The policy brief by the African Capacity Building Foundation (ACBF) highlights that while it is widely agreed that domestic resource mobilization is the way to go, the 2015 Africa Capacity Report shows that this may not be achieved because of one missing link: the capacity to do so. It highlights that the civil society, which consists of organized groups and institutions that are independent of the state, can play a leading role in bargaining with Government on behalf of the people around effective strategies for mobilizing domestic resource and curbing illicit financial flows in Africa

African Capacity Building Foundation

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1Policy Brief 1
Building Capacity for Domestic Resource 
Mobilization:  The Role of the Civil Society
March 2016
The Issue
With the recent adoption of the Sustainable Development Goals (SDGs), and the commitment of Africa to implement Agenda 2063, which is the continent’s development blueprint, domestic 
resource mobilization becomes a crucial issue. Given the 
background that most African countries did not  fully achieve the 
Millennium Development Goals (MDGs) due to over- reliance on 
donor resources, enhancing domestic resource mobilization in 
Africa becomes a necessity. Domestic resource mobilization has 
two elements to its definition: the generation of savings and taxes 
on one hand and their allocation to economically and socially 
productive activities. Accountable states and institutions are crucial 
for the success of domestic resources mobilization initiatives and 
the curbing of illicit financial flows1. 
However, while it is widely agreed that domestic resource 
mobilization is the way to go, the 2015 Africa Capacity Report2 
shows that this may not be achieved because of one missing link: 
the capacity to do so. It highlights that the civil society, which 
consists of organized groups and institutions that are independent 
of the state3, can  play a leading role in bargaining with Government 
on behalf of the people around effective strategies for mobilizing 
domestic resource and curbing illicit financial flows in Africa.
The Study 
The 2015 Africa Capacity Report, is based on a survey from 45 
African countries. It measures and examines capacity in relation 
to the development agenda in African countries, surveys the state 
and trends in domestic resources mobilization and illicit financial 
flows across the continent, and puts together good practices in this 
area from countries that have been successful in their initiatives.
Key Emerging Issues
State of Domestic Resources Mobilization in Africa: Most countries 
in Africa are now able to increasingly mobilize domestic resources 
to finance their own development. For example, African countries 
collected $503.3 billion in tax revenue in 2013, compared to $123. 
1 billion in 2012 which is more than a four-fold increase.  However 
a significant proportion is made up of resource rents which are not 
stable due to volatility of international commodity prices. Resource 
rents are basically the high taxes governments get from corporations 
for extracting natural resources in their countries. Due to volatility 
of global prices for natural resource commodities, the revenues 
from resource rents also become very volatile. Tax performance 
in African countries was found to be inefficient and costly with a 
significant amount of revenue lost due to tax exemptions and tax 
avoidance. The efforts made in mobilizing domestic resources as 
proxied by the tax effort index shows that most African countries 
are not efficient enough, as evidenced in box 1. 
The 2015 Africa Capacity Report also finds that citizens are largely 
reluctant to pay taxes due to lack of transparency in the use of tax 
revenues,  high levels of corruption in government and the lack of 
awareness on the use of tax revenue. The  watch-dog role of the 
civil society hence becomes critical.
Curbing Illicit Financial Flows: Illicit financial flows from Africa 
represent a significant loss of taxes that could be used to finance 
development programs, build infrastructure and finance social 
services. The Report points out that more financial resources are 
lost from Africa than the amount of development aid received. 
From 2005, illicit financial flows (IFF) from Africa were higher than 
the amount of aid received annually, and grew over time. The IFF 
total over the period 2003-2012 was estimated at $603.4 billion, 
against $421.6 billion in official development assitance (ODA). As 
a share of GDP over the period, IFFs were higher in countries in 
Sub-Saharan Africa (5.5 percent) than in other continents. Most of 
the IFFs in Africa emanate from  trade misinvoicing (68.2%) while 
the rest is in the form of illicit “hot money4” flows. IFFs are found to 
be high in countries rich in resources where corruption is also high. 
Ten countries rich in resources in Africa, which includes Nigeria 
and South Africa, accounted for 80 percent of the continent’s total 
IFFs in 2012. 
Capacity  Challenges For Africa In Domestic Resource Mobilization: 
According to the 2015 Africa Capacity Report, the key capacity 
areas that need particular attention for effective domestic resource 
Contributed by the Knowledge, Monitoring and Evaluation Department.  
Box 1: Tax Collection Effort 
The analysis done for 45 African countries illustrated that 
most countries collected less tax revenue than their potential. 
Specifically, 27 out of the 45 countries surveyed are regarded 
as low-tax-effort countries regardless of the fact that some of 
these countries are rich in resources. This is largely attributed 
to the structural challenges in these countries, which reduce the 
capacity of the governments and tax authorities to maximize 
tax revenue collection. Notably, 97% of the countries surveyed 
had tax exemptions dedicated to investors which did not really 
match with the growth in taxes collected over time from the 
firms being exempted. 
1  Illicit financial flows are also discussed because they are a huge loss of domestic resources for Africa.
2 African Capacity Building Foundation, (2015). Africa Capacity Report 2015: Capacity Imperatives for Domestic Resource Mobilization in Africa. ACBF: Harare
3 The civil society refers to a wide array of organizations that is community groups, NGOs, labor unions, indigenous groups, charitable organizations, faith-based organizations, professional 
associations and foundations. It is a social sphere separate from both the state and the market and these sometimes advance their common interests through collective action (World Bank. 
2013. Defining the Civil Society. Available at http://web.worldbank.org/WEBSITE/EXTERNAL/TOPICS/CSO/0,contentMDK:2011499  accessed on 14 January 2016).
4  Refers to illegal transactions like drug selling and money laundering.
2mobilization in Africa are around fighting illicit financial flows; 
improving tax revenue collection; improving financial sustainability; 
and fighting corruption.
Capacity in the context under discussion has three overriding 
determinants. First, capacity is determined by the ability of the 
relevant economic agents (in particular, government and financial 
sector operators) to perform the necessary intermediation tasks 
that result in tax receipts and savings.  National income and output, 
being determinants of tax revenue and saving, constitute the 
second set of determinants of resource mobilization capacity. This, 
in turn, implies that investment and the efficiency of investment 
and production matter greatly for resource mobilization capacity. 
Third, a major determinant of resource mobilization capacity is the 
willingness of the population’s income earners to save and to pay 
taxes. In this process, the civil society acts as the watchdog of the 
state activities and advocates that citizens realize the importance 
of paying taxes.
Capacity challenges in domestic resources mobilization should be 
understood at all levels of society in African states to curb illicit 
financial flows. Weak public management structures impede the 
progressive realization of corruption control initiatives that might 
be set up to deal with domestic resource mobilization leakages. 
The civil society has a prominent role to play in creating conducive 
environments for economic growth by ensuring that there is 
transparency of the programs implemented in order to ensure 
efficient tax collection systems. To begin the process of removing 
these capacity constraints there is need for strong will on the part 
of the political leadership and resolute support and cooperation of 
the populace at large. 
Governments face challenges in raising finances to implement 
programs on financial development. As a way of averting the 
financial challenges, governments could engage the civil society 
as potential partners in enhancing their capacity in improving 
domestic resource mobilization policies and in harnessing 
resources that could be tapped upon.
Civil Society Initiatives in Domestic Resource Mobilization: Several 
efforts have been made by the civil society in curbing illicit financial 
flows and creating a conducive environment for domestic resource 
mobilization. However, the focus has largely been on illicit financial 
flow advocacy, as opposed to domestic resource mobilization. The 
box below highlights some of the efforts5. 
Box 2 is an illustration of the advocacy roles that the civil society in 
Africa can play in supporting their countries to design, implement 
effective domestic resource mobilization strategies as well as 
curbing of illicit financial flows. This includes holding governments 
accountable for fairness in revenue collection and usage.
Recommended Options for 
Civil Society
For effective domestic resource mobilization and mitigation of 
resource leakage, the 2015 Africa Capacity Report recommends 
that civil society organizations should take action by working closely 
with Governments and other stakeholders in:
• Undertaking resources audits in all African countries so that the 
citizens may have an understanding of the available national 
resource pools and disseminate such statistics freely to the 
public.
• Advocating for transparency around foreign direct investment 
– highlighting the incentives and how domestic players are 
beneficiaries, and how the value-chain of production around 
societies’ natural resources endowments are harnessed to 
benefit citizens.
• Revealing how seriously government customs services are 
collecting mandated official import duties/tariffs and how 
domestic businesses are protected from unfair competition.
• Requesting accountability by all state actors especially those 
holding public offices where decisions around taxes and 
resource rents are made. 
• Lobbying for access to information on expenditure of resources 
mobilized by the nation through taxation. 
• Developing capacity for the citizens in Africa to demand 
transparency on revenue collection and expenditure, through 
advocacy trainings and workshops.
• Advocating for political independence on revenue collection 
agents and increased accountability. 
• Creating awareness campaigns to the citizens on the importance 
of tax compliance. Civil society organizations can partner with 
the national revenue authorities to create awareness to the 
taxpayers of their rights and obligations
• Advocating for stronger legal frameworks against the dangers 
of corruption, tax evasion and illicit financial flows for tracking, 
stopping and recovering illicitly flowing resources.
Implications
It seems clear that most countries in Africa are now able to increasingly 
mobilize domestic resources to finance their own development. 
However, the potential for mobilizing more remains huge. Some of 
the challenges to achieving optimality relate to reluctance to pay 
taxes due to lack of transparency in the use of tax revenues,  high 
levels of corruption in government and the lack of awareness on 
the use of tax revenue. This calls for the need for capacitating the 
civil society with the knowledge and advocacy skills around the 
designing of strategies that will optimise revenue collection in a fair 
manner while holding governments accountable in the utilisation of 
revenues. Such advocacy would have to be built on well researched 
findings.
 
Relatedly, there is need for governments to recognize civil society 
groups as important players in the designing and implementation 
of policies aimed at enhancing domestic resource mobilization and 
curbing illicit financial flows. This partnership will enable credible, 
open systems of policy making in Africa. This calls for strong 
leadership ethos in government as resource mobilization strategies 
are about developing sound systems of public administration and 
democratizing the process of resource use in their countries.
Box 2:  
Selected Country Specific Civil 
Society Activities
The Trade, Tax and Justice Initiative in South Africa has been 
mounting national and international educational campaigns that 
involved local populations. The campaigns were targeted towards 
the mining sector as a way of advocating for the full payment of 
taxes. It was also aimed at curbing huge financial outflows from 
the South African banking sector to the western countries by 
some of the diamond mines. This advocacy campaign was carried 
out to enable the local population, the government, and the 
private sector to understand the bad side of tax avoidance by 
corporations.
Ghana has adopted a comprehensive National Anti-Money 
Laundering and Combating the Financing of Terrorism (AML/
CFT) Strategy and Action Plan. This is to be used as a framework 
for strengthening the legal, institutional, and enforcement 
mechanisms for the prevention of financial crimes. It’s also aimed 
at combating money laundering and the financing of terrorism. 
The Trade and Debt in Africa Forum, a civil society grouping in 
Ghana, has been playing a leading role in the advocacy campaigns 
in the country in order to ensure that society understands the 
framework.
For more on the Africa Capacity Report on ‘Capacity Imperatives on Domestic Resource Mobilization’ and other Publications by the Foundation, 
visit: www.acbf-pact.org 
5 Source: African Capacity Building Foundation, (2015), Unpublished Country Profiles for the African Capacity Report 2015: Capacity Imperatives for Domestic Resource Mobilization in Africa, ACBF: 
Harare.


Building Capacity for Domestic Resource Mobilization: The Role of the Civil Society

1Policy Brief 1Building Capacity for Domestic Resource Mobilization:  The Role of the Civil SocietyMarch 2016The IssueWith the recent adoption of the Sustainable Development Goals (SDGs), and the commitment of Africa to implement Agenda 2063, which is the continent’s development blueprint, domestic resource mobilization becomes a crucial issue. Given the background that most African countries did not  fully achieve the Millennium Development Goals (MDGs) due to over- reliance on donor resources, enhancing domestic resource mobilization in Africa becomes a necessity. Domestic resource mobilization has two elements to its definition: the generation of savings and taxes on one hand and their allocation to economically and socially productive activities. Accountable states and institutions are crucial for the success of domestic resources mobilization initiatives and the curbing of illicit financial flows1. However, while it is widely agreed that domestic resource mobilization is the way to go, the 2015 Africa Capacity Report2 shows that this may not be achieved because of one missing link: the capacity to do so. It highlights that the civil society, which consists of organized groups and institutions that are independent of the state3, can  play a leading role in bargaining with Government on behalf of the people around effective strategies for mobilizing domestic resource and curbing illicit financial flows in Africa.The Study The 2015 Africa Capacity Report, is based on a survey from 45 African countries. It measures and examines capacity in relation to the development agenda in African countries, surveys the state and trends in domestic resources mobilization and illicit financial flows across the continent, and puts together good practices in this area from countries that have been successful in their initiatives.Key Emerging IssuesState of Domestic Resources Mobilization in Africa: Most countries in Africa are now able to increasingly mobilize domestic resources to finance their own development. For example, African countries collected $503.3 billion in tax revenue in 2013, compared to $123. 1 billion in 2012 which is more than a four-fold increase.  However a significant proportion is made up of resource rents which are not stable due to volatility of international commodity prices. Resource rents are basically the high taxes governments get from corporations for extracting natural resources in their countries. Due to volatility of global prices for natural resource commodities, the revenues from resource rents also become very volatile. Tax performance in African countries was found to be inefficient and costly with a significant amount of revenue lost due to tax exemptions and tax avoidance. The efforts made in mobilizing domestic resources as proxied by the tax effort index shows that most African countries are not efficient enough, as evidenced in box 1. The 2015 Africa Capacity Report also finds that citizens are largely reluctant to pay taxes due to lack of transparency in the use of tax revenues,  high levels of corruption in government and the lack of awareness on the use of tax revenue. The  watch-dog role of the civil society hence becomes critical.Curbing Illicit Financial Flows: Illicit financial flows from Africa represent a significant loss of taxes that could be used to finance development programs, build infrastructure and finance social services. The Report points out that more financial resources are lost from Africa than the amount of development aid received. From 2005, illicit financial flows (IFF) from Africa were higher than the amount of aid received annually, and grew over time. The IFF total over the period 2003-2012 was estimated at $603.4 billion, against $421.6 billion in official development assitance (ODA). As a share of GDP over the period, IFFs were higher in countries in Sub-Saharan Africa (5.5 percent) than in other continents. Most of the IFFs in Africa emanate from  trade misinvoicing (68.2%) while the rest is in the form of illicit “hot money4” flows. IFFs are found to be high in countries rich in resources where corruption is also high. Ten countries rich in resources in Africa, which includes Nigeria and South Africa, accounted for 80 percent of the continent’s total IFFs in 2012. Capacity  Challenges For Africa In Domestic Resource Mobilization: According to the 2015 Africa Capacity Report, the key capacity areas that need particular attention for effective domestic resource Contributed by the Knowledge, Monitoring and Evaluation Department.  Box 1: Tax Collection Effort The analysis done for 45 African countries illustrated that most countries collected less tax revenue than their potential. Specifically, 27 out of the 45 countries surveyed are regarded as low-tax-effort countries regardless of the fact that some of these countries are rich in resources. This is largely attributed to the structural challenges in these countries, which reduce the capacity of the governments and tax authorities to maximize tax revenue collection. Notably, 97% of the countries surveyed had tax exemptions dedicated to investors which did not really match with the growth in taxes collected over time from the firms being exempted. 1  Illicit financial flows are also discussed because they are a huge loss of domestic resources for Africa.2 African Capacity Building Foundation, (2015). Africa Capacity Report 2015: Capacity Imperatives for Domestic Resource Mobilization in Africa. ACBF: Harare3 The civil society refers to a wide array of organizations that is community groups, NGOs, labor unions, indigenous groups, charitable organizations, faith-based organizations, professional associations and foundations. It is a social sphere separate from both the state and the market and these sometimes advance their common interests through collective action (World Bank. 2013. Defining the Civil Society. Available at http://web.worldbank.org/WEBSITE/EXTERNAL/TOPICS/CSO/0,contentMDK:2011499  accessed on 14 January 2016).4  Refers to illegal transactions like drug selling and money laundering.2mobilization in Africa are around fighting illicit financial flows; improving tax revenue collection; improving financial sustainability; and fighting corruption.Capacity in the context under discussion has three overriding determinants. First, capacity is determined by the ability of the relevant economic agents (in particular, government and financial sector operators) to perform the necessary intermediation tasks that result in tax receipts and savings.  National income and output, being determinants of tax revenue and saving, constitute the second set of determinants of resource mobilization capacity. This, in turn, implies that investment and the efficiency of investment and production matter greatly for resource mobilization capacity. Third, a major determinant of resource mobilization capacity is the willingness of the population’s income earners to save and to pay taxes. In this process, the civil society acts as the watchdog of the state activities and advocates that citizens realize the importance of paying taxes.Capacity challenges in domestic resources mobilization should be understood at all levels of society in African states to curb illicit financial flows. Weak public management structures impede the progressive realization of corruption control initiatives that might be set up to deal with domestic resource mobilization leakages. The civil society has a prominent role to play in creating conducive environments for economic growth by ensuring that there is transparency of the programs implemented in order to ensure efficient tax collection systems. To begin the process of removing these capacity constraints there is need for strong will on the part of the political leadership and resolute support and cooperation of the populace at large. Governments face challenges in raising finances to implement programs on financial development. As a way of averting the financial challenges, governments could engage the civil society as potential partners in enhancing their capacity in improving domestic resource mobilization policies and in harnessing resources that could be tapped upon.Civil Society Initiatives in Domestic Resource Mobilization: Several efforts have been made by the civil society in curbing illicit financial flows and creating a conducive environment for domestic resource mobilization. However, the focus has largely been on illicit financial flow advocacy, as opposed to domestic resource mobilization. The box below highlights some of the efforts5. Box 2 is an illustration of the advocacy roles that the civil society in Africa can play in supporting their countries to design, implement effective domestic resource mobilization strategies as well as curbing of illicit financial flows. This includes holding governments accountable for fairness in revenue collection and usage.Recommended Options for Civil SocietyFor effective domestic resource mobilization and mitigation of resource leakage, the 2015 Africa Capacity Report recommends that civil society organizations should take action by working closely with Governments and other stakeholders in:• Undertaking resources audits in all African countries so that the citizens may have an understanding of the available national resource pools and disseminate such statistics freely to the public.• Advocating for transparency around foreign direct investment – highlighting the incentives and how domestic players are beneficiaries, and how the value-chain of production around societies’ natural resources endowments are harnessed to benefit citizens.• Revealing how seriously government customs services are collecting mandated official import duties/tariffs and how domestic businesses are protected from unfair competition.• Requesting accountability by all state actors especially those holding public offices where decisions around taxes and resource rents are made. • Lobbying for access to information on expenditure of resources mobilized by the nation through taxation. • Developing capacity for the citizens in Africa to demand transparency on revenue collection and expenditure, through advocacy trainings and workshops.• Advocating for political independence on revenue collection agents and increased accountability. • Creating awareness campaigns to the citizens on the importance of tax compliance. Civil society organizations can partner with the national revenue authorities to create awareness to the taxpayers of their rights and obligations• Advocating for stronger legal frameworks against the dangers of corruption, tax evasion and illicit financial flows for tracking, stopping and recovering illicitly flowing resources.ImplicationsIt seems clear that most countries in Africa are now able to increasingly mobilize domestic resources to finance their own development. However, the potential for mobilizing more remains huge. Some of the challenges to achieving optimality relate to reluctance to pay taxes due to lack of transparency in the use of tax revenues,  high levels of corruption in government and the lack of awareness on the use of tax revenue. This calls for the need for capacitating the civil society with the knowledge and advocacy skills around the designing of strategies that will optimise revenue collection in a fair manner while holding governments accountable in the utilisation of revenues. Such advocacy would have to be built on well researched findings. Relatedly, there is need for governments to recognize civil society groups as important players in the designing and implementation of policies aimed at enhancing domestic resource mobilization and curbing illicit financial flows. This partnership will enable credible, open systems of policy making in Africa. This calls for strong leadership ethos in government as resource mobilization strategies are about developing sound systems of public administration and democratizing the process of resource use in their countries.Box 2:  Selected Country Specific Civil Society ActivitiesThe Trade, Tax and Justice Initiative in South Africa has been mounting national and international educational campaigns that involved local populations. The campaigns were targeted towards the mining sector as a way of advocating for the full payment of taxes. It was also aimed at curbing huge financial outflows from the South African banking sector to the western countries by some of the diamond mines. This advocacy campaign was carried out to enable the local population, the government, and the private sector to understand the bad side of tax avoidance by corporations.Ghana has adopted a comprehensive National Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Strategy and Action Plan. This is to be used as a framework for strengthening the legal, institutional, and enforcement mechanisms for the prevention of financial crimes. It’s also aimed at combating money laundering and the financing of terrorism. The Trade and Debt in Africa Forum, a civil society grouping in Ghana, has been playing a leading role in the advocacy campaigns in the country in order to ensure that society understands the framework.For more on the Africa Capacity Report on ‘Capacity Imperatives on Domestic Resource Mobilization’ and other Publications by the Foundation, visit: www.acbf-pact.org 5 Source: African Capacity Building Foundation, (2015), Unpublished Country Profiles for the African Capacity Report 2015: Capacity Imperatives for Domestic Resource Mobilization in Africa, ACBF: Harare.

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Building Capacity for Domestic Resource Mobilization: The Role of the Civil Society

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