Boost Tax Revenues, W’Bank Tells African Oil Producers | Independent Newspapers Limited
Newsletter subscribe


Boost Tax Revenues, W’Bank Tells African Oil Producers

Posted: Oct 6, 2015 at 12:58 am   /   by   /   comments (0)

By Sola Alabadan,


For Nigeria and other oil-producers in Africa such as Angola, Republic of Congo, and Equatorial Guinea, whose growth is threatened by the drop in oil prices, the World Bank has advised them to boost revenues through taxes and improved tax compliance.

The advice was contained in the bank’s new Africa’s Pulse, the twice-yearly analysis of economic trends and the latest data on the continent released on Monday in Washington.

The governments were also charged to embark on structural reforms to alleviate domestic impediments to growth.

The governments were also enjoined to improve the efficiency of public expenditures to create fiscal space in their budget as fiscal deficits across the region are now larger than they were at the onset of the global financial crisis while lower revenues, especially among oil producers, have led to a widening of fiscal deficits.

The report also posited that countries of Sub-Saharan Africa’s growth would slow down in 2015 to 3.7 per cent from 4.6 per cent in 2014, reaching the lowest growth rate since 2009.

However, the World Bank affirmed that African countries are continuing to grow, albeit at a slower pace, due to a more challenging economic environment.

The 2015 forecast remains below the robust 6.5 per cent growth in GDP which the region sustained in 2003-2008, and drags below the 4.5 per cent growth following the global financial crisis in 2009-2014.

Overall, growth in the region is projected to pick up to 4.4 per cent in 2016, and further strengthen to 4.8 per cent in 2017.

“The end of the commodity super-cycle poses an opportunity for African countries to reinvigorate their reform efforts and thereby transform their economies and diversify sources of growth.

“Implementing the right policies to boost agricultural productivity, and reduce electricity costs while expanding access, will improve competitiveness and support the growth of light manufacturing,” says Makhtar Diop, World Bank Vice President for Africa.

In view of the fact that African countries continue to face a stubbornly high birth rate, which has limited the impact of the past two decades of sustained economic growth on reducing the overall number of the poor, the report stated that Africa would not meet the Millennium Development Goals (MDG) of halving the share of population living in poverty between 1990 and 2015.

“The dramatic, ongoing drop in commodity prices has put pressure on rising fiscal deficits, adding to the challenge in countries with depleted policy buffers,” says Punam Chuhan-Pole, Acting Chief Economist, World Bank Africa and the report’s author.

“To withstand new shocks, governments in the region should improve the efficiency of public expenditures such as prioritising key investments, and strengthen tax administration to create fiscal space in their budgets,” he said.

The World Bank maintained that the growth in Sub-Saharan Africa would be repeatedly tested as new shocks occur in the global economic environment, underscoring the need for investments in new energy capacity, attention to drought and its effects on hydro-power, reform of state-owned distribution companies, and renewed focus on encouraging private investment would help to build resilience in the power sector.