African countries could mobilise more than US$469 billion in additional annual revenue without raising tax rates by improving tax administration, strengthening institutions and embracing digital technologies, a senior official of the African Development Bank (AfDB) has said.
Kevin Urama, the AfDB’s Chief Economist and Vice President for Economic Governance and Knowledge Management, said stronger domestic resource mobilisation remained the most sustainable way for African nations to finance development and reduce dependence on external borrowing.
Speaking in an interview with Nigeria’s News Agency of Nigeria (NAN), Urama said the continent has significant untapped revenue potential that can be unlocked through reforms rather than higher taxes.
“We see that by improving tax administration through digitisation and other reforms, just adopting best practices, the continent can mobilise more than US$469 billion extra without increasing tax rates,” he said.
The comments come as many African governments face mounting fiscal pressures, rising debt-servicing costs and growing demands for investment in infrastructure, healthcare, education and climate resilience.
According to the AfDB, improving tax compliance and broadening the tax base could generate substantial resources while avoiding the political and economic challenges often associated with raising tax rates.
Many African countries continue to struggle with weak tax collection systems, large informal sectors and administrative inefficiencies that limit government revenues despite periods of economic growth.
Experts have long argued that revenue mobilisation in Africa remains below potential due to tax evasion, inadequate enforcement mechanisms and limited use of digital technologies in public finance management.
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Urama said digitalisation could play a critical role in improving transparency, reducing leakages and increasing efficiency in tax collection systems.
He noted that modern technologies can help governments track transactions more effectively, simplify tax filing procedures and expand compliance among businesses and individuals.
Beyond tax administration reforms, Urama stressed the importance of stronger public institutions and better service delivery as tools for improving citizens’ willingness to pay taxes.
“When people see that taxes are being used effectively to provide public services, compliance tends to improve,” he said.
The AfDB has consistently advocated for stronger domestic revenue generation as African governments seek alternatives to external financing sources that have become increasingly expensive due to higher global interest rates and tighter financial conditions.
The continent faces an estimated financing gap running into hundreds of billions of dollars annually, particularly in infrastructure development. The African Development Bank estimates that Africa requires between $130 billion and $170 billion each year for infrastructure investments, with a significant funding shortfall persisting.
Analysts say greater domestic resource mobilisation would not only provide governments with additional fiscal space but also strengthen economic resilience by reducing exposure to external shocks and volatile international capital markets.
The push for improved revenue collection comes amid broader efforts by African policymakers to build more self-reliant economies capable of financing long-term development goals.
Several countries across the continent have launched digital tax systems and electronic payment platforms in recent years to improve collection efficiency and reduce corruption.
However, challenges remain, including limited digital infrastructure, capacity constraints within tax authorities and resistance from segments of the informal economy.
Urama said addressing these challenges would require sustained political commitment, institutional reforms and investments in technology and human capital.
He argued that Africa’s development ambitions cannot be achieved solely through foreign aid or borrowing and that domestic resources must play a central role in financing growth.
The AfDB official’s remarks underscore a growing consensus among development economists that improving governance and public sector efficiency could unlock substantial financial resources without placing additional tax burdens on citizens and businesses.
As governments across the continent seek ways to balance fiscal sustainability with development needs, the prospect of mobilising nearly half a trillion dollars annually through reforms offers a potentially transformative opportunity for Africa’s economic future.
