In contrast, the Europe and Central Asia region has the highest rate of 32% ( UNU-WIDER Government Revenue Dataset, 2021). Both the South Asia region and the Middle East and North Africa region have similarly low rates as Sub-Saharan Africa of about 14%. These numbers have remained stagnant over the past three decades, with African countries collecting an average of 12–15% of GDP as taxes from 1990 to 2020. High- and upper-middle-income countries like Seychelles, Namibia and South Africa have rates as high as 28–33% whereas low-income countries like Chad, Democratic Republic of Congo and Ethiopia have rates as low as 7%. This continent-wide average masks significant variation across countries. In 2018, the most recent year with wide data coverage, Sub-Saharan African countries collected 14% in taxes as a share of GDP ( UNU-WIDER Government Revenue Dataset, 2021). Tax collection in Africa is low, but similar to other regions at a similar income level ( Figure 1). As a unique feature, the paper concludes with insights from interviews with senior tax administrators across the continent on their practical experiences and challenges in adopting technology for tax administration. It combines an overview of the literature with case studies highlighting specific country examples. In particular, it applies the framework in Okunogbe and Santoro (2022) to each of these tax categories to examine how technology may be used to define compliance, that is, to identify the tax base to monitor compliance, that is, to detect evasion when it occurs and to facilitate compliance, that is, to make it easier for people to comply with their tax obligations. It then describes the ways in which technology may be deployed to address these challenges. The paper begins with an overview of the challenges faced by African economies in maximising key tax categories: consumption taxes, real estate taxes, trade taxes and income taxes. As different sectors of government adopt technology solutions to increase efficiency and improve service delivery to citizens, tax administration presents an important application. While digital transformation across different sectors has been occurring over the past few decades, the surge in remote work experiences and the need for social distancing precipitated by COVID-19 has accelerated the adoption of many technologies that already existed and spurred the development of others. This paper examines how African countries may use recent advances in technology to improve tax administration. However, many African countries struggle to collect an adequate amount of taxes. Tax revenues also allow countries to be less reliant on foreign aid and natural resource revenues. Taxation lies at the crucial intersection of public good provision, income redistribution, social safety nets and government accountability. Taxes are important for economic development.
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