IDEAS home Printed from https://ideas.repec.org/p/agd/wpaper/22-045.html
   My bibliography  Save this paper

Towards efforts to enhance tax revenue mobilisation in Africa: Exploring the interaction between industrialisation and digital infrastructure

Author

Listed:
  • Pamela E. Ofori

    (University of Insubria, Varese, Italy)

  • Isaac K. Ofori

    (University of Insubria, Varese, Italy)

  • Simplice A. Asongu

    (Yaoundé, Cameroon)

Abstract

Motivated by the momentous rise in the new economy, the implementation of the African Continental Free Trade Area agreement, and the expected rebound of foreign direct investment to Africa from 2022, this study examines the joint effects of industrialisation and digital infrastructure on resource mobilisation in Africa. To this end, we mine data for 42 African countries for the analysis. The results, which are based on the system GMM estimator show that although unconditionally both industrialisation and digital infrastructure enhance (i) goods and services tax (GST), and (ii) profits, corporate and income tax (PCIT) mobilisation efforts in Africa, the effects of the former is rather remarkable in the presence of the latter. Particularly, we find that although all our digital infrastructure dynamics amplify the effect of industrialisation on GST, only ICT usage and ICT skills matter for PCIT. Second, the study unveils ICT thresholds for complementary policies. Accordingly, industrialisation and ICTs are necessary and sufficient conditions for tax revenue mobilisation only below some ICT thresholds. Above these ICT thresholds, complementary policies are needed to maintain the overall positive incidence on tax revenue mobilisation. Policy recommendations are provided in the end.

Suggested Citation

  • Pamela E. Ofori & Isaac K. Ofori & Simplice A. Asongu, 2022. "Towards efforts to enhance tax revenue mobilisation in Africa: Exploring the interaction between industrialisation and digital infrastructure," Working Papers of the African Governance and Development Institute. 22/045, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:22/045
    as

    Download full text from publisher

    File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/Towards-efforts-to-enhance-tax-revenue-mobilisation-in-Africa.pdf
    File Function: Revised version, 2022
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ofori, Isaac K. & Asonngu, Simplice A., 2021. "Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa," MPRA Paper 108178, University Library of Munich, Germany.
    2. Vanessa S. Tchamyou, 2019. "The Role of Information Sharing in Modulating the Effect of Financial Access on Inequality," Journal of African Business, Taylor & Francis Journals, vol. 20(3), pages 317-338, July.
    3. Dora Benedek & Ernesto Crivelli & Sanjeev Gupta & Priscilla Muthoora, 2014. "Foreign Aid and Revenue: Still a Crowding-Out Effect?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(1), pages 67-96, March.
    4. Asongu, Simplice A. & Adegboye, Alex & Nnanna, Joseph, 2021. "Promoting female economic inclusion for tax performance in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 159-170.
    5. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Remittances, the diffusion of information and industrialisation in Africa," Contemporary Social Science, Taylor & Francis Journals, vol. 15(1), pages 98-117, January.
    6. Vanessa S. Tchamyou & Simplice A. Asongu, 2017. "Information Sharing and Financial Sector Development in Africa," Journal of African Business, Taylor & Francis Journals, vol. 18(1), pages 24-49, January.
    7. Ofori, Isaac K. & Armah, Mark K. & Taale, Francis & Ofori, Pamela E., 2021. "Addressing the Severity and Intensity of Poverty in Sub-Saharan Africa: How Relevant is the ICT and Financial Development Pathway?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue forthcomi.
    8. Emran, M. Shahe & Stiglitz, Joseph E., 2005. "On selective indirect tax reform in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 599-623, April.
    9. Lotz, Joergen R & Morss, Elliott R, 1970. "A Theory of Tax Level Determinants for Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 18(3), pages 328-341, April.
    10. Maria Melody Garcia & Christian Haldenwang, 2016. "Do Democracies Tax More? Political Regime Type and Taxation," Journal of International Development, John Wiley & Sons, Ltd., vol. 28(4), pages 485-506, May.
    11. Ofori, Isaac Kwesi & Asongu, Simplice A., 2021. "ICT Diffusion, Foreign Direct Investment and Inclusive Growth in Sub-Saharan Africa," MPRA Paper 107757, University Library of Munich, Germany.
    12. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Inequality thresholds, governance and gender economic inclusion in sub-Saharan Africa," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(1), pages 94-114, January.
    13. Mr. Andrew Feltenstein, 1992. "Tax Policy and Trade Liberalization: An Application to Mexico," IMF Working Papers 1992/108, International Monetary Fund.
    14. John Thornton, 2014. "Does foreign aid reduce tax revenue? Further evidence," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 359-373, February.
    15. Vanessa S. Tchamyou & Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "The Role of ICT in Modulating the Effect of Education and Lifelong Learning on Income Inequality and Economic Growth in Africa," African Development Review, African Development Bank, vol. 31(3), pages 261-274, September.
    16. Agbeyegbe, Terence D. & Stotsky, Janet & WoldeMariam, Asegedech, 2006. "Trade liberalization, exchange rate changes, and tax revenue in Sub-Saharan Africa," Journal of Asian Economics, Elsevier, vol. 17(2), pages 261-284, April.
    17. Simplice A. Asongu, 2013. "How has Mobile Phone Penetration Stimulated Financial Development in Africa?," Journal of African Business, Taylor & Francis Journals, vol. 14(1), pages 7-18, April.
    18. Tchamyou, Vanessa S. & Erreygers, Guido & Cassimon, Danny, 2019. "Inequality, ICT and financial access in Africa," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 169-184.
    19. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    20. Ofori, Isaac Kwesi & Obeng, Camara Kwasi & Mwinlaaru, Peter Yeltulme, 2021. "Effect of Exchange Rate Volatility on Tax Revenue Performance In Sub-Saharan Africa," MPRA Paper 107702, University Library of Munich, Germany.
    21. Vito Tanzi, 1992. "Theory and Policy: A Comment on Dixit and on Current Tax Theory," IMF Staff Papers, Palgrave Macmillan, vol. 39(4), pages 957-966, December.
    22. Mr. Vito Tanzi, 1992. "Theory and Policy: A Commenton Dixit andon Current Tax Theory," IMF Working Papers 1992/015, International Monetary Fund.
    23. Simplice A Asongu & Lieven De Moor, 2017. "Financial Globalisation Dynamic Thresholds for Financial Development: Evidence from Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 192-212, January.
    24. Ofori, Isaac K. & Gbolonyo, Emmanuel & Dossou, Marcel A. T. & Nkrumah, Richard K., 2022. "Remittances and Income Inequality in Africa: Financial Development Thresholds for Economic Policy," MPRA Paper 113015, University Library of Munich, Germany.
    25. Camara Kwasi Obeng & Peter Yeltulme Mwinlaaru & Isaac Kwesi Ofori, 2022. "Global Value Chain Participation and Inclusive Growth in Sub-Saharan Africa," Springer Books, in: Evelyn F. Wamboye & Bichaka Fayissa (ed.), The Palgrave Handbook of Africa’s Economic Sectors, pages 815-840, Springer.
    26. Zucman, Gabriel & Fagan, Teresa Lavender & Piketty, Thomas, 2015. "The Hidden Wealth of Nations," University of Chicago Press Economics Books, University of Chicago Press, number 9780226245423, Febrero.
    27. Joweria M. Teera & John Hudson, 2004. "Tax performance: a comparative study," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(6), pages 785-802.
    28. Nora Lustig & Jon Jellema & Valentina Martinez Pabon, 2019. "Leaving No One Behind: Can Tax-Funded Transfer Programs Provide Income Floors in Sub-Saharan Africa?," Commitment to Equity (CEQ) Working Paper Series 85, Tulane University, Department of Economics.
    29. Jean-François Brun & Gérard Chambas & Jules Tapsoba & Abdoul-Akim Wandaogo, 2020. "Are ICT's boosting tax revenues? Evidence from developing countries," CERDI Working papers hal-02979897, HAL.
    30. repec:idq:ictduk:3948 is not listed on IDEAS
    31. Jean-François Brun & Gérard Chambas & Jules Tapsoba & Abdoul-Akim Wandaogo, 2020. "Are ICT's boosting tax revenues? Evidence from developing countries," Working Papers hal-02979897, HAL.
    32. Augustin Kwasi Fosu & Abdul Fatawu Abass, 2019. "Domestic Credit and Export Diversification: Africa from a Global Perspective," Journal of African Business, Taylor & Francis Journals, vol. 20(2), pages 160-179, April.
    33. Sarah Gammage & Naziha Sultana & Allison Glinski, 2020. "Reducing Vulnerable Employment: Is there a Role for Reproductive Health, Social Protection, and Labor Market Policy?," Feminist Economics, Taylor & Francis Journals, vol. 26(1), pages 121-153, January.
    34. Hrushikesh Mallick, 2021. "Do governance quality and ICT infrastructure influence the tax revenue mobilisation? An empirical analysis for India," Economic Change and Restructuring, Springer, vol. 54(2), pages 371-415, May.
    35. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2010. "The worldwide governance indicators : methodology and analytical issues," Policy Research Working Paper Series 5430, The World Bank.
    36. Mr. Dhaneshwar Ghura, 1998. "Tax Revenue in Sub-Saharan Africa: Effects of Economic Policies and Corruption," IMF Working Papers 1998/135, International Monetary Fund.
    37. Morrissey, Oliver, 2015. "Aid and Government Fiscal Behavior: Assessing Recent Evidence," World Development, Elsevier, vol. 69(C), pages 98-105.
    38. Abhijit Sen Gupta, 2007. "Determinants of Tax Revenue Efforts in Developing Countries," IMF Working Papers 2007/184, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shao, Qinglong & Kostka, Genia, 2023. "The COVID-19 pandemic and deepening digital inequalities in China," Telecommunications Policy, Elsevier, vol. 47(10).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Isaac K. Ofori & Pamela E. Ofori & Simplice A. Asongu, 2021. "Towards Efforts to Enhance Tax Revenue Mobilisation in Africa: Exploring Synergies between Industrialisation and ICTs," Research Africa Network Working Papers 21/058, Research Africa Network (RAN).
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "Governance, capital flight and industrialisation in Africa," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-22, December.
    3. Asongu, Simplice A. & Adegboye, Alex & Nnanna, Joseph, 2021. "Promoting female economic inclusion for tax performance in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 159-170.
    4. Ofori, Isaac Kwesi & Obeng, Camara Kwasi & Mwinlaaru, Peter Yeltulme, 2021. "Effect of Exchange Rate Volatility on Tax Revenue Performance In Sub-Saharan Africa," MPRA Paper 107702, University Library of Munich, Germany.
    5. Asongu, Simplice A. & Odhiambo, Nicholas M., 2020. "Inequality and gender inclusion: Minimum ICT policy thresholds for promoting female employment in Sub-Saharan Africa," Telecommunications Policy, Elsevier, vol. 44(4).
    6. Asongu, Simplice A. & Odhiambo, Nicholas M., 2021. "Inequality, finance and renewable energy consumption in Sub-Saharan Africa," Renewable Energy, Elsevier, vol. 165(P1), pages 678-688.
    7. Pamela E. Ofori & Simplice A. Asongu & Vanessa S. Tchamyou, 2021. "The Synergy between Governance and Economic Integration in Promoting Female Economic Inclusion in Sub-Saharan Africa," Working Papers 21/071, European Xtramile Centre of African Studies (EXCAS).
    8. Simplice A. Asongu & Mushfiqur Rahman & Okeoma J-P Okeke & Afzal S. Munna, 2021. "Tourism management for financial access in Sub-Saharan Africa: inequality thresholds," Research Africa Network Working Papers 21/079, Research Africa Network (RAN).
    9. Simplice A. Asongu & Joseph Nnanna & Paul N. Acha-Anyi, 2020. "Inclusive Education for Inclusive Economic Participation: the Financial Access Channel," Research Africa Network Working Papers 20/019, Research Africa Network (RAN).
    10. Simplice Asongu & Rexon Nting, 2021. "The mobile phone in governance for environmental sustainability in Sub-Saharan Africa," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 39(1), pages 225-243, June.
    11. Pamela E. Ofori & Simplice A. Asongu & Vanessa S. Tchamyou & Raufhon Salahodjaev, 2023. "The Synergy between Governance and Trade Openness in Promoting Female Economic Inclusion in Sub-Saharan Africa," Working Papers of The Association for Promoting Women in Research and Development in Africa (ASPROWORDA). 23/001, The Association for Promoting Women in Research and Development in Africa (ASPROWORDA).
    12. Simplice A. Asongu, Nicholas M. Odhiambo, 2021. "Taxation, foreign aid and political governance in Africa," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 18(2), pages 217-249, December.
    13. Ofori, Isaac K. & Asonngu, Simplice A., 2021. "Foreign Direct Investment, Governance and Inclusive Growth in Sub-Saharan Africa," MPRA Paper 108178, University Library of Munich, Germany.
    14. Isaac K. Ofori & Francesco Figari, 2022. "Economic Globalisation and Inclusive Green Growth in Africa: Contingencies and Policy-Relevant Thresholds of Governance," Working Papers 22/053, European Xtramile Centre of African Studies (EXCAS).
    15. Ofori, Isaac K. & Gbolonyo, Emmanuel Y. & Ojong, Nathanael, 2023. "Foreign direct investment and inclusive green growth in Africa: Energy efficiency contingencies and thresholds," Energy Economics, Elsevier, vol. 117(C).
    16. Isaac K. Ofori & Francesco Figari, 2022. "Economic Globalisation and Inclusive Green Growth in Africa: Contingencies and Policy-Relevant Thresholds of Governance," Working Papers of the African Governance and Development Institute. 22/053, African Governance and Development Institute..
    17. Asongu, Simplice A. & Rahman, Mushfiqur & Nnanna, Joseph & Haffar, Mohamed, 2020. "Enhancing information technology for value added across economic sectors in Sub-Saharan Africa✰," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    18. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Insurance Policy Thresholds for Economic Growth in Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(3), pages 672-689, July.
    19. Simplice Asongu & Nicholas M. Odhiambo, 2020. "Financial access, governance and insurance sector development in sub-Saharan Africa," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(4), pages 849-875, February.
    20. Asongu, Simplice A. & Nnanna, Joseph & Acha-Anyi, Paul N., 2020. "Finance, inequality and inclusive education in Sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 162-177.

    More about this item

    Keywords

    AfCFTA; Africa; ICT access; ICT diffusion; Industrialisation; Tax; Revenue;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F6 - International Economics - - Economic Impacts of Globalization
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agd:wpaper:22/045. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Asongu Simplice (email available below). General contact details of provider: https://edirc.repec.org/data/agdiycm.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.