Nigeria and South Africa are expected to be removed from the Financial Action Task Force (FATF) gray list on October 24, a move anticipated to improve investor sentiment in Africa’s two largest economies.
The FATF, a Paris-based watchdog, placed both countries under increased monitoring in February 2023 for shortcomings in addressing illicit financial flows.
The designation subjected their financial systems to stricter scrutiny and heightened compliance requirements, raising concerns among global investors.
Recent on-site inspections by FATF assessors indicated that Nigeria and South Africa have substantially completed their action plans.
The final decision will be taken at the FATF plenary in Paris later this month, with sources confirming that both countries have demonstrated significant progress in strengthening anti-money laundering and counter-terrorism financing measures.
Lauren van Biljon, senior portfolio manager at Allspring Global Investments UK Ltd, said the anticipated delisting “would certainly be good for sentiment” as it confirms that reforms are not only in place but also sustainable.
Although the direct market impact may be modest, analysts expect a short-term uplift in asset prices.
A 2021 International Monetary Fund (IMF) report found that countries listed under the framework experienced a large and statistically significant decline in foreign investments.
Exiting the list would therefore signal improved risk perception for Nigeria and South Africa, strengthening their prospects for attracting capital.
South Africa’s National Treasury said in July that the country had substantially completed all 22 required action items following the FATF inspection.
Nigeria has also advanced its compliance efforts through the Nigerian Financial Intelligence Unit and related agencies, though officials have not commented ahead of the plenary.
Mozambique and Burkina Faso, which have also made progress in completing action plans, are being considered for removal.
The simultaneous delisting of four African economies would represent a boost to regional financial credibility.
The final announcement will be made at the close of FATF’s October plenary, with global markets closely watching for confirmation.