Namibia: N$17 Billion Illicit Financial Flows Assessment Exposes Losses

• Namibia is losing an estimated N$16.7 billion annually to illicit financial flows, which represents 9% of its nominal GDP.
• This substantial leakage, primarily driven by trade misinvoicing, tax evasion, and corruption, was detailed in the country's first comprehensive assessment.
• The government has set a target under its NDP6 to reduce illicit financial flows from 9% to 5% of GDP by 2030.
• Since 2023, Namibia has strengthened its anti-money laundering and financial crime legislation, including amendments to the Financial Intelligence Act.
• The Financial Intelligence Centre's 2025/26 report highlighted significant enforcement, including freezing N$61 million in suspected proceeds of crime.

Namibia is grappling with an estimated annual loss of N$16.7 billion due to pervasive illicit financial flows, a sum that represents approximately 9% of the nation's nominal gross domestic product.

Namibia is grappling with an estimated annual loss of N$16.7 billion due to pervasive illicit financial flows, a sum that represents approximately 9% of the nation's nominal gross domestic product. This significant leakage from the financial system is equivalent to about 16% of the government's entire budget and surpasses the N$13 billion allocated to the Ministry of Health and Social Services, highlighting the profound impact on public resources. These substantial funds are siphoned off through various channels, including widespread tax evasion, sophisticated trade misinvoicing schemes, corruption, and the proceeds of criminal activities.

The gravity of these figures was recently unveiled through Namibia's inaugural comprehensive assessment of illicit financial flows, a landmark report shared by the Ministry of Finance. This assessment, which received Cabinet approval for both publication and submission to the United Nations Statistics Division, provides the first consolidated estimate of funds illegally acquired, transferred, or utilized across Namibia's borders. It further estimates that the country forfeited approximately N$2.7 billion in potential tax revenue during the period under review. The report identifies trade misinvoicing as a primary conduit for these illicit outflows, detailing methods such as companies overpricing imports to move additional capital abroad, underpricing imports to reduce customs duties and value-added tax (VAT), or manipulating export values to decrease taxable income or improperly claim incentives. Additionally, some exporters fail to declare the full value of goods sold internationally, effectively retaining foreign currency outside Namibia's formal financial system. The comprehensive assessment was meticulously prepared by a technical working group comprising 14 agencies, under the leadership of the Bank of Namibia, with crucial technical support provided by the United Nations Conference on Trade and Development (UNCTAD).

In response to the alarming scale of these illicit financial flows, the Namibian government has established an ambitious target within its Sixth National Development Plan (NDP6), aiming to reduce these outflows from the current estimated 9% of GDP to 5% by the year 2030. Minister of Finance Ericah Shafudah underscored the detrimental effect of these flows, stating that they deplete resources vital for national development, public investment, essential service delivery, and overall economic growth. She further emphasized the increasing urgency of combating illicit financial flows as Namibia expands its international trade footprint and develops nascent sectors such as renewable energy, green hydrogen, and petroleum, necessitating a coordinated and multifaceted approach involving all relevant stakeholders.

Since 2023, the government has proactively strengthened its legislative framework to combat financial crime and illicit flows. This includes significant amendments to the Financial Intelligence Act and the Prevention of Organised Crime legislation, alongside the introduction of new laws governing virtual assets and payment systems. These legislative updates are critical components of Namibia's anti-money laundering legislation efforts. These proactive measures have already yielded tangible results, with authorities recovering over N$28 million in taxes during 2025, and a single investigation in 2026 leading to the recovery of more than N$45 million. The new estimates derived from the comprehensive assessment will be instrumental in pinpointing vulnerable sectors and trading activities, bolstering enforcement capabilities, recovering lost revenue, and enhancing the monitoring of cross-border transactions.

Namibia's struggle with illicit financial flows mirrors a broader continental challenge, as Africa has collectively experienced an estimated loss exceeding US$1 trillion over the past five decades. This staggering amount is roughly equivalent to the total official development assistance received by the continent during the same period, underscoring the profound economic drain caused by these activities. The Financial Intelligence Centre (FIC), a key institution in Namibia's financial system, plays a crucial role in combating these flows.

According to the FIC's 2025/26 annual report, the center produced 482 financial intelligence reports during that year, providing vital support for criminal investigations, tax audits, and prosecutions. Demonstrating its enforcement capabilities, the FIC also issued 20 account restriction orders, impacting 46 distinct bank accounts, and successfully froze approximately N$61 million in funds suspected to be proceeds of crime on a temporary basis. Furthermore, intelligence provided by the FIC directly contributed to N$29 million in tax collections, facilitated N$11 million in new tax assessments, and supported 10 preservation orders valued at N$9 million, showcasing the direct impact of its work on recovering illicitly obtained funds and strengthening the nation's financial integrity.

Lawyers and compliance officers in Namibia should advise clients on heightened regulatory scrutiny and enforcement risks related to cross-border transactions, trade misinvoicing, and tax compliance, particularly in sectors identified as vulnerable to illicit financial flows. They must also review compliance frameworks in light of recent legislative amendments concerning financial intelligence, organised crime, virtual assets, and payment systems.

Source: Reporting on recent financial disclosures.