–As Africa Lags Far Behind
The African Tax Administration Forum (ATAF) has alarmed over the very limited progress of Africa in achieving the Sustainable Development Goals (SDGs) by 2030, but believes that building the necessary skills and capacity within tax administrations will have a more sustainable impact in sourcing funding to achieve the 17 Goals.
ATAF is the continent’s main tax body, driven by the belief that strengthening tax systems in Africa could help generate the much needed revenues and put the continent back on track to achieving the SDGs by 2030. Liberia is among the 38 countries making up ATAF, and has served on its leadership over the years.
Since the historic adoption of the Sustainable Development Goals (SGDs) in 2015 and in spite of the wide buy-in by governments worldwide, achieving the SDGs by 2030 continue to present serious challenges for Africa.
According to a report by the Sustainable Development Goals Centre for Africa (SDG/A), after nearly a decade of implementation, the continent has made minimal progress in most of the 17 goals, if any at all.
ATAF quotes the report as noting that the only notable signs of progress were on SGD 5, 13 and 15, which deal with gender issues and climate change and whose assessment focuses more on the adoption of key policies and not so much on empirical results. The main culprit for this state of affairs, ATAF suggests, is the insufficiency of funds to finance the implementation of the goals.
Indeed, the 2019 Financing for sustainable development report warns that “mobilizing sufficient financing remains a major challenge in implementing the 2030 Agenda for Sustainable Development”. According to the report, existing multilateral funding mechanisms are under huge strain, which leaves much of the goals underfunded with a growing risk of not being achieved by 2030.
The developing world, and Sub-Saharan Africa in particular, where most countries’ tax to GDP ratios falls below the 15% minimum required to be able to fund basic public services, are amongst the most exposed economies.
In clearer terms, it is estimated that Africa needs an additional $500 billion to $1.2 trillion annual financing to meet its SDG targets. With the declining official development assistance (ODA) and other decreasing external sources of funding, experts agree that these amounts must be generated internally.
Towards achieving this, ATAF has developed a multi-dimensional approach to boosting tax revenues in Africa including tailored technical assistance programs, training and capacity building workshops, knowledge generation and dissemination and multilateral diplomacy.
“We are eleven and a half years away from the SDGs deadline. Sadly, a good number of African countries still do not raise sufficient revenues to meet basic state functions. But this is not a death sentence. Large amounts of revenues can be unlocked by capacitating our tax administrations with the right skills, knowledge and expertise, and our Ministries of finance with the necessary data, sound policies and adequate regulatory and legislative frameworks”, says Logan Wort, the Executive Secretary of ATAF, speaking at the World Bank Group’s General Meetings last week.
ATAF signed a Memorandum of Understanding with the World Bank on the side line of the Meetings precisely in order to strengthen the two organizations cooperation in building strong revenue administrations in Africa.
In its 10 years of existence, the organization has been the continent’s champion on tax matters. To date, it has 20 on-going country programs focusing on cross-border taxation, exchange of information, transfer pricing and VAT, amongst others. Such programs have proven instrumental in generating over $300 million in additional tax revenues for ATAF members. New transfer pricing rules have been introduced in 12 countries, allowing them to increase their revenues from large taxpayers.
The organization has therefore trained more over 15,422 tax officials and policymakers on tax audit, tax treaties analysis, compliance risk management and fraud detection, transfer pricing, revenue forecasting and analysis and many others.
As a home-grown initiative, ATAF presents the characteristics of a winning formula for overcoming the development financing challenges currently faced by the continent. If Africa is indeed to mobilize sufficient revenues to meet the SDGs by 2030, improving its tax systems represents one of the key areas to focus on. Having an already established body such as ATAF to provide the expertise required for this, is a definite plus.