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Thursday, November 30, 2023

GRA boss says Africa should improve domestic revenue mobilisation

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By Omar Bah

The Commissioner General of the Gambia Revenue Authority has urged African countries to introduce policies that would improve domestic revenue mobilisation amid global economic crisis and uncertainties.

Addressing the ATAF’s African tax outlook validation meeting in Abuja, Commissioner Yankuba Darboe said: “It has become even more necessary for African countries to initiate policies that will improve the fiscal space and expand the tax base with a view of enhancing domestic revenue mobilization.”

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In The Gambia, CG Darboe added, international trade receipts have dropped significantly as domestic revenue has overtaken international trade receipts as the main contributor to its overall revenue collection.

“While the factors highlighted earlier may have contributed in a significant way to the slump in international trade receipts, the growing number of bilateral and international trade instruments in the long run may hurt smaller, less industrialized and import-based economies,” he said.

He added: “However, this is not to say that the AfCFTA is not a good idea. From a continental point of view, the establishment of a free trade area for Africa is welcoming but its unintended consequences must also be highlighted.”

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He said for countries like The Gambia that rely heavily on revenue from the tourism industry, the travel restrictions imposed to curb the pandemic significantly affected revenue receipt from the tourism industry.

“Before the pandemic, the tourism industry contributed 5% of our domestic revenue receipt in 2019 and this declined to1% in 2021. Even as economies around the globe were trying to recover from the pandemic, a host of factors conspired to further dampen any hopes of recovery. The global supply chain crisis, the outbreak of the Russia-Ukraine war and the slow recovery from the coronavirus pandemic have all worsened the economic outlook for 2023,” he said.

He said the ongoing war between Russia and Ukraine has been more impactful on the economies of developing countries than the impact of the pandemic.

“The war has sent gas prices to the roof resulting in governments across the world, especially in Africa, paying huge subsidies to stabilize gas prices and curb inflation. I am aware of the ongoing debate amongst economists in many African countries, including The Gambia, on the desirability or otherwise of continuing the unsustainable subsidy on petroleum. However, that will be a debate for another day,” he added.

These factors, he added, should send Africa into a deep reflection to bring the continent to the realization its economies are extremely fragile and events outside Africa can have such a huge impact on the lives of its people.

“I am not a prophet of doom, but things might even get worse as the July 2022 World Economic Outlook projects global growth to slow from an estimated 6.1 percent in 2021 to 3.2 percent in 2022, moderating to 2.9 percent in 2023. This is lower than projected in the April 2022 World Economic Outlook update by 0.4 and 0.7 percentage point respectively,” he stated.

He said ATAF has become a champion of the continent’s domestic revenue mobilization drive and the ATO publications have become a reference point for statistics, sharing our challenges and learning good practice.

The GRA boss statement was centred on the revenue outlook considering the current economic circumstances across the globe.

He said the growth in bilateral and multilateral instruments within the continent, such as the ECOWAS Trade Liberalization Scheme (ETLS) and the African Continental Free Trade Area (AfCFTA), means smaller and less industrialized countries stand to lose more revenues from international trade.

“With all its good intentions in promoting intra-African trade, smaller, less industrialized and import-based economies have already started to feel the pinch,” he noted.

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