African nations have been urged to enhance their domestic revenue collection to reduce dependence on foreign aid, which has been declining in recent years. At the 11th African Tax Researchers' Network (ATRN) conference in Kigali, experts emphasized the need for self-reliance in revenue collection. Rwandan Finance and Economic Planning Minister, Yusuf Murangwa, stated that Africa should focus on generating its own revenue rather than relying on foreign aid.
Minister Murangwa noted that with the global economic landscape changing, Africa cannot continue to rely on foreign aid for its development. He stressed that the continent must explore ways to increase domestic revenue collection, particularly through taxation. According to Murangwa, Africa's reliance on foreign aid is not a sustainable long-term strategy, especially in the face of global conflicts and shifting international politics.
Research has shown that high-quality research is essential in informing tax policy decisions. The African Tax Outlook report revealed that the average tax-to-GDP ratio for African countries that are members of the African Tax Administration Forum (ATAF) is around 15%, compared to 34% for OECD countries. The report also noted that development aid to Africa declined by 9% in 2024 and is expected to decrease by 17% in 2025.
The debt burden on African governments has also increased, with public debt rising from 54.5% of GDP in 2019 to over 63%. This has made it challenging for many countries to service their debt. In light of these challenges, increasing domestic revenue collection has become a critical issue for African countries. Experts argue that this can be achieved by improving tax administration and reducing tax evasion.
Professor Annet Oguttu, Chair of the ATRN, highlighted that Africa has historically relied heavily on foreign aid, but this trend has been reversing since 2024. She emphasized that despite ongoing global conflicts, Africa must focus on generating its own revenue to ensure sustainable development. Oguttu noted that the continent must explore ways to increase domestic revenue collection and reduce its reliance on foreign aid.
Ronald Niwenshuti, Commissioner General of the Rwanda Revenue Authority (RRA), acknowledged that Rwanda still faces challenges in collecting domestic revenue. He noted that while the country aims to be self-reliant in revenue collection, there is still a gap to be filled. Niwenshuti emphasized that the RRA is working to improve tax administration and provide better services to taxpayers to increase revenue collection.
The ATRN conference aims to promote collaboration and knowledge sharing among African tax authorities. The network brings together tax experts and policymakers to discuss issues related to tax policy and administration. By working together, African countries can develop effective strategies to increase domestic revenue collection and reduce their reliance on foreign aid.
Key points
- African countries must boost domestic revenue collection to reduce reliance on dwindling foreign aid.
- The continent's average tax-to-GDP ratio is around 15%, compared to 34% for OECD countries.
- Development aid to Africa declined by 9% in 2024 and is expected to decrease by 17% in 2025.
