The Nigerian government in 2016 said over N4.58 trillion ($15 billion) had been misappropriated by the previous government through fraudulent arms procurement deals.
This statement was released by the international body in Abuja on Thursday, May 18, 2017.
The body also noted that it is increasing becoming difficult for the President Muhammadu Buhari to achieve one of its cardinal electoral campaign promises of defeating the Boko Haram insurgency which has claimed an estimated live of over 20,000 people and avail the country with the highest number of internally displaced people in the world.
"Corrupt military officials have been able to benefit from the conflict through the creation of fake defence contracts, the proceeds of which are often laundered abroad in the UK, U.S. and elsewhere," the watchdog said in a statement.
"This has crippled the Nigerian military in fighting an aggressive ideologically inspired enemy such as Boko Haram."
Transparency International said this had left the military "without vital equipment, insufficiently trained, low in morale and under-resourced".
Nigeria’s Acting President, Prof. Yemi Osinbajo noted in 2016 that over N4.58 trillion ($15 billion) had been misappropriated by the previous government through fraudulent arms procurement deals.
Responding to this report, a Nigerian Defense spokesman, Major General John Enenche stated that the allegations by the world body are false for the current leadership of the military.
"A lot has been done to train, boost troops' morale and procure vital equipment through due process."
"And will continue to get better with the right kind of leadership that we have today," General Enenche noted.
On the recapturing of towns by the Boko Haram insurgents, the military said it has been recapturing much of the territory claimed by Boko Haram since the conflict began in 2009, but noted that most of the reclaimed towns are usually razed down by the terrorists.
The group encouraged the Federal Government to make its Transparency International said Nigeria should make its defense budget and procurement systems more transparent to ensure that contracts were not inflated, or given to shell companies to conceal the true beneficiary.