COVID-19 dries up Africa tax revenues

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Gaborone - African countries are losing billions in taxes due to restrictions put in place to curb the spread of the new coronavirus, new research by the African Tax Administration Forum (ATAF) reveals.

ATAF says “assuming the status quo remains, by the end of December 2020, Africa would be estimated to have lost approximately US$3,99 billion in customs revenues on account of COVID-19”.

The researchers said countries with higher GDPs were reporting smaller customs revenue losses.

“We postulated that countries with high GDP need not rely more on customs revenues as they have diversified sources of revenue generation stemming from the large size of their economies” ATAF said.

African countries collectively lost US$1,09 billion in customs revenues between February and April this year.

The researchers used data collected from a sample of ATAF members, including Angola, Burundi, Cote d’Ivoire, Eswatini, the Gambia, Ghana, Madagascar, Malawi, Mauritius, Mozambique, Niger, Rwanda, Sierra Leone, South Africa, Tanzania, Togo, Zambia and Zimbabwe.

“Much as volume of trade is high in such countries, they have industries that would benefit from customs concessions and would import largely duty-free raw materials to boost domestic production unlike finished products which attract higher duties,” the researchers said.

“On the other hand, economies with under-developed manufacturing industries are likely to import a significant proportion of finished products versus raw materials and also rely heavily on customs revenues as a means of revenue domestic mobilisation.

“The pandemic is expected to bring about a major decline in tax revenue in most countries stemming from overall economic slowdown and from the tax policy and administrative measures taken in response. On the other it is impacting trade as it affects customs border operations,” the researchers said.

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