Illicit Financial Flows in Africa: A Silent Drain on Development and Economic Sovereignty Illicit Financial Flows (IFFs) represent one of the most pervasive threats to economic stability and sustainable development across Africa and the wider global economy. Defined as the illegal movement of money or capital from one country to another, IFFs typically occur through corruption, money laundering, tax evasion, trade misinvoicing, transfer mispricing, and other criminal or unethical activities. While IFFs are a global challenge, Africa bears a disproportionate burden. According to the United Nations Economic Commission for Africa (UNECA), the continent loses over $88.6 billion annually to illicit outflows—a figure nearly equivalent to the total yearly Official Development Assistance (ODA) received by African nations. This silent hemorrhage of resources is a profound obstacle to the continent’s prosperity, undermining national budgets, distorting governance, and exacerbating inequality. The Scale and Impact of IFFs on Africa IFFs deprive governments of critical revenues required to finance infrastructure, healthcare, education, and social protection. These lost resources could otherwise catalyze development and reduce dependency on foreign aid. A joint report by UNCTAD and UNECA indicates that IFFs account for as much as 5% of Africa’s GDP annually. In certain African nations, losses from IFFs surpass entire health or education budgets. The African Development Bank (AfDB) warns that IFFs weaken institutions, disrupt economic planning, and perpetuate the cycle of poverty and underdevelopment. IFFs also corrode public trust. When elites illicitly enrich themselves through opaque financial mechanisms while public services deteriorate, the social contract between citizens and governments erodes. This undermines democracy, fuels inequality, and entrenches corruption. Case Study: Tanzania’s Struggle Against IFFs Tanzania offers a compelling case study on the practical impacts of IFFs and the country’s ongoing efforts to combat them. At a multi-stakeholder dialogue held in Dodoma and convened by Policy Forum, various stakeholders—including government officials, CSOs, MPs, academia, and the private sector—gathered to examine how IFFs affect the Tanzanian economy. According to Ms. Nora Kawiche, a facilitator from St. Augustine University of Tanzania (SAUT), IFFs in Tanzania manifest in both criminal and commercial forms. These include: Money laundering Drug and mineral smuggling Human trafficking Tax evasion and trade misinvoicing Citing the 2021 Global Financial Integrity (GFI) report, Tanzania is estimated to lose $1.83 billion annually to IFFs. Between 2010 and 2017 alone, the country reportedly lost $360 million (about 844 billion Tanzanian shillings) to trade misinvoicing and transfer mispricing, particularly within the extractive sector. One prominent example highlighted was the Glencore corruption scandal, where the multinational commodity trading and mining firm was involved in over a decade of bribery and financial misconduct to secure contracts in countries like Nigeria, DRC, and South Sudan. The firm used shell companies, fake consultancy contracts, and intermediaries to disguise illicit payments, exemplifying how global corporate malpractice deepens African financial vulnerabilities. Tanzania’s Institutional and Legislative Response Despite the daunting scale of IFFs, Tanzania has taken several legislative and institutional steps to address the crisis: 1. Legislative Reforms: Anti-Money Laundering (Amendment) Act, 2022 Transfer Pricing Regulations, 2018 Beneficial Ownership Regulations (BRELA registry) Finance Act 2020 (amending the Companies Act, 2002) Tax Laws (Miscellaneous Amendments) 2. Institutional Strengthening: Financial Intelligence Unit (FIU) Transfer Pricing Unit (TRA) Tax Incentive Monitoring Unit Beneficial Ownership Registry However, Ms. Kawiche stressed that gaps remain, including: Weak enforcement of existing laws Fragmented inter-agency coordination Limited transparency in mining contracts Public access to beneficial ownership data Towards Solutions: A Call for Collective Action IFFs cannot be tackled in isolation. Given their transnational nature, they require coordinated international cooperation, regulatory harmonization, and multi-sectoral engagement. African governments, in partnership with civil society, parliaments, and development partners, must: Enforce transparency in cross-border transactions Establish inter-agency task forces on IFFs Promote real-time data sharing and audits Strengthen financial regulation and oversight Collaborate with global partners to close tax havens and secrecy jurisdictions Political will remains essential. As Ms. Kawiche emphasized, beyond technical capacity, there must be a deliberate review of legal loopholes, enforcement reforms, and genuine efforts to align national laws with global anti-IFF frameworks. Conclusion: Stemming the Silent Drain IFFs represent more than the theft of public resources—they signify a theft of opportunity, dignity, and future prosperity for millions of Africans. If left unchecked, they will continue to hollow out the very foundations of economic independence and governance. As Policy Forum Board Chairman Mr. Israel Ilunde and Vice-Chair of Tanzania’s Parliamentary Budget Committee Mr. Twaha Mpembenwe both emphasized, curbing IFFs requires a whole-of-society approach. Only through collective action, policy coherence, and a steadfast commitment to transparency and accountability can Africa reclaim its stolen wealth and steer its nations toward inclusive and sustainable development. Olatunji Abdulrazaq CNA, ACTI, ACIArb(UK) Founder/CEO, Taxmobile.Online