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Towards Efforts to Enhance Tax Revenue Mobilisation in Africa: Exploring Synergies between Industrialisation and ICTs

Author

Listed:
  • Isaac K. Ofori

    (University of Insubria, Varese, Italy)

  • Pamela E. Ofori

    (University of Insubria, Varese, Italy)

  • Simplice A. Asongu

    (Yaoundé, Cameroon)

Abstract
Motivated by the momentous rise in ICT diffusion, the implementation of the African Continental Free Trade Area agreement, and the expected rebound of foreign direct investment inflow to Africa from 2022, this study examines the joint effects of industrialisation and ICT diffusion on resource mobilisation in Africa. To this end, we use data on 42 African countries for the period 1996 – 2020 for the analysis. First, we provide evidence robust to several specifications from the dynamic system GMM to show that although unconditionally both industrialisation and ICT diffusion enhance (i) goods and services tax (GST), and (ii) profits, corporate and income tax (PCIT) mobilisation efforts in Africa, the effects of the former are rather remarkable in the presence of the latter. Particularly, the results show that, while ICTs 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

  • 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).
    • Handle: RePEc:abh:wpaper:21/058
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    References listed on IDEAS

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    Cited by:

    1. Isaac Kwesi Ofori & Toyo Amègnonna Marcel Dossou & Seyi Saint Akadiri, 2023. "Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?," Current Issues in Tourism, Taylor & Francis Journals, vol. 26(3), pages 429-449, February.
    2. 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.
    3. 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 23/001, European Xtramile Centre of African Studies (EXCAS).
    4. Isaac K. Ofori & Toyo A. M. Dossou & Simplice A. Asongu & Mark K. Armah, 2021. "Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa?," Working Papers of the African Governance and Development Institute. 21/098, African Governance and Development Institute..
    5. Ofori, Isaac K. & Dossou, Marcel A.M. & Asongu, Simplice A. & Armah, Mark K., 2023. "Bridging Africa’s income inequality gap: How relevant is China’s outward FDI to Africa?," Economic Systems, Elsevier, vol. 47(1).
    6. Eslam A. Hassanein & Nagwa Samak & Salwa Abdelaziz, 2024. "The synergetic effect of economic complexity and governance on quality of life: policy thresholds," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-20, December.
    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).

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    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

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