- Oil Sector: Source of Illicit Financial Flows
The Nigeria Extractive Industries Transparency Initiative and Trust Africa have revealed that Nigerian business operators in the oil and gas sector contributed the most to the illicit financial flows recorded yearly in the country.
The report titled, ‘Averting Illicit Financial Flows in Nigeria’s Extractive Industry’, stated that businesses in the oil and gas sector are responsible for 92.9 per cent of the total illicit financial flows in Nigeria annually.
Breaking down the report, illegal oil bunkering accounted for 35 per cent of the total 92.9 per cent IFFs in Nigeria, while commercial transactions by multinational companies that dominated the sector contributed more than 60 per cent.
The NEITI and TA report pointed to the over-dependent on vulnerable oil sector and its complex structure mainly controlled by the political class as the key reasons for its huge IFFs.
According to NEITI and its partner agency, “Nigeria’s reliance on the cash-based economy was another reason why IFFs thrive in the country.”
They further stated that “opportunities for IFFs through fraud and money laundering in Nigeria’s oil industry generally started as administrative control failures by those expected to exercise statutory and regulatory frameworks in the industry.”
Nigeria is said to be losing between $15 billion to $18 billion.