AEO launches a new database on African Fiscal Performance

African Economic Outlook A complete database of public revenue flows for 50 African governments from 1996 to 2008 is now publicly available on AEO.org, the online gateway to African economies provided by the OECD Development Centre, the African Development Bank (AfDB), the UN Economic Commission for Africa (UNECA) and the UN Development programme (UNDP). The database was used in its original form for the African Economic Outlook (AEO) 2010 study on “Public Resource Mobilisation and Aid”, which covered the 1996-2007 period.

Statistics are gathered every year during AEO country missions.

Data Shows a Gradual Increase in Tax Revenues

The following graph shows the level of fiscal revenues expressed as share of GDP (%) since 1990. The main finding from the data is that African countries, across all income levels, have gradually increased their level of collected fiscal revenues over the past two decades. However, the crisis is expected to impact negatively on the fiscal revenue performance of African countries in 2009.

A Performance Fuelled by Rising Commodity Prices

In 2010, African budgets are expected to experience the maximum impact of the crisis: the last decade’s rise in tax revenues has been largely driven by the rise in commodity prices, which bumped up natural resource-related tax revenues. With prices coming down as a result of the global economic crisis, we foresee a fall in government revenues.

Analysis of this fiscal revenue data highlights Africa’s dependence on external financial flows, particularly commodity-related revenues. Economies are over-exposed to the wills and woes of the global economy, resulting in unpredictable and volatile revenue flows. This in turn complicates the design and implementation of long term national development strategies. Recognition of this vulnerability has given new impetus to the dialogue on domestic resource mobilisation across Africa, particularly taxation.

The Way Forward?

Strategies towards more effective, efficient and fair taxation in Africa typically lie with a deepening of the existing tax base. Policy options include cracking down on fraud and evasion, removing tax preferences, particularly for large corporations and traders, dealing with abuses of transfer pricing techniques by multinationals and taxing extractive industries more fairly and more transparently. African governments should actively promote mutual learning to tap the continent’s best practices in tax collection. The international community has a key role to play in enhancing administrative capacity.

Access the new database on African Fiscal Performance here.

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