Governance of natural resources is a defining factor in the economic future of many African nations. With about 3.5 billion people living in resource-rich countries, the extractive sector has the potential to drive sustainable development and reduce poverty – if managed transparently, equitably and responsibly. However, corruption and weak oversight continue to drain revenues that could be reinvested into public services and infrastructure. As global demand for critical energy transition minerals surges, the stakes are higher than ever. Without stronger safeguards, resource wealth risks fuelling illicit financial flows and economic inequality rather than benefiting citizens.

Open data and transparency initiatives, such as those led by the EITI, play a crucial role in ensuring that Africa’s natural resources contribute to long-term prosperity. Growing global demand for transition minerals – such as cobalt, copper, nickel, lithium and rare earths – presents a significant economic opportunity for producing countries.

The Democratic Republic of the Congo (DRC) and Zambia, for example, are among the world’s top producers of cobalt and copper and are involved in the Lobito Corridor project, a 1,300-km railway expected to facilitate mineral transportation and generate economic benefits in the process.

Across Africa, governments are seeking to maximise revenues and economic benefits from the extractive sector through measures such as increased taxes, export bans, investment incentives, state participation and local content policies. However past commodity booms have yielded limited benefits for many countries due to corruption and weak governance, highlighting the need for stronger safeguards.

Addressing corruption risks in Africa’s extractive sectors

Corruption risks in the extractive sector stem from various factors. The dominance of multinational companies operating across multiple jurisdictions increases risks related to tax evasion and related-party transactions.

The sector’s potential for windfall revenues can incentivise rent-seeking behaviour, particularly among political elites, while the involvement of politically exposed persons (PEPs) can raise concerns about undue influence and conflicts of interest.

These vulnerabilities have led to bribery and fraud in the allocation of licenses and contracts – and weak oversight exacerbates the risk of corruption. Regulatory responsibilities are often divided among multiple government entities – such as tax authorities, environmental administrators, mining regulators and customs authorities – each operating with limited financial and technical resources, siloed processes and minimal coordination.

This fragmentation allows practices such as mineral smuggling, undervaluation and under-reporting of production volumes to persist. Revenue leakages also occur through tax evasion, non-payment or underpayment of fees and misappropriation of earmarked funds. These challenges are compounded by macroeconomic pressures, including debt burdens and revenue shortfalls, making effective governance of the extractive sector all the more critical.

However, a coordinated, multi-stakeholder approach – supported by robust transparency frameworks – can help mitigate these risks. Open data plays a crucial role in enabling oversight and ensuring accountability.

The role of the EITI in strengthening transparency

The EITI is the global standard for open and accountable management of natural resources. Working with more than 50 countries, including 28 in Africa, the EITI promotes transparency by requiring the disclosure of key data on licensing, production, revenues, state participation, contracts and beneficial owners of extractive companies, among other information. These disclosures enable public debate, support policy reforms, mitigate corruption risks and help citizens hold governments and companies accountable.

A data-driven approach to fighting corruption: Progress in Africa

While challenges remain, EITI implementing countries in Africa have made notable progress in using data to identify and address corruption risks. Beneficial ownership transparency, in particular, has proven to be a powerful tool in combatting corruption and illicit financial flows. Investigative efforts and civil society initiatives have leveraged beneficial ownership data to expose unethical business practices, enhance corporate accountability and promote responsible governance.

In Nigeria, a tool linking beneficial ownership data with PEPs exposed over 500 red flags in the extractive sector. The initiative identified risks related to potential conflicts of interest, revealing that 40% of flagged PEPs were members of the House of Representatives, while 75% of companies with irregular ownership structures were concentrated in the oil and gas sector. While these findings do not necessarily indicate wrongdoing, they provide a basis for further investigation into potential corrupt practices.

In Ghana, investigations using beneficial ownership data led to the revocation of a mining license due to a criminal conviction record of company directors. In 2020, Ghana’s minister for mines directed the Minerals Commission not to renew a gold mining license after investigations of data from the country’s beneficial ownership registry, led by Northern Patriots in Research and Advocacy (NORPRA), revealed fraud convictions in Australia.

In another example, in Zambia, research into beneficial ownership and tax compliance uncovered non-compliance by mining companies, prompting calls for stronger oversight. The Centre for Trade Policy and Development (CTPD) found that several companies cited in the 2021 Auditor General’s report had filed nil declarations on mineral royalty tax despite holding export permits for cobalt, copper and manganese. These missing declarations resulted in mineral royalty losses for the government. Beneficial ownership data was instrumental in identifying the true owners of these companies and holding them accountable for financial discrepancies.

As demand for transition minerals grows, African governments are increasingly entering into bilateral and multilateral agreements – such as those linked to the Lobito Corridor – to strengthen value addition, mobilise extractive revenues and drive economic growth. However, opaque agreements remain a major risk, facilitating illicit financial flows that cost Africa an estimated USD 88.6 billion annually. Undisclosed value addition agreements, resource-backed loans and mineral-for-infrastructure deals can further undermine good governance and efforts to sustainably manage debt.

Contract transparency is crucial to mitigating these risks. Disclosures through the EITI are strengthening public oversight, supporting balanced negotiations, helping to mitigate governance and corruption risks and driving key reforms.

In Nigeria, an analysis of the fiscal impact of failure to review the terms of production sharing contracts (PSCs) estimated a loss of between USD 16 billion and 28 billion in government revenues, triggering key legislative reforms. In the DRC, an EITI-led review of a contract for a copper-cobalt project informed renegotiations that secured an additional USD 4 billion for the country.

In some cases, EITI disclosures have curbed illicit financial flows and supported government anti-fraud efforts. In Burkina Faso, for example, EITI reporting highlighted the seizure of fake gold bars worth over USD 15 million, and Mozambique’s reporting supported the discovery and repayment of embezzled funds amounting to USD 350,000. 

Transparency initiatives on local procurement, employment, and artisanal and small-scale mining (ASM) in countries such as Ghana and Tanzania are helping to ensure that local communities benefit from extractive activities. 

The path forward: Leveraging data for better governance

Development should not be hampered by corruption. A well-governed extractive sector requires transparency, data-based policymaking and informed public debate. Africa’s wealth of transition minerals presents risks and opportunities. By strengthening data collection, improving disclosures and ensuring data is used effectively, governments can harness these resources for sustainable development and improve the livelihoods of Africans.  

This article first appeared in Good Governance Africa’s Africa in Fact International Edition 2025

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