Africa continues to bleed economically through Illicit Financial Flows (IFFs), losing an estimated $88.6 billion annually, according to a landmark coordinated audit launched on Thursday in Nairobi. The audit, conducted by 12 Supreme Audit Institutions (SAIs) across the continent, seeks to address this drain by enhancing collaboration and strengthening legal frameworks across African countries.
Speaking during the official launch of the Compendium of Best Practices on the Coordinated Audit of Illicit Financial Flows, African Organization of Supreme Audit Institutions (AFROSAI) Secretary General Mbah Acha Fomundam hailed the audit as a milestone in the continent’s fight against IFFs.
“We conceived this idea in 2016, 2017 because we realized that illicit financial flow was a big problem—not just for audit institutions but for Africa as a whole,” she said. “Today, we have the regional report, which is a culmination of national audits and a powerful tool to support governments and institutions in this fight.”
The coordinated audit, led by Kenya’s Auditor General Nancy Gathungu, is the first of its kind and aims to improve coordination across jurisdictions that often operate in silos.
Each participating country focused on a thematic area relevant to its context, ranging from the extractive industries and banking sectors to transfer pricing schemes and taxation loopholes. According to Auditor General, the audit found that the biggest weakness across the continent is lack of coordination—both within countries and across borders.
“We found that many institutions are working in isolation. One agency may have critical information but isn’t sharing it with others who can take action or investigate further,” she said.
Gathungu added that while many assume IFFs only flow out of Africa, there’s also increasing evidence of cross-border flows within the continent, often linked to money laundering schemes that eventually see the money return in disguised forms.
“Corrupt individuals are taking advantage of weak systems and border controls, allowing illicit funds to move from country to country before ending up in offshore accounts or coming back into the continent as laundered investments,” she noted.
The report underscores the urgent need for African countries to not only strengthen their individual legal and regulatory frameworks but also to implement sanctions against culprits—something many states have failed to do consistently. Despite Kenya having robust anti-corruption, anti-money laundering, and anti-terrorism financing laws, enforcement remains a critical gap.
“The weakest link is the lack of sanctions—not just for those siphoning money out, but also for jurisdictions receiving these funds. If recipient countries would audit themselves and question the origins of the inflows, it would give us a clearer picture of how much is truly lost and gained,” Gathungu said.
She acknowledged that there are no recent figures available, although the country has increased efforts to curb IFFs following its grey listing in February 2024. However, she noted that the challenge persists due to weak implementation of audit recommendations and poor inter-agency collaboration.
Cryptocurrencies were also flagged as a growing concern. Gathungu warned that the digital currency space has become a major avenue for hiding or transferring illicit funds.
“It’s a grey area. But we need legal frameworks, technological tools, and even artificial intelligence to track and audit crypto-based financial flows,” she said, adding that capacity building is critical for audit institutions to keep pace with tech-savvy criminals.
Gathungu says Africa is likely losing more than $88.6 billion annually reported in 2020, as illicit financial flows have evolved and intensified since then.
“We’re seeing more complexity in public and private sectors, more innovation in how funds are concealed, and unfortunately, evolving sophistication in illicit schemes. Although we don’t have exact updated figures, it is probable that the numbers are increasing,” she said.
The Auditor General urged African governments to work together. Strengthening national systems, ensuring cross-border cooperation, and holding perpetrators accountable is the only way to stop the financial haemorrhage undermining Africa’s development.