Enhancing Domestic Resource Mobilization: Experiences, Challenges and Potential Opportunities from the Sub-Sahara Africa

Abstract

 Enhancing domestic resource mobilization (DRM) in many countries especially in the Sub-Sahara Africa remains a daunting task. Many strategies and approaches to improve domestic revenue collection adopted by governments have not given rise to significant improvement in DRM. Approaches such as the use of information and communication technology (ICT) to monitor implementation of revenue mobilization, laws, regulations and procedures; electronic fiscal device management system (EFDMS), improvement of the business and investment environment, monitoring of various directives issued by the government on DRM. This paper reviews various measures taken by the government to enhance domestic revenues mobilization in selected Sub-Sahara Africa countries focusing on Senegal, Rwanda and Botswana. Literature reviews on DRM was conducted in various journal articles, governments’ reports including budget speeches and financial management documents covering the period of five years from 2016 to 2020. This period was chosen because it was period under the late president John Pombe Magufuli who instituted various measures aimed at enhancing domestic resource mobilization. The review of 2016 to 2020 period revealed that out of the three countries, only Botswana has been able to meet targets for DRM. Significant improvement was recorded in DRM while the inflows from the other two countries were unstable and unpredictable mainly due to logistical problem and political difficulties of taxing the informal sector. The qualities of revenue policies were inadequate, weak revenue administration capacity, inability to tax to full potential of natural resources and inadequate application of ICT technology. In Rwanda, political commitment was noted to contribute significantly to revenue mobilization especially the strong monitoring and evaluation system in place. The paper argues that widening the DRM base, especially the tax and non-tax revenue bases, designing policies and strategies that are supportive and creating an enabling environment and mainstreaming ICT for revenue collection from the rapidly growing informal sector require  critical policy considerations.