Kemi Olowu

Africa’s domestic resource mobilization gap is estimated at around $194 billion annually, underscoring a deep fiscal shortfall that continues to constrain development spending across the continent, according to experts from the West African Tax Administration Forum (WATAF) and the Tax Justice Network Africa (TJNA).

Ad >>>

The experts disclosed the figures during an interactive session with ECOWAS parliamentarians at the ongoing 2026 First Ordinary Session in Abuja, where they warned that the gap is further worsened by an additional $89 billion lost each year to illicit financial flows.

They said the combined pressure of revenue shortfalls and capital leakages is significantly weakening African economies’ ability to fund infrastructure, social services and long-term growth priorities.

Illicit financial flows, they explained, are largely driven by harmful tax practices such as tax evasion, aggressive tax avoidance and trade misinvoicing. These practices, they noted, continue to erode public revenues and reduce the fiscal space available to governments across Africa.

According to the experts, about 65 percent of illicit financial flows on the continent are commercially driven, often involving complex corporate structures that enable profit shifting and underreporting of taxable income across borders.

They warned that while the $89 billion annual loss from illicit financial flows is already substantial, the much larger $194 billion domestic resource gap highlights a structural challenge in Africa’s ability to mobilize internal revenue at scale.

The session also focused on tax harmonization within the ECOWAS sub-region as a key strategy to address these challenges. The experts said stronger coordination of tax policies among member states would help close loopholes that allow revenue leakage through regulatory inconsistencies, smuggling and tax competition.

They cautioned that without effective harmonization, West African countries would continue to lose significant revenue, although they stressed that progress depends on political commitment, strong implementation at national level and effective parliamentary oversight.

WATAF Research Manager Dr. Nita Belemaobgo said the organisation is supporting ECOWAS in developing coordinated tax directives aimed at strengthening fiscal alignment across the region. She noted that evidence-based tools and regional cooperation could improve accountability and reform outcomes.

WATAF’s Communications and Information Technology Manager, Danicius Sengbeh, emphasized the role of parliamentarians in strengthening oversight of tax systems, describing the issue as central to sovereignty, fairness and the economic future of West Africa.

TJNA’s Dr. Zandile Ndebele urged lawmakers to adopt stronger legislative frameworks that ensure African countries retain more value from their domestic resources. She said reforms should go beyond taxation to include broader economic measures that promote local beneficiation and transparency.

Solomon Adoga of TJNA called for tighter oversight of the mining sector, including stricter scrutiny of mining agreements and more rigorous evaluation of tax incentives through cost-benefit analysis. He warned that African countries must better protect their taxing rights and reduce reliance on external jurisdictions in revenue collection.

The experts further urged ECOWAS member states to deepen cooperation on tax transparency, information sharing and global tax reform efforts, noting that coordinated action could reduce distortions and strengthen regional integration even in the absence of a single currency.

They cited Nigeria, Ghana and Côte d’Ivoire as examples of countries already advancing tax reform efforts aimed at improving fairness and boosting domestic revenue mobilization.

WATAF’s Jonas Igwe concluded that addressing illicit financial flows and narrowing the $194 billion annual domestic resource gap would require sustained political will, stronger institutional coordination, digital modernization of tax systems and continuous monitoring at both national and regional levels.