TRADE MISINVOICING, EXTERNAL DEBT AND SUSTAINABLE DEVELOPMENT: A NIGERIAN EXAMPLE

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Abstract

This paper evaluated how trade misinvoicing orchestrates external debt in Nigeria and its obstructive tendencies on Nigeria’s sustainable economic development. The paper is pertinent, given that Nigeria is among the top ten developing countries in the world who are victims of substantial illicit trade misinvoicing outflows. The methodological approach is a mix of descriptive analysis (using tables and graphs) and a t-test of difference in means between trade misinvoicing outflow from Nigeria, external debt and official development assistance (OD) in Nigeria for the period 2003 – 2012. Findings indicate that as trade misinvoicing outflow increased during the period 2003 -2012, Nigeria’s external debt increased yearly. Results from the statistical t-test showed that the mean difference in trade misinvoicing outflow is significantly greater than the mean differences in external debt and official development assistance received into Nigeria. This finding attests to the huge internal financial resources that Nigeria lost during the period 2003 - 2012 through illicit trade misinvoicing outflow. The analysis further disclosed that trade misinvoicing outflow has hampered Nigeria’s stride to sustainable economic development given the record increases in unemployment, poverty, lack of access to sanitation facilities, low percentage of qualified health staff to child birth and a widening income inequality as measured by GINI index. The paper concludes that the drainage of Nigeria’s internal financial resources through illicit trade misinvoicing has denied Nigeria the needed finance to enhance the actualisation of sustainable economic development. Recommendations are proffered to assist in halting trade misinvoicing outflow from Nigeria.

Keywords: Trade Misinvoicing, External Debt, Sustainable Development, Illicit Outflow, Taxation, Poverty, Nigeria

How to cite this paper: Ngwakwe, C. C. (2015). Trade misinvoicing, external debt and sustainable development: A Nigerian example. Risk governance & control: Financial markets & institutions, 5(2-1), 120-134. https://doi.org/10.22495/rgcv5i2c1art6