Africa has the potential to generate more than $469 billion in additional annual revenue without raising tax rates, according to the African Development Bank, highlighting the enormous opportunity for governments to strengthen public finances through improved efficiency and compliance.
Professor Kevin Urama, chief economist and vice president for Economic Governance and Knowledge Management at the AfDB, disclosed this in Abuja.
According to Urama, the continent’s revenue gap is less about tax rates and more about weak tax administration, limited compliance, and inefficiencies in public institutions.
He explained that by embracing digital technologies, modernising tax systems, and adopting global best practices, African countries could significantly increase domestic revenue mobilisation without imposing additional tax burdens on citizens and businesses.
“We see that by improving tax administration through digitisation and other reforms, and simply adopting best practices, the continent can mobilise more than $469 billion in additional revenue annually without increasing tax rates. It is about improving efficiency and strengthening compliance,” he said.
Digitalisation Key to Revenue Growth
Urama identified digital transformation as a critical enabler of revenue generation, noting that modern tax administration systems can improve transparency, reduce leakages, expand the tax net, and enhance collection efficiency.
He added that stronger domestic resource mobilisation remains the most sustainable pathway for financing Africa’s development priorities, reducing reliance on external borrowing and development assistance.
Why Citizens Resist Tax Payments
The AfDB economist observed that low tax compliance across many African countries is often linked to inadequate public service delivery.
According to him, many citizens are reluctant to pay taxes because they frequently provide essential services for themselves, including electricity, water, security, and road infrastructure.
He argued that governments can strengthen voluntary tax compliance by improving the quality of public services, increasing transparency, and demonstrating prudent management of public resources.
“When citizens see tangible value from taxes paid, trust in government improves, and compliance naturally increases,” he noted.
AfDB Supporting Revenue Reforms
Urama said the AfDB is working with several African countries, including Nigeria, to strengthen domestic revenue mobilisation through technical assistance and capacity-building programmes for national revenue authorities.
He also revealed that the Bank has developed a Public Service Delivery Index, a tool designed to help governments assess and improve service delivery performance while strengthening the social contract between citizens and the state.
The initiative, he said, is aimed at encouraging accountability, improving governance outcomes, and creating an environment where citizens are more willing to contribute to national development through tax payments.
As African economies seek sustainable financing solutions amid growing fiscal pressures, the AfDB believes that technology-driven tax reforms and improved public service delivery could unlock hundreds of billions of dollars in untapped revenue across the continent.
