13 December 2013

Nigeria: Corruption, Tax Evasion Drain U.S.$946.7 Billion From Nigeria, Others in 2011 - New Study

Photo: Leadership
Corruption in Nigeria

Crime, corruption, and tax evasion drained $946.7billion from the developing world in 2011, up more than 13.7 per cent from 2010, when illicit financial outflows totalled $832.4bn. This a recent report by the Global Financial Integrity (GFI), a Washington DC-based research and advocacy organisation working to curtail illicit financial flows out of developing countries has revealed. The report entitled Illicit Financial Flows from Developing Countries: 2002-2011, pegged cumulative illicit financial outflows from developing countries at $5.9trillion between 2002 and 2011.

According to the report, Nigeria was ranked 10th among the 25 biggest exporters of illicit financial flows over the decade, with a cumulative illicit financial flow of $142.27bn.

China occupied the top spot as the largest cumulative exporter of illegal capital flight, with outflows totalling $1.08trn over the decade. Russia was ranked the second biggest exporter of illicit capital over the decade, with $880.96bn in illicit outflows.

Mexico was third on the list, with $461.86bn, while Malaysia was ranked fourth, with $370.38bn.

India and Saudi Arabia had $343.93bn and $266.43bn respectively. They are closely followed by Brazil, with $192.69bn; Indonesia , $181.83bn; Iraq, $78.79bn; Thailand, $140.88bn; United Arab Emirates, $114.64bn; South Africa,$100.73bn cum; Philippines, $88.87bn; Costa Rica, $80.65bn cum; Belarus, $75.09bn cum; Qatar, $62.82bn; Poland, $49.39b; Serbia ,$49.37bn; Chile, $45.20bn; Paraguay, $40.12bn; Venezuela, $38.97bn; Brunei, $38.37bn; Panama, $38.09bn, and Turkey,$37.28bn.

"As the world economy sputters along in the wake of the global financial crisis, the illicit underworld is thriving -- siphoning more and more money from developing countries each year.

"Anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques drained nearly a trillion dollars from the world's poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth. While global momentum has been building over the past year to curtail this problem, more must be done. This study should serve as a wake-up call to world leaders; the time to act is now," said GFI president, Raymond Baker.

The report said the $946.7bn of illicit outflows lost in 2011 was a 13.7 per cent uptick from 2010, which saw developing countries haemorrhage $832.4bn, and a dramatic increase from 2002, when illicit outflows totalled just $270.3bn, estimating that the developing world lost a total of $5.9trn over the decade spanning 2002 through 2011.

It further added that the $946.7bn that flowed illicitly out of developing countries in 2011 was approximately 10 times the US$93.8bn of net official development assistance (ODA) that went into these specific 150 developing countries that year. It stated that for every $1 in economic development assistance going into a developing country, roughly $10 of capital is lost via illicit outflows.

"Illicit financial flows have major consequences for developing economies," explained Mr. LeBlanc, the co-author of the report. "Poor countries haemorrhaged nearly a trillion dollars from their economies in 2011 that could have been invested in local businesses, healthcare, education, or infrastructure. This is nearly a trillion dollars that could have been used to help pull people out of poverty and save lives. Without concrete action, the drain on the developing world is only going to grow larger."

The report therefore suggested that "curtailing these outflows should be paramount to policymakers in Africa and in the West, because they drive and are in turn driven by a poor business climate and poor overall governance, both of which hamper economic growth."

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