According to new data from Revenue Statistics in Africa 2017 released on 12 October 2017 the mobilisation of domestic resources is improving steadily in African countries. This annual report is produced jointly by the African Tax Administration Forum (ATAF), the African Union Commission (AUC) and the Organisation for Economic Co-operation and Development (OECD), with financial support from the European Union.
This is the second edition of the report and covers 16 African countries. Comparable data on tax and non-tax revenues is shown for Cabo Verde, Cameroon, Democratic Republic of Congo, CĂ´te d’Ivoire, Ghana, Kenya, Mauritius, Morocco, Niger, Rwanda, Senegal, South Africa, Swaziland, Togo, Tunisia and Uganda.
The report finds that the average tax-to-GDP ratio for those countries was 19.1% in 2015. All the countries have achieved an increase in their tax-to-GDP ratio compared to the year 2000, with an average rise of 5 percentage points. The tax to GDP ratio in these African countries remains lower than the average tax-to-GDP ratios for Latin America and the Caribbean (LAC) and the OECD which are 22.8% and 34.3% respectively. The main reason for the difference between tax to GDP ratios in these African countries (19.1%) and LAC countries (22.8%) is that the African countries featured in the report collect significantly lower social security contributions than LAC countries.
In 2015 taxes on goods and services such as value added tax (VAT) were the largest contributor to total tax revenues in the African countries (57.2% on average). Taxes on income and profits contributed 32.4%.
As a percentage of GDP total non-tax revenues were lower than tax revenues in all the African countries covered by the report. The total non-tax revenues collected as a percentage of GDP ranged from 0.6 % of GDP for South Africa to 15.1% of GDP for Swaziland (mostly revenues from the Southern African Customs Union). The amounts of non-tax revenue varied considerably between countries due to a wide disparity in natural resource revenues and international donations (foreign aid, debt relief, or funding of national programmes).
Non-tax revenues are generally more volatile than tax revenues and they can vary by more than 1% of GDP from year to year. This is often due to the volatile nature of grant and property revenues. In 2015, grants made up 7.2% of Niger’s GDP and 6.3% of Rwanda’s GDP. Property revenues made up 2.8% of Cameroon’s GDP, mainly from rents and royalties.
The report looks at the role of domestic resource mobilisation in improving governance and the business environment. The African countries are strengthening their tax policy and tax administration capacity but they continue to face the various challenges. These include problems from large informal sectors and a narrow tax base, particularly in resource-rich countries, that makes them vulnerable to unstable resource revenues.