Africa needs capital to finance businesses, infrastructure and jobs. Yet research estimates that billions of dollars leave African economies each year through unrecorded capital outflows. New evidence shows that tax authorities are recovering more revenue from offshore investigations, but the wider question remains: why is so much wealth held beyond the reach of domestic economies?

The wealth that leaves

Africa lost an estimated US$2.7 trillion through capital flight between 1970 and 2022, according to a January 2025 report by Léonce Ndikumana and James K. Boyce of the Political Economy Research Institute at the University of Massachusetts Amherst. The study covered 30 African countries.

The researchers estimated that the cumulative outflow was equivalent to 99% of those countries’ combined gross domestic product in 2022. Since 2010, Africa has been losing an estimated US$97 billion annually through unrecorded capital outflows. Six of the ten countries with the highest estimated capital flight were oil exporters. [1]

The researchers describe the scale of these outflows as a “financial hemorrhage” of African economies.

These figures require care. Capital flight estimates are not a census of foreign bank accounts, property portfolios or investments owned by wealthy Africans. Nor does every capital outflow involve illegal activity. The figures nevertheless point to a persistent problem for countries that need more domestic financing to expand businesses, improve infrastructure and create jobs.

The question is not simply why wealthy Africans hold assets abroad. It is what drives the movement of money, which transactions are legitimate, and how much of the flow involves undeclared income or illicit activity.

Security has a price

For many investors, foreign assets provide protection against risks at home. International shares, bonds and property offer access to different currencies and markets. Diversification can reduce dependence on one economy, while foreign-currency holdings can protect purchasing power when a domestic currency weakens.

Political uncertainty, changes in tax policy and doubts about the enforcement of contracts can also affect investment decisions. Business owners operating across borders may have practical reasons to maintain foreign accounts and investments.

But these legitimate decisions must be distinguished from the concealment of taxable income or the movement of proceeds from crime. An offshore account is not evidence of wrongdoing. Its legal and economic significance depends on how the money was earned, whether the assets were declared where required, and how the arrangement is used.

For African economies, the problem becomes more serious when capital leaves because domestic investment opportunities are limited or confidence in institutions is weak. Money held abroad may still generate income for its owner, but it is not automatically available to finance a local manufacturer, technology company or infrastructure project.

Nor would every dollar retained at home become productive investment. Investors need viable projects, reliable infrastructure, access to markets and confidence that contracts will be honoured.

The cost of financial secrecy

The scale of illicit financial flows is another measure of the challenge. UN Trade and Development estimated in 2020 that Africa lost US$88.6 billion annually through illicit financial flows, equivalent to about 3.7% of the continent’s GDP at the time. [2]

The estimate covers more than wealthy individuals moving money into offshore accounts. Illicit financial flows include illegal cross-border transfers associated with commercial practices, tax-related abuses, crime and corruption. The figure should not be presented as the amount wealthy Africans transfer abroad each year.

In its 2024 report on vulnerabilities to illicit financial flows, Transparency International examined nine African countries, including Kenya, Nigeria, South Africa and Zambia. It identified weaknesses in governance and anti-money-laundering systems that can make countries vulnerable to corrupt financial flows. The organisation also stressed that such flows are difficult to measure. [3]

Offshore companies, trusts and other financial structures can serve legitimate commercial purposes. But arrangements that obscure beneficial ownership can make it harder for tax authorities to establish who owns an asset, whether income has been declared and whether money is linked to criminal activity.

The answer is not to treat every foreign holding as suspicious. It is to ensure that authorities can obtain reliable information, investigate credible concerns and enforce the law without favouring the wealthy or politically connected.

Tax authorities are making progress

New figures suggest that African governments are improving their ability to identify taxable assets held abroad.

In June 2026, the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes reported that African countries identified €417 million in additional tax revenue during 2025 through exchange of information and related voluntary disclosure programmes. Since 2009, the total additional revenue identified had reached €4.6 billion. [4]

By the end of 2025, eight African countries, including Kenya, Ghana, Mauritius, Nigeria, Rwanda, Seychelles, South Africa and Uganda, were exchanging financial account information automatically under the Common Reporting Standard. Their tax authorities received information on nearly three million financial accounts covering €259 billion in assets held abroad.

The €259 billion figure is not a measure of hidden or untaxed wealth. It represents assets covered by the information received by participating tax authorities. The €417 million figure, meanwhile, relates to additional tax revenue identified, not necessarily cash already collected in every case.

The progress matters because access to information can help tax authorities compare declarations with financial assets held abroad. But information exchange alone does not guarantee enforcement. Authorities need the staff, systems and legal powers to analyse the information, investigate discrepancies and recover tax where it is owed.

Give investors a reason to stay

Enforcement is only part of the answer. African economies also need domestic markets in which investors can earn credible returns without taking unreasonable risks.

That means predictable regulation, reliable courts, sound public finances and financial markets that give businesses access to equity as well as debt. Investors need opportunities to finance growing companies, infrastructure and productive industries. Pension funds and other institutional investors need a wider range of well-governed assets in which to invest.

Governments should also examine why local savings are not financing more productive activity. If viable companies cannot raise capital, investors face abrupt policy changes or contracts are difficult to enforce, money may seek opportunities elsewhere.

Tax incentives and repatriation schemes cannot substitute for these reforms. Bringing assets home does not guarantee that they will finance new businesses or employment. Any repatriation programme must also distinguish lawful wealth from proceeds of crime and ensure that tax obligations are met.

Regional integration could widen investment opportunities by giving African investors access to larger markets. But the benefits depend on credible rules, effective institutions and projects capable of generating sustainable returns.

The test is confidence

Africa’s offshore question is not whether wealthy people should be allowed to invest abroad. International diversification is a normal part of modern finance. The challenge is to distinguish legitimate investment from capital flight and illicit financial activity, while making domestic markets more attractive.

The latest evidence points in two directions. Long-term estimates show the scale of capital flight, while recent tax-transparency figures demonstrate that cross-border cooperation can help authorities identify additional revenue.

Neither measure tells us exactly how much wealth wealthy Africans hold offshore for legitimate reasons, how much is undeclared, or how much would otherwise have been invested at home. Those questions require better data and country-specific research.

The real test is whether African economies can offer investors credible opportunities, enforce tax rules fairly and prevent financial secrecy from shielding illegal activity.

The question is not simply why African wealth moves abroad. It is what would make more of it choose to invest at home.