Why it’s difficult to track terrorism financing in Nigeria

Nigeria’s largely cash-based and informal economy has made it difficult for security agencies to trace the movement of illicit funds, especially those meant for funding terror activities, a panel of experts said Wednesday.

The experts spoke during a panel session at a symposium organised by the Center for Fiscal Transparency and Integrity in Abuja on Wednesday.

The panellists include Peter Enoch from the State Security Service (SSS); Sa’ad Hannafi, former director of military intelligence; Ademola Lawal, a retired colonel in the Nigerian Army; Ibrahim Ditse from the National Financial Intelligence Unit (NFIU) and Ibrahim Adeyemi, Deputy Investigations Editor, Humangle media.

Tracing terror funds

Mr Lawal said security agencies have focused too much on tracing funds within the radar, noting that most of the terrorists and funds mostly move outside the radar of the financial intelligence units.

Beyond that, he said, Nigeria lacks a comprehensive citizen identity and information data to track individuals, making it more difficult.

He added that security agencies must focus on tracing the movement of funds outside the formal banking system.

He said: “They (terrorists) have become so independent and localised that they generate their own funds locally. And how do they do it? It’s very simple. As a matter of fact, in this country, our economy is still informal.

“A lot of transactions go on outside the books. And once you have that, you are going to have challenges in tracking them. And most importantly, I must say this, we have neglected identity –citizen identity. You can operate in this country, spend a lot of money, without a footprint.”

In his submission, Mr Adeyemi said journalistic investigations have revealed how terrorists source funds locally without hindrance by holding local communities hostage, imposing levies on them, forcefully taking their farm produce and forcing them to work on the terrorists’ farms.

He noted that while Nigeria went through hardship early in the year when the Central Bank of Nigeria (CBN) withdrew high naira denominations from circulation, the terrorists still operated freely without keying into the formal banking system.

According to him, the terrorists simply resorted to taking food items, cattle, motorcycles and other valuables as ransom instead of the usual cash.

“We’ve talked about arms trafficking and drug trafficking, but we have not talked about how terrorists are dominating ungoverned spaces and how terrorists are imposing illegal taxes and making multi-millions of naira from the people they are terrorising and the government appears to be helpless,” he said.

“The people rely and believe in the terrorists more than the government. If the terrorist gives an order, they’ll rather listen to the terrorists more than the government agencies.”

Mr Hannafi noted that while terror financing remains at the heart of all terrorist activities, making it one of the most important aspects of terrorism, he said tracing the funds remains the nightmare of security agencies.

“Everything is done in the dark. A lot of things are hidden as seemingly legitimate funds. So we have to dig deep in order to find the leakages,” he said.

He, however, said once the security agencies are able to trace the trail of the money, the problem is beyond halfway solved.

He said: “Terrorism financing is the centre of gravity of terrorism. There’s an adage that says follow the money trail. Once you can identify the money trail then you are more than halfway towards countering terrorism”.

Earlier in her presentation on Terror Financing and Organised Crime in Africa, Folashade Okeshola, a professor of Sociology at the Ahmadu Bello University, Zaria, said terrorism has an immense negative effect on a country’s economy.

She said: “It discourages foreign investments, tourism, or assistance programmes that can affect the target country’s economy and support of the government in power as it is currently happening in Niger Delta.”

Economy of Violence

Meanwhile, the Centre for Journalism Innovation and Development (CJID) presented research it conducted on the economy of violence in the Lake Chad Region.

In his presentation, the Executive Director of the CJID, Tobi Oluwatola, noted that terrorists in the Lake Chad region mobilise their finances through licit and illicit activities.

“There are a lot of legal activities that terrorists engage in to fund their activities. There’s a lot of farming, they own NGOs, they are sometimes in the civil services, they fish and do a lot of animal husbandry and whatnot,” he said, adding that the illicit activities include smuggling, kidnapping, extortion and drug trafficking.

The report recommended a synergy between security and development efforts, especially the inclusion of women and young people in the implementation of medium and long-term interventions in the region.

Other recommendations include the provision of better equipment for the armed forces as well as increased remuneration.