Impact of Illicit Financial Flows on Domestic Resource Mobilization: Optimizing Revenues from the Mineral Sector in Africa

The document: Impact of Illicit Financial Flows on Domestic Resource Mobilization: Optimizing Revenues from the Mineral Sector in Africa focuses on how illicit financial flows (IFFs) undermine the efforts of African countries to mobilize domestic resources, especially from the mineral sector. It builds on the findings of the High-Level Panel on IFFs from Africa, which highlighted the extent of financial leakages, mainly due to practices like tax evasion, transfer pricing, and other illicit practices by multinational companies operating in the sector. This report examines case studies from the Democratic Republic of Congo, South Africa, Tanzania, and Zambia to understand the complexity and scale of the issue. The study reveals how IFFs occur throughout the mining value chain—from exploration to production, marketing, and sales—creating significant revenue losses for African countries. It also discusses the importance of governance, regulatory reforms, and international cooperation in combating these practices to better harness the continent’s mineral wealth for sustainable development. Key recommendations include: strengthening institutional capacities adopting international standards enhancing fiscal regimes and fostering greater collaboration between African nations to reduce the impact of IFFs on domestic revenue.