With an estimated $1.3trn siphoned out of Africa over the past five decades through corruption, tax evasion, trade mis-invoic- ing, as well as other criminal activities, illicit financial flows continue to cause the continent to bleed much-needed development cash.

These losses not only rob African countries of much-needed revenue but also hinder infrastructure development, social services, and sustain- able growth. While policy reforms and global cooperation have been ongoing, the scale and sophistication of these il- licit funds demand bolder, tech-enabled solutions.

The Pan-African Payment and Settle- ment System (PAPSS), as well as emerg- ing artificial intelligence (AI) tools, have been identified as powerful means that could reshape Africa’s response to illicit financial flows.

This is because AI offers real-time data analytics, anomaly detection, and predic- tive insights capable of identifying suspi- cious financial behaviour across borders, sectors, and languages.

Increase transparency and close loopholes

Meanwhile, PAPSS is streamlining intra- African transactions by reducing reliance on foreign currencies and external fi- nancial systems, a key vulnerability ex- ploited by illicit financiers. A combination of these technologies holds the potential to increase transparency, close loopholes, and empower regulatory bodies. PAPSS, an Afreximbank-led initiative, aims at simplifying cross-border transactions within Africa. The payment system has continued to expand, in July reaching 17 countries, with 15 financial institutions and 14 national switches connected.

The system, which leverages digital innovation and real-time settlement ca- pabilities, is seen as a cornerstone of the AfCFTA and a step toward economic in- tegration across the continent.

The founder and chief executive of- ficer of the Center for the Promotion of Private Enterprise (CPPE), Muda Yusuf, believes the impact of AI-powered financial surveillance and PAPSS could be signifi- cant for intra-African trade and devel- opment.

“It would facilitate the localisation and re-channelling of such resources into more useful economic activities within the continent. It would boost resource availability for investment and develop- ment. It would also moderate the need for borrowing by countries on the continent. The huge indebtedness of many African countries has become a major impediment to economic progress.

“The developmental impact of block- ing such leakages would be enormous, given the adverse impact of corruption and illicit financial flows on economic development in Africa. Such illicit flows had also fuelled the troubling phenom- enon of insecurity and terrorism on the continent. The benefits of an effective technology-driven surveillance system would be incredible,” Yusuf explains.

PAPSS CEO Mike Ogbalu says that AI is also helping transform businesses on the continent. “Today, payments are more about data than physical cash. With AI tools, we can process and analyse vast datasets to generate actionable insights. For instance, we now use AI in our Anti- Money Laundering (AML) systems. In- stead of relying solely on static rules, our systems are now trained to detect and learn new patterns, making it easier to predict and prevent fraud.

“We’re optimistic about the pace of adoption. We’re currently active in 17 countries and are seeing momentum in Francophone Central and West Africa. By the end of this year, we expect to expand to 30 countries, covering more than 500m bank accounts,” Ogbalu says.

Nicholas Ozor, executive director at the African Technology Policy Studies Network (ATPS), says that tech has the potential to drive Africa forwards. “In Africa, over 70% of the population is in- volved in agriculture, yet we still struggle to feed ourselves. Meanwhile, in coun- tries like the United States, only about 4% are involved in agriculture, and they are food sufficient. The difference lies in the application of science, technology, and innovation.

“Innovation enables us to do things smarter. Currently, Africans are increas- ingly embracing technology across all sectors, because it is the only sustainable way to achieve economies of scale and increase productivity.”

Chimmuanya Ijezie, an artificial intel- ligence engineer and business analyst, based in Manchester, United Kingdom, believes that AI-driven tools can signifi- cantly enhance PAPSS by adding real-time monitoring and intelligent analysis to cross-border transactions.

Machine learning

“As the AfCFTA increases the volume of intra-African trade, PAPSS must handle more transactions while safeguarding against illicit financial flows. AI helps by detecting suspicious patterns like unusual transaction frequencies, sudden value spikes, or mismatched trade declarations that might otherwise go unnoticed.

“Machine learning, an aspect of AI, can help PAPSS to scan large volumes of transaction data and flag anomalies instantly. Natural language processing (NLP), another key AI tool, can analyse unstructured information such as emails, contracts, or invoices to identify red flags like mis-invoicing or shell company ac- tivity,” he notes.

From the foregoing, with Africa’s pe- rennial struggle with illicit financial flows, the integration of cutting-edge technologies such as AI and platforms like PAPSS offers a transformative path forward.

Achieving a synergy between AI and PAPSS will be a strategic leap towards economic sovereignty and sustainable development. 

‘Illicit financial flows have drained Africa of billions, undermining development and fuelling insecurity. But with the adoption of technologies like AI and PAPSS, we have a real opportunity to track, prevent, and rechannel these resources into productive use.’

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