owasanoye warned, “developing countries will remain dependent on aid and borrowing despite abundant natural resources.”
For Nigeria, the fight against IFFs is not just about plugging revenue leaks—it is about securing the nation’s economic sovereignty and ensuring sustainable development.