Africa’s billion-dollar bleed: illicit financial flows undermine development and sovereignty

Africa is losing an estimated $88 billion annually through illicit financial flows (IFFs), depriving nations of vital resources for healthcare, education, and infrastructure, according to the African Union (AU).
The AU and experts warn that tax evasion, money laundering, and profit-shifting by multinational corporations, often aided by weak regulations and corrupt elites, are draining the continent’s wealth. “IFFs are not victimless crimes — they rob our future,” said Victor Sekese, CEO of SNG Grant Thornton. The impact is tangible: in Nigeria alone, profit shifting in the oil sector has cost billions — funds that could provide clean water to 500,000 people or save thousands of children’s lives. While “Illegal financial flows exist worldwide,” admits tax justice advocate Idriss Linge, “Africa is the most affected because budgets are already stretched.” A 2020 UNCTAD report revealed IFFs cost Africa 3.7% of its GDP — more than half the financing gap for achieving the Sustainable Development Goals. Experts also say that commercial activities account for 65% of the losses, criminal activities account for 30% of the losses and corruption accounts for 5% of the losses.
Christoph Trautvetter of the Network for Tax Justice noted that elites and corporations exploit tax havens and offshore accounts. Meanwhile, enforcement is weak. “Rich and powerful in both Africa and the global North ultimately benefit from this system,” he said. Efforts are underway: more than 100 countries now exchange bank account data, and a new UN framework aims to tackle digital tax injustice. Sekese is also optimistic that technology could provide some answers, such as by “(accelerating) the use of generative AI to prevent illicit financial flows.” Still, experts warn that Africa’s fragmented financial systems, porous borders, and rising use of untraceable cryptocurrencies are accelerating the problem. Combatting IFFs, analysts argue, requires not just enforcement and technology, but also political will and regional cooperation.