To deepen domestic resource mobilization, countries should double efforts to broaden their national tax base, Deputy Executive Secretary and Chief Economist UN Economic Commission for Africa, Hanan Morsy, has said.
Morsy who spoke at the closing of the Experts Segment of the 56th session of African Conference of Ministers in Victoria Falls, Zimbabwe said broadening the tax base could help Africa raise her tax to GDP ratio, which currently is the lowest across the regions.
“Optimising Africa’s tax collection efforts is imperative for sustainable development,” she said, adding that countries can begin by improving their efficiency of public spending, ensuring every dollar invested delivers maximum returns.
“It is not just about investing in the right areas, it is also about doing them in the best possible way to minimize waste and maximizing impact,” she stressed.
On the question of taxation, she recommended progressive tax systems, digitalization through electronic tax filing and removing ineffective tax exemptions.
She disclosed that the ECA was currently piloting research on assessing optimal taxation of the digital and technology sectors.
On Climate change, she said this has exacerbated the situation of an already shrinking fiscal space with increasing financing needs, leading to a vicious cycle of investment shortfalls that increase exposure risk and worsen impact, further eroding fiscal space and increasing financing cost.
“It is important for African countries to leverage their assets, starting by harnessing the most valuable asset of all – human capital,” Morsy said, adding that “empowering and equipping our youth will be crucial to shape our shared future.”
To achieve this, Morsy stressed the need to continue prioritizing innovation and investment in skills acquisition and education.”
Africa’s path to sustainable development, she pointed out, was hinged on three crucial elements, namely addressing finance and investment to attract more affordable and concessional finance to the continent through the reform of the global financial architecture.
“This also requires de-risking projects to attract private sector investment that is needed to boost the meagre 14% share of private sector in Africa,” she said.
At the regional level, she said countries must transform potential and ideas into tangible action through concrete bankable projects, saying this underscored the success of regional initiatives and approaches, which “depend greatly on our ability to effectively implement the African Continental Free Trade Area (AfCFTA).
She said countries should continue to foster the creation of regional value chains in critical sectors like minerals and electric vehicles (EVs), food and energy systems and technology,” adding that regional collaborations could energize Africa joint determination to foster economic diversification, industrialization, and intra-regional trade, to catalyze positive transformation throughout our continent.
Morsy called for national level actions such as creating an enabling environment and adequate policy and regulatory frameworks, which, she said, entailed optimizing public revenue and spending, streamlining lengthy permits and approval processes and fighting untransparent regulations and policy inconsistencies, monitoring and reporting properly the use of proceeds and aligning with medium- to long-term strategic priorities.
The experts report which explored a spectrum of instruments and mechanisms aimed at financing the transition to inclusive green economies in Africa would be presented to the Finance ministers meeting scheduled for March 4 and 5, 2024 for purposes of advancing the agenda.
