Illicit financial flows (IFFs) have entrenched themselves as a significant issue in Nigeria and Africa, marked by a complex web of activities ranging from corruption and tax evasion to money laundering and illegal trade.
These flows infiltrate diverse sectors of the Nigerian economy, prompting calls for technological solutions to address this pervasive menace.
The gravity of IFFs extends beyond national borders, affecting both industrialized and developing countries.
The precise scale of IFFs originating in developing nations is challenging to measure, but it is believed to surpass official development assistance from OECD donor countries, as outlined in the Global Financial Integrity report.
The detrimental impact of these practices on the social and economic fabric of nations, particularly in Africa, where resources are limited, has led to an urgent need for enhanced national regulations, proper implementation, and compliance with international best practices.
Recent discussions, such as the Realnews 11th-anniversary lecture in Lagos, have emphasized the role of technology in swiftly addressing the challenge of illicit financial flows.
Notable speakers at the event, including Edwin Harris, Director-General of the ECOWAS Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA), and Dr. Aminu Maida, Executive Vice Chairman of the Nigerian Communications Commission (NCC), shed light on the multifaceted nature of IFFs.
Harris, speaking on ‘The Threats of Illicit Funds Flow to the African Countries,’ emphasized the systemic nature of IFFs, urging African leaders to intensify efforts in combating this cankerworm that jeopardizes sustainable development. He identified corruption, criminal activities, and commercial endeavors as the primary sources of IFFs from Africa.
Highlighting the staggering economic losses, Harris revealed that Africa is estimated to have lost $1 trillion or more over the past 50 years to IFFs.
The annual loss is estimated to exceed $50 billion, with corroborating figures from the OECD and UNCTAD underscoring the severity of the issue.
Emphasizing the global nature of IFFs, Harris stressed the need for proactive and unwavering efforts to dismantle the systems extracting wealth from Africa.
He called for collective actions by national authorities, the private sector, and civil society organizations to instigate change at both national and continental levels.
The dire consequences of IFFs on sustainable development were reiterated, with Harris noting the severe economic, social, and political impacts on Africa.
These financial outflows, fueled by corruption and illegal activities, hinder the rule of law, weaken democratic institutions, and pose a threat to the achievement of development agendas.
In response to these challenges, technology emerges as a potential ally in the fight against IFFs. Dr. Aminu Maida highlighted the critical role of robust information and communications technology (ICT) systems in preventing, investigating, and mitigating the risks associated with financial crimes.
He outlined various technological tools, including blockchain, instant payments, artificial intelligence, and data analytics, being deployed to combat financial crimes.
Despite the transformative impact of ICT in the fight against financial crime, Maida acknowledged potential concerns such as cybersecurity threats, false positives, algorithmic bias, human capacity issues, regulatory compliance, technological obsolescence, and funding constraints.
He emphasized the need for collaborative efforts to address these challenges, ensuring inclusive and adaptive strategies to combat emerging criminal methods.
In conclusion, continued investment in ICT solutions, a multidisciplinary approach involving technology specialists, legal professionals, and legislators, along with public education on Internet safety, are deemed essential to effectively combat illicit financial flows in Nigeria and Africa.
