1. Introduction
The purpose of this project is to identify
and measure capital flight from Nigeria in the
context of the country’s dominant oil sector.
•The sector is the third-largest contributor to
Nigerian GDP, behind agriculture and trade.
•Generates 76% of total government revenue.
•Illicit financial flows, corporate tax evasion by
prominent multinational oil corporations (MNCs),
and institutionalized government corruption are
key drivers of capital flight from Nigeria.
Capital flight is a major impediment to
economic activity in developing countries, as the
revenues generated from high-value resource
extraction industries travel to rich countries and
to countries with lenient tax policies.
Research Question
What are the origins and implications of capital
flight from Nigeria? How does it relate to the
country’s oil sector?
Role of the Research Assistant
The researcher gathered and analyzed
data from online databases and recorded findings
in tables and summaries. The researcher
investigated the major MNCs operating within the
oil sector, their country of origin, the extent of
their operations in the sector, their impacts on
Nigerian employment and economic growth, and
the destination of their financial flows.
Data and Findings
Data were collected from economic
journals and public records from governments
and non-government organizations. The Nigerian
Extractive Industries Transparency Initiative
(NEITI) was a key source of information on the
number of MNCs in the sector, the revenue
provided by the sector, and the sector’s
contribution to GDP and growth.
Discussion
•Revenues from MNCs flow to tax havens outside
Nigeria; a portion of Shell’s revenue from Nigeria
goes to subsidiaries in Switzerland and Bermuda,
for example.
•Nigeria’s absolute reliance on its oil sector
destabilizes its economy.
•The sector, which is not labor-intensive and
contributes little to GDP compared to its share of
total government revenue, is vulnerable to
volatile oil demand and prices.
Conclusion
Presence of MNCs in Nigeria’s oil sector is a major
catalyst of capital flight. Fortunately, the country
is successfully taking measures to diversify the
economy in a way that reduces its dependence on
the oil sector. In 2012 the oil sector shrank and
emerging industries such as telecommunications
grew as a percentage of growth in real GDP
(Audu, 2015).
References
•Audu, Taju, Financial, Physical, and Process
Audit , Nigerian EITI, (2015).
•Dim, Chukwuma & Ezenekwe, Uju, Capital Flight
to Savings Gap in Nigeria, International Journal
of Economics and Finance, (2014).
•Fajana, Sola, Industrial Relations in the Oil
Industry in Nigeria, International Labor
Organization, (2005).
•Ajilore, Taiwo, An Economic Analysis of Capital
Flight from Nigeria, International Journal of
Economics and Finance, (2010).
0
5
10
15
20
25
30
35
40
45
Agriculture Oil & Natural Gas Wholesale & Retail
Trade
Telecommunication
& Post
Building &
Construction
Sectoral Contribution to GDP (%), 2012
Q1, 2012 Q2,2012 Q3,2012 Q4,2012
Oil
Revenue
2376.0 1981.6 1936.2 1826.6
Non-oil
Revenue
521.6 614.6 666.1 566.2
Total
Revenue
2897.7 2596.2 2783.0 2413.6
Revenue by Quarter, 2012 (billion Naira)
Source: Audu (2015)