Article written

  • on 10.05.2016
  • at 12:15 PM
  • by Staff

African countries must collect more taxes. But how? 0

Improving tax collection in African countries is a vital step towards sustainable economic development, and has benefits far beyond the revenue it generates. By Gargee Ghosh of the Bill and Melinda Gates Foundation.

Regional and global leaders from business, government and civil society are gathered for the World Economic Forum in Kigali this week to celebrate Africa’s decades-long progress in economic growth and poverty reduction – and to talk about the future.

Africa is a much better place for women, adolescents, and children than it was 25 years ago when the Millennium Development Goals were launched. But those gains could be at risk. Falling commodity prices, slowed economic growth, and global uncertainty have many governments grappling with how to mobilise the resources necessary to sustain and accelerate progress.

As a foundation that is deeply invested in partnering with governments across the continent to help improve the lives of the poorest, we (the Bill and Melinda Gates Foundation) are hearing a clear message from countries: that equitably raising and efficiently spending domestic resources should be at the heart of efforts to reduce poverty.

Already, the large majority of financing for essential services such as health care and education in Africa comes from countries themselves. In 2012, sub-Saharan Africa tax revenue was 10 times larger than the $51.9-billion in Official Development Assistance the continent received.

But tax systems in most African countries are underdeveloped. In many countries, tax as a share of GDP has been slow to rise, and in some cases has declined, over the past 15 years.

New revenue, raised equitably and spent efficiently, can enhance the lives of Africa’s citizens by financing better health care, schools, sanitation systems, and social safety nets for the poorest. Rwanda is a great example. Through a combination of legislation, stronger administration and more effective taxpayer registration and compliance, Rwanda increased revenues by nearly 50% between 2001 and 2013. This was critical in increasing domestic resources for health: from 2008 to 2013, government spending on health rose from 3.2% of GDP to 6.5% and per capita health spending doubled from $32 to $70 – while external funding dropped by 15%.

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by Gargee Ghosh

Photo Credits: Cal Harding/Flickr

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