On 31 October 2018 the OECD released the third edition of Revenue Statistics in Africa. The publication, released during the 18th International Economic Forum on Africa, is a joint initiative between the African Tax Administration Forum (ATAF), the African Union Commission (AUC) and the OECD, with the support of the European Union.

Domestic resource mobilisation is an important factor in reaching the UN Sustainable Development Goals. Developing countries need to mobilize government revenue to provide funds for adequate public goods and services including health, education and infrastructure. Taxation is a reliable source of revenue compared to the often volatile non-tax revenues relating to commodities.

An important measure of progress in domestic resource mobilisation is the tax-to-GDP ratio. The tax-to-GDP ratio measures the total tax revenue of a country as a proportion of GDP. According to UNESCAP in 2014 a minimum tax-to-GDP ratio of 25% is essential for a country to become a developed economy.

Revenue Statistics in Africa shows that tax-to-GDP ratios still vary widely across African countries. Within the sample of countries examined the ratio ranged from 7.6% in the Democratic Republic of the Congo to 29.4% in Tunisia in 2016. Of the countries in the sample six of the countries – Mauritius, Morocco, Senegal, South Africa, Togo and Tunisia – had tax-to-GDP ratios of at least 20% in 2016. This is still well below the average tax-to-GDP ratio for Latin America and the Caribbean which was 22.7% in 2016 and well below the average ratio for OECD countries which was 34.3% in 2016.

These changes in the tax-to-GDP ratios in African countries were largely influenced by economic factors, for example declines in oil prices and lower activity among mining and oil companies in the Democratic Republic of the Congo and in Niger. The increase in the tax-to-GDP ratio in Botswana was connected to a significant rise in the sale of diamonds. Improvements to tax administration also contributed to increases in the tax-to-GDP ratio, for example in Mali.

Africa has generally made progress in improving domestic resource mobilisation since 2000 and the tax revenues remained stable in 2016. Using the comparable data for 21 participating countries the report concludes that the average tax-to-GDP ratio remained at 18.2% in 2016, which is the same level as in 2015. This represents significant progress compared to the year 2000 when the average tax-to-GDP ratio was 13.1%.

The publication reveals that the African countries continue to rely heavily on taxes on goods and services. These taxes accounted for 54.6% of total tax revenues in the sample of 21 countries on average. Of this, value added tax (VAT) alone accounted for 29.3% of tax revenues in the sample.

The contribution of income taxes is however increasing. Taxes on income and profits accounted for 34.3% of total revenues across the sampled countries in 2016. Most of the growth in tax revenues since 2000 is due to increases in the contribution of income tax, which increased from 2.6% of GDP reaching 6.2% of GDP in 2016. Revenue from corporate income tax increased by 1.4 percentage points over the same period and is now 2.8% of GDP. Revenue from personal income tax has risen from 2.1% to reach 3.0% of GDP in 2016.

Non-tax revenues have continued to decline on average across the sampled countries in 2016 but they are still an important source of income for some of the countries. These non-tax revenues, including income from natural resources and grants, were more than 5% of GDP in nine of the 21 countries of the sample.

The 2018 edition of Revenue Statistics in Africa contains a special chapter on the African Union’s Strategy for the Harmonization of Statistics in Africa (SHaSA). The chapter looks at the approach to setting up and establishing an efficient statistical system covering the political, economic, social, environmental and cultural development and integration of Africa and looks at the role that can be played by Revenue Statistics in Africa in this strategy.