News
Illicit Financial Flows from Africa – Track It, Stop It, Get It
Illicit money outflows are draining Africa’s domestic resources, depriving it of crucial investment funds
The figures are staggering: between $1.2 trillion and $1.4 trillion has left Africa in illicit financial flows between 1980 and 2009 – roughly equal to Africa’s current gross domestic product, and surpassing by far the money it received from outside over the same period.
Illicit financial flows are money earned illegally and transferred for use elsewhere. The money is usually generated from criminal activities, corruption, tax evasion, bribes and transactions from cross-border smuggling.
The numbers tell only part of the story. It is a story that exposes how highly complex and deeply entrenched practices have flourished over the past decades with devastating impact, but barely made it into the news headlines.
“The illicit haemorrhage of resources from Africa is about four times Africa’s current external debt,” says a joint report by the African Development Bank (AfDB) and Global Financial Integrity, a US research and advocacy group.
The report, Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009, found that cumulative illicit outflows from the continent over the 30-year period ranged from $1.2 trillion to $1.4 trillion.
The Guardian, a British daily, notes that even these estimates – large as they are – are likely to understate the problem, as they do not capture money lost through drug trafficking and smuggling.
Turning logic upside down “The traditional thinking has always been that the West is pouring money into Africa through foreign aid and other private-sector flows, without receiving much in return,” said Raymond Baker, president of Global Financial Integrity, in a statement released at the launch of the report earlier this year.
Mr. Baker said the report turns that logic upside down, adding that Africa has been a net creditor to the rest of the world for decades.
Professor Mthuli Ncube, chief economist and vice-president of the AfDB, agrees: “The African continent is resource-rich. With good resource husbandry, Africa could be in a position to finance much of its own development.”
The composition of these outflows also challenges the traditional thinking about illicit money.
According to estimates by Global Financial Integrity, corrupt activities such as bribery and embezzlement constitute only about 3% of illicit outflows; criminal activities such as drug trafficking and smuggling make up 30% to 35%; and commercial transactions by multinational companies make up a whopping 60% to 65%.
Contrary to popular belief, argues Professor Baker, money stolen by corrupt governments is insignificant compared to the other forms of illicit outflow.
The most common way illicit money is moved across borders is through international trade. Information scanty and scattered
A ten-member high-level panel chaired by former South African President Thabo Mbeki leads research by the UN Economic Commission for Africa (ECA) into illicit financial flows, assisted by ECA Executive Secretary Carlos Lopes as the vice-chair.
Other members of the panel include Professor Baker and Ambassador Segun Apata of Nigeria. The ECA blames illicit outflows for reducing Africa’s tax revenues, undermining trade and investment and worsening poverty.
Its report will be released in March 2014. Undoubtedly the panel faces a daunting task. Charles Goredema, a senior researcher at the South Africa-based Institute of Security Studies, cautions the panel on the challenges ahead.
Writing in the institute’s newsletter, ISS Today, Goredema warns the panel that it will find that in many African countries, data on illicit financial flows “is scanty, clouded in a mixed mass of information and scattered in disparate locations.”
He ranks tax collection agencies and mining departments among the bodies most reluctant to share data.
Goredema lists Transparency International, Global Financial Integrity, Christian Aid and the Tax Justice Network as some of the advocacy groups that have tried to quantify the scale of illicit financial flows.
The extent of such outflows remains a matter of speculation, he says, with the figures on Africa ranging between $50 billion and $80 billion per year.
Other estimates by the ECA put the figure at more than $800 billion between 1970 and 2008.
“The absence of unanimity on [the amount] is probably attributable to the fact that the terrain concerned is quite broad, and each organisation can only be exposed to a part of it at any given point in time,” Goredema writes, adding, “It is less important to achieve consensus on scale than it is to achieve it on the measures to be taken to stem illicit financial outflows from Africa.”
Underpricing trade deals Nonetheless, research and advocacy groups who have worked on illicit outflows see a direct link between these outflows and Africa’s attempts to mobilize internal resources.
Despite annual economic growth averaging 5% over the past decade – boosted in part by improved governance and sound national policies – Africa is still struggling to mobilize domestic resources for investments.
If anything, the boost in economic growth has caused a spike in the illicit outflows, says Ambassador Apata in an interview with Africa Renewal.
Overseas development aid, while helpful, has its limits, says the ECA. There are many channels to move illicit money.
These include over-invoicing or underpricing trade deals, transfer pricing and using offshore financial and banking centres and tax havens.
Transfer pricing occurs when multinationals decide how much profit to allocate to different parts of the same company operating in different countries, and then determine how much tax to pay to each government. About three-fifths of global trade is conducted within multinationals.
“Many developing countries have weak or incomplete transfer pricing regimes,” according to the Guardian, citing an issue paper authored by the Paris-based Organization for Economic Cooperation and Development (OECD), a group of high-income economies.
The paper says poor countries have weak bargaining power. “Some [countries] have problems in enforcing their transfer pricing regimes due to gaps in the law, weak or no regulations and guidelines for companies,” says the OECD paper, adding that poor countries have limited technical expertise to assess the risks of transfer pricing and to negotiate changes with multinationals.
Offshore tax shelters According to the OECD paper, member countries are failing to identify company owners who benefit from money laundering.
It criticizes OECD members for not doing enough to crack down on illicit outflows. In order to prevent, uncover or prosecute money laundering, says the paper, authorities must be able to identify company owners.
The OECD advises its members to invest in anti-corruption and tax systems in poor countries, as this has high payoffs.
The bulk of illicit money today is channelled through international tax havens, says the Thabo Mbeki Foundation, an NGO set up by the former president to promote Africa’s renaissance.
The foundation accuses “secrecy jurisdictions” of running millions of disguised corporations and shell companies, i.e., companies that exist on paper only.
These jurisdictions also operate anonymous trust accounts and fake charitable foundations that specialize in money laundering and trade over-invoicing and underpricing.
“Developing countries lose three times more to tax havens than they receive in aid,” said Melanie Ward, speaking to the Guardian.
Ms. Ward is one of the spokespersons for the Enough Food for Everyone IF campaign, a coalition of charities calling for fairer food policies, and head of advocacy at ActionAid, an anti-poverty group.
The money lost, she says, should be spent on essential development of schools, hospitals and roads, and on tackling hunger, not siphoned into the offshore accounts of companies.
A 2007 joint report by the World Bank and UN Office on Drugs and Crime estimated that every $100 million returned to a developing country could fund up to 10 million insecticide-treated bed nets, up to 100 million ACT treatments for malaria, first-line HIV/AIDS treatment for 600,000 people for one year, 250,000 household water connections or 240 km of two-lane paved roads.
Support for new rules to rein in offshore tax shelters has come from an unlikely source – the leaders of eight of the world’s biggest economies, the Group of Eight (G8).
Having been stung by the 2008 global financial crisis, the G8 leaders at this year’s summit in Lough Erne, Northern Ireland, introduced – for the first time – rules to fight tax evasion.
The rules will now require multinationals to disclose the taxes they pay in countries in which they operate.
During the run-up to the G8 summit, advocacy groups campaigned to get rich countries to introduce laws on transparency in corporate taxes.
Among them was the Africa Progress Panel, chaired by former UN Secretary-General Kofi Annan.
On the eve of the summit, it published its annual flagship report, Africa Progress Report 2013, strongly criticizing the current rules on corporate transparency. Unconscionable acts
“It is unconscionable that some companies, often supported by dishonest officials, are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximize their profits while millions of Africans go without adequate nutrition, health and education,” Mr. Annan wrote in the foreword to the report.
Tax evasion, he said, has cut into African citizens’ fair share of profits from their abundant resources.
In the end, the G8 leaders adopted the Lough Erne Declaration, a 10-point statement calling for an overhaul of corporate transparency rules.
Among other things, the declaration urges authorities to automatically share tax information with other countries to fight tax evasion.
It states that poor countries should have the information and capacity to collect the taxes owed to them.
The declaration further calls on extractive companies to report payments to all governments, which should in turn publish them.
While the Financial Times embraced the declaration as “an advance” in corporate transparency, Sally Copley, another spokesperson for the IF campaign, says in a statement, “The public argument for a crackdown on tax dodging has been won, but the political battle remains.” Copley wants the G8 to impose strict laws on tax evasion.
For its part, Africa Progress Report 2013 calls for multilateral solutions to global problems because “tax evasion, illicit transfers of wealth and unfair pricing practices are sustained through global trading and financial systems.”
It urges African citizens to demand the highest standards of propriety and disclosure from their governments, and rich countries to demand the same standards from their companies.
Initiatives by institutions in Africa and the adoption of the Lough Erne Declaration raise hopes for strict rules against illicit financial flows from Africa.
“Seizing these opportunities will be difficult. Squandering them would be unforgivable and indefensible,” Mr. Annan warns in his foreword to the panel’s report.
Meanwhile, ECA’s slogan “Track it. Stop it. Get it” aptly captures what needs to be done about money flowing illicitly out of Africa.
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Nigeria and Israel yesterday reaffirmed their commitment to deepening bilateral cooperation in research, technology and innovation as both countries pledged to expand partnerships that will drive entrepreneurship, commercialise research and accelerate economic development.
The commitment was made at the closing ceremony and innovation showcase of the I-FAIR Cohort of the Israel-Nigeria Innovation Fellowship for Aspiring Inventors and Researchers (I-FAIR) in Abuja, where the Ambassador of Israel to Nigeria, Michael Freeman, announced that funding had been secured for the fifth edition of the programme, scheduled to begin in October 2026.
Freeman described I-FAIR as a practical demonstration of the growing partnership between both countries, saying it had enabled Nigerian innovators to develop local solutions to national challenges through Israeli mentorship and expertise.
He said, “This programme has never been about bringing Israeli solutions to Nigeria. It’s been about helping brilliant Nigerian innovators develop Nigerian solutions to Nigerian challenges supported by Israeli experience, mentorship and innovation.”
The envoy noted that the initiative had brought together government, academia, investors, engineers and entrepreneurs to transform innovative ideas into businesses capable of creating jobs and stimulating economic growth.
Announcing the continuation of the programme, he said, “I am so proud to stand here today and announce that we have secured with our partners funding for I-FAIR 5 and I-FAIR 5 will be launching in October 2026.”
Freeman said the relationship between Nigeria and Israel had grown significantly over the past four and a half years through cooperation in innovation, agriculture, healthcare, education, water management and technology.
He expressed confidence that stronger collaboration between both countries would unlock greater opportunities for startups, research institutions and businesses.
According to him, “Israel brings experience and innovation, technology, agriculture, healthcare, cyber security, security and water management. Nigeria brings extraordinary talent, creativity, entrepreneurship and one of the most dynamic young populations anywhere in the world.”
He added, “I have no doubt that the best chapters of the relationship between Israel and Nigeria are still ahead of us.”
The Executive Secretary of the Tertiary Education Trust Fund, Architect Sonny Echono, also reaffirmed TETFund’s commitment to strengthening research and innovation through strategic partnerships with Israel and other stakeholders.
He said the I-FAIR programme aligned with Nigeria’s priorities in food security, agriculture, medicine, technology, clean energy and the circular economy, adding that TETFund would continue supporting initiatives that promote research commercialisation.
Echono stressed that collaboration between government, academia and industry remained critical to translating research findings into products and services.
He said, “It is this critical linkage, especially between science, engineering, technology and innovation, and the productive sector that is critical for translating R&D results and inventions into finished products for socio-economic benefits of our people.”
He disclosed that TETFund was working with partners to establish innovation facilities in about 60 tertiary institutions and had created a student innovation fund that would provide up to ₦50 million to students with commercially viable ideas.
The TETFund boss also announced plans for a National Research Fair later this year, where innovators would showcase products before policymakers, financial institutions and investors to attract funding and commercial partnerships.
Paying tribute to the outgoing Israeli ambassador, Echono described Freeman as a strong bridge between Nigeria and Israel.
He said, “Nigeria is grateful for your service. You have been a strong bridge between our two countries.”
Earlier, Head of Programmes at Innov8 Hub, Tolulope Aina, said sustainable economic development depended on building an innovation ecosystem that transforms ideas into successful businesses.
She noted that Innov8 Hub had supported more than 3,000 innovators, researchers and entrepreneurs, helping them convert research into products, startups and investment-ready ventures.
Aina said, “Nigeria does not suffer from a shortage of brilliant minds, what we need are stronger pathways that help those ideas become products, businesses, and opportunities that improve life.”
She thanked the Embassy of Israel and TETFund for their continued support in strengthening Nigeria’s innovation ecosystem.
According to her, “Building an innovation-driven economy requires collaboration, long-term commitment and shared purpose.”
Chief Judges drawn from countries across the African continent have resolved to collaborate and support measures aimed at ensuring the success of the Africa Continental Free Trade Area (AfCFTA) through an efficient, reliable and predictable dispute resolution system.
They agreed to explore ways to harmonize disputes resolution mechanisms in the continent with a view to making it easier and faster to resolve commercial disputes.
The resolutions formed part of the decisions taken at the third Africa Chief Justices’ Alternative Dispute Resolution (ADR) Summit held in Nairobi, Kenya between June 18 and 19.
According to a statement by the Special Assistant on Media to the Chief Justice of Nigeria (CJN), Justice Kudirat Kekere-Ekun, Mr. Tobi Soniyi, the African judicial leaders were of the view that commercial confidence depends largely on legal certainty.
They emphasised how structured Alternative Disputes Resolution could enhance commercial justice, protect the business environment and support the AfCFTA.
In her contribution, the Chief Justice of Nigeria (CJN), Justice Kudirat Kekere-Ekun urged called on African judiciaries to proactively prepare for emerging challenges to disputes resolution in the continent.
Justice Kekere-Ekun, who served as Co-Chair of the session on “Financial sector disputes, tax certainty and ADR: Building commercial confidence in Africa, noted that AfCFTA represents one of the most ambitious economic integration projects in modern history.
The CJN, who stressed the importance of a proactive Judiciary to the success of AfCFTA, warned that its success would depend, not only on trade protocols, tariff reductions and economic policies, but also on the strength and reliability of the institutions that support commerce.
Justice Kekere-Ekun urged her colleagues to examine how judiciaries in the continent, central banks, tax administrations and ADR institutions could work together to reduce uncertainty, prevent disputes, strengthen investor confidence and support the realization of AfCFTA’s objectives.
She envisaged the growth of intra-African trade to inevitably generate cross-border tax disputes; foreign exchange disputes; banking and payment system disputes; digital commerce disputes; enforcement of arbitral awards; recognition of foreign judgments; and disputes arising from regional supply chains.
The CJN, who said “African Judiciaries must proactively prepare for these emerging realities,” challenged African judicial leaders on the importance of disputes prevention mechanism.
She stated that modern commercial justice must move beyond the traditional focus on disputes resolution after conflicts arise.
“The most successful commercial systems are not those that generate the highest volumes of litigation but those that reduce the need for litigation,” she added.
Justice Kekere-Ekun, who stressed the importance of ADR, cautioned against seeing ADR as merely an alternative procedure.
She said ADR should rather be considered as a strategic tool for reducing transaction costs, preserving commercial relationships, enhancing investor confidence, reducing court congestion, improving ease of doing business and strengthening commercial certainty.
Sharing the Nigerian experiences, Justice Kekere-Ekun cited the recent decision by the Nigerian Supreme Court in the case of EMTS v. AFDIN Ventures Ltd. & Ors. (2026), which reaffirmed important principles of commercial certainty, including respect for arbitration agreements; recognition that consent may be inferred from conduct; judicial restraint from re-litigating arbitral disputes on the merits; and the importance of finality in arbitral awards.
According to her, the decision reinforced Nigeria’s position as an arbitration-supportive jurisdiction.
She identified timely resolution of tax disputes as an important factor in ensuring certainty and recommended Nigerian tax disputes resolution mechanism which she said “offers useful example of institutional reforms that support commercial certainty.”
Justice Kekere-Ekun recommended the Nigeria’s Tax Appeal Tribunal model, which she described as one of Nigeria’s most significant innovations.
According to Mr. Soniyi, Justice Kekere-Ekun’s message to his brother justices is clear: building an African commercial environment in which investors, businesses, regulators and citizens can transact across borders with confidence, secure in the knowledge that their rights will be protected and their obligations fairly enforced.
The summit advanced the goals of the African Chief Justices Alternative Dispute Resolution Forum (ACJADRF) to harmonize jurisprudence and establish common enforcement standards across the continent.
The CJN was, on the last day of the summit, nominated by the Chief Justice of Kenya as the Vice Chairperson of the Africa Chief Justice ADR Forum with effect from August 1, 2026. The nomination was ratified by the forum.
Twenty-one former Almajiri learners and street children are set to graduate as certified technology technicians under the Almajiri-to-Tech Initiative, a programme designed to equip vulnerable children with digital and entrepreneurial skills while addressing youth unemployment, poverty and insecurity.
The pioneer graduation ceremony is scheduled to hold on July 29 in Abuja, where the graduates will demonstrate practical skills, including assembling computers and drones, before government officials, development partners, members of the diplomatic community and the media.
The initiative was founded by technology education advocate, Mr Tim Akano, in partnership with New Horizons Nigeria, an Information and Communication Technology (ICT) training organisation.
According to the organisers, the programme seeks to provide practical solutions to the growing challenge of out-of-school children by combining technology education, entrepreneurship, mentorship and character development.
The organisers said the initiative had transformed children who previously had little or no exposure to technology into technicians capable of repairing laptops, desktop computers, mobile phones, power banks, electric fans, microwave ovens and other electronic devices.
They explained that the participants also received entrepreneurship training, mentorship, transportation support, daily meals, learning materials and professional work tools during the programme.
The organisers added that religious instructors from the participants’ respective faiths regularly visited the trainees to provide moral guidance, describing character development as a critical component of the initiative.
Unlike many vocational interventions that end with the presentation of certificates, the organisers said graduates of the programme would receive start-up support, while outstanding participants would be provided with professional work tools to establish their own businesses.
They also disclosed plans to launch a business directory and customer contact platform that would enable individuals, businesses and organisations to engage the services of the graduates.
Speaking on the initiative, Akano, who is also the Managing Director and Chief Executive Officer of New Horizons System Solutions Ltd., said the programme was conceived as a practical response to the challenges of youth unemployment, insecurity, poverty and irregular migration.
“You do not end migration by building higher walls. You do not defeat insecurity by relying only on military force, and you do not end poverty by preaching patriotism.
“You solve these challenges by building hope where hopelessness exists, equipping young people with practical skills, and creating opportunities where they live,” he said.
According to him, the pilot programme has demonstrated that children who have experienced neglect and exclusion can become innovators, entrepreneurs and contributors to national development when provided with quality education and opportunities.
He said one of the trainees, Mohammed, who arrived from the Niger Republic without speaking English, had acquired sufficient language proficiency within months to communicate confidently with customers while carrying out computer and electronics repairs.
Another participant, Fatima, discovered her interest in poetry during the programme and produced a poem celebrating New Horizons Nigeria, reflecting the broader personal development fostered by the initiative.
The organisers said the programme was inspired by concerns over the growing number of out-of-school children in Nigeria, estimated at about 30 million, and the broader global challenge of millions of children without access to education.
They argued that investing in digital skills, entrepreneurship and mentorship for vulnerable children offers a sustainable approach to addressing poverty, insecurity, youth unemployment and violent extremism.
As part of efforts to sustain the programme, the foundation said it had established a fully equipped workshop known as “The Almajiri Republic Workshop” in Wuse II, Abuja.
The workshop, according to the organisers, will serve as a commercial repair centre where graduates can provide computer and electronics repair services while continuing to strengthen their technical expertise.
The foundation called on the Presidency, federal and state governments, Ministries, Departments and Agencies (MDAs), members of the National Assembly, development partners, donor agencies, corporate organisations, civil society groups, religious institutions and other stakeholders to support the expansion of the initiative across Nigeria.
It maintained that scaling up the programme could transform millions of vulnerable children into skilled professionals capable of contributing to economic growth while reducing poverty, unemployment and insecurity.
The organisers said local and international media organisations, including CNN, BBC, Al Jazeera and ARISE News, had been invited to witness the graduation ceremony and the practical demonstrations by the pioneer graduates.
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