Achieving the African Union’s Agenda 2063, the United Nations’ Sustainable Development Goals (SDGs) and implementing the Addis Ababa Action Agenda require mobilising additional finance in general, and domestic resources in particular, to fund public goods and services. Taxation provides a predictable and sustainable source of government revenue, in contrast with the volatility of other important sources of public revenues, such as grants and royalties. For African countries, where external debt and dependency on volatile resource revenues present notable economic challenges, enhancing domestic resource mobilisation is not just a fiscal strategy; it’s also a critical pathway to achieving self-reliance, economic resilience and sustainable development, aligning specifically with the aspirations set out in the African Union's Agenda 2063 for a self-sufficient, integrated and prosperous Africa.

Revenue Statistics in Africa presents an internationally comparable set of indicators on tax and non-tax revenues that can be used to track progress on domestic resource mobilisation and to inform tax policy and reform. The report and its data also contribute to the Pan-African Statistics Programme, a joint effort between the African Union and the European Union to strengthen statistical capacity in Africa by providing quality revenue statistics data that can inform decision-making processes and policy monitoring towards African integration. The progress of the Pan-African Statistics Programme demonstrates a commitment towards data-driven and context-sensitive policymaking in Africa. Accurate and relevant data is foundational for formulating policies that resonate with Africa's distinctive economic and political landscapes and societal nuances, thereby propelling more effective and impactful initiatives on the ground.

This edition of Revenue Statistics in Africa includes data on tax revenues up to and including 2022. This first chapter analyses the evolution of the tax-to-GDP ratio, tax structure and share of tax revenue by level of government in 36 African countries: Botswana, Burkina Faso, Cabo Verde, Cameroon, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Côte d’Ivoire, Equatorial Guinea, Egypt, Eswatini, Gabon, Ghana, Guinea, Lesotho, Kenya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, the Seychelles, Sierra Leone, Somalia, South Africa, Togo, Tunisia, Uganda and Zambia. Mozambique, Somalia and Zambia are included for the first time in this edition.

This chapter also compares the averages of the 36 African countries with the averages of 36 Asian and Pacific economies (OECD, 2024[1]), 26 Latin American and Caribbean (LAC) countries (OECD et al., 2024[2]), and 38 OECD countries (OECD, 2024[3]). The discussion supplements the detailed country information on tax revenues in Chapter 5.

Exploring tax-to-GDP ratios in the 36 African countries in this publication reveals a multitude of economic realities. The wide-ranging ratios underscore the economic diversity within the continent, each telling a story of fiscal potential and challenges unique to each country. Understanding and navigating these differences is crucial for designing effective tax policies that bolster economic stability and drive development in Africa.

The unweighted average tax-to-GDP ratio of the 36 countries in this report was 16.0% in 2022 (Figure 1.1) and increased by 0.5 percentage points (p.p.) from its level in 2021. The tax-to-GDP ratio is measured as tax revenues (including compulsory social security contributions paid to general government) as a proportion of gross domestic product (GDP).1 In comparison, the average tax-to-GDP ratios in Asia and the Pacific, Latin America and the Caribbean, and OECD countries were 19.3%, 21.5% and 34.0% respectively in 2022.

Africa’s low average tax-to-GDP ratio relative to the level in other regions demonstrates the constrained fiscal space within which African countries operate. This limits their ability to channel substantial investments into sectors like healthcare, education and infrastructure, which are central to sustainable development and societal well-being in Africa. Addressing these gaps is imperative for unleashing Africa's developmental potential, ensuring inclusive and sustainable growth across the continent.

Tax-to-GDP ratios varied widely across the countries included in this publication in 2022, ranging from 2.6% in Somalia to 33.5% in Tunisia. Morocco, Tunisia, the Seychelles and South Africa had tax-to-GDP ratios above 25%; 13 countries recorded tax-to-GDP ratios between 15% and 25%, while 19 countries had tax-to-GDP ratios below 15%.

This section analyses changes in nominal tax revenues and nominal GDP in 2022 and the resulting changes in tax-to-GDP ratios, which it compares to changes in 2021. The value of the tax-to-GDP ratio depends on two components; its numerator (tax revenue) and its denominator (GDP) (see Box 1.1). This means that the changes in tax-to-GDP ratios reflect changes in nominal tax revenues as well as changes in nominal GDP.

In 2022, the countries covered by this report recorded median growth of 13.9% in nominal tax revenues relative to the previous year, while nominal GDP grew by 11.7% over the same period. Figure 1.2 shows year-on-year changes in nominal tax revenues and nominal GDP between 2021 and 2022 by country. All countries except Mali recorded increases in nominal tax revenues in 2022. The Democratic Republic of the Congo and Chad recorded increases of more than 60%. All countries recorded increases in nominal GDP in 2022; in 24 countries, this increase was less than the increase in tax revenues, leading to higher tax-to-GDP-ratios relative to 2021. In eleven countries, nominal GDP rose by more than nominal tax revenues, causing the tax-to-GDP ratio to decline.

The average tax-to-GDP ratio of the African countries covered in this report increased by 0.5 p.p. between 2021 and 2022, following a rise of 0.3 p.p. between 2020 and 2021. As a share of GDP, tax revenues increased in 23 countries, decreased in 11 and remained unchanged in two (Figure 1.3). Although tax revenues also increased in 23 countries and decreased in 12 countries in 2021, increases were of a greater magnitude in 2022 than in 2021 (1.2 p.p. on average in 2022 compared to 1.0 p.p. in 2021) whereas decreases were smaller (-0.9 p.p. on average in 2022 compared to -1.1 p.p. in 2021).

In 2022, Chad and the Democratic Republic of Congo registered the largest increases in their tax-to-GDP ratio, of 3.3 p.p. and 3.6 p.p. respectively. In contrast, the tax-to-GDP ratios of both Sierra Leone and Mali decreased by 1.9 p.p. between 2021 and 2022, the largest decline among the countries in the report.

In 2022, Africa faced a challenging macroeconomic backdrop, as regional GDP growth slowed to 4.0% in real terms from 4.9% in 2021 (AUC/OECD, 2024[6]), This slowdown was attributed to tightening global financial conditions, trade disruptions and supply bottlenecks. Growth was also impaired by the increasing impact of climate change and extreme weather events (AfDB, 2023[7]). As in the rest of the world, inflation rose strongly in Africa in 2022, leading to higher food and energy prices. In response, some governments in the region adopted measures to reduce the impact of higher international prices on consumers, including reductions or exemptions of taxes on goods and services, such as VAT and excises3 that reduced tax revenues. Meanwhile, higher prices in the oil and mineral sector led to higher profits and hence to higher revenues from corporate taxes in 2022 in countries that produce these resources (ATAF, 2023[8]).

Although tax-to-GDP ratios have rebounded from the COVID-19 shock in many African countries, the recovery has been uneven across the continent. In 2022, the tax-to-GDP ratio was above the level in 2019 (prior to the pandemic) in 21 of the 36 countries, while it was below this level in 15 countries.

In 2022, the Africa average tax-to-GDP ratio was 0.5 p.p. above its 2019 level (15.5%). This was also the case for the Asia-Pacific region, whose average tax-to-GDP ratio increased in 2021 and 2022, by 0.5 p.p. and 0.6 p.p. respectively after a contraction of 1.0 p.p. in 2020 (see Figure 1.4). By contrast, the average tax-to-GDP ratio in the LAC region had not regained its pre-pandemic level by 2022 despite increases of 0.3 p.p. in both 2021 and 2022. The OECD average has exceeded its 2019 level since 2020.

Between 2021 and 2022, revenues from corporate income tax (CIT) increased by 0.4% of GDP on average across the 36 countries in this publication, driving the overall increase in tax revenues in the region. Revenues from taxes on goods and services increased by 0.1% of GDP over the period. Within taxes on goods and services, revenues from value added taxes (VAT) and import duties both increased by 0.1% of GDP on average whereas excises decreased by 0.1% of GDP over the period.

Table 1.1 shows year-on-year changes in tax revenues as a share of GDP by main tax category for the average of African countries in this report since 2020.

• Revenues from taxes on goods and services were most adversely affected by the impact of the COVID-19 pandemic in 2020, decreasing by 0.4% of GDP.

• Revenues rebounded strongly in 2021 boosted by VAT revenue collections, which recorded the largest fall in 2020.

• Revenues from income taxes as a percentage of GDP remained unchanged in 2020 and 2021 and showed a strong increase in 2022 driven by growth in CIT revenues.

• Revenues from PIT remained unchanged as a percentage of GDP since 2020. Social security contributions fell by 0.1% of GDP in 2020 and were unchanged thereafter.

Figure 1.5 presents changes in tax-to-GDP ratios between 2021 and 2022 by main tax heading across the 36 countries and on average for Africa. The largest increases (in Chad and the Democratic Republic of the Congo) were mainly driven by increases in income tax revenues while the largest decreases (in Mali and Sierra Leone) were mainly due to decreases in revenues from taxes on goods and services.

The tax-to-GDP ratio of the Democratic Republic of Congo increased 3.6 p.p. between 2021 and 2022. Favourable economic conditions led to a 3.0 p.p. rise in income tax revenue in 2022. The largest increases were in the mineral sector, where corporate profits increased due to higher global prices. The digitalisation of tax declarations and payments also contributed to improved mobilisation of tax revenues in 2022 (Ministère des Finances de al République Démocratique du Congo, 2023[9]).

The 3.3 p.p. increase in Chad’s tax-to-GDP ratio was mainly driven by an increase of 3.8 p.p. in CIT revenues over the period. The oil sector was the principal factor behind the increase: CIT revenues from oil companies increased by 3.6 p.p. in 2022 due to higher oil prices (African Development Bank, 2023[10]).

In Sierra Leone, the tax-to-GDP ratio decreased by 1.9 p.p. in 2022, primarily due to a drop of 1.3 p.p. in revenues from taxes on goods and services. Sierra Leone is highly dependent on imports, notably of basic commodities such as rice and fuel, making it highly vulnerable to external economic shocks and fluctuations in global commodity prices (Danladi, 2020[11]). It was significantly impacted by a doubling of inflation in 2022 compared with 2021. As a result, Sierra Leone depreciated its exchange rate, trade was disrupted, and household consumption fell in 2022. This contributed to the reduction in tax revenues between 2021 and 2022 (African Development Bank, 2023[12]).

Tax revenues declined in nominal terms in Mali while the economy grew in 2022. As a percentage of GDP, tax revenues in Mali fell by 1.9 p.p. between 2021 and 2022, driven by declines in VAT revenues (of 1.0 p.p.) and non-VAT revenues from taxes on goods and services (of 0.8 p.p.). These occurred in a context of ECOWAS economic and financial sanctions against Mali in 2022, which affected Mali’s imports. As a result, revenues from VAT on imports and customs duties fell significantly in 2022 compared to 2021 (by 23% and 10% in nominal terms) (IMF, 2023[13]) (Direction générale du Trésor de La France, 2024[14]).

The Seychelles’ tax-to-GDP ratio declined by 1.2 p.p. due to a fall in CIT revenues of 1.7 p.p. A reduction of the standard CIT rate from 25% to 15% from January 2022 onwards contributed to the decline in the tax-to-GDP ratio over the period (ATAF, 2023[8]).

In 2022, Africa’s average tax-to-GDP ratio was 1.1 p.p. higher than in 2013. In comparison, the averages for the LAC region and OECD countries increased by 0.8 p.p. and 1.4 p.p. respectively between 2013 and 2022. The overall growth in tax revenues in Africa since 2013 was disrupted by falls in oil and gas prices in 2015 and the COVID-19 shock in 2020.

Africa’s average tax-to-GDP ratio increased from 14.9% of GDP in 2013 to 15.3% in 2015 but decreased the following years due to a fall in commodity revenues. In 2017, it returned to the 2013 level. The average then increased until 2019 to 15.5% of GDP (Figure 1.6), followed by a contraction due to the COVID-19 pandemic. The years 2021 and 2022 marked a rebound in tax revenues.

All main revenue categories increased between 2013 and 2022 at approximately the same pace. Revenues from taxes and goods and services increased by 0.5 p.p. between 2013 and 2022: VAT accounted for 0.2 p.p. of that increase to reach 4.5 % of GDP in 2022.

PIT also contributed to the increase in the African average tax-to-GDP ratio, rising from 2.6% of GDP in 2013 to 2.8% in 2022. CIT revenues increased by 0.2 p.p. over this period mainly due to the increase of 0.4 p.p. between 2021 and 2022. CIT revenues declined as a share of GDP between 2014 and 2016, in part due to falls in oil and mineral prices and decreases in CIT rates across the continent.

Figure 1.8 presents changes in tax revenues as a share of GDP across the 36 countries and for the Africa, LAC and OECD averages between 2013 and 2022 by tax type and overall. Tax-to-GDP ratios rose in 25 African countries between 2013 and 2022 and declined in 11 countries. Tunisia recorded the largest increase over the period (of 5.4 p.p.), which was mainly attributable to higher revenues from PIT (2.6 p.p.), VAT (1.4 p.p.) and social security contributions (1 p.p.). During this period, Tunisia undertook extensive reforms to its tax policy and administration to mobilise tax revenues. In addition, increases in PIT revenues and social security contributions arose partly from 147% increase in payroll brought about by successive wage gains under post-revolutionary trade union pressure (OECD/ATAF/AUC, 2021[15]).

As Figure 1.8 shows, recent progress in domestic resource mobilisation has varied significantly across African countries. This is further demonstrated by Figure 1.9, which shows that tax revenues in Togo and Chad followed very different trajectories since 2010.

Togo’s tax-to-GDP ratio showed strong and steady growth over this period, increasing by 6.8 p.p. between 2010 and 2022 and exceeding the African average from 2014 (except in 2018). Over the period, Togo made significant efforts to improve revenue collection procedures in its three revenue administrations and undertook several reforms to mobilise tax revenues. Measures implemented by Togo between 2010 and 2012 included the monitoring and modernisation of revenue collection and information systems, as well as measures to tackle fraud and tax evasion. Another reform was the establishment of the OTR (Office Togolais des recettes), which unified customs and tax services into a single administration in 2014. More recently, Togo introduced tax identification numbers, reduced tax exemptions and established controls to combat corruption (IMF, 2019[16]).

Tax levels in Chad, on the other hand, were highly volatile between 2010 and 2022. Resource endowments significantly influence tax-to-GDP ratios (see Box 1.2), and this is particularly true for Chad, an oil-dependent economy whose tax revenues have been highly affected by oil prices. Chad recorded a significant decrease in tax revenues as a percentage of GDP between 2011 and 2016, from 13.4% (its highest level) to 3.6% (its lowest level). This was mainly caused by a decrease in revenues from CIT, which predominantly comes from oil companies. Oil prices fell between mid-2014 and early 2016, after which they were volatile (especially during and after the COVID-19 pandemic); tax revenues as a share of GDP fluctuated accordingly.

The composition of a country’s tax revenues across different tax types is known as its tax structure or tax mix. This is an important indicator since different taxes have different economic and social effects. The tax structures in the 36 countries in this publication reflect different policy choices, economic structures and conditions, tax administration capabilities and historical factors.

The 36 countries covered in this report can be divided into three broad groups according to their principal source of revenue: (i) VAT; (ii) other taxes on goods and services; and (iii) income taxes. Figure 1.11 shows the decomposition of tax revenues across all countries included in this publication, differentiating between income taxes (both personal and corporate), social security contributions, and taxes on goods and services (including VAT and other goods and services taxes).

Taxes on goods and services was the principal source of tax revenues for 22 countries (the first two groups of countries in Figure 1.11). Among these countries, taxes on goods and services generated between 37.4% of tax revenues in Tunisia and 87.1% of tax revenues in Somalia. VAT accounted for the largest share of revenues from taxes on goods and services in most of the countries in this group whereas other taxes on goods and services were the leading source of revenues for eight countries.

For 14 countries, taxes on income and profits accounted for the principal share of total tax revenues. Within this group, income tax revenues ranged from 43.1% of total tax revenues in Egypt to 74.9% in Equatorial Guinea. Twenty-one of the 36 countries received a higher share of tax revenues from CIT than from PIT in 2022. The share of CIT revenue was particularly large in Chad and Equatorial Guinea, where they accounted for more than 60% of total taxes.

The importance of social security contributions in total tax revenues varies greatly across the 31 countries for which data is available in this publication. In 2022, the share was highest in Mali, Morocco and Tunisia, exceeding 20% of total tax; in the remaining countries social security contributions generated less than 0.2% of total tax revenues in Cabo Verde to around 13.5% in Egypt (Figure 1.11).

The variation in social security contributions reflects a diversity of social security programmes and contribution rates, with many countries using a variety of systems to fund social benefits. For example, social security contributions in South Africa finance the Unemployment Insurance Fund while other benefits, such as social assistance programmes covering old age, sickness and maternity, are financed by general revenues. In contrast, social security schemes in Morocco and Tunisia are modelled on the French system and provide a wide range of benefits on a contributory basis, including old age, disability, sickness and maternity, work injury (Tunisia), unemployment (Morocco) and family benefits (SSA, 2015[23]).

In 2022, VAT generated the largest share of tax revenues on average for the countries included in this publication (Figure 1.12). VAT revenues accounted for 27.0% of total tax revenues on average, higher than the Asia-Pacific (36) average of 24.9% but lower than the LAC average of 28.3%. All three regions had a significantly larger share of tax revenues collected from VAT compared to the average for OECD countries, for which VAT revenues accounted for 20.8% of total tax revenues. VAT revenues for the Africa average were lower than all the other regions when measured as a share of GDP (4.5% of GDP in Africa, compared to 4.8% in Asia-Pacific, 6.1% in the LAC region and 7.0% in the OECD).

Relative to the other regions, Africa recorded the highest share of non-VAT taxes on goods and services (other taxes on goods and services in the graphs) at 24.4% of total tax revenues. Trade taxes represent an important source of revenue for Africa amounting to about half of non-VAT taxes on goods and services revenues in 2022. This share is likely to evolve with the ongoing implementation of the African Continental Free Trade Area (AfCFTA) (see Box 1.3).

CIT revenues as a share of total tax revenues in Africa averaged 21.2% in 2022, a similar level to the Asia-Pacific (36) average but higher than the LAC and OECD average shares (18.8% and 12.0%, respectively). Reported as a percentage of GDP, the average share of CIT revenues for Africa (3.3%) was lower than the other regional averages in 2022 (around 3.8% in Asia-Pacific and 3.9%, for the OECD and LAC averages) (Figure 1.12). By contrast, the African average share of PIT revenues (16.2% of total tax revenues) was lower than the OECD average of 23.7% but higher than the LAC and Asia-Pacific (36) averages (9.2% and 15.9%, respectively). As a percentage of GDP, the average level of PIT revenues across the OECD was nearly triple the Africa average.

Between 2013 and 2022, the Africa average tax structure hardly changed. It only shifted very slightly towards a greater share for social security contributions and a marginally smaller share for consumption-related taxes.

The shares of PIT and VAT revenues in the average tax structure for the African countries in this publication have slightly declined although revenues from both sources increased as a percentage of GDP, to 2.8% and 4.5% of GDP, respectively, in 2022 (Figure 1.15). In contrast, the share of CIT and social security contributions in total tax revenues between 2013 and 2022 increased by 0.3 p.p. and 0.8 p.p. respectively.

This section discusses the VAT revenue ratio (VRR) for almost all the countries included in this publication. The VRR “measures the difference between the VAT revenue actually collected and what would theoretically be raised if VAT was applied at the standard rate to the entire potential tax base in a “pure” VAT regime and all revenue was collected” (OECD, 2024[26]).

The VRR is the ratio of actual VAT revenues to the product of final consumption (net of VAT revenues) and the standard VAT rate. The calculation is shown below:

$\frac{\mathrm{V}\mathrm{A}\mathrm{T}\mathrm{ }\mathrm{r}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{n}\mathrm{u}\mathrm{e}\mathrm{s}\mathrm{ }\mathrm{ }}{\left(\mathrm{f}\mathrm{i}\mathrm{n}\mathrm{a}\mathrm{l}\mathrm{ }\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{s}\mathrm{u}\mathrm{m}\mathrm{p}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\mathrm{ }\mathrm{e}\mathrm{x}\mathrm{p}\mathrm{e}\mathrm{n}\mathrm{d}\mathrm{i}\mathrm{t}\mathrm{u}\mathrm{r}\mathrm{e}-\mathrm{V}\mathrm{A}\mathrm{T}\mathrm{ }\mathrm{r}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{n}\mathrm{u}\mathrm{e}\mathrm{s}\right)\mathrm{ }x\mathrm{ }\mathrm{s}\mathrm{t}\mathrm{a}\mathrm{n}\mathrm{d}\mathrm{a}\mathrm{r}\mathrm{d}\mathrm{ }\mathrm{V}\mathrm{A}\mathrm{T}\mathrm{ }\mathrm{r}\mathrm{a}\mathrm{t}\mathrm{e}}$

This indicator provides insights into VAT revenue loss related to exemptions and reduced rates, fraud, evasion and tax planning as well as weaknesses in tax administrations. However, the indicator needs to be interpreted with caution and with reference to the underlying characteristics of the VAT system in each country, as a high VRR could result from cascading effects4 or failure to refund VAT input credits. Other factors may increase the ratio, for example when place-of-taxation rules for international trade diverge from the destination principle (OECD, 2024[26]).

Informality can also have an impact on VRRs. In many African countries, a high proportion of the workforce operates in the informal sector. Not being registered for tax purposes, they do not benefit from VAT refunds for their inputs (AfDB/OECD/UNDP, 2016[27]). The interpretation of the VRR is also more difficult for countries relying significantly on tourism: these countries may record a high VRR because purchases by non-residents are not included in final consumption expenditure (the denominator) but in exports whereas the VAT on these purchases is included in the overall VAT revenues (the numerator) (Keen, 2013[28]). Another factor that may be linked to the previous point relates to the level of trade: countries with relatively a high ratio of trade to GDP tend to show high VRRs, probably because collecting VAT at the point of entry of a country is easier than collecting in the domestic market (Ebrill, L. P., Keen, M., & Perry, V. J., 2001[29]).

Figure 1.16 shows the VRR for the 35 countries in this publication that operate a VAT system (which excludes Somalia). In 2022, the average VRR for these countries stood at 0.37, which was below the OECD average of 0.58. The VRRs ranged widely: the Seychelles, Cabo Verde and Mauritius had the highest VRRs (0.97, 0.67 and 0.56, respectively) while Equatorial Guinea and Chad had the lowest (0.09 and 0.04 respectively).

The Seychelles has a relatively broad-based VAT system and there are no reduced VAT rates, although there are a few VAT exemptions for basic necessities such as agricultural and pharmaceutical products and for fuels (OECD, 2020[30]). In addition, the high VRR could be partly due to the importance of tourism: revenue from VAT is primarily generated through the Seychelles’ tourism sector, which is taxed at the standard rate and contributes about half of total VAT receipts (OECD, 2020[30]).

The tourism sector also plays an important role in the economies of both Cabo Verde and Mauritius (World Bank, 2024[31]) (Ministry of Tourism, 2023[32]) and could partly explain their higher VRR. Although the VRR of Mauritius is relatively high, (IMF, 2024[33]) argues that VAT collection in the country could be improved by removing exemptions, addressing compliance issues and lowering VAT thresholds to widen the tax net.

Chad’s low VRR is linked to low levels of VAT revenue collection (amounting to 0.6% of GDP in 2022 and about 1% of non-oil GDP) as a result of weak VAT administration, VAT exemptions, deficiencies in the VAT refund mechanism, and the large informal sector (IMF, 2019[34]).

Trade (mostly imports) is more than 40% of GDP in Seychelles, Cabo Verde and Mauritius, whereas it is less than 15% in Chad and Equatorial Guinea. This finding supports previous findings that a high level of trade generally tends a higher VRR (Ebrill, L. P., Keen, M., & Perry, V. J., 2001[29]). Countries with high imports as a percentage of GDP such Cabo Verde and the Seychelles also recorded a high share of VAT on imports as a percentage of VAT revenues (62% and 37% respectively in 2022) whereas this proportion was low for Equatorial Guinea and Chad (12% and 4% respectively in 2022).

Through the Paris Agreement of 2016, countries have committed to decarbonising their economies by the middle of this century, implying a shift away from fossil fuels as a source of energy. To reduce emissions and drive decarbonisation, more and more countries are deploying environmentally-related taxes and price-based policy instruments. By incorporating a price signal into consumer decisions, systems of environmental taxation give effect to the polluter-pays principle to favour greener over more polluting economic activities. Well-designed systems of environmental taxation in effect can thereby influence environmental outcomes by encouraging businesses and households to consider the environmental costs of their behaviour.

The 2023 Africa Climate Summit, Nairobi Declaration takes note that in addressing environmentally-related tax revenues, it is crucial to emphasise the acute vulnerabilities many African countries grapple with, arising from the unpredictable and devastating impacts of climate change (African Union, 2023[35]). Prolonged droughts, unyielding floods and wildfires brought by climate change inflict a heavy humanitarian and economic toll, undermining livelihoods, health and education, and threatening peace and security across the continent. Despite not being historical contributors to global warming, African countries bear its harsh consequences, underscoring the urgent need for global collaborative efforts.

An environmentally-related tax is a tax whose base is a physical unit (or a proxy of a physical unit) of something that has a proven, specific harmful impact on the environment regardless of whether the tax is intended to change behaviours or is levied for another purpose (OECD, 2005[36]). Revenues from taxes on energy can increase in the medium term if countries increase effective tax rates on the carbon content of fuels (Marten and van Dender, 2019[37]). A joint ITF and OECD study shows how revenues from road transport can be stabilised in the long term through a mix of taxing distance driven, vehicles and fuel (OECD/ITF, 2019[38]).

Although environmentally-related taxes are not a category in the standard OECD classification of tax revenues, they can be identified through the detailed list of specific taxes included for most countries within this overarching classification. It is on this basis that they are included in the OECD Policy Instruments for the Environment (PINE) database (OECD, 2024[39]).5 In 2020, the OECD started collecting Environmentally Related Tax Revenue (ERTR) accounts in line with the System of Environmental and Economic Accounting; ERTRs are disaggregated by industries and households.

A detailed examination of country-specific taxes for 34 of the 36 African countries6 in this report with ERTR data demonstrates that, on average, revenues from environmentally related taxes amounted to 1.0% of GDP in 2022, a higher level than the LAC and Asia-Pacific unweighted averages of 0.8% and 0.7% of GDP, respectively but lower than the OECD (1.8% of GDP). Across Africa, ERTRs ranged from less than 0.1% of GDP in the Republic of the Congo, Nigeria and Somalia to 3.5% in the Seychelles (Figure 1.17). These figures should be treated with caution as it is not possible to identify the precise level of ERTRs for each country; the level of revenues shown in Figure 1.17 depends in part on the granularity of tax revenue data available.

ERTRs can be split into different categories of tax base, notably energy (e.g., fossil fuels and electricity), transport, pollution and resources (e.g., mining and fossil fuel extraction).

• In 2022, revenues from energy taxes generated the majority of ERTRs among the countries in this publication (0.7% of GDP on average). Taxes on energy products accounted for the largest share of ERTRs in 20 of the 34 countries.

• Revenues from motor vehicles and transport services accounted for most of the remainder (approximately one-third of ERTRs and 0.2% of GDP on average). They were the main source of ERTRs for four countries.

• Revenues from other environmentally related bases are smaller, at 0.1% of GDP on average for natural resources and pollution combined. Taxes on natural resource extraction were most prominent in Gabon, Guinea and Mali. A pollution tax in the form of a levy on non-biodegradable packaging was the main source of ERTRs in Cabo Verde.

• On average, the structure of ERTRs in Africa is very similar to the OECD and the LAC region. By contrast, Asia-Pacific economies rely equally on taxes on energy, resources and transport.

Analysis of environmental taxes in the Africa region needs to be understood in the context of the extensive use of fossil fuel subsidies. Latest figures from the IEA indicate that fossil fuel consumption subsidies rose to an unprecedented USD 1 trillion globally in 2022. Rising fuel prices pushed many countries to increase fossil fuel subsidies to keep prices at an affordable level for households and companies (IEA, 2023[40]). Among the countries in this publication, Egypt, Gabon, Ghana and Nigeria provided fossil fuel consumption subsidies amounting to about USD 66.2.5 billion, USD 385.4 million, USD 2.6 billion and USD 18.7 billion, respectively, in 2022 (IEA, 2023[41]). These amounts represented a significant increase compared to 2021 for all four countries, with increases ranging from 136% in Egypt to 350% in Gabon. These subsidies may add significantly to countries’ borrowing needs, forcing some African countries (such as Ghana, Kenya and Nigeria) to remove some subsidies in 2022 or 2023 (Africa Business Insider, 2023[42]).

The 36 countries included in this publication belong to one or more Regional Economic Communities (RECs) on the continent, which facilitate economic integration between their members (African Union, 2024[43]). This section describes tax revenue trends and tax structures in five RECs, namely the East African Community (EAC), the Economic Community of Central African States (ECCAS), the Economic Community of West African States (ECOWAS), the Arab Maghreb Union (AMU) and the Southern African Development Community (SADC)7.

Revenue Statistics in Africa includes many members of these RECs but not all; coverage ranges from 57% for EAC to 80% for SADC. The indicators showing average tax revenue levels and tax structures among the five RECs only include the member states participating in Revenue Statistics in Africa.

The average tax-to-GDP ratios for SADC and AMU exceeded the Africa average of 16.0% in 2022 (at 18.6% and 26.0%, respectively), while the average tax-to-GDP ratios for ECCAS, ECOWAS and EAC were below the Africa average (11.7%, 14.4% and 14,6%, respectively). Between 2013 and 2022, average tax-to-GDP ratios rose in all five RECs, with increases ranging from 0.8 p.p. in ECCAS to 2.3 p.p. in EAC and 3.2 p.p. in AMU. Tax-to-GDP ratios increased by 1.2 p.p. in SADC and by 1.4 p.p. in ECOWAS on average (Figure 1.18).

Tax structures varied across the RECs in 2022, albeit with some commonalities between them.

• Income taxes were the principal source of revenues for ECCAS countries on average, with CIT representing the highest share of total tax revenues (35.6%). CIT revenues contributed a larger share of tax revenues in ECCAS than in any of the other RECs.

• Taxes on goods and services was the main source of revenues for EAC, ECOWAS and AMU. Within taxes on goods and services, EAC and AMU levied a slightly larger share of VAT revenues than revenues from non-VAT taxes on goods and services (“other taxes on goods and services” in Figure 1.19). Although ECOWAS has the largest share of VAT revenues among the three RECs, non-VAT taxes on goods and services accounted for the largest share of tax revenues at 29.4%.VAT revenues in these three RECs ranged from 25.2% in AMU to 28.5% in ECOWAS.

• Income taxes and taxes on goods and services were equally important as a percentage of total tax revenues for SADC countries on average. VAT was the principal source of SADC tax revenues, amounting to 31.9%, and represented the largest share compared to the other RECs. VAT revenues accounted for twice as much in SADC countries on average than revenues from other taxes on goods and services (15.3%). PIT was the second-largest source of tax revenues in SADC; at 21.3% of tax revenues, the share of PIT was also the largest among all RECs analysed here.

• Revenue from social security contributions accounted for less than 10% of total tax revenues in all the RECs except AMU, where they contributed to 18.1% of total taxation in 2022.

As a percentage of GDP, revenues from the main tax categories varied greatly across the RECs:

• Average PIT revenues ranged from 1.4% of GDP in ECCAS to 4.6% in SADC while CIT revenues ranged from 2.5% of GDP in ECOWAS to 4% in ECCAS. PIT and CIT revenues were of similar magnitude in SADC and AMU on average.

• VAT revenues and revenues from non-VAT taxes on goods and services were lowest in ECCAS (both 2.6% of GDP) and highest in AMU on average (6.4% and 4.9% of GDP respectively).

• Social security contributions ranged from 0.7% of GDP in SADC to 5.5% in AMU on average.

Countries participating in Revenue Statistics in Africa are categorised according to one of four income groups as defined by the World Bank (World Bank, 2024[44]): low income (13 countries), lower middle-income (16 countries), upper middle-income (6 countries) and high income (1 country, the Seychelles). This section presents trends in tax-to-GDP ratios and the tax structure in 2022 by income group, excluding the high-income group because of the limited coverage (the Seychelles is thus not included in the analysis).

The average tax-to-GDP ratio for each income group shown in Figure 1.20 confirms the tendency for more-developed countries to have higher tax-to-GDP ratios (discussed in Box 1.2). In 2022, the average tax-to-GDP ratios of the lower middle-income countries and upper middle-income countries were higher than the Africa average, at 16.9% and 17.8% respectively. In contrast, the average tax-to-GDP ratio of low-income countries was 13.5%, which was below the Africa average and below the threshold of 15% considered as a tipping point to accelerate growth and development (Gaspar, Mansour and Vellutini, 2023[45]).

A combination of a large informal sector and a high reliance on foreign aid often pushes low-income countries towards a lower level of tax collections and a narrower tax base (Besley and Persson, 2014[46]) (Bachas, Jensen and Gadenne, 2024[47]). It is especially crucial for low-income countries to increase tax revenues as they often lack steady sources of funding and confront the greatest spending needs.

On average, tax revenues as a share of GDP increased for all income groups. between 2013 and 2022. Tax revenues in low-income countries increased by 1.3 p.p. over the period while they rose by 1.6 p.p. in lower middle-income countries and by 2.3 p.p. in upper middle-income countries.

The tax categories contributing most to the increase in tax revenues between 2013 and 2022 vary across income groups. The rise in tax revenues in low-income countries was primarily due to higher income tax revenues, mainly from CIT. Revenues from non-VAT taxes on goods and services were the main factor behind the growth in tax revenues in lower middle-income and upper middle-income countries.

Figure 1.21 presents the tax structure as a percentage of GDP and as a share of total tax revenues for the Africa average and the three income groups. The tax structure in the low-income countries and in lower middle-income countries is characterised by a high reliance on taxes on goods and services (respectively 55.0% and 52.8% of tax revenues in 2022). In contrast, the average tax mix of upper middle-income countries has a greater share of income taxes (55.1%).

Within taxes on goods and services, VAT ranged between 24.6% to 27.9% of total tax revenues across the three income groups on average. As concerns non-VAT taxes on goods and services, upper middle- income countries showed the lowest share as a percentage of total tax revenues on average whereas low-income countries recorded the largest share (respectively 12.9% and 28.9% of total tax revenues). Conversely, the share of PIT in 2022 was highest in the upper middle-income countries (17.2% of total tax revenues) and lowest in low-income countries (14.8%).

(Bachas, Jensen and Gadenne, 2024[47]) explain that taxes on goods and services as a share of total taxes tend to decrease with economic development, while the share of PIT tends to increase. They contend that the PIT base expands as countries develop and the workforce transitions from self‑employment to dependant employment (contributing to a transition from the informal sector to the formal sector). This transition is supported by the increasing market share of larger firms, which leads to a higher share of employees in the workforce. These trends tend to result in higher PIT revenues as well as a smaller informal sector in countries with higher incomes. Low‑income countries find it difficult to enforce taxes on self-employed and low-earning workers and tend to exempt this sector of the workforce even though it tends to represent most workers.

Analysis of taxation by level of government for the countries participating in this publication is limited by the fact that data on sub-national tax revenues are only available for six countries: Eswatini, Mauritius, Morocco, Nigeria8, Somalia and South Africa. In 2022, sub-national government revenues accounted for 0.3% of total tax revenues in Mauritius, 2.1% in Eswatini, 2.8% in Morocco, 4.2% in South Africa, 12.0% in Nigeria and 35.1% in Somalia

Revenues from property taxes are the most important source of reported tax revenue for sub-national governments in Eswatini, Mauritius, Morocco and South Africa. They accounted for all the reported tax revenue collected locally in Eswatini, Mauritius and South Africa and for more than 80% in Morocco. In contrast, sub-national government tax revenues in Nigeria are mostly sourced from income taxes and in Somalia from taxes on goods and services.

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