Editor’s Note: February 20, 2019
Time to get serious about tax collection
The UK government has announced $61m in funding to strengthen tax systems in developing countries. Around $9m of this will be specifically dedicated to tax reform and collection in Africa.
It’s a small boost for one of the continent’s more pressing challenges.
Africa has the world’s lowest tax to GDP ratio at around 18% according to the OECD. In sub-Saharan Africa the figure drops to 15%.
Changing this is vital.
The continent faces severe funding shortages in areas like infrastructure, estimated to be around $87bn – $112bn a year. Against the backdrop of mounting debt, rising deficits, and monetary policy normalization in developed markets one of the best ways to tackle such shortfalls is domestic resource mobilization – ie. taxes. The IMF has described this as “one of the most pressing policy challenges” for Africa.
The issue is not new, and efforts to boost revenues have seen the tax to GDP ratio in sub-Saharan Africa increase from 11% in the early 2000’s. It’s progress, but there is little to celebrate – 15% is considered the minimum required for basic state functioning.
Apart from more urgency, new approaches are needed. Telecommunications technology, for example, has been used in places like Rwanda and Ethiopia to boost revenue mobilization.
One way or the other it’s time to get serious about tax collection.
From The Continent
South African finance minister Tito Mboweni will deliver his maiden budget speech today, amid growing concerns about policy direction in Africa’s most advanced economy. He faces a delicate balancing act between reassuring investors and addressing development needs ahead of national elections in May. More: Independent Online
Uganda has accused the local operation of mobile operator MTN, Africa’s biggest, of under-declaring sales and causing losses to public revenues. The claim is part of souring relations with the company, which has seen a number of senior executives expelled in the last month for allegedly compromising national security. More: Reuters
The Daily Stat
The number of candidates competing in Senegal’s presidential election on February 24. More:VOA
The Global Perspective
Egyptian authorities have detained and expelled a New York Times journalist upon his arrival at Cairo international airport, in a move reflecting growing authoritarianism under the country’s president Abdel Fattah el-Sisi. Last week Egypt’s parliament overwhelmingly backed a constitutional amendment that could extend his rule to 2034. More: Bloomberg
The UN has said that more than 100,000 people have been displaced in Burkina Faso by instability and fighting within the last two months. This is part of wider volatility in the Sahel region, driven by the proliferation of Islamist militant groups. More: Reuters