New blog: Fair Finance Nigeria meets banking sector
Illicit Financial Flows (IFFs) and tax evasion by multinational corporations present significant challenges to economic development and social equity in Nigeria. This means the need for robust and accountable financial systems has never been more critical. Fair Finance Nigeria was established in 2023 and led by Oxfam and the Civil Society Legislative Advocacy Centre (CISLAC), aims to contribute to a just and equitable financial system.
Fair Finance Nigeria recently met with the Chartered Institute of Bankers of Nigeria (CIBN) and the Bank Directors Association of Nigeria (BDAN).
During the meeting with the CIBN, Mr. Henry Ushie (Oxfam), highlighted how 60-70% of the $600 billion lost from Africa each year due to illicit financial flows is from Nigeria, which is a significant loss to the economy. To combat this, understanding and improving the role of financial institutions, systems, and policies is essential. Fair Finance Nigeria is currently planning a policy assessment on Nigerian banking policies related to ESG and aims to identify gaps and opportunities for retaining these funds within the economy. In the discussion with BDAN, the need to engage at the highest levels to stem these leakages and repatriate the ill-gotten gains back to African countries, to invest in basic services and opportunities needed by the people was emphasized.
Dr. Harry Udoh (STEP), shared how by monitoring the investments and support provided to businesses, especially in the extractive and fossil fuel industries, banks can mitigate adverse environmental, economic, and social impacts. He called for banks to reform practices to curb illicit financial flows as doing so can ensure that resources remain within Nigeria, contributing to national development rather than being siphoned off to offshore accounts.
Mr. Tijah Bolton (Policy Alert) delved into three specific sectors and their sustainability issues. Firstly, the influx of illegal logging activities by foreign companies leads to significant biodiversity loss and deprives the government of essential revenue. Secondly, the oil and gas sector, companies divesting without proper closure and community engagement in the Niger Delta region raises serious human rights and environmental concerns. Thirdly, agricultural companies are involved in land-grabbing, logging and human rights violations. He questioned the banking sector's role in identifying and limiting finances for these companies. His insights underscored the need for banks to align their financing practices with sustainability, human rights, and ethical business conduct. In his discussion with BDAN, he highlighted the issue of gender inequality in the banking and financial sector, with data showing that 30% of adult women in Nigeria are excluded from formal and informal financial services, compared to 21% of men.
The CIBN President, Professor Pius Olanrewaju, underscored the importance of fostering partnerships and collaboration to achieve sustainability goals. Professional organizations like CIBN play a crucial role in promoting ethics, integrity, and education within the financial sector. By engaging stakeholders on environmental and sustainability-related matters, CIBN aims to address broader societal challenges. The President highlighted the impact of the environmental insecurities in various sectors, including banking, recognizing the interconnection is vital for driving meaningful change. CIBN committed to collaborate with Fair Finance Nigeria in a roundtable discussion in September, demonstrating a proactive approach to developing robust policy options for regulators, practitioners, and operators.
The Executive Secretary and CEO of BDAN, Adebukola Orenuga, acknowledged the significant challenge of illicit financial flows, Countries like the UK and US are seen as "godfathers" reluctant to repatriate the stolen funds and assets back to Africa, despite legal procedures being followed.
The planned roundtable discussion in September, involving key stakeholders, will provide a platform for dialogue and collaboration. By developing actionable policy recommendations, this initiative seeks to foster a more sustainable and transparent financial environment in Nigeria. CIBN and BDAN will be part of the technical working groups to ensure the success of the roundtable discussions. CIBN has committed to working closely with the coalition to access these policies to find areas for improvement and influence.
By collaborating with CIBN and BDAN, Fair Finance Nigeria aims to advocate for improvement of policies and stronger compliance mechanisms.
Participating organizations in Fair Finance Nigeria: Oxfam in Nigeria, Connected Development Initiative (CODE), BudgIT, Civil Society Legislative Advocacy Centre (CISLAC), Policy Alert, Support for Training and Entrepreneurial Program (STEP)
