In Depth takes a close look at one sector critical for development in Africa. Every year the African Development Bank, the OECD Development Centre and the UNECA choose a new sector to study, taking into account the strategic challenges and opportunities Africa will have in the future. This year’s work on Public Resource Mobilization and Aid in Africa attempts to raise awareness of the need to strengthen taxation systems in Africa.
Last year’s study looked at Innovation and ICT while in 2008 the Partners examined Developing Technical and Vocational Skills in the region.
Public Resource Mobilisation and Aid in Africa
Africa is taking a growing role in the world, its population is increasing fast and so too is its need for finance to build for the future: to achieve the United Nations’ Millennium Development Goals and close the gap between its infrastructure and the rest of the world’s, the continent requires an annual investment of USD 93 billion over the next decade.
Why review African tax systems now?
The global economic crisis has revealed the risks for African economies of depending too much on external flows for their revenues. First, the reliance on commodities means many African countries remain vulnerable to upsets from the rest of the world, such as the swings in international prices in 2008 and 2009. Second, the risk of over indebtedness cannot be ruled out. With the expected fall in export revenues and return to unsustainable fiscal and current account deficits, international reserves may not be able to protect economies from the shortage of external finance.
Taxes per capita in Africa
Taxes per capita are the annual total of all collected taxes divided by the number of inhabitants. In general, taxes per capita have been increasing in Africa throughout the last two decades although the increase has been modest in low income countries.
Taxes per capita provide an intuitive measure of the amount of tax revenue available on average to a government for each inhabitant.
It is the amount of tax money available for the government to spend on everything ranging from building roads to providing public education on average for each inhabitant. Figure 6 plots the evolution of taxes per capita (same income groups as in Figure 5).
Past themes
Morocco's example
Jean-Philippe Stijns, co-author of the "Public Resource Mobilisation" study, highlights Morocco's practices while observing their taxation policies.
Useful links
- OECD Development Centre
- OECD
- African Development Bank
- UNECA
- World Bank
- United Nations
- Proparco's magazine
Private Sector and Development
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