Illicit financial flows threaten Nigeria’s fiscal stability

Nigeria’s fiscal stability is under threat from illicit financial flows (IFFs) fuelled by tax evasion, profit-shifting, and money laundering, the chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, said on Tuesday.

Speaking at a national conference on illicit financial flows in Abuja, Mr Adedeji said illicit flows through tax evasion, profit-shifting, money laundering and trade mis-invoicing were depriving Nigeria of funds needed for infrastructure, public services and inclusive growth.

He noted that multinational corporations exploiting global tax loopholes were responsible for billions of naira in lost revenue each year.

“The scale of this flow, especially due to aggressive tax avoidance by multinationals exploiting global arrangements, continues to threaten Nigeria’s fiscal stability,” he said.

The FIRS chairman said the assent of four tax reform bills by President Bola Tinubu on 26 June signalled a renewed commitment to modernising the tax system, increasing transparency and boosting compliance.

However, he stressed that “legal reform is only a starting point” and must be supported by improved enforcement and digitalisation.

He said the agency was pursuing a multi-pronged strategy, including voluntary compliance, taxpayer education and the deployment of advanced data and intelligence tools to track suspicious financial activities. “Our goal is to foster a culture where compliance is driven by trust, not by fear,” Mr Adedeji added.

‘Hydra-headed Monster’

Minister of State for Finance, Doris Uzoka-Anite, described illicit flows as a serious national threat, linking them to reduced funding for essential services and deepening poverty.

READ ALSO: Nigeria’s rebased GDP remains fourth in Africa despite expansion

“Illicit financial flows are the in-between pipes of our national wealth. They undermine revenue generation, erode tax bases, promote corruption, and reduce the resources available for critical investments in health, education, infrastructure, and social protection,” she said.

She warned that Nigeria loses about $15 billion annually through profit-shifting and tax avoidance by multinational corporations, which limits the government’s ability to provide roads, schools, hospitals and jobs.

Ms Uzoka-Anite urged participants at the conference to go beyond talk and commit to concrete measures.

“We must act with courage, we must act with speed, and we must collaborate in protecting our tax bases and stopping those property shipping from Nigeria without paying appropriate taxes,” she said.