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8
Chapter
Conclusions and policy recommendations
Over the past two decades, African countries made notable progress in mobilizing domestic resources to finance their development goals. However, despite the fiscal reforms undertaken by many African countries since 2000, government revenue, at 21.4 per cent of GDP in 2018, remains low relative to the continent’s potential and the financial resources needed to achieve national development aspirations. The incremental financing needs for Africa to achieve the Sustainable Development Goals (SDGs) are huge, with estimates ranging from $614 billion to $638 billion a year between 2015 and 2030. The incremental financing needs are particularly high in low-income countries and lower-middle-income countries, at as much as $1.2 trillion a year. This translates into an estimated financing gap of 11 per cent of GDP between 2015 and 2030.
Against this backdrop, this Report analyses the state of fiscal policy and finds that African countries can broadly increase government revenue by 12–20 per cent of GDP (figure 8.1). It identifies potential means of increasing revenue, including adopting appropriate fiscal policy; taxing hard to reach sectors such as agriculture, the informal sector and the digital economy; improving mobilization of non-tax revenue; leveraging information technology and digitalization to broaden the tax base, reduce revenue collection costs and improve tax administration; and strengthening policies that tackle base erosion and profit shifting, tax avoidance and tax evasion.
The report uses secondary data as well as primary data collected from 10 case study countries to examine the institutional and policy factors that influence the effectiveness and efficiency of fiscal policy. Fiscal performance and public revenue collection during 2000–2018 receive special attention.
This chapter summarizes the key fiscal policy issues in Africa and presents the salient findings. It proposes a policy framework for adoption by African countries that offers a menu of policy options for raising additional revenue to meet the SDGs.
