Trade misinvoicing and industrial development in Nigeria

Purpose The development of the Nigerian industrial sector is critical for the achievement of sustainable development. However, the gowing volume of trade misinvoicing, among other illicit financial flows, greatly undermines the limited available domestic resources needed to power industrial development. The Nigerian government has made concerted efforts toward industrialization, but the efforts seem futile. Thus, this study investigates whether trade misinvoicing is one of the factors fostering or dampening industrial development in Nigeria. Design/methodology/approach Annual time-series data covering the period between 1986 and 2018 were sourced, and the dynamic ordinary least squares (DOLS) estimation technique was used to analyse the data. Findings The results reveal that trade misinvoicing has a catastrophic effect on industrial development, as it has largely impeded industrial progress in Nigeria. This adverse effect not only restrains the contribution of the industrial sector to aggregate output but also limits the sector's capacity to absorb the teeming Nigerian labour force. Practical implications The practical implication of these findings is that the Nigerian government and policymakers need to design and implement sound strategies and policies to tackle trade misinvoicing, improve regulatory quality and bolster industrial development. Originality/value The research is the first to empirically examine the effect of trade misinvoicing on industrial development in Nigeria.