AS per OECD survey, Africa's average tax-to-GDP ratio was 15.6% in 2021, unchanged from the previous year and remaining below its pre-pandemic levels.

Launched at the 22nd International Economic Forum on Africa in Paris, the new report reveals that tax-to-GDP ratios remained below pre-pandemic levels in 17 of the 33 countries covered by the report in 2021, widening the gap between tax-to-GDP ratios in Africa and other regions. Between 2020 and 2021, tax revenues increased as a percentage of GDP in 20 of the 33 countries and decreased in 13. The new edition includes Gabon and Guinea for the first time.

The report’s findings underscore the financing challenges facing African countries as a result of the COVID-19 pandemic, which have resulted in widespread increases in borrowing and debt service costs. The impact of the pandemic on Africa’s public finances has subsequently been compounded by rising food and energy costs, widening the financing gap for achieving Agenda 2063 and the Sustainable Development Goals in Africa.

The gap between Africa’s average tax-to-GDP ratio and that of Asia and the Pacific (19.8%), Latin America and the Caribbean (LAC) (21.7%) and the OECD (34.1%) widened in 2021. The LAC average tax-to-GDP ratio rose by 0.8 percentage points (p.p.) in 2021 following a decline of the same magnitude in the previous year, while the Asia-Pacific average rose by 0.2 p.p. in 2021 following a 0.9 p.p. decline in 2020.

Tax-to-GDP ratios among African countries ranged from 5.9% in Equatorial Guinea to 32.5% in Tunisia in 2021. Botswana observed the largest increase in its tax-to-GDP ratio in 2021, of 2.8 p.p. The next largest increases occurred in South Africa (1.9 p.p.) and the Democratic Republic of the Congo (1.8 p.p.). Chad registered the largest decrease in 2021, of 4.6 p.p., followed by the Seychelles and Equatorial Guinea (2.6 p.p. and 2.5 p.p., respectively).

Revenues from taxes on goods and services were the only tax category that increased on average across African countries in 2021, rising by 0.2% of GDP on average following a decline of 0.4% of GDP in 2020. VAT revenues increased by 0.1 p.p. in 2021, following a 0.3 p.p. fall in 2020. The new report includes a chapter based on the VAT Digital Toolkit for Africa, a joint publication by the OECD, the African Tax Administration Forum (ATAF) and the World Bank Group that suggests possible approaches that could be considered to safeguard VAT revenues in African countries amid the rapid growth of digital trade on the continent.

Non-tax revenues declined by 0.3 p.p. across the 33 African countries in 2021 to an average of 5.8% of GDP. While revenues from rents and royalties increased by 0.4 p.p., revenues from grants declined by 0.3 p.p. and Southern African Customs Union revenues fell by 0.5 p.p. Tax revenues increased by 1.5 p.p. of GDP between 2010 and 2021 on average, whereas non-tax revenues decreased by 1.4 p.p. over this period, resulting in only a small increase in average public revenues as a share of GDP overall.

Revenue Statistics in Africa is a joint initiative of the African Union Commission (AUC), the OECD and its Development Centre, and the African Tax Administration Forum (ATAF), with the technical support of the African Development Bank and the Cercle de réflexion et d’échange des dirigeants des administrations fiscales. The 2023 edition received support from the European Union and is part of the second phase of the Pan-African Statistics Programme, a joint initiative between the African Union and the European Union.