How Illicit Financial Flows Lead to Forex Depreciation and Inflation in Nigeria

The Independent Corrupt Practices and other Related Offences Commission (ICPC) announced that illicit financial flows have led to the devaluation of the exchange rate, inflation, and a rise in the expenses associated with servicing external debts.

During a one-day awareness workshop held in Abuja, organized by the Commission, Prof. Bolaji Owasanoye, the Chairman of ICPC, highlighted these concerns while discussing the recently published “Guidelines for Private Sector Response to Vulnerabilities from Illicit Financial Flows (IFF) in Nigeria.”

Owasanoye noted that Illicit Financial Flows (IFFs) are draining the country’s foreign reserves and revenue.

“The illicit financial flows have resulted in exchange rate depreciation, inflation, and an increase in the cost of servicing external debts.
“It is negatively impacting the cost of imported goods like petroleum, with its attendant radical consequences on the daily livelihood experience of ordinary citizens,” he said.
Need for diverse measures to tackle the menace:
Owasanoye called for diverse measures to tackle the menace in all its forms, to improve Nigeria’s quest for domestic revenue increase, relative to the size of its economy.

He gave assurance that the Commission would continue to focus on practical measures to enhance Nigeria’s ability to stem IFFs and reduce capital flight.

According to him, it will also enhance the country’s capacity for domestic resource mobilization by identifying vulnerabilities and other weaknesses in the systems and processes of agencies as well as institutions within the public and private sectors.

He said it would also help in advising reforms, to mitigate losses.

Owasanoye said that the workshop was necessitated by the need to get feedback from the private sector constituency on any possible challenges towards the implementation of the recommendations in the guidelines.

He added that a similar platform would be created for public officers and other stakeholders to discuss the Guidelines for the Negotiation of Contracts and Agreements.

Fight against illicit financial flows:
The Special Adviser to the President on Revenue, Mr Zacch Adedeji, in his remarks said that the government would strengthen the country’s fight against illicit financial flows.

Adedeji noted with concern that IFFs had significantly eroded domestic revenues and hampered the government’s efforts to mobilize resources.

This, he said, was threatening the economic stability and sustainable development of the country.