The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Tuesday warned that Africa and Nigeria cannot continue to rely on external borrowing while losing huge resources to illicit financial flows, insisting that domestic revenue mobilisation must take centre stage.

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 stressed that such sources “are inherently uncertain and often influenced by external dynamics beyond our control.”

He added that the continent must urgently curb illicit financial practices, noting 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 economies.”

The minister’s remarks come amid rising concerns over Nigeria’s growing debt profile and fiscal pressures.

Edun said the changing global economic environment has made reliance on foreign funding even more risky, warning that “we are witnessing significant shifts in the international system… reshaping how countries engage, compete, and collaborate,” adding that Africa must now “increasingly rely on our own strength, our own institutions, and our own resources.”

He emphasised that under the African Union’s Agenda 2063, countries are targeting to mobilise up to 90 per cent of development financing from domestic resources, a move he described as critical to achieving long-term economic stability.

Expanding on the risks of financial leakages, Edun said African economies must prioritise stopping illicit flows and improving tax systems.

He further listed key challenges confronting the continent to include 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 had taken steps to reduce reliance on external borrowing by strengthening domestic revenue mobilisation and improving fiscal transparency.

He noted that since May 2023, the government had implemented comprehensive tax reforms aimed at simplifying the system, broadening the tax base, reducing the burden on vulnerable populations, and improving compliance, with the reforms taking effect in January 2026.

Edun also highlighted measures to improve accountability in oil revenue management, stating that the President had signed an executive order mandating that all oil and gas revenues be remitted into constitutionally designated accounts before disbursement.

He added that recent policy actions, including the removal of fuel subsidies and the unification of the foreign exchange market, had “significantly improved fiscal transparency, reduced distortions, and strengthened investor confidence.”

The minister further disclosed that Nigeria had launched a National Single Window system to enhance trade efficiency and reduce leakages linked to trade-based illicit financial flows.

“These reforms are already yielding results,” he said, pointing to improvements in non-oil revenue performance, stronger fiscal buffers, and rising investor confidence.

He stressed that beyond national efforts, African countries must collaborate to tackle illicit financial flows through stronger enforcement and cross-border cooperation, while also investing in digital systems, institutional capacity, and governance reforms.

Edun also noted the importance of financial inclusion and capital market development, noting that governments must mobilise domestic savings and make investment opportunities accessible to citizens.

“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 close 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 the continent are modernising systems, expanding the tax base, and adopting digital solutions to improve compliance, transparency, and efficiency.

The NRS boss added that Nigeria was implementing comprehensive reforms to build a more technology-driven and responsive tax administration capable of supporting national development.

He stressed that stronger continental cooperation was critical, given the transnational nature of illicit financial flows, urging stakeholders to work together to safeguard Africa’s resources and finance development from within.

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 government finances.

She noted that the continent faces tightening fiscal space alongside growing development needs, warning that countries would have to rely more on revenue collection and closing loopholes such as illicit financial flows.

Baine said Africa’s economic outlook remains fragile, with external shocks likely to impact growth, trade, and inflation across both oil-exporting and importing countries.

She added that while tax revenues have shown gradual improvement, they remain below global benchmarks, stressing the need for stronger and more efficient tax systems.

Baine noted that Africa’s development goals would only be achieved if countries finance them internally through “robust, fair and efficient tax and fiscal systems.” (The PUNCH)