Can you imagine losing $1 trillion and not even noticing? This is the stark reality that Illicit Financial Flows pose in Africa. Over the past five decades, Africa has experienced an estimated loss exceeding $1 trillion in illicit financial flows (IFFs) —an amount roughly equivalent to the total official development assistance received during the same period. These flows drain Africa’s resources, crippling development and deepening inequality. They steal capital meant for hospitals, schools, and infrastructure, leaving countries with weaker economies and fewer public services. By fuelling corruption and tax evasion, IFFs undermine governance and erode trust in institutions. The overall impact is a cycle of poverty and inequality, as precious resources are siphoned off and development efforts are stifled, leaving African nations with fewer means to achieve sustainable growth and stability.
Traditional policy measures to combat illicit financial flows (IFFs) may fall short due to several interconnected challenges. Institutional capacity gaps, resource constraints, and corruption undermine effective enforcement and oversight of illicit financial flows. Additionally, complex legal frameworks and inconsistent international cooperation hinder asset recovery, while fragmented efforts and siloed responsibilities have further undermined reform efforts. Finally, the unique local realities in African countries—such as fragile institutions, political instability, informal economies, widespread poverty, and gaps in financial regulations create an environment where illicit activities can easily thrive outside formal oversight.
Tackling IFFs in Africa requires innovative, locally adapted strategies that directly confront these unique challenges and address the root causes of illicit flows. Effective interventions require a comprehensive understanding of the specific socio-economic, political, and institutional factors that facilitate illicit flows within each context. Additionally, stakeholder and community engagement and regional cooperation are vital to dismantling transnational criminal networks and closing loopholes exploited for illicit financial activities. Ultimately, sustainable progress depends on a multi-faceted approach that combines policy reforms, capacity building, technological innovation, and active participation of local stakeholders.
CABRI and the Swedish Tax Agency (STA) are partnering once again on a capability building programme to address illicit financial flows in Africa through collaborative, evidence-based, and politically informed interventions. The programme involves close collaboration from multi-disciplinary teams across various institutions at the country-level, such as Ministries of Finance, Revenue Authority, Financial Intelligence, Enforcement agencies amongst others. The programme is built around Problem Driven Iterative Adaptation (PDIA), a problem-focused approach that guides teams to diagnose local IFF issues, develop context-specific solutions, and continuously refine interventions through real-world feedback. It emphasizes building cross-sector coalitions and conducting thorough political economy analyses to understand incentives, power dynamics, and institutional constraints. This ensures that solutions are not only technically feasible but also politically viable, thereby increasing the chances of sustained and effective reforms.
This is the second cohort of the four-year programme, which is embedded within the SECFIN Africa initiative. This year, six country teams from Liberia, Kenya, Namibia, Rwanda, South Africa, and Zambia are participating in the program, aimed at addressing the diverse issues fuelling illicit financial flows (IFF) in their countries. The program started with an intensive online training course that introduces participants to the Problem-Driven Iterative Adaptation (PDIA) approach. The training provides valuable insights into the main drivers and impacts of IFF in Africa and begins guiding teams in developing a compelling problem statement focused on a key IFF challenge specific to their country.
Below are some of the key insights and emerging themes identified across the different country teams:
Tax-based avoidance and crimes make up the majority of IFF around the world, and its impact is particularly severe in Africa. These relate to illicit ways for business and individuals to avoid paying their fair share of taxes, though activities such as trade mispricing, profit shifting, and the use of offshore accounts or shell companies to conceal assets and income, undermining revenue collection and economic stability. In Africa, the impact of these tax-related illicit activities is particularly severe, with the continent experiencing an estimated tax gap of between 10-30% of potential revenue—amounting to billions of dollars in lost revenue annually (2021, Tax Justice Network). These are some of the aspects that the country- team from Kenya are focused on addressing. Despite having existing customs laws and enforcement systems, Kenya continues to lose substantial revenue due to trade-based tax crimes, including missing trader mis-invoicing, under-declaration of goods, and the use of false documentation. These illicit practices distort trade data, undermine fair competition, and erode trust in the tax system. Tailored mechanisms for detection, coordination, and response that align to local realities is essential for closing the tax gap and enhancing the country’s economic resilience.
IFF fuel criminal activities that hinder the rule of law and destabilize governance structures. The United Nations Office on Drugs and Crime (UNODC) estimates that globally, 2-5% of the world's GDP is laundered each year, facilitating organized crime networks and illicit financial operations. Beyond money laundering, illegal resource exploitation—such as unregulated logging, illegal mining, and wildlife trafficking—costs the continent billions of dollars each year in lost revenue and environmental degradation. Not only do these flows deprive governments of crucial revenue needed to fund public services and enforce laws, but they also perpetuate a vicious cycle where criminal actors thrive and governance institutions weaken, further destabilizing peace and security across the continent. In Liberia, fragmented anti-money laundering efforts reveal vulnerabilities that enable organized crime to thrive. Better coordination and data sharing among agencies are crucial to restoring the rule of law and ensuring the country’s stability. These are some of the aspects that the country-team from Liberia, will be focusing on during the 2026 programme.
Certain sectors are more prone to fuel IFF in Africa due to their high profit margins combined with opaque transactions. The natural resources sector, including oil, gas, minerals, and timber, is particularly susceptible. The financial and banking sectors, especially informal and unregulated financial systems, are also hotspots for money laundering. Additionally, sectors like real estate and construction are often exploited for money laundering. These sectors are particularly vulnerable due to their complex transactions, lack of transparency, and insufficient regulatory oversight, thereby perpetuating the cycle of illicit activity. The country-team from Namibia, for instance will be looking more closely at IFF in the fisheries sector, which contributes nearly 4% to GDP in 2024 but accounts for a disproportionately lower share of tax revenues, with evidence suggesting undervaluation of exports and profit-shifting practices.
The rise of cryptocurrencies in Africa is fuelling IFF by enabling anonymous, cross-border illicit transactions that are harder to trace. The global economy is moving away from a centralized traditional finance system towards decentralized digital currencies, which are gaining increasing acceptance as alternative stores of value, payment methods, and investment assets. Africa is the second-fastest-growing region for cryptocurrency adoption worldwide, with a 120% increase in crypto transactions in 2021 (Chainalysis’ 2022 Crypto Crime Report). Cryptocurrencies are increasingly being used as an alternative means for cross-border transfers due to high costs and slow traditional channels. However, they are also a key source of IFF by providing anonymous and decentralized channels for tax evasion, money laundering, and the illegal transfer of funds across borders, making it more challenging for authorities to track and combat illicit activities. Without clear regulatory frameworks for monitoring and enforcing compliance, these flows threaten the legitimacy of the financial infrastructure as a whole and create opportunities for illicit actors to funnel illicit financial flows undetected. Countries are increasingly identifying cryptocurrencies as a source of risk for IFF, as illustrated by 3 country-teams from South Africa, Rwanda and Zambia choosing to focus on this important issue in the SECFIN programme.
These insights show the multi-faceted and complex nature of IFF challenges, driven by interconnected technical, political, economic, and social factors that differ across countries and sectors. By fostering local ownership and a culture of continuous learning, the SECFIN programme aims to produce sustainable reforms led from within, that deepen understanding IFF dynamics within each country while remaining resilient to political and institutional shifts. Through this process, the initiative also builds local capability, strengthens transparency and accountability, thereby restoring public trust and improving the overall integrity of financial systems across participating countries.
In January and February 2026, teams will convene for a framing workshop, designed to deepen their understanding of core issues, identify entry points with wider support, and collaboratively develop implementation roadmaps.