Tax exemptions in Sub-Saharan Africa: states forgo revenue despite budget consolidation efforts
In Sub-Saharan Africa, tax expenditures, including exemptions, credits, deductions, and preferential rates, average 3% of GDP and can reach up to 13% in some countries, according to the IMF. This occurs even as several states implement budget consolidation programs and seek to increase internal revenues. The article examines this phenomenon through the cases of Senegal, Côte d'Ivoire, and Ghana. In Senegal, tax expenditures amounted to 952.7 billion FCFA in 2021, representing 6.2% of GDP and 37% of tax revenues, with 41% concentrated in the extractive sector. However, the Court of Accounts noted in February 2025 that annual reports on tax expenditures for 2022 and 2023 were not published, contrary to UEMOA directive requirements. In Côte d'Ivoire, tax exemptions were approximately 400 billion FCFA annually as of March 2023, impacting sectors like oil and gas, and raw cocoa and coffee exports. The country is engaged in an IMF program to raise its tax pressure rate from 12.8% to 15.9% of GDP by 2026, leading to some exemptions being removed in the 2025 finance law. Ghana adopted a Tax Exemptions Act in 2022 to rationalize exemptions amid a severe debt crisis and an IMF program. Despite this, total tax expenditures only slightly decreased from 4.8 to 4.6 billion cedis between 2022 and 2023, while import exemptions rose from 2.46 billion cedis in 2021 to 3.55 billion in 2023, constituting 77% of total tax expenditures. The article highlights three reasons states forgo revenue: at
