I attended this week the governing council of UN Habitat meeting in Nairobi. In the course of
the meeting, interacted with number of Government Officials from African countries and
discussed in detail challenges faced by African Cities and the dire need of adequate housing.
We all agreed that addressing the need to invest the required $1.3 Trillion to solve the housing
gap in Africa is an impossible task. However, given the risks that lack of housing poses to social
cohesion, peace and security in Africa, doing nothing is not an option. While I was listening to
all these well intended Government officials, I came to realize that they have been handed a
short hand. The informal sector in Africa presents approximately 80% of the economies of
most African countries. This means that 80% of economic agents do not pay taxes. In my view it
is impossible to run and economy with a 20% tax base. This is in my humble view the challenge
of the 21st century for African countries. In order to make the necessary investments in
infrastructure that are required to create the conditions for a development, the African
countries must formalize their economies. Those who have, are succeeding – South Africa –
Mauritius – Morocco to name a few.
The possible answer is to accelerate the digitization of financial transactions. Electronic money
is traceable and taxable. The informal sector strives on CASH. Governments have the means to
promote the use of electronic money and must leverage this tool to expand the tax base. Just
mu humble thoughts! I would be happy to join a group of willing individuals to dig deeper and
propose solutions to African Governments.
WD