Africa has the potential to mobilise an additional US$469 billion in tax revenue annually without increasing tax rates, according to the African Development Bank’s (AfDB) Chief Economist and Vice President, Prof. Kevin Chika Urama, who argues that strengthening the social contract between governments and citizens is the continent’s most significant untapped fiscal opportunity.
The remarks, made during an AFNIS Executive Dialogue, reposition domestic resource mobilisation as a governance and public service challenge rather than a taxation issue, offering a compelling roadmap for financing Africa’s infrastructure, industrialisation and development priorities.
Improving Governance Rather Than Raising Taxes
Prof. Urama challenged the conventional narrative that African governments need higher tax rates to expand fiscal space. Instead, he argued that improving public service delivery, simplifying tax systems and strengthening transparency could significantly increase voluntary tax compliance across the continent.
According to him, many African citizens already shoulder substantial “implicit taxes” by privately financing services that governments are expected to provide, including electricity generation, water supply, road access and security.
“When citizens must drill their own boreholes, purchase generators, repair roads or provide private security, they are effectively paying an additional tax outside the formal fiscal system,” he explained, arguing that rebuilding confidence in public institutions would encourage broader participation in formal taxation.
Public Service Delivery Becomes an Economic Competitiveness Issue
The AfDB economist emphasised that improving the quality of public services is central to expanding domestic revenue mobilisation.
Rather than relying on enforcement mechanisms alone, governments can increase tax compliance by demonstrating that public resources are being managed prudently and translated into tangible improvements in infrastructure, healthcare, education and other essential services.
This approach, he noted, creates a virtuous cycle in which stronger institutions encourage voluntary compliance, while higher revenues provide governments with greater capacity to invest in development priorities.
The argument reframes taxation as part of a broader governance ecosystem in which accountability, transparency and service delivery are fundamental drivers of fiscal sustainability rather than administrative afterthoughts.
AfDB Introduces Public Service Delivery Benchmark
To strengthen accountability, Prof. Urama highlighted the African Development Bank‘s AfDB African Public Service Delivery Index, launched in 2025.
The index provides an independent, standardised assessment of the quality of public service delivery across African countries and sectors, enabling governments, citizens and development partners to benchmark performance and identify areas requiring reform.
Beyond measuring service quality, the framework seeks to strengthen evidence-based policymaking while reinforcing accountability in the management of public resources.
For investors and development finance institutions, such governance benchmarks also contribute to evaluating institutional effectiveness; an increasingly important consideration in assessing sovereign risk and investment readiness.
Strategic Context: Domestic Resource Mobilisation Moves to the Centre of Africa’s Development Agenda
As African countries confront rising debt servicing costs, constrained development finance and growing infrastructure needs, domestic resource mobilisation has become one of the continent’s foremost economic priorities.
While policy debates have traditionally focused on expanding tax bases or introducing new levies, increasing attention is now being directed towards improving tax administration, strengthening institutions and enhancing public expenditure efficiency.
The proposition that Africa can generate substantially higher revenues without increasing tax rates aligns with broader continental efforts to finance industrialisation, infrastructure and climate resilience through stronger domestic fiscal systems rather than greater external borrowing.
AFNIS Insight
Prof. Urama’s intervention reframes one of Africa’s most pressing economic debates. The question is no longer simply how governments can collect more revenue, but how they can rebuild the trust required for citizens and businesses to participate more willingly in formal fiscal systems.
If Africa can genuinely unlock an additional US$469 billion through improved governance and voluntary compliance, the implications extend far beyond public finance. Greater domestic revenues could expand governments’ capacity to finance infrastructure, accelerate industrialisation, strengthen healthcare and education systems, and reduce dependence on increasingly constrained external financing.
For policymakers, the message is clear: fiscal reform must be accompanied by visible improvements in service delivery and institutional accountability. For investors and development finance institutions, stronger governance and more predictable domestic revenues enhance sovereign resilience and improve the long-term bankability of infrastructure and development projects.
As Africa pursues economic transformation under Agenda 2063 and the African Continental Free Trade Area (AfCFTA), strengthening the social contract may prove to be one of the continent’s most valuable economic reforms; not only for increasing tax collection but for building more resilient and competitive economies.