Africa is losing nearly $88 billion every year to illicit financial flows, according to a new report by the African Union (AU).
The losses, driven by tax evasion, money laundering and unreported financial transactions, are depriving the continent of crucial funds for infrastructure, education, health and industrial development.
The AU report highlights a 76% surge in illegal financial transfers over the past decade.
Despite efforts by several African nations to establish Financial Intelligence Units and strengthen tax administrations, their impact has been limited by weak enforcement, fragmented regulations and inadequate coordination between states.
“International standards are often ill-adapted to African realities, making regulation more complex,” the report notes.
The AU has responded by creating a continental cooperation platform to share information on suspicious transactions and develop tools tailored to regional needs.
However, experts warn that the absence of harmonised laws and a lack of technical resources continue to hinder progress.
The economic implications of these illicit flows are severe.
Funds that could finance development projects are being diverted, increasing many countries’ reliance on foreign aid.
Legitimate businesses face unfair competition, while investor confidence in some markets remains fragile due to perceived risks and lack of transparency.
Global geopolitical tensions, including the war in Ukraine, have exacerbated the problem by fostering opaque financial networks, often routed through offshore structures and intermediaries.
To combat the trend, the AU urges African states to strengthen local regulatory frameworks, enhance information sharing and adopt advanced tracking technologies. “Without stronger regional cooperation and more rigorous monitoring, these losses will continue to burden public budgets,” the report warns.
The AU’s latest findings position financial transparency and compliance as strategic priorities for Africa’s economic future, calling for urgent collective action to stem the flow of capital leaving the continent unlawfully.
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