Research in Brief

Digital Financial Services and Digital IDs: What Potential Do They Have For Better Taxation in Africa?

Research in Brief 78

New digital technologies, such as Digital Financial Services (DFS) and digital IDs, are gaining momentum in Africa and lower income countries (LICs) more broadly. These technologies could have an impact on an increasingly digitised and IT-driven tax administration, since they hold potential to improve a number of core functions of a revenue authority. Yet, increasing evidence on existing technology in tax administration indicates a number of barriers, which are likely to mute these gains. Against this background, this paper summarises critical questions relevant to research and policy to make more effective use of digital technology in contexts of weak fiscal capacity and IT development:

• What is the nature and potential of DFS and digital IDs in the specific context of LICs?

• Given the scarce evidence relating to DFS, digital IDs and taxation, what can be learned from how existing data and technology is used in LICs’ revenue authorities?

• How can tax administrations make the best use of DFS and digital IDs in the future?

This Research in Brief is a summary of ICTD Working Paper 137.

Authors

Celeste Scarpini

Celeste Scarpini is a Research Officer at the ICTD, and a PhD student at the Department of Economics, University of Sussex. Her main research interests relate to tax administration in sub-Saharan Africa, from technology adoption to data management and revenue collection strategies.

Fabrizio Santoro

Fabrizio is a Research Fellow at the Institute of Development Studies, and the Research Lead for the second component of the ICTD's DIGITAX Research Programme. His main research interests relate to governance, public finance, and taxation, with a strong focus on impact evaluation methodologies and statistical analysis. He holds a PhD in Economics from the University of Sussex.

Laura Muñoz Perez

Laura Munoz is the former Programme Lead of DIGITAX Programme.

Wilson Prichard

Wilson Prichard is an Associate Professor at the University of Toronto, a Research Fellow at the Institute of Development Studies, Chair of the Local Government Revenue Initiative (LoGRI) and former Executive Officer of the International Centre for Tax and Development (2020-2024). His research focuses on the relationship between taxation and citizen demands for improved governance in sub-Saharan Africa.

Giulia Mascagni

Giulia Mascagni is a Research Fellow at the Institute of Development Studies and Executive Director of the ICTD. Her main area of work is taxation, but she also has research interest in public finance, evaluation of public policy, and aid effectiveness. She is an economist by training, holding a PhD in Economics from the University of Sussex. Her main geographical interest lies in African countries, with a particular focus on Ethiopia and Rwanda.
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Publication Details

Publisher: ICTD
Date: December 2022
Citation: Santoro, F.; Munoz, L.; Wilson, P. and Mascagni, G. (2022) Digital Financial Services and Digital IDs: What Potential do They Have for Better Taxation in Africa? ICTD Research in Brief 78, Brighton: Institute of Development Studies
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