copy the linklink copied! Executive summary
Achieving the United Nations’ Sustainable Development Goals (SDGs) and implementing the Addis Ababa Action Agenda require mobilising additional finance, in particular domestic resources, to fund public goods and services. This report presents internationally comparable indicators on tax and non-tax revenues that can be used to track progress on domestic resource mobilisation and to inform tax policy and reform.
Revenue Statistics in Africa 2019 provides data on 26 African countries: Botswana, Burkina Faso, Cabo Verde, Cameroon, the Republic of the Congo, the Democratic Republic of the Congo, Côte d’Ivoire, Equatorial Guinea, Egypt, Eswatini, Ghana, Kenya, Madagascar, Mali, Mauritania, Mauritius, Morocco, Niger, Nigeria, Rwanda, Senegal, the Seychelles, South Africa, Togo, Tunisia and Uganda. It includes a special feature on the African Continental Free Trade Area (AfCFTA) and its impact on public revenues.
copy the linklink copied! Tax revenues
In 2017, the unweighted average tax-to-GDP ratio for the 26 countries in this publication (the “Africa (26) average”) was 17.2%. The tax-to-GDP ratio refers to total tax revenue, including social security contributions, as a percentage of gross domestic product (GDP). The Africa (26) average was below the Latin America and the Caribbean (LAC) average of 22.8% and the OECD average of 34.2%. Tax-to-GDP ratios ranged from 5.7% in Nigeria to 31.5% in the Seychelles in 2017, with nearly three quarters of the countries falling between 11.0% and 22.0%. The tax-to-GDP ratio exceeded 22% in four countries (Morocco, Seychelles, South Africa and Tunisia).
Tax revenues increased by 1.5% of GDP on average between 2008 and 2017, thanks to increases in revenues from VAT (0.7 percentage points [p.p.]) and from taxes on income and profits (0.3 p.p.) driven entirely by a 0.7 p.p. increase in revenues from personal income taxes. The increase in the Africa (26) average tax-to-GDP ratio was higher than the increase for the LAC and the OECD averages (both 1.3 p.p.). The Africa (26) average has plateaued at 17.2% since 2015, with increases in tax-to-GDP ratios in some countries being offset by decreases in others.
The greatest source of tax revenues among countries featured in this publication were taxes on goods and services, which accounted for 53.7% of total tax revenues on average in 2017, with VAT alone contributing 29.4%. Taxes on income and profits accounted for 36.2% of tax revenues. This was a similar tax structure to that of the average LAC country, except in relation to social security contributions: social security contributions as a proportion of GDP in LAC were more than twice the level seen in Africa.
Taxes on goods and services were the principal source of tax revenues for 21 countries in 2017, ranging from 36.6% of tax revenues in Tunisia to 78.5% in Togo. For the five other countries (Botswana, Equatorial Guinea, Eswatini, Nigeria and South Africa), taxes on income and profits accounted for the principal share of total tax revenue. The share of social security contributions in total tax revenue was highest in Tunisia (30.7% of total revenues), Morocco (19.3%) and Egypt (15.0%).
On average, in 2017 revenue from environmentally related taxes amounted to 1.3% of GDP in Africa, slightly lower than the OECD unweighted average of 1.6% of GDP (2016 figure) but higher than the LAC average of 0.9% of GDP. In 2017, tax revenues from energy products generated 70% of total environmentally related tax revenue on average, followed by revenues from motor vehicle and transport taxes.
The VAT revenue ratio (VRR), included for the first time in this publication, shows the difference between VAT revenues that would be expected if standard rates were uniformly applied and what was actually collected. These differences could come from exemptions and reduced rates, fraud, evasion and tax planning as well as weaknesses in tax administration. In 2016, South Africa and Togo had the highest VRR (0.66 and 0.65 respectively) whereas Nigeria, the Democratic Republic of the Congo, and Equatorial Guinea had the lowest (0.19, 0.17 and 0.07 respectively). In 2016, the VRR of 0.37 in Africa was below the LAC average of 0.59 and the OECD average of 0.56.
copy the linklink copied! Non-tax revenues
In 2017, total non-tax revenues were lower than tax revenues in all countries except Botswana, the Republic of the Congo and Equatorial Guinea. The highest shares were in Botswana (18.7% of GDP) and Eswatini (14.3%) – both of which were net recipients of funds from the Southern African Customs Union (SACU) – followed by the Republic of the Congo, which reported oil revenues amounting to 13.0% of GDP. Non-tax revenues were below 5% of GDP for 17 of the 26 countries.
Non-tax revenues tend to vary more between years than tax revenues, often due to changing commodity prices or the variability of grants. However, non-tax revenues have been on a downward trend since 2008, offsetting gains in tax-to-GDP ratios. Most countries saw a decline over this period in both grants and resource revenues.
The sources of non-tax revenues vary across the countries in the report. For ten countries (Niger, Rwanda, Togo, Burkina Faso, Senegal, Mali, the Democratic Republic of the Congo, Madagascar, Côte d’Ivoire and Uganda), grants were the principal source of non-tax revenues. Seven countries (the Republic of the Congo, Equatorial Guinea, Mauritania, Cameroon, Tunisia, Nigeria and South Africa) received more revenues from rents and royalties. Botswana and Eswatini received a majority of their non-tax revenue (56% and 86%, respectively) from the SACU revenue-sharing agreement.
copy the linklink copied! Special feature
This edition also includes a special feature on the African Continental Free Trade Agreement (AfCFTA), which came into force in May 2019. Its objective is to create a single market for goods and services covering 1.7 billion people and with aggregate GDP of USD 3.4 trillion by 2030. Although the AfCFTA is expected to boost tax revenues in the long term due to its positive impact on GDP, the elimination of trade taxes will reduce revenues in the short run. Data from Revenue Statistics in Africa 2019 show that the importance of trade taxes has declined since 2008 across most of the 26 countries but still accounted for 11.8% of total tax revenues on average in 2017. It also shows that low-income countries are most reliant on revenue from trade taxes, underlining the importance of mechanisms proposed in the AfCFTA to support vulnerable countries in transitioning to the new arrangements.
