By Tunde Oso with agency reports
Nigeria and South Africa were taken off a global watchdog’s dirty-money list, providing a fillip for increased remittances and foreign investment in two of Africa’s largest economies.
The Paris-based Financial Action Task Force, according to Bloomberg, said on Friday that the countries — along with Mozambique and Burkina Faso — are no longer on the list of jurisdictions subject to increased monitoring, after their governments stepped up efforts to combat money laundering and terrorist financing.
South Africa and Nigeria landed on the gray list in February 2023, while Mozambique was added in October 2022 and Burkina Faso originally got designated in February 2021. At the FATF’s June plenary, the organization praised the nations for their recent reforms to address illicit financial flows.
South Africa’s exit from the list should reinforce market optimism and signal progress on government reforms — a boost for institutional strength that may lift sentiment, lower bond yields and ease debt-servicing costs, even if it doesn’t alter the growth outlook, Jee-A Van Der Linde, senior economist at Oxford Economics, said before the release.
The removal from the so-called gray list should also make it easier and cheaper for citizens working overseas to send money home. That’s particularly relevant for Nigeria, which receives about $20 billion a year in remittance inflows.
“This development reinforces confidence in our economy and the integrity of our monetary and financial systems, signaling to investors and global partners that Nigeria’s institutions are strong, transparent and internationally trusted,” Finance Minister Wale Edun said in a message sent by text before the announcement. “It will ease cross-border transactions, improve capital flows, including foreign direct investment, and strengthen the foundations for rapid and sustainable economic growth and job creation.”
The FATF announcement may also help pave the way for new investments by foreign firms such as the massive liquefied natural gas project in northern Mozambique.
Bloomberg News reported last month that the FATF was set to announce the moves.
Under the presidency of Mexican official Elisa de Anda Madrazo, the group has revamped its gray-listing criteria. It has placed a greater emphasis on scrutinizing the body’s wealthiest members while putting less of a focus on jurisdictions classified as least-developed countries, which typically pose a lower systemic risk.
The FATF assessment calendar shows South Africa could have an on-site visit in April 2027, when it will be evaluated on the group’s new methodology for the fifth round of reviews.
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