A forum report issued Tuesday highlights not only how much the pandemic has affected African trade but how it has reduced revenue for countries that are struggling to maintain their economies and address health care needs during the crisis.
"On one hand, this pandemic is expected to bring about a major decline in tax revenue in most countries stemming from overall economic slowdown and from the tax policy and administrative measures taken in response," the report said. "On the other hand, it is impacting trade as it affects customs and border operations."
The report analyzes trade data from Angola, Burundi, the Ivory Coast, Gambia, Ghana, Eswatini, Madagascar, Malawi, Mauritius, Mozambique, Niger, Rwanda, Sierra Leone, South Africa, Tanzania, Togo, Zambia and Zimbabwe. The group is "proportionally representative" of the African continent as a whole, the ATAF said.
In those 18 countries, imports dropped by 12% in April 2020 compared with April 2019. From those figures, the ATAF estimated that revenue collected by countries on any tariffs, duties or other fees charged in imports dropped by 10% during February, March and April, with the bulk of that decline in the final month.
The total amount of lost revenue was $489.2 million, constituting a 5% to 10% drop of overall customs revenue, according to the report.
From those figures, the ATAF estimated that the overall continent lost $1.09 billion, which could amount to a $4 billion annual loss if the figures hold throughout the year.
The report highlights the grave economic impact of the virus for developing African nations, which rely more on customs revenue than traditional corporate income tax relative to Western nations.
For instance, according to World Bank data, in 2018, customs revenue made up 4.03% of South Africa's total revenue, 13.84% of the Ivory Coast's and 41.48% of the Central African Republic's, compared with 2.69% for the U.S.
The report recommended that tax administrations heighten audits, electronic and computerized tracking of cargo, information-sharing and compliance risk management systems to help meet revenue targets as imports plunge. The report also noted the need for enhanced protection for customs workers for the risk of virus exposure.
The ATAF did not immediately respond to a request for further comment.
--Editing by Neil Cohen.
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