By Ebi Kesiena
The African Development Bank (AfDB) has revealed that Africa loses approximately $1.6 billion daily due to illicit financial flows and profit shifting by multinational corporations operating on the continent.
Kevin Urama, AfDB’s Chief Economist, disclosed this during a media briefing, stressing that Africa loses far more through financial outflows than it gains from Foreign Direct Investment (FDI).
He emphasized the need for stakeholders to focus on curbing these losses rather than solely pursuing inflows.
“Corruption remains a significant issue on the continent, with estimates showing Africa loses about $248 billion annually to corrupt practices. When illicit financial flows of over $90 billion and corporate profit shifting are added, the total annual loss amounts to around $587 billion,” Urama explained.
He highlighted that this figure translates to about $1.61 billion daily, a stark contrast to the $174.5 billion Africa received in FDI, official development assistance, portfolio flows, and remittances in 2022. Urama questioned the continent’s priorities, stating, “If we’re losing nearly $600 billion annually, our focus should be on stopping these outflows rather than chasing smaller inflows.”
Addressing the Root Causes
Urama underscored the importance of institutional quality, accountability systems, and capacity building within public service to combat illicit flows effectively. He pointed out that better regulatory frameworks, policies, and technological tools are essential for tracking and curbing financial leakages.
According to him, the AfDB has introduced a Public Service Delivery Index for Africa. This index measures both the quality and perception of public services across key sectors, ensuring transparency and accountability.
“It’s not just about claiming progress but ensuring citizens feel the impact. For instance, placing an electric pole in a community doesn’t equate to delivering electricity if households cannot connect,” Urama noted.
Nigeria’s struggles with illicit financial flows have contributed to its inclusion on the Financial Action Task Force (FATF) greylist since February 2023. However, the Nigerian Financial Intelligence Unit (NFIU) reported in October that FATF approved the country’s fourth progress report during its recent plenary session.
The AfDB’s findings serve as a call to action for African governments to prioritize curbing illicit financial flows, strengthening institutions, and fostering greater accountability to safeguard the continent’s financial resources.
