Africa’s Extractive Industry Loses $40bn Annually To Illicit Financial Flows

Africa is losing an estimated $40 billion every year to illicit financial flows (IFFs) in its extractive industry, according to the United Nations Economic Commission for Africa (ECA). This massive outflow of funds significantly undermines the continent’s development prospects and exacerbates economic inequality.

ECA’s deputy executive secretary, Antonio Pedro, highlighted at a High-Level Policy Dialogue in New York that these illicit flows deprive African populations of essential services and economic opportunities.

He described the problem as rooted in Africa’s overdependence on exporting raw materials without value addition—a colonial-era economic model that continues to limit growth and job creation.

Exporting raw minerals, he said, is effectively exporting jobs, a luxury Africa can no longer afford given its need to create at least 20 million jobs annually for its growing youth population.

Such financial losses not only hinder developmental progress but also exacerbate economic injustices, depriving African populations of access to essential resources and underscoring the connection between IFFs and the pursuit of reparatory justice, Pedro said.

He argued that IFFs in the extractive sector were one of the symptoms of a serious structural problem compounding Africa’s development, i.e. its excessive dependence on the export of raw materials, an extractivist model and construct inherited from colonial times.

As such, addressing IFFS and its root causes should be at the centre of Africa’s development policy and action.

Pedro was a panellist at the HLPD to draw the curtain on the month-long 2025 African Dialogue Series (ADS), on the theme, “Justice for Africans and People of African Descent Through Reparations.”

It was organised by the UN Office of the special adviser on Africa, and the AU Permanent Observer Mission to the UN, in collaboration with various UN agencies, including the ECA.

The Africa Dialogue Series (ADS) is an annual event that brings together global leaders to discuss pressing issues impacting Africa and its diaspora, focused on the AU theme of the year.

He underscored that addressing these critical challenges is essential for fostering Africa’s self-reliance and attaining sustainable development. He indicated that with the adoption of strategic frameworks such as the African Mining Vision and the African Green Minerals Strategy, which advocate for resource-driven industrialisation and value addition, the continent has the necessary instruments to guarantee that its abundant mineral resources promote economic emancipation, employment generation and benefit local communities. The focus should be in operationalising those frameworks.

He emphasised that advancing local content and reforming the global financial and governance systems are crucial for mitigating IFFs and advancing African development goals. Furthermore, he stressed the importance of global collaboration and sustainable development.

Consequently, he called upon African nations to unite  and build common voices and positions in order to advocate for their interests on the international platform effectively. He posited that to achieve transformational change, mineral, trade, industrial, energy, infrastructure development, and international relations policies should be implemented in an integrated and coherent manner.

Pedro stressed that it is a joint responsibility of governments, mining enterprises, local communities, financial institutions, and other stakeholders to bridge the gaps of perception on what constitutes benefits and work together to prioritise sustainable development in the extractive sector.

Pedro commended the 2025 Africa Dialogue Series for providing a forum conducive to meaningful discourse on reparations and justice for Africans and people of African descent.

“As we advance, prioritising sustainable development and tackling the systemic problems that perpetuate IFFs, along with reparatory measures, is a crucial step to achieving justice for Africa. In doing so, we have the potential to unlock Africa’s true capabilities and promote a more equitable global system,” he said.