Ghana’s Revenue Mobilisation Falls Short of African Peers, IFS Finds

 

Ghana is collecting significantly less public revenue than comparable African economies, raising concerns about the country’s ability to finance infrastructure, meet public expenditure commitments and reduce its dependence on borrowing.

An analysis by the Institute for Fiscal Studies (IFS), led by its Executive Director, Dr Said Boakye, puts Ghana’s total revenue and grants at 15.7% of Gross Domestic Product (GDP), against an average of 20.1% for 25 Sub-Saharan African countries.

The performance places Ghana 18th among the 25 countries, 4.4 percentage points below the regional average.

The gap is wider when Ghana is compared with Namibia, Seychelles and Botswana, which recorded revenue and grants-to-GDP ratios of 31.3%, 30.0% and 29.5%, respectively.

The figures point to a persistent weakness in Ghana’s ability to convert economic activity and natural resource wealth into government revenue.

Ghana misses billions in potential revenue

The IFS estimates that Ghana could have raised substantially more revenue in 2025 if it had matched the average performance of the countries in its sample.

Government revenue and grants stood at GH¢224.88 billion, equivalent to US$17.91 billion, representing 15.7% of GDP.

At the Sub-Saharan African average of 20.1%, the amount would have increased to GH¢288.26 billion, or US$22.96 billion. This would have provided an additional US$5.05 billion.

The difference is considerably larger when measured against Botswana’s performance.

Applying Botswana’s 29.5% revenue-to-GDP ratio to Ghana’s economy, the government would have collected GH¢423.06 billion, equivalent to US$33.69 billion, in 2025. That is US$15.78 billion above actual collections.

The IFS makes a similar comparison for 2022, when Ghana collected GH¢96.65 billion in revenue and grants, equivalent to US$11.68 billion.

At the regional average, collections would have reached GH¢123.48 billion, or US$14.93 billion, giving the government an additional US$3.25 billion.

Matching Botswana’s ratio would have raised potential collections to GH¢181.23 billion, equivalent to US$21.91 billion.

Weak revenue collection adds to borrowing pressures

The IFS links Ghana’s poor revenue performance to its recurring fiscal challenges, arguing that limited collections leave the government with insufficient resources to finance development projects and other public expenditure.

Although expenditure management problems have contributed to excessive borrowing, the Institute says weak revenue mobilisation has also played a significant role.

The resulting financing gaps have contributed to repeated debt accumulation, high debt-service costs and fiscal crises.

The effects are also reflected in infrastructure development. The IFS cites the International Institute for Management Development’s 2025 infrastructure ranking, which scored Ghana 13.5 on a scale of 0 to 100.

Botswana scored 28.3, while South Africa recorded 20.4.

The Institute also links limited revenue mobilisation to the comparatively low salaries of public sector workers, arguing that this constrains their purchasing power and dampens domestic demand.

Ghana earns less from mining despite larger output

The mining sector is one of the clearest examples of Ghana’s revenue mobilisation problem, according to the IFS.

Despite having a larger mining economy than Botswana, Ghana generates considerably less government revenue from the sector.

Between 2019 and 2023, Ghana’s average mining-sector value added was US$5.03 billion annually. Government revenue from mining averaged US$729.61 million, representing 15% of value added.

Botswana, despite recording average mining value added of US$2.81 billion over the same period, generated average annual government revenue of US$1.72 billion.

This represented 60.9% of mining value added.

In other words, Botswana’s average mining revenue was 135.7% higher than Ghana’s, although its mining-sector value added was 44.1% lower.

The disparity continued in 2025. Ghana’s mining-sector value added reached US$13.40 billion, but government revenue from mining was only US$1.60 billion, representing 11.9% of value added.

Using Botswana’s average revenue capture rate of 60.9%, Ghana could have generated US$8.16 billion from mining that year, an additional US$6.56 billion over actual collections.

The IFS argues that the difference cannot be explained simply by the relative profitability of the minerals mined by the two countries.

It points to an earlier study in which it found that economic rent, or supernormal profits, from Ghana’s mining sector alone exceeded the entire value of mining output produced in Botswana.

The comparison raises questions about the share of mineral wealth that accrues to the state and whether Ghana’s fiscal arrangements are securing adequate returns from its resources.

Revenue leakages and tax exemptions

The Institute also identifies revenue leakages as a longstanding weakness in Ghana’s public revenue system.

These include underreporting, tax evasion, tax avoidance and other practices that reduce collections, sometimes with the involvement of revenue administrators.

The problem, according to the IFS, affects both tax and non-tax revenue.

Successive governments have introduced administrative and institutional reforms, as well as technology-based interventions, to improve collection. Such efforts date back to the 1980s, when they were commonly described as mechanisation, before evolving into digitisation in later years.

However, the Institute says revenue leakages remain a major challenge.

The extensive use of tax exemptions and other fiscal incentives to attract investment is another factor identified in the analysis.

Ghana has historically granted tax concessions to encourage private investment, particularly foreign investment and export-oriented production.

The Free Zones Act, 1995 (Act 504), introduced under the Rawlings administration, was one such intervention. It established the legal framework for Free Zones to promote processing and manufacturing for export.

While investment incentives can support economic activity, the IFS identifies their excessive use as a constraint on government revenue.

The findings place renewed focus on how Ghana structures its mining fiscal regime, manages tax concessions and addresses weaknesses in revenue administration.