Illicit financial flows a catalyst for corruption and crime across Africa

The Global Initiative against Transnational Organised Crime (GI-TOC) has warned that Africa is plagued by an increasing array of illicit financial flows, with many countries serving as sources, transit points, or destinations. 

It added that these flows erode economic stability, fuel corruption, and sustain organised crime, causing harms that extend well beyond the continent.

According to the United Nations Economic Commission for Africa (UNECA) and Ghana’s Financial Intelligence Centre (FIC), the continent loses more than $88,6 billion to these flows annually.

The continent also faces challenges from poverty, inequality, and climate change that can exacerbate crime rates, though safety levels vary significantly by country and region, with some nations being among the safest in the world.

According to GI-TOC, large-scale scandals have frequently relied on professional intermediaries to move illicit funds using complex financial transactions and business structures.

Networks of lawyers, accountants, and providers of corporate services enable the transfer of illicit proceeds from African markets to international financial hubs. 

“For example, professional money laundering networks have been instrumental in transferring substantial illicit funds on behalf of southern African organised crime syndicates to foreign destinations that include Hong Kong and Dubai. These syndicates are involved in markets such as gold, tobacco, drugs, and human trafficking,” read the report. 

The report stated that beyond law firms, front companies are routinely used to integrate illicit funds through real estate, construction, and the trade in precious metals and stones. Accountants, law firms, real estate developers, construction firms, and casinos are also complicit – sometimes knowingly, sometimes due to regulatory blind spots. 

According to the report, intelligence on illicit financial flows in the real estate sector is largely anecdotal due to a lack of data. However, the sector is widely rated as ‘high risk’ due to cash-based, high-value transactions and opacity around beneficial ownership. These features allow illicit actors to conceal assets and launder funds, as well as increase the value of holdings through renovations paid in cash and resale.

The construction industry in Africa has also been flagged as becoming increasingly entangled with illicit finance, driven by the sector’s high-value transactions, cash dependency, and limited regulatory oversight. 

In 2023, the Action Group against Money Laundering in Central Africa identified construction as Chad’s top laundering risk.

Kenya’s Business Registration Service reported that more than half of the companies flagged for money laundering in 2024 operated in the construction sector.

In South Africa, gangs in the Cape have heavily exploited construction tenders.

Senior Training Co-ordinator at the Institute for Security Studies, Willem Els, said illicit finance is crippling the continent’s economy, adding that governments should tackle the state-embedded actors to deal with the situation.

Els said the involvement of state-embedded actors in criminal activities was also highlighted in the ongoing Madlanga Commission of Inquiry and the Parliament Ad Hoc Committee.  

The two bodies are currently probing the allegations of criminal infiltration and corruption in South Africa's criminal justice system, particularly within the police service.

Cape Times