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Fed Govt seeks seizure, repatriation of illicit funds — Nairalovers

Fed Govt seeks seizure, repatriation of illicit funds — Nairalovers

By Nduka Chiejina (Assistant Editor)

The Federal Government yesterday appealed to countries that are the main destination for illicit financial flows (IFFs) to freeze, seize and repatriate such funds.

Minister of Finance, Budget and National Planning Mrs. Zainab Ahmed made the appeal during a virtual International Conference on Illicit Financial Flows (IFFs) and Asset Recovery.

According to her, countries that are the main destination for IFFs and their proceeds should take urgent steps to assist in combating this scourge, by preventing the inflow of illicit funds, freezing or seizing assets already in the country, and by ensuring that illicit funds and any proceeds are repatriated.

The government is also leading the call for African countries to be present when decisions on IFFs are taken at a global level.

“Africa must have a seat at the table and be well represented during negotiations about illicit funds and their proceeds,” Mrs Ahmed said.

The resulting domestic revenue losses from IFFs she said “are significant, putting developing countries and the entire African region at risk of not achieving sustainable and inclusive development, especially in the wake of the coronavirus pandemic”.

She said Africa is in a “race to the bottom to attract foreign direct investments (FDIs) as a result of the current international tax practices and treaties”.

The finance minister lamented that “commercial activities (particularly aggressive tax avoidance and tax evasion, through trade mispricing, abusive transfer pricing, profit shifting and tax arbitraging) account for approximately 65 per cent of illicit financial flows across Africa”.

Mrs Ahmed said in Nigeria and across the African continent, countries “suffer various forms of IFFs, including tax evasion and other harmful tax practices, the illegal export of foreign exchange, abusive transfer pricing, trade mispricing, mis-invoicing of services,  illegal exploitation and under-invoicing of natural resources, organised crimes, and corruption”.

The minister warned that “unless checked, IFFs will continue to significantly erode domestic revenues, enable corruption, threaten economic stability and sustainable development, divert money from public priorities and hamper government’s efforts to mobilize domestic resources and recover better.”

The recent United Nations Conference on Trade and Development (UNCTAD) report on the impact of illicit financial flows on African development she said presented “the scope and disproportionate impact of IFFs on African countries”.

“Commercial tax evasion and other types of IFFs inevitably impact the allocation of already limited government funds, with disproportionate impact on public services benefiting women and youth” she said.

“Consequently, curbing IFFS can lead to improvements in environmental, social, and economic development in Africa”.

As one of the most affected countries, she said Nigeria “has demonstrated strong commitment to addressing IFFs through our participation in the Open Government Partnership and the significant progress made in the extractive industry”.

Nigeria, she added, has demonstrated that technology-enabled improvements in tax collection and compliance help deter tax crime and facilitate public trust while mainstreaming of transparency and anti-corruption measures into economic-policy-making processes significantly reduces crime.

In the area of asset recovery, she said Nigeria has “taken proactive steps towards the recovery of stolen assets, in part through  engagement with multilateral stakeholders; bilateral agreements on the return of stolen assets with several critical destination countries including the United States and Switzerland; and the establishment of an independent Financial Intelligence Unit within the Central Bank of Nigeria”.

According to her, “more needs to be done across Africa to ensure the recovery of stolen assets, and there is need for enhanced support to African countries from the international community in building the capacity and systems necessary to ensure sustained and effective asset recovery.”

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