Kenya last year became an international case study in how not to raise taxes, following deadly youth-led protests against tax proposals meant to boost government revenue.
However, as African countries grapple with mounting debt and increasingly costly loans, raising taxes may be unavoidable. The challenge is how to do it without triggering the kind of backlash seen in Kenya.
This was one of the central themes at this year’s Africa CEO Forum in Abidjan, Côte d’Ivoire, where business leaders agreed that governments must rethink their approach to raise taxes successfully to meet their development goals.
The executives argued that ideally, tax increases should be accompanied by extensive consultations with all stakeholders, not just on the tax changes, but also on how the additional revenue will be used.
“The protest you saw in Kenya last year was a culmination of a country that has gone through what has been, for a very long time, policies that are non-consultative,” said Martin Ochien’g, managing director of Kenyan agribusiness firm Sasini PLC, during a forum session on Monday.
“In Kenya, the entire region, and even in the southern parts of the continent, there’s a bold need for policymakers in the public space to listen to the public in regard to what they’re putting together.”
Kenya will not impose new taxes or increase existing ones in the budget proposals for the year starting July, after deadly protests broke out last year against the government’s measures to raise revenue.
More than 50 people were killed when the youth-led marches broke out last June, forcing President William Ruto to abandon tax hikes worth Sh346 billion, and causing a delay in funding from the International Monetary Fund (IMF).
Diane Karusisi, CEO of the Bank of Kigali, said backlash over tax hikes goes beyond consultation—it also reflects intergenerational tensions, particularly among young people, who largely led the protests in Kenya.
“This particular demographic feels a sense of a lack of intergenerational equity. They feel that some people in the past generations have messed up in public finances, and they have to pay for it,” she said during a session at the forum.
Some experts argued that building public trust through greater transparency and accountability in the management of public finances could also reduce resistance.
“The problems we are having are not generally revenue issues,” said Henry Oroh, executive director of Nigerian lender Zenith Bank.
“The problem is fundamentally, how do we appropriate revenues? And over time, the citizenry has seen that there is no trust in government, and when there’s no trust, there’s backlash.”
Besides the public, corporates have also opposed higher taxes, citing shrinking margins that limit their ability to grow, expand, and employ more people.
Ebenezar Asante, senior vice president at pan-African telco MTN Group, said this is a widespread issue across African countries.
“If you want to just focus on a few multinationals and corporates, then often, we would continue to find a situation where corporates would be overtaxed, and the more they’re overtaxed, the less they have to invest, and then you limit their ability to create employment,” he said.
To have a taxation model that works and avoids backlash, Mr Asante argued, governments should base their decisions on data that reflect the reality of their countries and not what is prescribed by lenders like the IMF.
“Our tax policies should be informed by the econometrics, data for the economy. It is not what the IMF is telling you. Not what the classical economic models will tell you. It is what your country, your economy, and your region will tell you,” he argued.
