Domestic Resource Mobilization in Africa: State, Capacity Imperatives and Policy Actions

• Published in: Africa journal of management 2017-04, Vol.3 (2), p.184-212
• Main Authors: Nnadozie, Emmanuel, Munthali, Thomas, Nantchouang, Robert, Diawara, Barassou
• Format: Article
• Language: English
• Subjects: Africa; capacity building; domestic resource mobilization; illicit financial flows
• ISSN: 2332-2373; 2332-2381
• DOI: 10.1080/23322373.2017.1335110

In Agenda 2063 and Agenda 2030, Africa has its major development aspirations defined in the broader global and continental economic development context. Implementation of the two Agendas calls for substantial financial resources at a time when the global development finance landscape is changing, from a model centered on official development assistance and the coverage of remaining financing needs through external debt, to a framework with greater emphasis on the mobilization of domestic resources. This paper looks at the capacity dimensions of domestic resource mobilization, which have received relatively little attention in the development arena and literature. Capacity being the missing link, this paper analyzes the capacity challenges associated with the effective mobilization and utilization of domestic resources in Africa, largely drawing on the 2015 Africa Capacity Report whose focus was on the capacity imperatives for domestic resource mobilization. The analysis finds that capacity challenges in domestic resource mobilization are largely around weak tax administration, inefficient collection of tax in the agriculture and informal sectors, low savings and financial non-inclusiveness, and high levels of illicit financial outflows. The paper recommends soft, human and institutional capacity building at the country, regional, and continental levels in the identified areas. Besides, it suggests the modernization of tax administration, and political will and mindset change at all levels. While the paper calls for concerted efforts by all stakeholders, it also proposes some research areas aimed at supporting the domestic resource mobilization agenda.