IMF and African group urge tax system upgrades

The International Monetary Fund (IMF) and the African Governors Group have issued a joint statement calling for modernizing Africa's tax systems to address the continent's growing debt and declining aid. The statement highlights the need for more effective and equitable tax systems to increase revenue and improve compliance.

Africa's tax revenue lags behind global averages

In 2023, the average tax revenue as a share of GDP for 38 African countries was 16.1%, significantly lower than the 33.9% average in OECD countries. While this figure has increased slightly over recent years, it remains below the averages in the Asia-Pacific and Latin America regions.

Many African countries struggle with low tax revenue

Twenty of the 38 monitored countries collected less than 15% of their GDP in tax revenue, with the largest gap reaching 34% in Tunisia. Regional averages are also low, with the Economic Community of West African States (ECOWAS) at 13.9% and the Central African Economic and Monetary Community at 13.2%.

Debt and aid decline strain African economies

The IMF's 2025 report indicates that more than a third of Sub-Saharan African countries are in debt distress or at high risk. Declining aid and rising interest rates have increased the portion of revenue spent on debt, with some countries losing over 10% of public revenues due to aid cuts.

Africa's growth forecast remains modest

Despite challenges like the Middle East war, the joint statement forecasts 4.5% growth for Africa in 2026, a slight increase from the 4.2% projected earlier this year. Inflation is expected to drop to 9.3%, but this is still considered high, and economic vulnerabilities remain.

IMF pledges support for African members

The IMF has committed to assisting African countries with advice, technical support, and financing if needed. The focus is on controlling inflation, maintaining public finances, improving governance, and implementing the African Continental Free Trade Area to boost employment and economic development.