Tax digitalisation in Africa: Emerging trends
Recent evidence from this study examines how tax digitalisation in Africa is being shaped by the growing use of digital merchant payments (DMPs) to strengthen tax compliance. Drawing on insights from Burkina Faso, Rwanda, Ghana, and Tanzania, the research highlights how digital tools are transforming revenue collection and public administration across the continent. As part of a broader shift towards e-government and digital public infrastructure, many African tax administrations are exploring how digital payments can improve efficiency, transparency, and revenue collection. For more context, see the ICTD Digital Public Infrastructure Hub and the IDS Tax and Development research programme.
Drivers and barriers to digital payment adoption
Several key lessons emerge. Factors such as firm size, knowledge of mobile money, access to digital financial infrastructure, and integration into digital value chains significantly influence whether businesses adopt DMPs. However, even where digital systems are available, cash remains the dominant mode of payment, reflecting deep-rooted habits and gaps in trust, infrastructure, and inclusion. Related findings from research on mobile money and taxation in Africa show that while mobile money drives inclusion and growth, taxation policies and institutional factors strongly influence adoption.
The findings suggest that successful adoption of DMPs depends not only on technological access but also on the broader institutional environment that governs data sharing, fiscal incentives, and regulatory coherence. Insights from the African Tax Administration Forum (ATAF) underscore the importance of such coordination for sustainable reform.
Opportunities for policy and reform
These results reveal both opportunities and challenges for digital transformation in tax systems. On one hand, well-developed digital ecosystems supported by effective policy frameworks can boost tax compliance and administrative efficiency. On the other hand, limited access to reliable infrastructure and unequal digital capabilities risk deepening existing disparities. To maximise the benefits of tax digitalisation in Africa, governments should invest in inclusive digital infrastructure, offer targeted fiscal incentives, and strengthen legal frameworks for data exchange. More broadly, the experience of integrating DMPs within tax systems demonstrates how digitalisation can act as a catalyst for wider public sector transformation and contribute to sustainable development across the region.
