An estimated US$88 billion (€76 billion) leaves Africa annually through tax evasion, money laundering, and corruption, the African Union (AU) says. In 2015, that figure was US$50 billion (€43 billion). Analysts say this deprives governments of revenue that could be invested in public services such as healthcare, education, and infrastructure.

Elites shifting money to tax havens

Christoph Trautvetter, coordinator of the German organization Network for Tax Justice, told DW that Africa loses billions because "digital corporations and commodity traders shift their profits to tax havens and corrupt elites stash money in anonymous offshore accounts." 

"The direct damage is even greater because this system promotes corruption and crime and weakens states that are supposed to ensure development," Trautvetter said, adding that the "rich and powerful in both Africa and the global North ultimately benefit from this system." 

"There is enormous resistance to ensuring greater transparency and better cooperation and to fundamentally reforming it," the tax expert said.

While he believes too little is being done to curb these losses, there has also been progress: most notably, more than 100 countries agreed in 2017 to automatically exchange information about bank account owners.

"This means that banks in many tax havens now automatically report information about account owners to the tax authorities in their home countries," said Trautvetter.  

More transparency in data controls

Many African countries are still implementing the agreement, so data for evaluation is still missing.

"But this will definitely lead to significant improvements in the coming years," Trautvetter says.

Another positive step has been a United Nations' global framework agreement. Since August 2025, the framework intends to clarify issues ranging from "global tax justice and the taxation of large digital corporations, to the detection of illegitimate financial flows."

Despite some successes, the AU report notes the global geopolitical changes over the past ten years have made Africa even more vulnerable. Important factors include the rivalry between the United States and China, theCOVID-19 pandemic, the war between Russia and Ukraine, and the geopolitical consequences of climate change. Additionally, some African nations have enormous levels of government debt.

The AU has created several instruments to combat illegal transactions. In addition to a pan-African cooperation platform, several working groups have been set up to recover stolen assets abroad, and control economic sectors such as mining, which are particularly vulnerable to undeclared exports.

At the national level, many African countries have established financial investigation units or specialized tax authorities. But the AU's findings show these institutions have not been as efficient as hoped. 

Illegal financial draining Africa

Idriss Linge from Cameroon is Advocacy Officer for the Tax Justice Network (TJN) based in Bristol, the United Kingdom. He acknowledges tax losses have hit Africa particularly hard: "Illegal financial flows exist worldwide, but Africa is the most affected because budgets are already stretched," he tells DW.

"Multinationals exploit extractive industries, tax havens enable them to underpay tax, and lack of transparency hides it all. Illegal financial flows are like a life-threatening condition, draining Africa's blood," says the tax justice analyst.

Resource-rich countries like Nigeria, Angola, and the Democratic Republic of Congo are most exposed, according to Linge. In Nigeria alone, billions have been lost through profit shifting in the oil sector.

"That money could provide clean water for 500,000 people, sanitation to 800,000, schooling for 150,000, and could save over 4,000 children through better healthcare. Illegal financial flows are not abstract – they deny people their rights," he told DW. 

Although the AU estimates Africa's financial loss from illegal financial activities at around $88 billion, Linge says this is most likely a severe underestimation. 

"At the same time, Africa is forced to service debts at high interest rates," Linge says, pointing out that African countries have to accept higher interest rates on the capital market than rich economies elsewhere. 

Deprived of revenue due to tax evasion and burdened by high debt repayments, many African countries find their budgetary and fiscal policies severely restricted. This hampers efforts to pay teachers and doctors, build climate resilience, or finance development. Stemming illegal financial flows would also be a first step toward greater sovereignty for governments.

Edited by Cai Nebe