Can Improving Taxation In Africa Help Meet Health Needs?

In Sierra Leone, there was a time when “people were so happy to pay” local taxes, says Joanna Favour Tom-Kargbo, an economic justice manager for the NGO Christian Aid. For instance, her council would make a documentary to show where the money was being spent, such as road or market construction. In that kind of situation, “you don’t need to coerce people to pay. Citizens were willing.”

The situation changed when the government used tax revenue to put on a lavish concert, Tom-Kargbo reports. It was poorly attended, and people considered it a waste of money. Trust in the tax system was broken.

But this kind of trust can be repaired—and it may be more crucial than ever now.

Foreign Aid Cuts Have Increased The Urgency Of Taxation In Africa

After the U.S. rapidly shut down its main foreign aid agency and eliminated over 80% of aid projects, many countries were left in the lurch. This was especially pressing for those that depended on U.S. assistance for basic health services, from vaccination to malaria prevention.

Researchers have estimated that nearly 300,000 people, most of them children, have died from the resulting vacuum of healthcare. One of those is Bukar Mohammed, a 7-year-old boy living with sickle cell disease in Northern Nigeria. After he developed a fever in February, his mother raced with him to their usual clinic—only to be told it had closed the week before due to an abrupt cutoff of funds.

The Trump administration, development officials in other wealthy countries, and aid critics around the world have called for nations receiving foreign assistance to find more of their own funds for development programs. This is partly out of necessity. “If the general overseas development system freezes or decreases, then taxes become even more important than what they currently are,” notes Giovanni Occhiali, a development economist at the International Centre for Tax and Development.

The Africa Centres for Disease Control and Prevention, which itself faces dozens of layoffs amidst a shrinking pool of money for global health, is urging African countries to fund their health sectors through improved and increased taxation. This could include solidarity levies, including taxes on airline tickets, imports, and cell phone services (though taxes on mobile financial transactions have proven very unpopular in countries including Ghana and Uganda). One UN proposal is for all low- and middle-income countries to tax revenue amounting to at least 15% of their GDP.

To some extent, this turn toward domestic taxation is now happening. According to a World Health Organization survey, at least 24 countries are increasing domestic public funding for health. (However, more countries are cutting costs.)

Governments are looking to increased taxation for areas beyond health. The Ethiopian government has proposed an organizational tax that to support disaster response, for instance. But in general, earmarking tax revenue for a specific purpose can risk making a country less responsive to emergencies.

The Grinding Work Of Improving Tax Systems

While governments may be able to temporarily reallocate some resources based on need, it’s no simple task to find more domestic money to plug the gaps. Many people are calling for new taxes on unhealthy products like tobacco, alcohol, and sugar-sweetened beverages, both to increase public revenue and strengthen public health. Such “sin taxes” already exist in South Africa and Botswana. In Zimbabwe, the finance minister recently introduced them in order to dedicate the proceeds to health projects. Yet there will be a lag as these taxes are rolled out. Thus, the World Health Organization is advising countries affected by the foreign assistance cuts to start the sin taxes right away, while rolling out health insurance in the longer term.

Overall, improving tax collection sustainably and equitably takes a long time. It took Togo about 12 years to increase the tax–GDP ratio by 5%, according to Occhiali; for most African countries, growing taxation by half a percentage point a year is ambitious. “Increasing domestic revenue mobilization is always a long-term endeavour,” Occhiali cautions. “Any type of tax reform really needs to be carefully planned and executed over a number of years.”

Indeed, tax changes that seem abrupt or unjust can have tragic consequences. Kenya was shaken by protests last year against proposed taxes on basic goods, following a string of other new taxes. Security forces killed at least 80 demonstrators, by one estimate. The outcry led to a government pledge to avoid new taxes.

In Sierra Leone, “most of the things have been taxed” already, says Tom-Kargbo. Particularly harsh for women feeding their families has been a 2024 tax of 5% on imported rice. This is aimed at bolstering Sierra Leone’s own rice production, but the upshot is that many families have simply been forced to eat less rice. There are also now taxes on phone calls and text messages.

In the context of waning foreign assistance around the world, Occhiali says, “there is a risk that governments facing immediate cuts…might be incentivized to take short-term action that might prove counterproductive in the long term.” He advises focusing on better administering the taxes that already exist, rather than raising new ones.

It may not be as glamorous as a rushed new tax, but strengthening the foundations of tax systems would ultimately be more helpful. According to the International Monetary Fund (IMF), many countries could increase their tax-to-GDP ratios, by up to 9 percentage points, by improving tax design and public institutions.

What Would Support People To Trust Their Tax Systems?

There are many reasons that tax is under-collected in some African countries. One is insufficient resourcing of tax agencies, which creates a vicious circle of not enough money for the overall public purse. When it comes to sufficiently taxing wealthy Africans, the difficulty tends to not be the legal system, but gaps in data and administrative capacity, says Ronald Waiswa, who worked for the Uganda Revenue Authority before joining the African Tax Administration Forum.

Corruption is also a problem. And there’s a more amorphous factor as well: low trust in governments to fairly collect tax and use it properly. If residents don’t see the benefits of taxation, they have little reason to support it. They can even see their own governments as parasitic.

As in many African nations, more tax collected in Sierra Leone goes to paying off external debt (primarily to the World Bank and IMF) than is spent on education and health. Sierra Leoneans aren’t necessarily seeing the benefits of the tax they’re increasingly being asked to pay, which often doesn’t even remain in the country. “We’re seeing the impact of poor-quality health services. We are seeing the impact of poverty continue,” Tom-Kargbo notes. “People are saying, ‘Where even are our tax monies going?’”

Sierra Leone has already tried earmarking taxes for free healthcare services, Tom-Kargbo reports. The problems have been implementation, accountability, and transparency—and inadequacy in these areas also lowers trust in the revenue authorities. In Ghana, transparency related to tax reforms makes people more likely to support them. In Somalia, focusing on services makes people especially comfortable with paying taxes.

Systems are currently stacked against poorer consumers. In Uganda, “Our domestic tax system now is really regressive,” comments Africa Kiiza, an economic justice adviser for Christian Aid. High earners are paying the same tax on salt, soap, and sugar as unemployed people, he says. Yet ordinary Ugandans aren’t seeing those consumption taxes necessarily translate into public services like education and health.

In South Africa, the Institute of Economic Justice is calling in the short term not for increased sales taxes, but