Africa Takes Major Steps to Curb Illicit Financial Losses, Boosting Transparency for Growth

Africa Takes Major Steps to Curb Illicit Financial Losses, Boosting Transparency for Growth

Africa loses an estimated $89 billion each year to illicit financial flows, including tax evasion, corruption, and theft—far more than the $54 billion the continent receives in foreign aid annually, according to the United Nations. To address this, African governments are making bold moves to reduce these losses, recognising that tackling illicit finance is crucial for poverty reduction and sustainable development.

Over the past decade, 30 African countries have introduced new transparency rules requiring the disclosure of company ownership, aimed at preventing both local and foreign actors from hiding illicit funds. An additional 11 countries have announced similar plans. In October, African leaders gathered in Seychelles for the first African Beneficial Ownership Transparency (AfBOT) Network meeting, where they shared progress and outlined the next steps.

Using Beneficial Ownership Data to Reclaim Assets

These reforms are already showing positive results. Nigeria, one of the first countries to create a public register of company owners, has used the data to recover over $150 million linked to former oil minister Diezani Alison-Madueke. Nigerian authorities are also working with international agencies to retrieve additional funds hidden in shell companies she allegedly controlled.

Beyond recovering assets, beneficial ownership registers are helping boost compliance within crucial sectors. Nigeria’s mining agency, for instance, has doubled its revenue over two years by identifying mining companies attempting to evade licensing fees by changing ownership. In Ghana, the civil society group NORPRA used beneficial ownership data to investigate the foreign directors of a mining company, revealing links to individuals with fraud convictions. As a result, Ghana’s Minerals Commission declined to renew the mining company’s licence.

Calling for Broader Global Transparency

At the AfBOT meeting, African leaders emphasised the importance of increasing global cooperation to effectively combat illicit financial flows. Major economies like China, Russia, Australia, Saudi Arabia, and Switzerland still lack public beneficial ownership registers, as do several tax havens that enable anonymous financial transactions. African governments argue that wider international adoption of transparency measures would significantly strengthen the impact of African reforms, supporting efforts to recover lost assets and unpaid taxes.

Need for Resources and Technical Support

African countries at the AfBOT summit also highlighted the need for resources and technical expertise to effectively manage beneficial ownership registers. Verifying ownership structures, especially when they cross borders, requires significant resources. Some donor governments, including the UK, and organisations like the World Bank have started supporting African countries with funding and assistance. For instance, the World Bank has linked part of its funding for Malawi to achieving results in beneficial ownership transparency.

Africa Building a New Model for Financial Transparency

African countries are developing transparency frameworks that meet their specific needs. For example, while global standards mainly focus on preventing money laundering, Africa’s approach is aimed at wider accountability by making data available to the public. Zambia has set up a register accessible to all, allowing companies, journalists, and civil society groups to use it to investigate potential risks and expose shell companies.

Zambia’s model is producing real-world results. An international mining equipment company operating in Zambia now uses the register to check for potential corruption risks among clients. By making ownership data accessible to everyone, Zambia is promoting a business environment that favours ethical practices and discourages illegal activities.

Towards a Transparent and Resilient Future

Africa’s commitment to beneficial ownership transparency is gaining momentum, with early results showing positive impacts on accountability and governance. African leaders are calling for continued global support to eliminate the weak links that allow corrupt actors to move money undetected.

As more African countries follow in the footsteps of Nigeria and Zambia, a more transparent and trustworthy financial system is emerging. These efforts not only strengthen Africa’s economic stability but also help create an environment that encourages ethical business practices, supporting long-term growth and development.