The IMF analysis finds that tax revenues across the region remain low compared with global peers, with the weakest performance concentrated in fragile and conflict‑affected states, plus hydrocarbon‑dependent economies. In some cases, taxes account for as little as 1% of gross domestic product (GDP), leaving governments heavily reliant on oil and gas revenues. More diversified economies, including Morocco and Tunisia, collect close to 20% of GDP in taxes, illustrating a wider gap in fiscal capacity across the region.
According to the report, heavy dependence on hydrocarbons leaves countries exposed to volatility driven by commodity price swings. Tax-based systems have proved more stable in economies less dependent on natural resources, giving governments more predictable room to fund services and respond to shocks.
A narrow tax base remains a major structural constraint. Many countries rely heavily on consumption taxes, such as value‑added tax, which generate about half of total tax revenues, while personal income tax and property tax systems remain underdeveloped. The IMF notes that weak direct taxation limits the ability to redistribute income, address inequality, and broaden the fiscal contract.
The report also points to persistent weaknesses in tax administration. High informality, low compliance, outdated legal frameworks, and extensive exemptions reduce revenue collection, while special incentives for selected sectors can further erode the base.
Despite the challenges, the IMF identifies significant scope for reform without dramatically raising rates. Strengthening administration, widening the tax base, improving compliance, and reducing poorly targeted exemptions are presented as priority steps. Digitalisation is highlighted as a key enabler, with modern technologies offering pathways to boost efficiency, improve enforcement, and curb evasion.
The IMF stresses that reform sequencing must match the country context. Fragile states may need to prioritise simpler, easier‑to‑collect taxes first, while more advanced economies can phase in broader income and property taxation over time.
–IMF/ChannelAfrica–
