The concern about capital flight from Africa and particularly Nigeria has been on the increase in recent time. Policy makers, analysts and researchers attributed the upsurge to the re-emergence of external debt accumulation (Ndikumana & Boyce, 2021). Analysts are concerned because of the potential negative impact of loss of resources to catalyze the long desired economic growth. Others are worried due to the fear of debt service burden that could worsen the already bad situation of paucity of government revenue. Moreso, considering the view of Rojas-Suarez (1990) on the risks of capital flights namely: “the risk of expropriation of domestic assets and the risk of losses in the real value of domestic assets resulting from inflation or exchange rate depreciations”, others have begun to think that the bolstering capital flight signals the existence of these risks in the Nigerian economy. Historically, there was the perception in the 1970s to early 1980s that “the risk of expropriation of domestic assets” explained to a large extent not only the infinitesimal flight of capital out of the developing countries but also large inflows of capital. The story however changed in the mid-1980s as debt crisis surfaced in the developing countries when capital inflows moderated as outflows spiked. The 1990s brought some relief as capital flight from Africa and particularly Nigeria was low perhaps due to low level of external debt.
Analysts have in recent time worried that this trend is rapidly changing. Ndikumana & Boyce (2018) estimated capital flights from thirty African countries from 1970 to 2018 to be around US$2.0 Trillion making them net creditors to the rest of the world. According to UNCTAD (2020) over US$836 billion left the continent of Africa as capital flight from 2000 to 2015. The concurrent episode of external debt pile-up and capital flight in Africa have been well studied in recent time (Ndikumana & Boyce, 2011; Ndikumana, 2015; Ndikumana et al. 2015) but lacking for Nigeria and thus the need for this study. To achieve this objective of exploring the new links between external debt and capital flight for Nigeria, this paper adopts an eclectic approach to estimate the incident with emphasis on the post market reform period of 1986 to 2022. Thereafter, modelled its determinants using the dynamic autoregressive distributed lag (ARDL) approach. The paper is divided into five sections including this introduction. Section 2 reviews past relevant theoretical and empirical literature, while section 3 details the methodology. Section 4 presents the empirical results, and the last section concludes the study. One of the salient contributions of this paper to literature, besides using all the existing techniques of estimating capital flight, is the fusion of those methodologies to yield another measure of the phenomenon (i.e., Yaaba-Onome Synthesis).
