ABUJA, Nigeria (VOICE OF NAIJA)-The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Tuesday cautioned that Africa and Nigeria can no longer depend on external borrowing while losing significant resources to illicit financial flows, stressing that domestic revenue mobilisation must become the primary focus.
Speaking at the opening of the 5th Session of the African Union Sub-Committee on Tax and Illicit Financial Flows in Abuja, Edun said, “Africa cannot sustainably finance its development through debt, aid, or external investment alone.”
He emphasised that such funding sources “are inherently uncertain and often influenced by external dynamics beyond our control.”
He further noted that the continent must urgently address illicit financial practices, adding that “illicit financial flows alone are estimated to cost the continent nearly $88bn annually resources that should otherwise be invested in infrastructure, education, healthcare, and productive sectors of our”
READ ALSO:Nigeria Is Not At War, Edun Reassures Investors
The minister’s comments come amid growing concerns over Nigeria’s rising debt burden and fiscal challenges.
Edun explained that shifts in the global economic landscape have increased the risks associated with foreign funding, stating that “we are witnessing significant shifts in the international system… reshaping how countries engage, compete, and collaborate,” and that Africa must now “increasingly rely on our own strength, our own institutions, and our own resources.”
He highlighted that under the African Union’s Agenda 2063, countries aim to mobilise up to 90 per cent of development financing from domestic sources, describing this as essential for long-term economic stability.
Expanding on financial leakages, Edun said African economies must focus on curbing illicit flows and strengthening tax systems.
He identified major challenges facing the continent, including tax evasion, weak institutional capacity, limited economic diversification and continued dependence on external financing, warning that addressing them “is not optional it is essential.”
On Nigeria’s reforms, the minister said the Federal Government has taken steps to reduce reliance on external borrowing by boosting domestic revenue mobilisation and enhancing fiscal transparency.
He noted that since May 2023, comprehensive tax reforms have been introduced to simplify the system, expand the tax base, reduce the burden on vulnerable groups and improve compliance, with implementation beginning in January 2026.
Edun also pointed to measures aimed at improving accountability in oil revenue management, including an executive order requiring all oil and gas revenues to be remitted into constitutionally designated accounts before disbursement.
He added that policy actions such as the removal of fuel subsidies and the unification of the foreign exchange market have “significantly improved fiscal transparency, reduced distortions, and strengthened investor confidence.”
The minister further disclosed that Nigeria has launched a National Single Window system to improve trade efficiency and minimise leakages associated with trade-based illicit financial flows.
“These reforms are already yielding results,” he said, citing improved non-oil revenue performance, stronger fiscal buffers and increased investor confidence.
He stressed that beyond national efforts, African countries must work together to combat illicit financial flows through stronger enforcement and cross-border collaboration, while investing in digital systems, institutional capacity and governance reforms.
Edun also underscored the importance of financial inclusion and capital market development, noting that governments must mobilise domestic savings and expand access to investment opportunities.
“What is required now is the resolve to act decisively and collectively,” Edun said, urging policymakers across the continent to deepen reforms and strengthen cooperation to achieve sustainable growth.
In his welcome address, the Executive Chairman of the Nigeria Revenue Service, Zacch Adedeji, said Africa must urgently strengthen its fiscal systems and domestic revenue base to bridge widening development financing gaps.
He warned that illicit financial flows, tax evasion and aggressive tax avoidance continue to drain resources needed for infrastructure, healthcare and social development, describing them as “lost opportunities, lost hospitals, lost schools, lost infrastructure.”
Adedeji noted that revenue authorities across Africa are modernising systems, expanding the tax base and adopting digital solutions to improve compliance, transparency and efficiency.
The NRS boss added that Nigeria is implementing wide-ranging reforms to build a more technology-driven and responsive tax administration capable of supporting national development.
He stressed that stronger continental cooperation is crucial, given the cross-border nature of illicit financial flows, urging stakeholders to collaborate in safeguarding Africa’s resources and financing development internally.
In her remarks, the Executive Secretary of the African Tax Administration Forum, Mary Baine, said Africa must urgently strengthen its tax systems as rising fiscal pressures and global economic shocks continue to strain public finances.
She noted that the continent faces shrinking fiscal space alongside growing development needs, warning that countries will need to rely more on improved revenue collection and closing loopholes such as illicit financial flows.
Baine said Africa’s economic outlook remains fragile, with external shocks likely to affect growth, trade and inflation in both oil-exporting and importing nations.
She added that although tax revenues have shown gradual improvement, they remain below global benchmarks, highlighting the need for more efficient and robust tax systems.
Baine stressed that Africa’s development objectives can only be achieved if countries finance them internally through “robust, fair and efficient tax and fiscal systems.”