NAIROBI, Kenya, Mar 26 – African governments have been urged to strengthen financial oversight, improve transparency, and enhance cross-border cooperation to curb illicit financial flows (IFFs) draining up to Sh11.7 trillion ($90 billion) annually from the continent.
The call follows new reports by the Coalition for Dialogue on Africa (CoDA), which serves as the Secretariat of the African Union High-Level Panel on Illicit Financial Flows, based on assessments across 16 African countries.
The findings show that despite progress in setting up financial intelligence units, transfer pricing frameworks and beneficial ownership registries, illicit flows have surged from about Sh6.5 trillion a decade ago, highlighting major enforcement and coordination gaps.
“These illicit flows have a negative impact on Africa’s development efforts: the most serious consequences are the loss of investment capital and revenue that could have been used to finance development programmes, the undermining of state institutions and a weakening of the rule of law,” the report states.
According to the findings, most losses stem from commercial activities such as trade mispricing, tax avoidance and profit shifting, while criminal activities including money laundering and trafficking account for the rest, with corruption cutting across both areas.
To address the challenge, governments have been advised to invest in stronger systems for tracking trade and financial data, including building robust databases and enhancing cross-border tax information sharing to detect suspicious transactions.
The reports also recommend closer coordination between financial intelligence units, tighter supervision of banks and foreign exchange bureaus, and increased transparency in public procurement and corporate ownership.
“Regulators must require companies to disclose their beneficial owners, especially when engaging in government contracts, while multinational firms should provide country-by-country financial reporting to reduce profit shifting,” the report notes.
The warning comes as Africa faces a widening financing gap for development, with experts noting that curbing illicit financial flows could help countries retain critical resources and reduce reliance on debt.
“The resource needs of African countries for social services, infrastructure and investment underscore the importance of stemming IFFs from the continent,” the reports add.
The findings were unveiled during a media briefing in Nairobi, where policymakers and experts called for stronger political will and regional cooperation to reverse the growing losses.
