The Rise of Domestic Resource Mobilisation in Africa
A significant fiscal transformation is taking place across the African continent, with several countries such as South Africa, Ghana, Kenya, Rwanda, Nigeria, Senegal, and Morocco leading the charge. This shift is centered around domestic resource mobilisation (DRM), which is gaining momentum through tax reforms and digital systems. These changes are reshaping how African economies fund their budgets and achieve greater fiscal independence.
Improved tax administration, data integration, and digital enforcement are enabling governments to collect more revenue while managing tight budgets. This evolution is enhancing fiscal resilience, allowing nations to better withstand economic shocks and invest in critical sectors like health, education, and infrastructure.
Jared Mokoema Shiswe, a policy analyst at the African Tax Administration Forum (ATAF), highlights that this shift is crucial for Africa’s ability to finance its own priorities. He emphasizes that with the right systems in place, countries can reduce their reliance on debt and make sustainable investments in key areas. DRM, once considered a weak link in many African economies, is now becoming one of the most important fiscal stories on the continent.
South Africa’s Revenue Success and Challenges
South Africa’s recent results exemplify this trend. Its revenue authority, SARS, reported collections of approximately US$101 billion for the year ending March 2025, exceeding its target by about US$522 million. This achievement is particularly symbolic given the country’s economic challenges.
SARS attributed its improved performance to a 13% increase in personal income tax receipts and resilient corporate income tax collections, especially from the financial sector. Commissioner Edward Kieswetter noted that the rollout of the new two-pot pension system, which allowed partial withdrawals from retirement savings for the first time, boosted taxable income and compliance, enabling the agency to surpass its baseline target for 2024/25.
However, SARS faces challenges in meeting its ambitious extra-collections target for 2025/26. While it has collected about 39.3 billion rand so far this fiscal year, it remains short of the 49.3 billion rand required to meet its expanded goal. Finance Minister Enoch Godongwana has warned that if collections fall short, spending cuts may be unavoidable. Despite these challenges, the overall trajectory is positive, with SARS’ total revenue reaching 1.855 trillion rand, or roughly US$101 billion—2.1% higher than the previous year.
Digital Transformation in Other African Countries
Rwanda’s experience mirrors this progress. The Rwanda Revenue Authority (RRA) collected 101.3% of its 2024/25 target, marking a 16.7% increase from the previous year. The agency credited enhanced taxpayer engagement, targeted sector audits, and expanded use of electronic filing systems for the improvement.
In Kenya, the Kenya Revenue Authority (KRA) also reported strong mid-year results for the 2024/25 fiscal year, driven by an accelerated digitalisation drive. Recent reforms include electronic invoicing, payroll data integration, and real-time reconciliation tools designed to enhance accuracy and accountability. However, some measures have faced resistance, such as a proposed finance law granting KRA broad access to citizens’ financial data, which was shelved following parliamentary opposition.
Nigeria’s Federal Inland Revenue Service (FIRS) has also seen solid gains. Improved customs administration and tighter oversight of oil royalties and VAT payments helped federal receipts exceed expectations in early 2025. This allowed the government to expand its fiscal envelope, raising the 2025 budget to ₦54.2 trillion from ₦49 trillion.
A Continent-Wide Shift
Ghana’s Ghana Revenue Authority (GRA) exceeded its first-half 2025 targets, driven by higher non-oil receipts and better VAT compliance. This marks a turnaround after years of underperformance that forced the government into an IMF-supported adjustment programme. The gains are now viewed as a pathway to rebuilding fiscal stability without deepening debt exposure.
According to ATAF’s latest African Tax Outlook, Africa’s average tax-to-GDP ratio has risen to 15.1%, up from 14.5% five years ago. While still below the global average of 33%, the upward trajectory indicates steady progress. Analysts project the ratio could reach 20% within a decade if reforms continue to unlock an estimated US$200–250 billion annually in additional domestic financing.
The Role of Digitalisation
Digitalisation is a major driver of this transformation. Electronic invoicing, online filing, and data-driven risk assessment are now mainstream tools in many tax agencies. According to the IMF’s Building Tax Capacity for Growth 2025 report, countries that digitalise their tax systems can raise collections by up to three percentage points of GDP within a few years, often without adjusting tax rates.
Shiswe notes that the real story is not higher tax rates, but smarter systems. When governments invest in data, technology, and compliance capacity, revenues increase without placing additional burden on citizens. However, he cautions that technology alone does not guarantee success. Political management and public trust are equally crucial.
Kenya’s 2024 protests against new tax measures highlighted how reforms can backfire if perceived as unfair or opaque. Tax reforms work best when accompanied by transparency and evidence that taxpayers’ contributions translate into visible public services.
Ongoing Challenges and Future Prospects
Despite these successes, challenges remain. Some revenue gains, like South Africa’s pension withdrawals, are one-off events unlikely to recur. Informal economies continue to dominate in many countries, leaving large portions of taxable activity untapped. In several markets, more than 60% of economic output still lies outside the formal system.
Efforts to modernise revenue collection are underway across the continent. In Morocco, the government has extended electronic filing to self-employed professionals, while Senegal is digitising property tax records to close municipal revenue gaps. Across West Africa, ECOWAS members are discussing cross-border tax data-sharing frameworks to improve compliance and curb evasion.
According to the IMF and ATAF, if Africa’s average tax-to-GDP ratio reaches 20 percent, the resulting additional revenue could finance universal primary healthcare, education, and major infrastructure across the continent, without resorting to external borrowing.
