Illicit financial flows: Experts push reforms to curb $407bn annual loss 

•Nigeria loses $18bn yearly to profit shifting, tax avoidance —Minister

•Every unaccounted dollar is lost road, hospital, job, says FIRS boss, Adedeji

Economic experts have urged Nigeria, including African governments, to strengthen tax enforcement, optimise digital compliance systems, and build public trust through transparency and fairness to stem illicit financial flows (IFFs) draining the cuntry’s resources.

The experts warned that Nigeria and other African countries risk losing more revenue to illicit financial flows (IFFs) unless urgent reforms are implemented to tighten tax compliance and renegotiate unfair international tax treaties.

The Minister of State for Finance, Dr. Doris Uzoka-Anite, decried huge revenue leakages from multinational corporations operating in Nigeria.

She estimated that the country loses $18 billion annually to profit shifting and aggressive tax avoidance practices.

Speaking in Abuja, she said, “There are so many foreign companies transacting in Nigeria without paying adequate taxes. Many of the international tax treaties Nigeria has signed do not reflect our renewed resolve for tax equity. This must change to align with current economic realities and the global drive for fairness between the North and South.”

Uzoka-Anite described IFFs as a national security and developmental threat.

“IFFs are a hydra-headed monster. They strip the country of resources that could build hospitals, schools, roads, and create jobs. Many of our international tax treaties no longer reflect our economic realities and must be renegotiated for tax equity,” she said.

The Federal Inland Revenue Service (FIRS) Chairman, ZacchAdedeji, described IFFs as a major threat to Nigeria’s fiscal stability, adding that IFFs remain a “structural drain” on the economy, depriving the country of funds needed for inclusive development.

He noted that the recent signing of four tax reform bills by President Bola Tinubu demonstrates a commitment to modernising Nigeria’s tax system but stressed that legal reforms alone are insufficient.

“To deliver results, we must reinforce enforcement, strengthen digital compliance, and communicate government policies clearly to build public trust.

“Each unaccounted dollar undermines governance, erodes public trust, and translates into lost infrastructure and deepening inequality,” he said.

Adedeji outlined FIRS’ three-pronged strategy to tackle IFFs, including promoting voluntary compliance, deploying real-time digital surveillance through its new Tax Intelligence and Automation Department, and strengthening inter-agency and global cooperation.

“As the coordinating agency under the Proceeds of Crime Act, FIRS has set up a dedicated directorate to recover stolen assets and work with law enforcement and international partners,” he added.

A member of the Thabo Mbeki High-Level Panel on IFFs, Ugandan lawyer Irene Ovonji-Odida, revealed that West and North Africa lost about $407 billion to trade mis-invoicing in 10 years, while Africa as a whole has lost $1 trillion in 50 years.

She called for a unified African position in global tax negotiations, particularly at the United Nations, through South-South cooperation.

Ovonji-Odida attributed 65% of IFFs to tax avoidance by commercial entities, 30% to criminal activities, and 5% to corruption, accusing Western powers of complicity in designing opaque global trade and financial systems that enable the outflows.

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Experts agreed that beyond legal reforms, Africa must develop a coherent tax strategy, strengthen institutional capacity, and renegotiate unfair international tax treaties to protect domestic revenue and finance development.

They called for renegotiating tax treaties, strengthening enforcement, and adopting a whole-of-society approach to stop IFFs and boost domestic revenue mobilisation.