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Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has warned that illicit financial flows are draining an estimated $88 billion from Africa each year, significantly undermining development efforts and weakening fiscal stability across the continent.
Edun made this known while delivering a keynote address at the 5th Session of the Sub-Committee on Tax and Illicit Financial Flows under the Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration held in Abuja.
He described illicit financial flows as one of the most critical threats to Africa’s economic progress, noting that the lost funds could otherwise support infrastructure development, healthcare delivery, education, and other essential sectors.
“Illicit financial flows alone are estimated to cost the continent nearly $88 billion annually—resources that should otherwise be invested in critical areas of our economies,” he stated.
The minister highlighted persistent structural challenges facing African economies, including tax evasion, weak institutional frameworks, limited diversification, and dependence on external financing. These issues, he noted, underscore the need for stronger regulatory compliance, enhanced financial compliance, and improved compliance management systems across the continent.
Edun called for urgent fiscal reforms, urging governments to strengthen tax systems, expand the tax base, and address revenue leakages through improved regulatory monitoring and compliance analytics. He emphasised that effective risk assessment and regulatory risk management are essential for sustainable economic growth.
“Broadening the tax base, improving compliance, and reducing leakages are critical to achieving long-term economic stability,” he said.
He also stressed the importance of developing robust capital markets and strengthening enforcement mechanisms to combat illicit financial flows. According to him, reforms must be supported by stronger institutions, digital transformation, and regional collaboration to enhance regulatory intelligence and policy coordination.
The minister pointed to the African Union’s Agenda 2063 as a strategic framework guiding reforms aimed at improving governance, strengthening tax systems, and boosting domestic resource mobilisation.
On Nigeria’s domestic efforts, Edun noted that the government has implemented a series of reforms since May 2023 aimed at simplifying the tax system, expanding the tax base, and promoting fairness. These reforms, which took effect in January 2026, are designed to enhance regulatory compliance frameworks and improve revenue generation.
He added that transparency in the oil and gas sector has been strengthened through Executive Order 9, which mandates that revenues be paid into designated accounts before utilisation. Additionally, the removal of fuel subsidies and exchange rate unification have improved transparency, reduced economic distortions, and boosted investor confidence.
Edun also highlighted the launch of the National Single Window system, which is expected to streamline trade processes, enhance efficiency, and reduce leakages linked to illicit financial flows through improved regulatory reporting and compliance tracking.
He emphasised that the work of the sub-committee is critical in shaping policies and partnerships that will enable African countries to safeguard their resources and build resilient fiscal systems.
Earlier, the Executive Chairman of the Nigeria Revenue Service, Zacch Adedeji, reiterated that illicit financial flows continue to deprive African countries of critical development resources.
“Every year, billions of dollars meant for development are lost through illegal transfers, trade mispricing, and tax evasion,” he said, warning that such losses translate into fewer public services and infrastructure projects.
Adedeji called for stronger continental cooperation, noting that illicit financial flows often exploit weak regulatory frameworks and cross-border gaps, making collaboration essential for effective enforcement and financial crime prevention.
Also speaking, the Executive Secretary of the African Tax Administration Forum, Mary Baine, stressed the importance of domestic revenue mobilisation as a sustainable pathway to development.
She noted that while Africa’s economic growth is projected to improve—from 3.3 per cent in 2024 to 3.9 per cent in 2025, with expectations of exceeding 4 per cent in 2026—it remains below its full potential.
Baine added that although tax revenues are gradually increasing across several countries, the average tax-to-GDP ratio remains relatively low at about 16 per cent, highlighting the need for stronger compliance technology, improved regulatory enforcement, and more efficient tax systems.
Overall, stakeholders at the session emphasised that tackling illicit financial flows will require coordinated reforms, stronger institutions, and the adoption of RegTech solutions to enhance transparency, accountability, and long-term economic resilience across Africa.
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