The Executive Director of the African Forum and Network on Debt and Development (AFRODAD), Jason Braganza, has stated that Illicit Financial Flows (IFFs) are a contributory factor to the deepening of Africa's debt crisis.

According to him, Africa loses about US$90 billion annually through Illicit Financial Flows.

Speaking during a webinar monitored by GhanaWeb Business on Thursday, April 10, 2025, Braganza explained that this problem forces governments on the continent to borrow.

He said; "The second issue is around Illicit Financial Flows. The amount of money lost through Illicit Financial Flows is estimated to be around 80 to 90 billion US dollars annually.

"This occurs through both licit and illicit ways of doing business on the continent. This is a huge problem because it contributes to deficits on the continent, which then forces governments to borrow," the Executive Director of AFRODAD stated.

Braganza further said that; "Dealing with Illicit Financial Flows becomes a significant part of why the debt crisis is emerging and deepening. Every year, if we're losing close to $80 billion, this is money that African governments have to find through taxation, largely through regressive taxes. The opportunities therein need to be very specific in terms of national-level interventions, but also coherent in terms of a coordinated continental set of interventions."

These IFFs, including tax evasion and capital flight, surpass the amount the continent receives in development aid.

Experts have attributed these losses to under-declared export values, particularly for commodities like gold, diamond, and platinum.

This leads to tax avoidance and royalty evasion by multinational corporations.

Also, companies engage in tax planning by shifting profits to low-tax jurisdictions and avoiding taxes in many African countries as corporate tax rates tend to be quite high on the continent, averaging between 25% and 30%.

These multinational companies establish themselves in low-tax jurisdictions, often referred to as 'tax havens' where they are offered near 0% taxes on profits.

Regarding debt default, Ghana is the latest country to face this predicament, following Zambia, Chad, and Ethiopia.

As it stands, some countries are paying more in debt service interest repayments than they are investing in public services.

SA/AE

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