This announcement represents more than a mere administrative adjustment; it signifies a transformation in how international markets view Africa’s leading economies. Specifically for Nigeria and South Africa, this delisting serves as both a diplomatic and economic endorsement. This vote of confidence has the potential to redefine capital flows, influence investor sentiment, and elevate governance standards throughout the African continent.

Understanding FATF’s grey list and its consequences

While not as punitive as blacklisting, grey-listing incurs tangible economic costs. When the Financial Action Task Force (FATF) places a country under “increased monitoring,” it signals weaknesses in its anti-money-laundering (AML) and counter-terrorist-financing (CTF) frameworks. This heightened scrutiny from correspondent banks and international investors drives up transaction costs and erodes financial credibility.

Grey-listed countries face an average decline in capital inflow of 7.6% of GDP, according to empirical data from the International Monetary Fund (IMF). This decline reflects a reduction in investor confidence and restricted access to external credit. The effect was particularly severe for economies like Nigeria and South Africa, which are already grappling with inflation, weak currencies, and unstable debt markets.

Nigeria’s reforms: Fintech oversight and enforcement

Nigeria’s removal from the list marks a significant overhaul of its financial surveillance framework. The government implemented strict anti-money laundering measures, enhanced monitoring of digital and mobile money transactions, and fostered improved collaboration between the Nigerian Financial Intelligence Unit and the Economic and Financial Crimes Commission (EFCC).

The reforms were crucial, as Nigeria’s fintech sector had attracted over US$1.2 billion in venture capital in 2023, outpacing existing regulations. FATF monitoring spurred the state to modernize digital compliance and implement stricter penalties for suspicious transactions. This restoration of regulatory credibility not only prevented further reputational harm but also prepared Abuja to draw new investment into its expanding financial technology ecosystem.

South Africa’s clean-up after state capture

South Africa’s politically charged return to compliance followed years of state capture scandals, which had severely eroded institutional trust and enabled the proliferation of illicit financial flows. In response, Pretoria implemented legislative reforms that enhanced the powers of the Financial Intelligence Centre (FIC) and fostered stronger prosecutorial cooperation among government agencies.

The National Treasury demonstrated clear political commitment by reinvestigating over 200 suspicious transactions involving politically exposed persons. Concurrently, the Reserve Bank enhanced its oversight of correspondent banking channels. These actions were recognized by the FATF as demonstrating “substantial effectiveness and political commitment.”

The market reacted quickly: bond spreads decreased, the rand strengthened, and global banks like Standard Chartered and HSBC eased compliance hurdles for South African deals.

Regional ripples: A confidence rebound for Africa

The delisting of Nigeria and South Africa carries significant regional implications. As Africa’s two largest economies, their previous grey-listing introduced a perceived risk for other markets, including Ghana, Kenya, and Côte d’Ivoire. The removal of this stigma has the potential to stimulate new investment in sectors such as fintech, renewable energy, and light manufacturing, all of which are highly dependent on efficient cross-border finance.

Mozambique and Burkina Faso’s progress demonstrates a broader shift across Africa towards compliance-driven governance. Their improved monitoring of cross-border cash flows linked to armed groups has instilled confidence in donors and multilateral organisations supporting counterterrorism and reconstruction efforts in the Sahel and southern Africa.

Beyond symbolism: Economic meaning for citizens

For citizens, the delisting could be more than symbolic. In Nigeria, it could lead to reduced transaction costs and renewed investor confidence, which in turn could help stabilize the naira, ease access to international credit, and lower the cost of remittances—a crucial benefit for a nation receiving over US$20 billion annually from its diaspora.

Stronger Anti-Money Laundering (AML) enforcement frameworks in South Africa also bolster consumer protection. By tracing illicit funds, these systems make it more difficult for corrupt officials, scammers, and financial predators to exploit ordinary citizens. Reduced borrowing costs could encourage domestic investment, while increased financial transparency fosters accountability across both public and private sectors.

A cautious vote of confidence

The delisting of Nigeria, South Africa, Mozambique, and Burkina Faso signifies a crucial juncture in African financial governance. This development confirms the success of years of institutional reforms and technical harmonization with international standards, indicating a progression towards enhanced transparency and accountability within African financial systems.

This represents a vote of confidence, not a final judgment. Continued vigilance, political will, and independent institutions are essential. The real measure of success will be whether this renewed credibility leads to concrete development, stronger currencies, job creation, and financial inclusion.

Delisting marks a new chapter in Africa’s quest for financial sovereignty and global respect, rather than the end of reform.

Written By: 

*Dr Iqbal Survé

Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN

*Sesona Mdlokovana

Associate at BRICS+ Consulting Group 

African Specialist

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