Africa can raise $469bn without tax hikes – AfDB

Africa possesses the potential to unlock over $469 billion in additional annual revenue without resorting to tax hikes, according to the African Development Bank (AfDB).

Prof. Kevin Urama, the AfDB's Chief Economist and Vice President for Economic Governance and Knowledge Management, highlighted this opportunity in a recent interview. He stressed that enhancing domestic resource mobilization is the most sustainable strategy for financing the continent's development.

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We see that by improving tax administration through digitisation and other reforms, just adopting best practices, the continent can mobilise more than $469bn extra without increasing tax rates. It is simply about improving efficiency and strengthening compliance.

Urama explained that significant revenue increases can be achieved by improving tax administration through digitalization and other reforms. He noted that strengthening public institutions and enhancing service delivery are crucial for increasing tax compliance. "It is simply about improving efficiency and strengthening compliance," he stated.

The economist pointed out that many citizens are hesitant to pay taxes when governments fail to provide essential services like electricity, water, and road infrastructure. He suggested that improving voluntary tax compliance hinges on the government's ability to deliver quality public services, foster transparency, and manage public resources prudently. The AfDB is actively supporting African nations, including Nigeria, in bolstering their domestic revenue mobilization efforts through capacity-building initiatives for national revenue authorities.

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Many citizens were reluctant to pay taxes because they often had to provide essential services such as electricity, water, and road infrastructure for themselves.