PARIS, France — The Financial Action Task Force (FATF) has formally removed Nigeria, South Africa, Mozambique, and Burkina Faso from its “grey list” of countries under increased monitoring for deficiencies in combating money laundering and terrorist financing. The decision, announced by the Paris-based watchdog, marks a significant step for the four African nations, particularly for the continent’s two largest economies, as they strive to enhance investor confidence and the integrity of their financial systems.
The delisting follows earlier reform progress and confirms recent market expectations. All four countries were commended for successfully closing gaps in their regulatory oversight and bolstering enforcement against illicit financial activities, thereby meeting the FATF’s stringent requirements.
Restoring Confidence and Easing Capital Flows
For Nigeria and South Africa, which were added to the list in February 2023, the move is seen as a crucial step toward reducing the cost of capital and boosting market sentiment. Mozambique was included in October 2022, and Burkina Faso in February 2021.
Wale Edun, Nigeria’s Finance Minister, emphasized the importance of the decision for the nation’s economic outlook.
“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,” Edun told Bloomberg. He added that the delisting is expected to ease cross-border transactions and improve capital flows, including foreign direct investment, which he believes will strengthen the foundation for rapid and sustainable economic growth and job creation.
Market Optimism and Reform Momentum
In South Africa, the removal from the grey list is expected to generate positive ripple effects in the markets.
Jee A Van Der Linde, a senior economist at Oxford Economics, suggested the exit should “reinforce market optimism” and signal progress in government reforms. According to a Bloomberg report, Van Der Linde noted that this improvement in institutional strength could lift sentiment, potentially reducing bond yields and lowering debt servicing costs, even if it doesn’t drastically change the country’s immediate growth outlook.
While observers acknowledge that the delisting does not immediately resolve deeper, structural economic issues within the nations, the move sends a strong signal that reform momentum is taking hold. As Nigeria and South Africa work to attract investment and deepen financial integration, the removal of this reputational hurdle is considered a timely boost to their economic prospects.
