The African Development Bank has said Africa could generate more than $469 billion in additional annual revenue without raising statutory tax rates, stressing that stronger tax administration and improved compliance could significantly boost government earnings across the continent.

This was disclosed by made by the Chief Economist and Vice-President for Economic Governance and Knowledge Management at the AfDB, Prof. Kevin Urama, during an interview with the News Agency of Nigeria on Wednesday in Abuja.

Across the continent, governments have increasingly pursued tax reforms to shore up revenues amid growing fiscal pressures.

In Nigeria, for example, value-added tax was increased from 5 per cent to 7.5 per cent in 2020, while several African countries have also adjusted VAT systems, expanded tax bases, or introduced new tax measures in recent years to strengthen domestic revenue mobilisation.

Urama said Africa still holds significant untapped revenue potential that can be unlocked without increasing the tax burden on citizens and businesses, adding that domestic resource mobilisation remains the continent’s most sustainable source of development financing.

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

Urama noted that many citizens across Africa are reluctant to pay taxes because they are often forced to provide basic services themselves that governments are expected to deliver, including electricity, water supply and road infrastructure.

He argued that governments can improve voluntary tax compliance by strengthening public service delivery, improving transparency in public financial management, and clearly demonstrating that tax revenues are being efficiently deployed for development outcomes.

The AfDB economist said the bank is already supporting several African countries, including Nigeria, in boosting domestic revenue mobilisation through technical assistance and capacity-building programmes for revenue authorities.

He added that the bank has also developed a Public Service Delivery Index designed to help governments enhance the quality of public services while also improving trust and accountability between citizens and the state.