Taxation Dynamics and Governance in Sub-Saharan Africa

Sub-Saharan African states face a persistent challenge in broadening their tax bases and strengthening fiscal capacity amidst diverse economic structures and political dynamics. The predominance of informal economic activity, weak administrative capacity and varying degrees of political will have led to a patchwork of revenue-raising strategies, from property levies in urban centres to flat-rate fees imposed on traders. Governance frameworks often struggle to balance equity and efficiency: efforts to register extensive numbers of small enterprises may inflate administrative workloads without proportionate revenue gains, while attempts to extend taxation into rural or informal contexts can erode public trust when collection costs exceed the returns. Meanwhile, the uneven enforcement of tax obligations among elites and high-net-worth individuals undermines perceptions of fairness and fuels tax evasion. Recent policy dialogues have emphasised the importance of digitalisation and taxpayer services to enhance transparency, alongside tailored reforms that engage local institutions and social networks. Such measures aim to foster a stronger fiscal contract in which citizens perceive tangible returns for their contributions, thereby reinforcing compliance and enabling sustainable public investment across sectors such as health, education and infrastructure.

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Technical terms

Informal sector: Economic activities that are neither regulated nor protected by the state, often outside formal tax and registration systems.

Tax morale: The intrinsic motivation of individuals to pay taxes, influenced by perceptions of fairness, trust and reciprocity with the state.

Fiscal reciprocity: The mutual exchange in which citizens provide revenue through taxes and the state delivers public goods and services in return.

Social contract: The implicit agreement between the governed and governing authorities, stipulating citizen obligations and state responsibilities.

References

1. Tax obsessions: Taxpayer registration and the “informal sector” in sub‐Saharan Africa. Development Policy Review (2022).
2. Tax and governance in rural areas: The implications of inefficient tax collection. Journal of International Development (2023).
3. Do tax policies discriminate against female traders? A gender framework to study informal marketplaces in Nigeria. Poverty & Public Policy (2022).
4. Furthering a feminist fiscal agenda: Engendering tax and development. Development Policy Review (2025).
5. Taxing high‐net‐worth individuals in Nigeria: Challenges and opportunities for policy‐makers from a preliminary investigation. Development Policy Review (2025).