Illicit financial flows, driven largely by trade manipulation and extractive-sector activities, are depriving African countries of resources needed for healthcare, education and infrastructure amid declining international development assistance.
African countries was said to lose an estimated $88 billion annually to illicit financial flows (IFFs), according to an August 2025 report by the African Union, highlighting a persistent challenge to the continent’s economic development, public finances and social welfare.
IFFs involve the illegal movement of money or assets across borders, often through trade mis-invoicing, tax evasion, smuggling, corruption and money laundering. The extractive sector, particularly mining, accounts for nearly half of the reported losses, underscoring concerns about the transparency of natural resource transactions and the distribution of revenues from Africa’s mineral wealth.
The scale of these outflows has significant implications, for governments struggling to finance essential public services. Revenue lost through illicit transactions could otherwise support hospitals, schools, employment programmes, clean water, sanitation and other services that determine population health and living standards.
The problem also weakens domestic revenue mobilisation, limits investment in infrastructure and productive industries, and increases governments’ reliance on borrowing and external assistance. Where public institutions lack the capacity to detect and prosecute financial crimes, illicit flows can further undermine accountability and public confidence.
The challenge is becoming more pressing, as international development assistance comes under pressure. Estimates cited in the debate, point to a 17% decline in development assistance, with reductions in funding from major donors, particularly the United States; adding to the financial constraints confronting lower-income countries. Against this backdrop, efforts to curb illicit financial flows have gained a reintroduced attention in international development discussions.
At the Fourth International Conference on Financing for Development (FfD4), held in July 2025, governments and other participants considered proposals aimed at broadening the sources of development finance and improving international tax cooperation.
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