KARAM SINGH: G20 presidency is a golden opportunity for SA to stop illicit financial flows

With SA holding the G20 presidency for 2025, it has a unique opportunity to address two of the most pressing issues of our time: countering corruption and tackling illicit financial flows (the movement across our borders of money that is illegally acquired, transferred or spent).

Deemed an opportunity missed by Brazil during its leadership tenure in 2024, corruption and illicit financial flows undermine the continent’s progress towards the AU’s Agenda 2063, and its ability to meet the UN’s sustainable development goal targets. SA’s G20 presidency offers an ideal platform to address corruption’s devastating impact on Africa and place it firmly on the global agenda.

Corruption facilitated by professional enablers in the global financial system divert resources away from critical areas such as healthcare, education and infrastructure, leaving the most vulnerable at a disadvantage. This deepens inequality, deprives marginalised communities of basic services and widens the wealth gap. At the heart of corruption lies its lifeblood: illicit financial flows — cross-border movements of funds originating from and perpetuating corruption.

According to the UN Conference on Trade & Development, Africa loses about $89bn a year to illicit financial flows, nearly as much as the combined total of official development aid and foreign direct investment inflows to the continent. In SA alone the Organisation for Economic Co-operation & Development estimates that up to 1% of the country’s GDP is lost this way. This significantly drains capital and revenues, undermines fiscal systems and reduces governments’ capacity to provide essential services.

Unique opportunity 

SA’s 2025 G20 presidency presents an opportunity to positively influence this downward spiral, with illicit financial flows appearing to be on government’s radar. Encouragingly, the spokesperson for the international relations & co-operation minister highlighted this as one of the issues to be addressed during SA’s G20 presidency term, along with advocating for reforming the global debt architecture and addressing the substantial development financing gap.

Though the sets of problems confronted by countries from the Global North and Global South differ in size and intensity, illicit financial flows are a shared challenge that requires collective accountability and action from all G20 members. The financial systems of many members serve as either the destination or conduit for corrupt money flows and in some cases even provide the professional services that enable these illicit funds to be hidden and stashed offshore.

On behalf of all countries held back by these issues, SA has a crucial chance to force fellow G20 members to acknowledge their own complicity in undermining sustainable development efforts by enabling dirty money flows.

Key actions to address corruption relating to illicit financial flows could include:

• Advocating for stricter global financial regulations and transparency, making it difficult for illicit funds to disappear into tax havens;
• Improving cross-border co-operation, strengthening legal enforcement and facilitating information-sharing among nations to help track and recover stolen funds;
• Holding multinational corporations accountable and combating practices such as tax evasion and profit shifting that deprive nations of rightful tax revenues; and
• Promoting greater global co-operation and encouraging partnerships between developing nations to collectively push for fairer global financial systems.

These are some of the measures SA could implement to help disrupt the enablers of illicit financial flows, making it difficult for funds to leave the countries they rightfully belong to.

SA’s theme for its G20 presidency in 2025 is “Fostering solidarity, equality and sustainable development”. None of these focus areas operates in isolation, and all depend on a corruption-free continent where funds are appropriately allocated to essential services.

Of course, this is easier said than done; corruption is a widespread global issue, particularly in Africa, where it only worsens existing socioeconomic issues such as poverty and inequality in a vicious cycle where bribes and extortion are often seen as a means to obtain essential goods and services.

Illicit financial flows are not only an African problem but a global challenge that undermines trust, transparency and equitable development. SA is taking important steps following the Zondo state capture commission to show it is committed to cleaning up its act. As G20 host, the country has an opportunity to encourage other G20 countries to join this anti-corruption journey.

As it takes on this pivotal global leadership role there is scope for SA to act decisively to foster solidarity, reduce inequality and create a more sustainable future for all. 

• Singh is executive director of Corruption Watch.