The African Development Bank (AfDB) has stated that African countries can generate more than $469 billion in additional annual revenue without increasing existing tax rates, provided governments improve tax administration, strengthen public institutions, and embrace digital technologies.
The disclosure was made by AfDB Chief Economist and Vice-President for Economic Governance and Knowledge Management, Prof. Kevin Urama, during an interview in Abuja.
According to him, stronger domestic resource mobilisation remains the most sustainable pathway for financing development across the continent.
Urama explained that the enormous revenue potential lies not in introducing new taxes or increasing existing ones, but in improving efficiency and compliance within current tax systems.
He noted that adopting best practices such as digital tax administration, improved record-keeping, and better enforcement mechanisms could significantly increase government revenues.
The AfDB official emphasized that many African countries continue to lose substantial revenue because of weak tax administration, inefficiencies, data fragmentation, and tax evasion.
He argued that modernising revenue collection systems would enable governments to capture resources that are already due to them without imposing additional burdens on citizens and businesses.
According to Urama, public trust remains a major factor influencing tax compliance across Africa.
He observed that many citizens are reluctant to pay taxes because they often have to provide essential services such as electricity, water, security, and road infrastructure on their own.
Improving public service delivery, he said, would encourage voluntary compliance and strengthen the relationship between governments and taxpayers.
The AfDB has been advocating a broader strategy for domestic resource mobilisation as part of efforts to reduce dependence on external borrowing and foreign aid.
The bank believes that African countries can create more fiscal space for development projects by improving revenue collection and reducing inefficiencies in public spending.
Beyond revenue collection, the bank estimates that African governments could also save hundreds of billions of dollars annually through improved public investment efficiency.
Its recent economic outlook report highlighted significant losses arising from waste, corruption, and inefficient project execution across the continent.
To support these efforts, the AfDB said it is working with several African countries, including Nigeria, to strengthen revenue authorities through technical assistance, institutional reforms, and capacity-building programmes.
The bank has also introduced a Public Service Delivery Index aimed at helping governments improve service delivery and rebuild citizen confidence in public institutions.
Analysts say the recommendation comes at a crucial time as many African economies face rising debt-servicing costs, shrinking development assistance, and increasing demands for infrastructure, healthcare, education, and social services.
Strengthening domestic revenue mobilisation is increasingly being viewed as a critical tool for achieving long-term economic resilience and financial independence.
The AfDB maintains that Africa possesses significant untapped fiscal potential and that the continent can finance a larger share of its development ambitions through better governance, digital transformation, and more efficient public institutions rather than relying solely on tax increases or external funding.