On 14 November 2022 the OECD published Revenue Statistics in Africa 2022. The annual publication is produced by the OECD jointly with the African Tax Administration Forum (ATAF) and the African Union Commission (AUC). Technical assistance is given by the African Development Bank and CREDAF.
The statistics show tax revenues in Africa fell by 0.5% between 2019 and 2020 as a result of the economic crisis caused by the pandemic. The average tax-to-GDP ratio for the 31 African countries covered in the report decreased by 0.3 percentage points in 2020, to an average ratio of 16.0%. Most of the countries in the survey reported a decline in their tax to GDP ratio. There is a wide range of tax to GDP ratios among African countries, ranging from 5.5% in Nigeria to 32.5% in Tunisia.
A contributor to the fall in tax revenues in the period was the introduction of policies to support households and businesses during the pandemic. This was particularly clear in Nigeria where a decline of 1,7 percentage points in tax revenue as a share of GDP resulted from the stimulus and relief package introduced to provide support during the pandemic.
Taxes on goods and services account for around half the total tax revenues in Africa on average, and the revenue from these taxes decreased by 0.4% of GDP in 2020. By contrast, revenues from personal income tax remained unchanged as a share of GDP and revenues from corporate income tax increased very slightly.
The fall in tax revenues was offset by an increase in non-tax revenues which rose by 0.6 percentage points to 6.8% of GDP on average in 2020 in the countries surveyed. This increase was related to higher inflows of foreign aid, with grant receipts increasing by 0.4 percentage points and higher payments received from the Southern African Customs Union Common Revenue Pool. Property income declined on average by 0.2 percentage points, partly as a result of the lower oil prices in 2020.
Taxation of the informal sector
The latest edition of the report presents a special feature on the taxation of the informal sector, which is an important issue in Africa as countries continue to look at increasing domestic resource mobilisation. It has been estimated that more than eight out of ten workers in Africa are in informal employment. Governments need to understand the sector more if they are to facilitate registration of individuals and firms and tax them efficiently.
Research was performed using questionnaires and focus groups to obtain feedback from respondents. The results indicate that the main reasons for operating in the informal sector were poor relations with tax administrations, insufficient tax information and problems in calculating, filing and reporting tax. Entry into the formal sector is inhibited by expensive registration processes, complex documentation requirements, high tax rates and a difficult business environment.