On May 4, $311 million was repatriated to Nigeria in the middle of one of the country’s worst fiscal crises ever. The amount is part of public funds still being recovered two decades after a former corrupt military leader stole around $3-$5 billion in the early 1990s.
Sani Abacha, a former dictator, ruled from November 1993 till his death in June 1998. He overthrew an interim government led by Ernest Shonekan, who was holding power with hopes of returning the country to a democratic rule.
Abacha was usually behind his black glasses, a no-nonsense person who rarely smiled or left the Aso Rock. Although his personality was enigmatic, Abacha was not the kind of person that could superficially be considered generous. He was a warlord and a gross abuser of human rights.
That image of Sani Abacha, though not forgotten, has softened over time to being known more as a benevolent thief whose loot proceeds keep coming handy at a time that the Nigerian petrodollar state is broke – no thanks to a history of corrupt leadership and questionable fiscal federalism.
So far, over $3.6 billion has been recovered from Western countries that were a haven for Abacha’s grand theft proceeds.
The first part of the stolen money was recovered from the Abacha family by Abdulsalami Abubakar in 1998; it amounted to $750 million.
Two years after, the government of Switzerland returned $64 million to Nigeria, during the Olusegun Obasanjo civilian administration.
In 2002, the Nigerian government made a deal with the Abacha family which led to the recovery of $1.2 billion from the stolen funds.
A year after, $160 million was repatriated from Jersey, British Isles. Then, another $88 million was repatriated from the government of Switzerland.
In 2005 and 2006, Obasanjo recovered $461 million and $44 million, respectively, from Switzerland.
Abacha was also generous to the Goodluck Jonathan administration which recovered $227 million from Liechtenstein in 2014.
President Muhammadu Buhari in 2018 repatriated $322 million from Switzerland from the stolen Abacha fund and has this month collected back $311 million from the United States and the British dependency of Jersey. Both recoveries were negotiated by Jonathan.
Recently, the Government of Jersey, the Federal Republic of Nigeria and the Government of the United States of America entered into tripartite Asset Recovery Agreement to repatriate over $308 million forfeited assets to the Nigerian government.
The tripartite agreement represents a major watershed in international cooperation in asset recovery and repatriation. The Nigerian government sais projects on which the funds will be expended will be administered by its Sovereign Investment Authority (NSIA) and independently audited.
News reports say there is a fresh $319 million in UK and France, courtesy of Abacha, touted by many as Nigeria’s “Sweetheart caring for the country from the grave”.
Abacha’s ‘gift’ to Nigeria seems unending and asides fear of ‘relooting’, Nigerians consider the latest recoveries to be a relief for the country which relies on oil exports for around 90 percent of its revenue but is now faced with grimmer realities following record oil price slump and demand plunge due to COVID-19.
Nigeria’s Excess Crude Account (ECA), which was meant to serve the purpose of providing liquidity for government whenever downturns in oil price affected revenue realisation, has fallen to a record low of around $71 million.
The buffer grew from $5.1 billion to over $20 billion between 2005 and 2009, but today is less than 1 percent of its 2009 balance.
According to the International Monetary Fund (IMF) in 2019, the ECA is the world’s second least-governed fund.
Concerns about transparency in the use of the recovered funds have been on the front burner of local and foreign media.
President Buhari’s office said the release of the latest fund from the US was a testament to the trust the US, UK and other jurisdictions have found in his leadership.
“For years many countries deemed successive Nigerian administrations as too corrupt, too venal and too likely to squander and re-steal the stolen monies – so they did not return the funds,” the presidency said.
But large as the Abacha loot has proved to be so far, it’s only a tip of the iceberg of illicit funds from Nigeria, denying the country access to its domestic resources which could have been used to bridge the gaping infrastructural gap and deliver economic prosperity to its citizens.
According to Africa Group Initiative at Brookings, Africa exported an aggregate $1.3 trillion of illicit financial flows, with resource-exporting countries such as Nigeria more prone to exporting large amounts of illicit financial flows. The reason for this is not far-fetched. First, large exports of oil provide more opportunities for trade mis-invoicing. Also, the line between private and public interests in the oil industry is often blurred, as government officials often own stakes in state-owned companies.
Illicit financial flows saw a notable increase in the 2000s in correspondence to increases in trade from Africa. Despite one noticeable dip in the 2000s, which occurred during the 2008 financial crisis, aggregate illicit financial flows have remained relatively high, reaching a peak of $114.5 billion in 2012.
South Africa, the Democratic Republic of the Congo, Ethiopia and Nigeria are the top four emitters of illicit flows on the continent, emitting over 50 percent of total illicit financial flows from Africa.
Repatriating funds that have been smuggled out can be an important tool to solidify the domestic resource base of African countries. In Nigeria, while some successes have been recorded in repatriating stolen funds back into the country, the process has, however, been long and tedious.
While stopping illicit outflows of capital before they happen is important, repatriating such illicit financial flows require cooperation at the global level. Interestingly, the past decade has seen increased effort from the global community toward reducing illicit financial flows.
Such efforts range from creating initiatives to curb money laundering to improving the sharing of tax information across countries.
It has also been established that higher real Gross Domestic Product is often associated with higher illicit financial flows due to the increased opportunities to channel illicit resources abroad generated by higher economic activity, suggesting a need for increased diligence as countries grow.
Also higher taxes and higher inflation lead to higher illicit financial outflows, suggesting that firms seek out relatively more stable or favourable fiscal environments for their funds.
While repatriated funds should be channelled to improve infrastructure in a bid to enhance economic growth, analysts says safeguards must, however, be put in place to ensure that these funds are not laundered again, adding that this should be accompanied by checks designed to deter illicit financial outflows in the first place.
