KEY POINTS

• The AfDB says Africa can unlock more than $469bn in additional annual revenue without raising tax rates.
• Kevin Urama says digitalization, stronger institutions and better service delivery would significantly lift tax compliance.
• The bank backs revenue authorities across Africa and has built a Public Service Delivery Index to strengthen the social contract.

Africa can unlock more than $469bn in additional annual revenue without raising statutory tax rates, according to the African Development Bank. The bank’s Chief Economist and Vice President for Economic Governance and Knowledge Management, Prof. Kevin Urama, said this in an interview with the News Agency of Nigeria on Wednesday in Abuja.

Better administration, not higher rates

Urama said countries could mobilize the extra revenue without touching tax rates, and he stressed that stronger domestic resource mobilization remains the most sustainable source of development financing for the continent. According to him, improving tax administration through digitalization, strengthening public institutions and enhancing service delivery would significantly lift tax compliance.

“We see that by improving tax administration through digitisation and other reforms, just adopting best practices, the continent can mobilise more than $469bn extra without increasing tax rates. It is simply about improving efficiency and strengthening compliance,” he said. In other words, the revenue gap lies in how governments collect, not in how much they charge.

Fixing the social contract

Furthermore, Urama linked weak compliance to citizens’ frustration with public services. He said many people hesitate to pay taxes because they often provide essential services such as electricity, water and roads for themselves. Consequently, he argued that governments could improve voluntary compliance by delivering quality public services, strengthening transparency and managing public resources prudently.

In addition, the economist said the AfDB supports African countries, including Nigeria, in strengthening domestic revenue mobilization through capacity building for national revenue authorities. Finally, he noted that the bank has developed a Public Service Delivery Index, which encourages governments to improve service delivery and rebuild the social contract between citizens and the state. Ultimately, his message tied revenue growth to trust, because citizens pay more readily when they see results from their taxes.