The African Development Bank (AfDB) has stated that African countries can generate more than $469 billion in additional annual revenue without increasing tax rates by improving tax administration, compliance, and efficiency.
AfDB Chief Economist Advocates Tax Reforms
Chief Economist and Vice-President for Economic Governance and Knowledge Management at the AfDB, Prof. Kevin Urama, disclosed this in an interview with the News Agency of Nigeria (NAN) in Abuja. Urama said weak tax administration and poor compliance remain major constraints to domestic resource mobilisation on the continent, noting that the adoption of best practices and digital technologies could significantly boost government revenues.
According to him, Africa can unlock substantial fiscal resources through reforms such as tax system digitalisation, stronger institutions, and improved revenue collection mechanisms without imposing additional tax burdens on citizens and businesses.
“We see that by improving tax administration through digitisation and other reforms, the continent can mobilise more than $469 billion extra without increasing tax rates. It is simply about improving efficiency and strengthening compliance,” he said.
Link Between Tax Compliance and Public Services
The AfDB economist also linked low tax compliance to poor public service delivery, arguing that many citizens remain reluctant to pay taxes because governments have failed to provide essential infrastructure such as electricity, water supply, and roads. He stressed that transparency, accountability, and improved service delivery would strengthen public trust and encourage voluntary tax compliance.
Urama added that the AfDB was supporting several African countries, including Nigeria, through capacity-building initiatives aimed at strengthening domestic resource mobilisation frameworks. He further disclosed that the bank had developed a Public Service Delivery Index to assess government performance and encourage reforms that improve service delivery and deepen citizens’ confidence in public institutions.
The AfDB’s position comes as many African countries face growing fiscal pressures arising from rising debt-service obligations, declining development assistance, and shrinking donor support, increasing the urgency for stronger domestic revenue mobilisation.
AfDB Approves $125m Investment in ATIDI
Meanwhile, the Board of Directors of the AfDB Group has approved a $125 million equity investment in the African Trade and Investment Development Insurance (ATIDI) to strengthen the institution’s capacity to provide risk insurance products that support trade and investment across Africa. The investment is aimed at strengthening ATIDI’s capital base and expanding its political risk and credit insurance offerings, which are designed to support foreign direct investment and boost intra-African trade.
ATIDI, legally known as the African Trade Insurance Agency, provides trade, credit, and political investment insurance to businesses and investors operating across its African member states. Its products help reduce the commercial and political risks associated with trade and investment activities on the continent.
According to the AfDB, the investment comes at a time of growing demand for trade and investment risk mitigation products across Africa. Vice President for Private Sector, Infrastructure and Industrialisation, Solomon Quaynor, said the investment aligns with the bank’s strategic priorities for the continent. Quaynor added that the investment is also consistent with the bank’s policy on non-sovereign operations, which seeks to support financing for private sector investments and projects in regional member countries.
ATIDI’s Chief Executive Officer, Manuel Moses, described the investment as another milestone in the long-standing partnership between the institution and the African Development Bank Group. Moses said the strengthened partnership would support Africa’s New Financial Architecture for Development and help unlock greater trade and investment opportunities across the continent.
