Experts: $89bn of Africa’s Wealth Lost Annually to Illicit Financial Flows

Oluchi Chibuzor

As Africa loses almost 4 per cent of its gross domestic products (GDP) annually to capital flights, it has been noted that about $89 billion of the continent’s wealth is lost annually to illicit financial flows (IFFs), undermining its capability to achieve sustainable development, political stability, and peace.

According to experts the growing level of Illicit capital flight, money laundering, terrorist financing, and corruption are a serious consequence of the systemic shortcomings of professionals, which now threatens national security, economic and political stability in the West African region.

To this end, a roundtable on Public and Private Sector Discussion with the theme, “Strengthening Anti-Money Laundering/ Countering Terrorist Financing (AML/ CTF) & Curbing Illicit Financial Flows (IFF) in Nigeria and the West Africa Region,” was organised by the Institute of Directors’ Centre for Corporate Governance (IOD CCG), with support from the Centre for International Private Enterprise.

The discussion, which engaged both the private sector gatekeepers and enablers in building consensus and fostering collaboration in solving AML and CFT, agreed it was therefore a collective priority of the private sector, civil society and government to address systemic challenges and gaps undermining the efforts to curb IFF and ML/TF.

Speaking at the event, Chairman, IoD Centre for Corporate Governance, Shuaibu Idris, stressed that tackling illicit financial flows was a matter of survival for Africa’s development.

He noted that illicit flows constitute a drain on Africa’s foreign exchange reserves, reduce efforts to enhance domestic resource mobilisation, contract investment inflows and contribute to low social development indicators including poverty and inequality.

“Africa not only loses about five of continental GDP annually to illicit capital flights but the proliferation of illicit financial flows enables terrorist activity and insecurity from the Lake Chad region which includes Nigeria spanning the Sahel region. The losses to economic growth, trade opportunities, and social development are therefore unquantifiable.

“It is a collective responsibility and a priority for the private sector, civil society and government to address systemic challenges and gaps undermining the efforts to curb IFF and ML/TF including lack of transparency, weak accountability mechanisms, under capacity, resource mismatch, and others that can be identified through dialogue and strategic engagements on this nature,” he emphasised.

For, Senior Managing Director, K2Integity, Mariano Federici, there was no effective way of combating corruption without private public partnership as it allows for coordination, information sharing, assessment of risks, and sharing operational intelligence to enable investigations.

“Only about 10 per cent of suspicious reports filed are investigated and this is a global problem. Experience from our reporting on the FinCEN Files project suggests a weak regulatory institution in the US and low level of investigating SARs,” he stated.

On how can jurisdiction be better positioned to detect illicit flows through cryptocurrency, Federici said even though it shows tremendous progress for the financial system in terms of moving values across the world it also raises risks of illicit financial flows. 

Speaking, a representative of the CIBN president and former Chief Compliance Officer, Heritage bank, Wumi Adeniyi said PPPs in the fight against money laundering would allow everybody to find it and comply.

In his remarks, CEO IoDCCG, Mr. Nerus Ekezie, said AML/CTF engagements have usually been short of participation of core actors in the financial institutions and real estate sector. 

He adds, “The Roundtable draws the attention of these stakeholders. DNFBPs have a low level of understanding their AML/CTF obligations, according to the Mutual Evaluation Report for Nigeria (GIABA). Therefore, this is the need to focus attention on FIs and REs. At the end of the workshop, it is expected that there will be improved coordination between the private sector and regulators and stronger compliance.”

For panelists, about $89 billion of African wealth is lost annually to IFFs, which undermines the capability to achieve sustainable development, political stability, and peace on the continent.