Africa Loses $163 Billion to Debt Service, uncollected digital tax

Pan-African lawyer and tax justice advocate Dr. Lyla Latif has called for Africa to rethink its fiscal future, warning that reliance on costly foreign debt is draining resources from schools, hospitals, and infrastructure.

Latif, a global specialist in tax, public money, and technology governance, urged governments to radically expand domestic revenue mobilisation by taxing untapped assets in the digital economy and high seas infrastructure.

“Data is worth a trillion US dollars. Nobody taxes data,” she declared, pointing to U.S.-based cloud giants that profit from African data without paying local taxes.

She highlighted how outdated tax rules and corporate loopholes perpetuate debt traps. With Kenya’s tax-to-GDP ratio at just 15.8%  far below the OECD average of 33.3%  Latif argued that governments must broaden their fiscal base. She cited Kenya’s foregone revenue of 3.3% of GDP through tax incentives, equivalent to billions lost to foreign companies.

Latif also spotlighted Africa’s maritime wealth. Under the UN Convention on the Law of the Sea, countries can levy fees on submarine cables crossing their territorial waters. Yet, unlike Malta which charges Google and Amazon €10,000 annually, African states collect nothing.

“Even if it’s $12,000 per company, that’s income that could pay for essential medication in public hospitals,” she said.

Beyond taxation, Latif dissected illicit financial flows, estimated at up to $89 billion annually, and warned of emerging threats like AI-enabled fraud. She described how inflated consultancy fees and transfer pricing drain taxable income, leaving governments dependent on high-interest loans.

“The IMF lends Germany at 2%. Kenya borrows at 11%,” she noted, underscoring systemic inequities.

Her presentation framed debt as a justice issue, urging journalists to expose loopholes and demand reforms. “Unless we learn how to mobilise more domestic revenue, we will never solve the debt issue.”

Source: Truth Media