Governing illicit financial flows has become one of main challenges confronting the surge for structural transformation in Africa. Illicit financial flows (IFF) perpetuate Africa's economic dependence on other regions and undermine the capacity of the African governments to articulate and implement a developmental state approach that prioritize capacity-expanding, transformative and distributive economic and social development policies. As outlined in the 2012 Economic Report for Africa (UNECA and AUC, 2012), unleashing Africa's productive capacity requires increasing investment in infrastructure, promoting technology transfer and innovation for value addition, and boosting agricultural productivity, among others. However, the quest for a developmental state in Africa has been significantly constrained by the financial structures of IFF, which undermine the potential for economic transformation in the continent through draining tax revenues and scarce foreign exchange resources, stifling growth and socio-economic development, and weakening governance.
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