The State of Public Resource Mobilisation in Africa

This section presents a series of stylised facts on the main trends in public resource mobilisation in Africa. The focus is placed on tax revenue, taxes per capita, direct taxation, indirect taxation, trade taxes, and tax effort. The section builds on a data set gathered by the fifty-country survey conducted by the Outlook. At the time of final drafting of the Outlook the consistent data ended in 2007.

Collected taxes in Africa increased from 22% of GDP in 1990 to 27% in 2007. Figure 3 illustrates this trend, as well as the growing wedge between fiscal revenues and ODA. However, a closer inspection of the increase reveals that it has been primarily driven by resource-related tax revenues in oil-producing countries. The performance of other types of taxes has been much more modest, as this section shows. Revenue from trade taxes has been declining since the late 1990s but this has been largely offset by indirect and corporate taxes, and resource-related tax revenues. Income taxes (mainly personal and non-resource corporate) have stagnated over the period.

The average growth in tax revenue of African countries in the last two decades also hides significant differences in the performance of individual countries. There is a strong dichotomy between oil-producers and oil-importers, both in terms of collected taxes and the structure of the tax mix. The ability of governments to generate tax revenue from oil can distract them from more politically demanding forms of taxation such as corporate income taxes on other industries, personal income taxes, value added tax (VAT) and excise taxes compared to countries with similar level of tax administrative capacity.