How Effective is Tackling Illicit Financial Flows in Africa? Evidence from Spatial Panel Analysis
| dc.contributor.author | Alain Babatound´e | |
| dc.contributor.author | Moustapha Lawani | |
| dc.date.accessioned | 2026-02-20T08:35:09Z | |
| dc.date.available | 2026-02-20T08:35:09Z | |
| dc.date.issued | 2026-02 | |
| dc.description.abstract | Sub-Saharan African countries experience high levels of illicit financial flows (IFFs), which significantly undermine domestic resource mobilization. Recognizing the transnational nature of IFFs, some Regional Economic Communities (RECs) have adopted anti-IFF instruments to address these challenges. This study inventories regional anti-IFF policies and evaluates their effectiveness in reducing IFFs and enhancing domestic resource mobilization. Expanding the World Bank Residual approach to include remittances, we estimate total IFFs at USD 3,646.7 billion (15.4% of GDP) between 1980 and 2021. Using a spatial panel model, we assess two anti-IFF instruments—anti-corruption and anti-criminality—within Economic Community of West African States (ECOWAS) and Southern African Development Community (SADC), accounting for both direct and spillover effects. Results reveal significant spatial inter-dependencies. In ECOWAS, ratifying anti-IFF instruments enhances domestic resource mobilization, with positive spillover effects in neighboring countries but no significant reduction in IFFs. In contrast, in SADC, these instruments effectively reduce IFFs while simultaneously improving domestic resource mobilization, albeit with negative spillover effects. Key policy recommendations include strengthening cross-border anti-corruption frameworks in ECOWAS, enhancing financial oversight, and improving governance structures to prevent IFF displacement. In SADC, efforts should focus on reinforcing regulatory enforcement, mitigating spillover effects through regional coordination, and balancing trade openness with financial safeguards. These findings underscore the need for a coordinated regional and continental approach to tackling IFFs in Africa. | |
| dc.identifier.uri | https://publication.aercafricalibrary.org/handle/123456789/4065 | |
| dc.publisher | AERC | |
| dc.title | How Effective is Tackling Illicit Financial Flows in Africa? Evidence from Spatial Panel Analysis |