Faced with mounting debt and constrained fiscal space, African governments are increasingly turning their attention to a previously underutilized revenue source—high-net-worth individuals (HNWIs). As external borrowing becomes more costly and citizens demand better public services, authorities are rethinking how to make tax systems more equitable and effective.
A key reason for this renewed focus is that Africa’s wealthiest citizens have long escaped scrutiny. In contrast to salaried workers—like public school teachers or supermarket clerks—whose taxes are automatically deducted, affluent individuals often operate outside the formal system. Their wealth may lie in rental properties, land holdings, or lucrative private contracts, and much of it remains invisible to tax authorities.
In countries like Uganda, only a fraction of top officials or legal professionals paid income tax before 2015. In Sierra Leone, a 2021 property registration drive in Freetown revealed that just 16% of landlords were registered for tax. The result is that wealthier Africans, despite having higher liabilities, often pay lower effective tax rates than average citizens.
To address this imbalance, tax authorities are being urged to focus less on overburdened informal traders and more on enforcing existing taxes on high earners. Research by the International Centre for Tax and Development shows that this shift—when properly resourced—can deliver impressive returns. In one Nigerian state alone, better enforcement yielded US$900,000 in a single year. In Uganda, similar efforts brought in an additional US$5.5 million.
This revenue boost doesn’t require new taxes. Instead, three straightforward strategies can have significant impact: identifying wealthy individuals, simplifying compliance procedures, and ensuring meaningful enforcement.
Countries like Uganda and Nigeria are already setting criteria to define high-net-worth taxpayers based on domestic realities. In Uganda, land transactions over US$300,000 or rental incomes above US$150,000 are indicators. Nigerian states use annual income thresholds ranging from Naira 2 million in Borno to Naira 25 million in Lagos. Other benchmarks include owning commercial farms or winning government contracts.
Once identified, dedicated HNWI tax units—similar to those that already monitor large corporations—can track these individuals’ tax affairs. However, operationalizing this effort depends on access to reliable data. Most African tax authorities lack comprehensive property or asset databases. A multi-criteria system using existing records can bridge the gap while additional data is collected over time.
Importantly, such efforts require strong political backing. Revenue agencies must secure cooperation from other government departments and be empowered to investigate well-connected individuals. Yet, enforcement doesn’t always need to be punitive. Voluntary disclosure programs have already generated significant returns—US$296 million in South Africa and US$192 million in Nigeria—while also revealing valuable asset information.
Additionally, requiring political candidates to submit tax clearance certificates, as seen in Uganda and Nigeria, provides another avenue to improve compliance and transparency.
While global discussions continue around wealth taxation and inequality, African governments have a more immediate opportunity: fixing the basics of their own tax systems. By focusing on HNWIs—who have historically contributed too little—they can create a fairer and more robust fiscal foundation.