Claim: President Akufo-Addo says that Ghana’s tax to GDP ratio is one of the lowest in West Africa.
DUBAWA rates the claim as partly true having analyzed the 2021 OECD Revenue Statistics for Africa Report and data from the World Bank, IMF, Finance Ministry, and the Revenue Authority Reports of some other West African countries.
Full Text
Ghana’s President, Nana Addo Dankwa Akufo-Addo has asserted that Ghana’s tax to GDP ratio is one of the lowest in West Africa.
The president made the claim in an interview with BBC Africa’s Peter Okwoche.
Justifying the government’s decision to implement a 1.5% levy on electronic transactions, Akufo-Addo said that the industry, despite its growth, had been tax-exempt, hence, the need to rope it into the tax net.
“It’s emerging as the biggest economy in the country and for a long period has not had any taxation at all. So it is important now that they also come into the net. Our country has one of this lowest tax to GDP ratios of any country in West Africa and of an equivalent economy.”
Verification
The tax-to-GDP ratio refers to total tax revenue, including social security contributions, as a percentage of gross domestic product (GDP).
According to the IMF, the minimum tax-to-GDP ratio required for economic growth and development is 15%. Countries with a ratio below the minimum are likely to struggle to meet their aspirations and developmental goals.
For this reason, countries with a lower rate are trying to increase or broaden their tax nets in order to meet the minimum IMF requirement and Ghana is no exception.
To authenticate the claim by the President, however, DUBAWA analyzed the 2021 Revenue Statistics in Africa report, published by the Organisation for Economic Co-operation and Development (OECD).
In the report, OECD provided the tax to GDP ratio of 30 African countries.
They indicated that their data was for 2019.
There are fifteen countries in West Africa and per Akufo-Addo’s claim, it means that Ghana is among those with a low tax to GDP ratio in the sub-region.
The fifteen countries in West Africa are Benin, Burkina Faso, Cabo Verde, Cote d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
The OECD report did not include data for Benin, The Gambia, Guinea, Guinea-Bissau, Liberia, and Sierra Leone.
Therefore, DUBAWA relied on data from various credible sources including the World Bank, IMF, Finance Ministry and the Revenue Authority of the countries whose data was not captured in the OECD report.
No document was found to have contained the tax-to-GDP data for Guinea for 2019 or even earlier.
| Country | Tax to GDP ratio (OECD) | Other sources (recent year) | World Bank |
| Benin | N/A | 13.2 (IMF African Department) 2019 | 10.8 (1979) |
| Burkina Faso | 17.6 | 15.5 (2019) | |
| Cabo Verde | 20.6 | 20.1 (2017) | |
| Cote D’Ivoire | 13.2 | 12.0 (2019) | |
| The Gambia | N/A | 11.88 (Gambia Ministry of Finance and Economic Affairs) / 10.9 IMF 2019 | 18.2 (1990) |
| Ghana | 13.5 | 12.0 (2019) | |
| Guinea | N/A | – | 10.8 (1992) |
| Guinea-Bissau | N/A | 9.2 (IMF) 2016 | 9.5 (2019) |
| Liberia | N/A | 14.0 (Liberia Tax Authority) 2019 | – |
| Mali | 16.8 | 14.5 (2019) | |
| Niger | 10.4 | 11.8 (1980) | |
| Nigeria | 6.0 | – | |
| Senegal | 16.6 | 16.4 (2018) | |
| Sierra Leone | N/A | 14.3 Public Financial Management (2019) | – |
| Togo | 15.0 | 13.2 (2019) |
Using the OECD data, which does not capture six countries, Ghana’s 13.5 Tax to GDP ratio is only higher than that of three countries but lower than the IMF minimum rate of 15%
If the data from other sources is used to complement the OECD data, Ghana’s 13.5 will only be higher than that of five countries. IMF’s 2016 data from Guinea-Bissau has not been included. Also, since DUBAWA found no document that contains recent data for Guinea, they have also not been factored in the determination of the truth or otherwise of the President’s claim.
Data from the World Bank does not have that of Nigeria, Liberia and Sierra Leone. Furthermore, the data for Benin, The Gambia, Guinea, and Niger are not so recent and cannot be considered reliable in drawing a conclusion.
Although data from the World Bank does not agree with figures quoted in the OECD report, Ghana’s 12.0 is the same as that of Cote D’Ivoire and only higher than that of Guinea-Bissau.
Conclusion
DUBAWA has analysed data from the 2021 OECD Report, the World Bank, IMF, Finance Ministry, and the Revenue Authority of several countries and have rated the claim as partly True because it is lower than the IMF minimum rate of 15% needed for economic growth but also lower than a number of West African countries
