Nigeria, others lose 67% export to misinvoicing

Nigeria and five other developing countries are losing as much as 67 per cent of their exports worth billions of dollars to trade misinvoicing in primary commodities, according to a fresh study by UNCTAD, which for the first time analyses this issue for specific commodities and countries.

Other developing countries are Chile, Côte d’Ivoire, South Africa and Zambia

Trade misinvoicing is thought to be one of the largest drivers of illicit financial flows from developing countries, so that the countries lose precious foreign exchange earnings, tax, and income that might otherwise be spent on development.

Released during UNCTAD’s Global Commodities Forum, the study uses data from up to two decades covering exports of commodities such as cocoa, copper, gold, and oil from Chile, Cote d’Ivoire, Nigeria, South Africa, and Zambia.

“This research provides new detail on the magnitude of this issue, made even worse by the fact that some developing countries depend on just a handful of commodities for their health and education budgets,” UNCTAD’s Secretary-General, Mukhisa Kituyi, said.

Commodity exports may account for up to 90 percent of a developing country’s total export earnings, he said, adding that the study generated fresh lines of enquiry to understand the problem of illicit trade flows.

“Importing countries and companies, which want to protect their reputations, should get ahead of the transparency game and partner with us to further research these issues,” Dr. Kituyi said.

The analysis shows patterns of trade misinvoicing on exports to China, Germany, Hong Kong (China), India, Italy, Japan, the Netherlands, Spain, Switzerland, the UK, US, and more.

It said: “Between 2000 and 2014, under invoicing of gold exports from South Africa amounted to $78.2 billion, or 67per cent of total gold exports. Trade with the leading partners exhibited the highest amounts: India ($40 billion), Germany ($18.4 billion), Italy ($15.5 billion), and the UK ($13.7 billion).

“Between 1996 and 2014, under invoicing of oil exports from Nigeria to the United States worth $69.8 billion, or 24.9 per cent of all oil exports to the US.

“Between 1995 and 2014, Zambia recorded $28.9 billion of copper exports to Switzerland, more than half of all its copper exports, but these exports did not show up in Switzerland’s books.

“Also between 1990 and 2014, Chile recorded $16.0 billion of copper exports to the Netherlands, but these exports did not show up in the Netherlands’ books.

“Also Cote d’Ivoire recorded $17.2 billion of cocoa exports to the Netherlands, of which $5.0 billion (31.3%) did not show up in the Netherlands’ books within the period.

“Between 2000 and 2014, under invoicing of iron ore exports from South Africa to China was worth $3 billion”, the report explained.