Tax Reform and Digitisation key to Financing Development, Says 2019 Economic Report on Africa

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A team of industry experts has affirmed that Africa must digitise its economies, broaden its tax base, prevent further deterioration of fiscal and debt positions, and aim for double-digit growth to achieve the UN 2030 global sustainable development goals (SDGs), and the AU Agenda 2063.

According to an analysis dubbed the 2019 Economic Report on Africa, while economic growth in Africa remained moderate at 3.2 per cent in 2018, Africa needs to do more and work towards achieving a fine balance between raising revenue and incentivizing investments, in order to boost growth.

The analysis, compiled by a team of qualified researchers, was released at an event known as the Conference of Ministers. The Economic Report on Africa is a flagship publication of the United Nations Economic Commission for Africa (ECA) focuses on fiscal policy. Government revenues account for 21.4%, insufficient to meet countries’ development financing needs.

“The Report identifies several quick wins in Africa’s pursuit of additional fiscal space to finance its accelerated development,” Vera Songwe, the ECA’s Executive Secretary stated at the launch.

“It also focuses on the instrumental role of fiscal policy in crowding-in investment and creating adequate fiscal space for social policy, including supporting women and youth-led small and medium enterprises,” she added.

But, a decade away from the SDG, she added that African countries continue to search for policy mixes to help accelerate the achievement of the SDGs.

“However, for many countries, financing remains the biggest bottleneck with implementing capacity a close second,” Songwe continued.

While analysing and highlighting both challenges and opportunities, the Report also recommends comprehensive macroeconomic reforms aimed at building financial resilience, placing emphasis on the need for Africa to accelerate growth to double digits by 2030 and to boost investment from its current 25 per cent of gross domestic product (GDP).

In some of Africa’s largest economies, including South Africa, Angola and Nigeria, the Report reveals, growth trended upwards but remains vulnerable to shifts in commodity prices. East Africa remains the fastest growing, at 6.1 per cent in 2017 and 6.2 per cent in 2018.

In West Africa, the economy expanded by 3.2 per cent in 2018, up from 2.4 per cent in 2017. Central, North and Southern Africa’s economies grew at a slower pace in 2018 compared to 2017.

The report argues that African countries can increase government revenue by 12 to 20 per cent of GDP by adopting a policy framework that strengthen revenue mobilisation, including through digitalising African economies stating that digitization could enhance revenue mobilization by up to 6 per cent.

According to the ECA, digital identification can broaden the tax base by making it easier to identify and track taxpayers and helping taxpayers meet their tax obligations

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