Untapped Resources: Tax Reforms Could Unlock $469bn Annually in Africa

By Al Mayadeen English

Source: News websites

5 Jun 2026 09:25

The African Development Bank says Africa could generate over $469 billion annually through better tax systems and efficiency, without increasing tax rates.

The African Development Bank (AfDB) said African countries could unlock more than $469 billion in additional annual revenue without raising tax rates, a figure that would exceed the continent’s estimated financing gap and reduce reliance on external borrowing and aid, Business Insider Africa reported.

The estimate comes at a time when African governments are facing increasing fiscal pressure from rising debt repayments, weaker aid inflows, and a tightening global financial environment.

According to S&P Global Ratings, Africa’s external debt repayments are projected to exceed $90 billion this year, while development institutions estimate the continent’s annual financing gap at around $400 billion.

These pressures have intensified the search for domestic sources of funding as governments attempt to balance budgets and sustain development spending.

AfDB estimates $469 billion in untapped revenue

AfDB Chief Economist Kevin Urama said the potential revenue can be unlocked through improved tax administration, digitization, and institutional reforms rather than higher tax rates.

“We see that by improving tax administration through digitisation and other reforms, just adopting best practices, the continent can mobilise more than $469 billion extra without increasing tax rates,” he said. “It is simply about improving efficiency and strengthening compliance.”

Tax inefficiency and governance gaps across the continent

The AfDB also estimated that Africa could mobilize up to $1.43 trillion annually through broader reforms, including improved public spending efficiency, stronger institutions, and deeper financial systems.

It argued that weak tax administration and fragmented financial structures continue to drain significant resources that could otherwise support development priorities.

According to Urama, tax compliance is also closely tied to public trust in government institutions. In many countries, households and businesses often rely on private solutions for services such as electricity, water, and security, which reduces incentives to contribute more to public revenue systems.

He added that improving transparency and service delivery would help strengthen compliance and increase willingness to pay taxes.

Digitization and reform key solutions

The AfDB has repeatedly called for digitized tax systems, integrated taxpayer databases, broader tax bases, and simplified compliance procedures as key reforms to improve revenue mobilization. These measures, it argued, would help governments capture revenue that is currently lost through inefficiencies.

The bank also said Africa’s long-term development strategy must increasingly rely on internal resources rather than external financing, especially as global uncertainty affects investment flows and development assistance.

It concluded that the continent’s biggest untapped financial resource is not external aid or commodity wealth, but improved collection of revenue that is already due.