Illicit Financial Flows

This research paper analyzes illicit financial flows (IFFs) in Africa, estimating that approximately US$89 billion leaves the continent annually. It identifies multinational commercial activities (65%) and criminal/corrupt activities (35%) as the primary drivers. The document highlights the resulting deficits in health and education spending and critiques the US as a secrecy jurisdiction. It evaluates efforts to combat IFFs through the African Tax Administration Forum (ATAF), the EITI, and the OECD/G20 BEPS framework, noting that African nations seek a higher global minimum corporate tax rate of 20%.

• Illicit financial flows (IFFs) from Africa represent a massive loss of resources, with a 2020 UNCTAD report estimating that approximately US$89 billion leaves the continent annually. This amount is equivalent to 3.7% of Africa’s GDP and nearly matches the combined annual inflows of foreign direct investment (FDI) and aid. These figures are considered conservative estimates due to the hidden nature of IFFs.
• The majority of IFFs (65%) are driven by commercial activities of multinational companies, including transfer mispricing, trade misinvoicing, tax treaty shopping, and unequal contracts. The remaining 35% are attributed to criminal activity and funds stolen by government officials via embezzlement, bribery, and theft of state assets.
• IFFs cause significant social and macroeconomic damage. Annual tax losses are estimated at US$17.1 billion, which leads to reduced spending on essential services; UNCTAD estimates that countries with high IFFs spend 58% less on education and 25% less on health than their peers. Additionally, these deficits force African nations to use predatory borrowing and drain foreign exchange reserves.
• The United States is identified as a "secrecy jurisdiction" that facilitates private offshore tax evasion. While the US Foreign Account Tax Compliance Act requires other governments to disclose information on US citizens' assets, the US government does not provide reciprocal information to the 113 participating governments. Furthermore, an executive order issued by President Donald Trump in early 2025 effectively stopped the enforcement of bribery-related offences under the Foreign Corrupt Practices Act.
• Illicit outflows are concentrated in Africa's largest economies. South Africa lost an average of US$7.4 billion per year to IFFs between 2010 and 2014. In 2014, Nigeria lost US$2.2 billion, which represented 4% of its total government revenue.
• The African Tax Administration Forum (ATAF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes have helped African governments recover approximately €1.7 billion in additional tax revenues, including penalties and interest, through voluntary disclosure programs and offshore tax investigations.
• African nations have expressed concerns regarding the OECD/G20 Inclusive Framework on BEPS, specifically the proposed 15% global minimum corporate tax rate (Pillar Two). African countries argue this rate is too low compared to their own average corporate tax rates of 25–35% and are advocating for a minimum rate of at least 20%.
• The Extractive Industries Transparency Initiative (EITI), which includes 26 African member countries, has identified major revenue leakages, including a US$2.4 billion recovery of tax payments in Nigeria, over US$100 million in missing funds in the Democratic Republic of Congo, and a US$55 million payment gap in Ghana.

APA

Yeboua, K., & Cilliers, J. (2026). Illicit Financial Flows. Institute for Security Studies. https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=05-illicit-financial-flows

Chicago

Yeboua, Kouassi, and Jakkie Cilliers. Illicit Financial Flows. Institute for Security Studies, 2026. https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=05-illicit-financial-flows.

Wikipedia

{{cite report |last1=Yeboua |first1=Kouassi |last2=Cilliers |first2=Jakkie |title=Illicit Financial Flows |publisher=Institute for Security Studies |date=28 May 2026 |url=https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=05-illicit-financial-flows |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{yeboua2026illicit, author = {Yeboua, Kouassi and Cilliers, Jakkie}, title = {{Illicit Financial Flows}}, institution = {Institute for Security Studies}, year = {2026}, month = may, url = {https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=05-illicit-financial-flows}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }