Combating corruption in the extractive industry in Africa

The document examines how corruption in the oil, gas, and mining sectors in Africa leads to significant wealth loss through illicit financial flows, tax avoidance, and transfer pricing. It identifies a lack of state capacity, bureaucratic discretion, and political will as primary drivers of these failures. While various international and regional initiatives exist, the author argues they are often ineffective due to low administrative capacity and a focus on 'grand' corruption over systemic issues. The paper highlights Botswana as a successful model of natural resource governance and provides twelve recommendations for technical and institutional capacity building to combat corruption.

• Corruption in the extractive sector is categorized into three types: incidental corruption affecting local communities, systematic corruption involving high-level public officials in large investments, and systemic corruption where the entire governance system is prone to fraud.
• Illicit financial flows (IFFs) are a primary mechanism of corruption in the extractive industry, occurring through corporate and individual tax abuse, market regulation abuse, and the theft of state assets.
• Africa suffers massive financial losses due to corruption and IFFs, with an estimated US$50 billion lost annually to IFFs, representing 5.7% of the continent's GDP.
• State capacity in many African countries is insufficient to enforce tax compliance or monitor extraction, leading to vulnerabilities such as transfer pricing and trade under-invoicing.
• Regional and international anti-corruption initiatives, including the AUCPCC and EITI, often fail because they assume a level of administrative capacity that is absent in many African states.
• The African Union Advisory Board on Corruption (AUABC) is described as weak and ineffective, having failed to initiate substantive work on the implementation of the AUCPCC.
• Botswana is presented as a successful example of resource governance, having avoided the 'resource curse' through a transparent, law-abiding government, prudent fiscal policy, and an independent anti-corruption directorate.
• Specific countries have experienced severe losses: Nigeria lost an estimated US$100 billion in oil and gas revenue between 2000 and 2012, and the DRC lost at least US$1.36 billion between 2010 and 2012 from underpricing mining assets.
• The author recommends a shift from focusing on 'grand corruption' cases toward a strategic strengthening of the overall system, including technical support for auditors, revenue agencies, and legislative oversight.

APA

Chikwanha, A. B. (n.d.). Combating corruption in the extractive industry in Africa. Institute for Security Studies. https://issafrica.s3.amazonaws.com/site/uploads/iss-sida-1.pdf

Chicago

Chikwanha, Annie Barbara. Combating corruption in the extractive industry in Africa. Institute for Security Studies, n.d. https://issafrica.s3.amazonaws.com/site/uploads/iss-sida-1.pdf.

Wikipedia

{{cite report |last1=Chikwanha |first1=Annie Barbara |title=Combating corruption in the extractive industry in Africa |publisher=Institute for Security Studies |url=https://issafrica.s3.amazonaws.com/site/uploads/iss-sida-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{chikwanhandcombating, author = {Chikwanha, Annie Barbara}, title = {{Combating corruption in the extractive industry in Africa}}, institution = {Institute for Security Studies}, url = {https://issafrica.s3.amazonaws.com/site/uploads/iss-sida-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }