On 15 December 2021 the OECD published Revenue Statistics in Africa 2021, covering 30 African countries that account for 75% of Africa’s GDP. The publication is a joint initiative of the African Tax Administration Forum (ATAF), the African Union Commission, the OECD and its Development Centre
The average tax-to-GDP ratio in the African countries surveyed was 16.6% in 2019, which represented an increase of 0.3 percentage points compared to the previous year. The rise was partly due to increases of more than 2.5 percentage points in the tax-to-GDP ratios in Equatorial Guinea, Mali and Tunisia, resulting in part from reforms to tax policy and administration in those countries.
The average tax-to-GDP ratio for the African countries in 2019 still remains below those of the Asia-Pacific region (21.0%), Latin America and the Caribbean (22.9%) and the OECD (33.8%).
The lowest tax-to-GDP ratio in the countries surveyed was 6.0% in Nigeria, and the countries with the highest ratios were the Seychelles and Tunisia at 34.3%. The tax-to-GDP ratio increased in 16 countries between 2018 and 2019; and decreased in 14 of the countries surveyed.
The report on revenue statistics also includes a special feature analysing the external debt levels in the African countries. This shows that external debt costs in those countries increased on average by 1.1% of GDP between 2010 and 2019. The result is that nearly two-thirds of the average increase in tax levels over the period was offset by the increase in debt servicing costs. The rise in debt servicing costs is attributable to changes in the level and composition of external debt; and will be adversely affected by the impact of the pandemic on the public finances and debt levels of the African countries.
Further fiscal reforms will be needed in African countries at a future time when the pandemic begins to ease. Reforms leading to increased government revenue will be necessary to finance developmental goals and to ensure debt sustainability.
Although some of the African countries have diversified their tax bases towards value-added tax and personal income tax (PIT), the African countries are still too reliant on trade taxes and the corporate income tax. These are however among the taxes most seriously affected by an economic downturn and government revenues are therefore liable to fluctuation.
Personal income tax and social security contributions accounted for only 24.8% of total tax revenues on average in the African countries in 2019, compared to 49.2% of tax revenues on average in the OECD countries, based on the 2018 figures.
In the African countries generally, there is significant scope to strengthen environmental taxes, which only amounted to 1.1% of GDP on average in 2019. This is lower than the OECD average which is 2.2% of GDP. African countries could also benefit from greater reliance on property taxes, which only represented 1.9% of total tax revenues, on average, in the African countries, which is only around one-third of the level in OECD countries.