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Paper short abstract

DRM has emerged as a critical pillar for advancing Financial stability, economic resilience and sustainable development across Africa. As external financing sources become increasingly uncertain & volatile, African countries are unfavorably compelled to meet the demands of their development agendas.

Paper long abstract

Enhanced DRM has emerged as a critical pillar for advancing financial stability, economic resilience, and sustainable development across Africa. As external financing sources become increasingly uncertain and volatile, African countries are compelled to leverage internal fiscal capacities to meet the growing demands of their development agendas, particularly in achieving the SDGs and Agenda 2063. This paper explores the strategic importance of DRM as a sustainable pathway to reducing fiscal dependence, expanding development financing, and fostering inclusive growth across the continent.

Despite the potential of DRM, Africa continues to face significant structural and institutional challenges. Weak tax administration systems, limited digital infrastructure, and corruption hinder effective revenue collection. The continent's average tax-to-GDP ratio remains among the lowest globally. Compounding the DRM constraints are Africa’s limited access to external finances, driven largely by unfavorable sovereign credit ratings and perceived investment risks. International credit rating agencies frequently assign disproportionately low ratings to African economies, often based on narrow metrics and external vulnerabilities rather than domestic policy efforts or development potential.

The paper argues for a multidimensional DRM framework anchored on policy coherence, institutional strengthening, and regional cooperation. Key recommendations include broadening the tax base through digital tax systems and formalization of informal enterprises, curbing illicit financial flows and promoting progressive tax reforms. Furthermore, efforts must be directed at reforming global credit rating systems to reflect African realities more fairly, improving public financial transparency to attract long-term FDI, and leveraging regional financial institutions to pool resources.