Taxes from International Transactions: Impact of Industrialization in Sub-Saharan Africa

Abstract

Despite the overreliance on the oil sector and huge revenue generated from oil-related taxes in the majority of sub-Saharan African countries, the tax-to-GDP ratio is still below the global index as measured by the World Bank. Africa needs to unveil the hidden natural resources to improve the export of raw commodities and thus generate more taxes from exportation. Although industrialization is growing, Africa's share of global manufacturing is less than 1%, putting the continent at the bottom of the global value chain. Africa has many of the ingredients of industrial success to unleash. This paper examined the impact of industrial performance on customs, import duties, and export taxes using the SGMM analytical technique. The findings showed that improvements in industrial performance negatively and significantly affected customs and import duties and exerted a significant positive effect on export taxes.