McKinsey’s solution to help Africa generate money: taxes!

To help Africa grow its economy, a lot of money is to be spent on infrastructure. McKinsey & Company has come up with a way to help African governments generate more money, by making businesses pay more tax.

In some countries, falling prices of commodities have had a direct impact on government revenues; crude oil prices have declined by around 40% over the past 18 months, and iron ore prices by more than 50%.

According to a report in New African Magazine, McKinsey suggests that Governments can still find the money to meet their development priorities by increasing Africa’s ‘fiscal space’–  its capacity to raise tax revenues from a diversity of sources. The options include increasing the focus on larger taxpayers, strengthening tax audits, simplifying tax systems, and modernising collections.

According to Acha Leke is a Director at McKinsey & Company,“significant revenue increases can be achieved in a short timeframe. We estimate that, by implementing the quick win initiatives outlined above, Africa’s governments could quite feasibly collect up to $50 billion in additional revenues within the next five years.”

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