Taxation and Indigenous Institutions in Sub-Saharan Africa

This paper contributes to the literature on tax performance in sub-Saharan African countries. A standard model of the determinants of tax revenue is augmented to include measures of indigenous pre-independence institutional structure constructed from anthropological data on the characteristics of ethnic group organisation. We posit that if the three largest ethnic groups characterised by a clan-based organisational structure are a sufficiently large share of the population they are more likely to be able to reach a political consensus that allows a higher revenue to GDP ratio. We find that indigenous institutions have an effect on tax performance in SSA that diminishes over time (as the economy grows and new institutions emerge).