Heavy Taxation Distorts, Destabilizes, and Impoverishes African Economies

[Editor’s note: As outlined in How Government Debt, Inflation, and Taxes Impoverish African Economies, government deficit spending, fiat monetary policy, and high taxes are destructive policies that distort, destabilize, and impoverish economies in Africa and globally. This text elaborates on the third section of that article, which focuses on the detrimental effects of heavy taxation]

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Despite government debt accumulation, currency printing, and onerous taxation to sustain government spending in light of the contemporary state-directed approach to economic development, stable and flourishing African economies are nowhere to be seen. Meanwhile, economic conditions continue to deteriorate while longstanding issues such as rampant inflation, arbitrary currency devaluations, mass unemployment, debt distress, overregulation, and taxes continue to afflict African economies, artificially causing widespread human suffering.

Colonial and neocolonial statist systems have caused and continue to cause severe economic, sociological, cultural, and moral harm to African societies. The Western statist economic models maintained during the post-neocolonial period have proven arbitrary, repressive, and ruinous, causing rampant inflation, debt crisis, economic turmoil, stagnation, and hardship. Most African countries maintain a heavy taxation policy instigated by Western economic models and institutions. Heavy taxation is one of the main impediments to economic development and prosperity.

Africa’s paradoxically burdensome taxation is a cruel and oppressive policy that conflicts with the principled and nonaggressive nature of the African worldview. African policymakers should avoid heavy taxation, which worsens economic conditions. Heavy taxes cause instability, deter investment, debilitate the economy, and harm lives. Throughout history, many nations have been ruined due to high taxes combined with other statist policies.

While most economies in the current statist Western global order are heavily taxed, the adverse effects of such taxation vary significantly between developed and developing countries. In developing nations, the adverse effects of heavy taxation are often more debilitating and impoverishing due to structural economic deficiencies, such as depreciating currencies, inflationary environments, limited capital and investment, and a higher incidence of poverty.

Africa’s Paradoxically Tyrannical Taxation

Nnete Okorie-Egbe was a Princess from Akwete in Nigeria who led a women’s revolt against British colonial tyranny, particularly taxation, in 1929. Similarly, a famous Angolan folklore tale depicts a protest against Portuguese colonial taxation. Locals in the then village of Caxito reportedly sent an alligator with a bag of money in its mouth to the local colonial office to pay the imposed taxes as a form of protest.

While the story of an alligator paying taxes is most likely a myth, the tale’s significance is real, so much so that it has been immortalized as an alligator monument in the now city of Caxito due to its strong symbolism and message. The message indicates that the local population resented and disapproved of the Portuguese imposition of taxation.

Figure 1: Princess Nnete Okorie-Egbe of Akwete, Nigeria. The Caxito anti-taxation monument in Angola.

Stories of anti-taxation protests are common across Africa. This is unsurprising as permanent and excessive taxation was imposed during colonial times. Note that while nominal levies or customary tributes were offered to kings and chiefs, overall taxation in precolonial Africa was minimal or nonexistent for the most part. Colonial governments imposed taxes, dismantling a centuries-old non-coercive tradition of tributes across Africa and replacing it with permanent and confiscatory taxation.

Sadly, postcolonial African governments have perpetuated this practice, resulting in increased levels of confiscatory and oppressive taxation throughout the continent. This policy contradicts the principled and nonaggressive nature of the African worldview, as it relies on coercion, the threat of imprisonment, and, ultimately, state aggression and violence. A tragic fact of post-neocolonial Africa is that contemporary African societies are more tyrannically taxed than during colonial times and much more so than in precolonial Africa, where taxation was minimal to nonexistent.

It is pertinent to clarify that, contrary to prevailing misconceptions, precolonial Africa was not devoid of enterprising, trading, and productive economic activity. Africa’s economic heritage predominantly consisted of free enterprise, free trade, and commodity (sound) money, not centralized, autocratic governance with socialist-like arrangements, as some claim.

Also, unlike the misconception about African governance propagated by colonialism, portraying African kings and chiefs as despotic rulers, in reality, precolonial African polities were characterized by a high degree of decentralization and devolution of power. Kings and chiefs worked in collaboration with Councils of Elders and other democratic institutions and traditions that provided mechanisms for checks and balances and prevented tyrannical rule.

As British economist Peter T. Bauer points out: “Despotism and kleptocracy do not inhere in the nature of African cultures or in the African character; but they are now rife in what was once called British colonial Africa, notably West Africa.”

Ghanaian economist and economic historian George Ayittey observes in Africa Unchained (p. 31):

Markets were not invented by Europeans and transplanted into Africa. There were free village markets in Africa before the Europeans stepped foot on the continent. This is not a veiled attempt to rewrite history but a statement of fact. Timbuktu, Salaga, Kano, and Mombasa were all great market towns of yesteryear. It is rather bizarre and an act of unpardonable cultural sabotage for African governments to pursue strident anti-market policies. For example, rural market activity in Africa has always been dominated by women, and these women traders have always been free enterprisers. And free trade routes crisscrossed the continent even centuries before the arrival of the Europeans. Free village markets, free enterprise, and free trade have always been part and parcel of Africa’s economic heritage.

As remarked, in most precolonial Africa, nominal levies or customary tributes were voluntarily offered to kings and chiefs, with minimal or nonexistent overall taxation. This contrasts with contemporary Africa, characterized by heavy taxation—a confiscatory, oppressive, and impoverishing policy enforced through state aggression.

Many African economies are among the most heavily taxed globally, and this policy continues the confiscatory and oppressive taxation imposed by colonial governments in an aggravated, more tyrannical form. African governments significantly hamper African economic development, prosperity, and independence by maintaining a policy of heavy taxation, thereby oppressing and impoverishing the people they are supposed to protect and uplift and not tyrannize like colonial regimes.

Anti-government protests related to taxation have been observed in several African countries in recent years, particularly Kenya, Ghana, and Tanzania. Nationwide protests against overtaxation took a deadly turn in Kenya in 2023 and 2024. The June 2024 anti-taxation protests were particularly tragic, as they were more deadly than the previous year's protests due to the militarist and violent response of the Kenyan government, which sought to suppress the demonstrations forcibly.

Instead of listening to the popular demand and engaging with the youth to resolve the issue peacefully, the government responded with a violent crackdown, using live bullets against unarmed and peaceful protesters. The aggressive and militarist response of the Kenyan government resembled a colonial regime ruthlessly suppressing the sentiments of the local population. Wanjiru Muthui, a female protester, took to her social media to express her distress over the tragic events:

l intended to share a message of hope today, but circumstances demand we address the brutal reality. We began our protests peacefully, united against the injustices of the Finance Bill 2024. Yet the response was brutal, bullets and teargas were unleashed upon us. Yes, some opportunists took advantage of the situation to destroy and steal property, and in some cases, citizens were angered by the betrayal of their representatives in parliament. But this does not justify the sheer scale of violence displayed by the police on unarmed civilians.

There are 7 confirmed killings, many injured, and others missing. Among the victims were doctors and paramedics who were attending to protesters. And that's not all. Last night, police carried out what can only be described as a massacre in Githurai. Numbers are still coming in, with estimates over 40 murders, including a woman simply selling fruits and vegetables. Irrefutable evidence through videos and images, along with police admissions, confirm over 758 rifle rounds were used on unarmed protesters in Githurai.

The President has labeled our calls for change as treason. If demanding justice and a better future is treason, then so be it. Our fight goes beyond the Finance Bill. We are fighting for the soul of our nation, for a future where leadership is accountable and the rights of the people are upheld. How can they justify using live bullets on people armed with handkerchiefs, water bottles, and phones? This is not right, and it must end.

It is tyrannical of African governments to increase the tax burden on struggling and long-tormented economies beset with rampant inflation, arbitrary currency devaluations, mass unemployment, stunted development, and other woes. Heavy taxation distorts, destabilizes, and impoverishes the economy, harming lives and undermining social peace. African policymakers should avoid heavy taxation, a confiscatory and oppressive policy that worsens economic conditions. African policymakers must reassess their tax policies and opt for minimal taxation to promote economic development and prosperity.

Western statist economic models continue to devastate African economies and lives. The heavy tax burdens imposed on African economies by African governments are confiscatory and oppressive, and this policy significantly hampers African economic development and prosperity. Africa must decouple philosophically from the West and abandon statism to build a stable, prosperous, and dignified postcolonial Africa. Africonomics offers the nilar, a transformative economic model for fostering integrated, stable, and thriving African economies.

Ms. Auma Obama, the half-sister of former U.S. President Barack Obama, was among the Kenyan youths who participated in recent protests against excessive taxation. She expressed her concerns:

We’re being teargassed. We have flags [the Kenyan flag] and banners. Nothing else. These young people have nothing else, just flags and banners. How can you teargas your own people? Listen to them. They are the future, they are 80 percent of our population. If they decide to turn against us, they can and that’s what they are doing now.

They are taxing our ancestral land, our ancestral land where we bury our people. How can you tax us on land that belongs to us forever since time immemorial? Are we going back to a colonial situation? It is not right. These young people need a future. They have no jobs. Over 50 percent of our population who are under 35 have no jobs. We cannot tax them without jobs. They are taxing them, but they have no jobs. You cannot tax the jobless, and then we’re telling them to take a loan, and when they start working, they’re indebted. It is not right.

The current levels of taxation in Africa are so confiscatory and oppressive that they might resuscitate Nnete Okorie-Egbe to lead another tax revolt or make the villagers of Caxito so outraged that they might send not just one but one hundred alligators to the tax office in protest. Most precolonial African societies had minimal to no taxes. Most postcolonial African societies are heavily taxed, yet economic stability and prosperity are nowhere to be seen.

Protests against excessive taxation and economic hardship have become increasingly common in several African countries in recent years, reflecting the deteriorating economic conditions. Heavy taxation is an unjust policy. It hampers economic development and social peace rather than promoting growth and prosperity. It causes increased economic distortions, instability, and impoverishment. The adverse impact of overtaxation on economic conditions in Africa is undeniable.

Colonial and neocolonial statist systems have caused and continue to cause severe economic, sociopolitical, and moral harm to African societies. African leaders are urged to prioritize African economic integration, development, and prosperity by abandoning Western economics and embracing Africonomics.

Business Insider Africa reports:

Corporate tax rates are generally higher in developing countries. In Africa, the average corporate tax rate is 27.5%—the highest of any region. Chad, Comoros, Equatorial Guinea, Guinea, Sudan, and Zambia all tie for the second-highest corporate tax rate in the world at 35.0%. Many countries in the region also rank as the worst for ease of doing business, with high start-up costs and multiple barriers to entry.

The fact that the world’s poorest region has the highest business tax rate is both revealing and bewildering. African governments seem to prioritize increasing their confiscatory control over society and maintaining an oppressive, impoverished status quo rather than seeking to foster Africa’s economic stability, development, and prosperity.

Flourishing businesses, particularly small and medium enterprises, are crucial for any nation’s economic development and prosperity and are a principal source of employment. Taxation (and bureaucratic hurdles) should be minimal to promote capital formation, investment, and productive enterprise and attract foreign investment, which are critical for economic development.

While politicians are not known for honesty and adhering to sound economic principles, it is essential to recognize that economic development and prosperity cannot be achieved with excessive taxation. African governments should avoid imposing heavy taxes if their goal is to promote economic development. History shows that no economy has ever achieved prosperity through high taxation policies, and African economies will not be an exception.

Despite having some of the highest business tax rates globally, poverty remains widespread in Africa. Longstanding issues such as sovereign debt crises, rampant inflation, economic turmoil, and deterioration have noticeably deepened over the past decade. Contrary to the “Africa Rising” narrative, it has arguably been another lost decade.

Economic conditions continue to deteriorate across the continent, resulting in increased protests and sociopolitical instability. This situation underscores the need for a fundamental change in economic policy choices, as the state-directed approach to economic development has proven repressive, destabilizing, and ruinous.

If heavy taxation and government spending were the keys to economic development and prosperity, Africa would be among the most economically prosperous regions. The truth is that government debt accumulation, deficit spending, currency printing, and heavy taxation are policies that distort, destabilize, and impoverish African economies, perpetuating tyranny, poverty, instability, structural injustices, and dependence.

The autocratic state-directed economic development approach continues to cause widespread economic instability, stagnation, and hardship. African leaders should prioritize African economic integration, stability, and prosperity by abandoning Western statist models and adopting the transformative economic model Africonomics offers. By implementing the nilar, African leaders can effectively transform Africa’s economic landscape with a unified and collaborative approach.

The tragedy of heavy taxation in Africa is not limited to businesses but affects individuals too. Take, for example, the case of Ivory Coast, which imposes a staggering personal income tax rate of 60 percent, the highest in the world. Another instance is South Africa, among the top ten most heavily taxed globally. South Africa may have the most confiscatory and oppressive tax code in Africa. These and other examples highlight Africa’s paradoxically tyrannical and impoverishing tax policy choices.

The issue of high taxes in Africa has worsened as many African governments have steadily increased tax burdens in recent years to generate more revenue amid increasing debt loads. This policy, aimed at addressing problems that governments have caused and meeting the costs of servicing mounting debt obligations, exacerbates economic distortions, stagnation, and hardship.

Developing countries struggle to repay their debts due to insufficient economic competitiveness, production, and output. Government debt accumulation and deficit spending exacerbate these issues. Increasing tax burdens in precarious economic conditions further distort, destabilize, and impoverish long-struggling and stagnant economies.

Sound economic reasoning, historical evidence, and common sense indicate that taxation is associated with tyranny. The heavier the tax burden, the more oppressive and confiscatory it is. Tragically, in postcolonial Africa, many governments impose even heavier tax burdens than the colonial administrations did, making them more tyrannical by comparison.

While precolonial Africa was predominantly characterized by free enterprise, free trade, commodity (sound) money with minimal to no taxation, and non-dictatorial governance, postcolonial Africa, in contrast, is characterized by authoritarian governments, kleptocratic rule, tyrannical taxation, and repressive policies that stifle economic development and prosperity, artificially causing widespread human suffering. Western statist economic models continue to oppress, destabilize, and impoverish African economies.

Taxation in Africa must be minimal to nonexistent, as this aligns with the principled and nonaggressive nature of the African worldview and its economic heritage of free-market systems (peaceful and voluntary economic relations). Most African kings and chiefs did not impose taxation on their people, much less permanent and excessive taxes.

Africonomics maintains that taxation is inherently coercive, extortive, distortive, and oppressive—therefore, unethical and morally unacceptable. Taxation must be minimal to nonexistent to minimize confiscation, oppression, and injustice and foster economic prosperity, peaceful human relations, and civilization.

Tax Havens and Tax Hells

Countries or jurisdictions with low to no tax liabilities are typically considered tax havens. So-called tax haven jurisdictions attract businesses and individuals not only due to a light and simplified tax code but also due to political and economic stability, respect for property rights, and offshore financial services.

Figure 2: Visualizing the world’s leading “tax havens” in 2024.

Source: Voronoi

There is no such thing as a tax haven. Countries referred to as “tax havens” should, in truth, be called non-tyrannical tax countries or less-tyrannical tax countries. Such jurisdictions have been labeled “tax havens” to stigmatize them, as we live in a statist world where complicated, confiscatory, and oppressive taxation is the norm instead of the exception. If there are tax havens, they are only relative to tax hells.

From the standpoint of governments and statist economics, it makes sense to demonize and undermine jurisdictions that maintain relatively simplified and attractive tax codes. First, to prevent “tax havens” from gaining much traction or acceptance. Second, the proliferation of “tax havens” exposes that today’s “normal” taxation policies amount to confiscatory and tyrannical taxation. The more stigmatized and harassed “tax havens” get, the more unacceptable they will appear. This gives governments more leeway to raise or introduce new tax rates.

The word haven means refuge, shelter, a place of safety, a place of security, a harbor in a storm, an oasis in the desert, a warm shelter in a snowy winter, a safe retreat. Semantically, a haven refers to a place or thing that provides safety, security, peace, comfort, or protection from unpleasant, dangerous, or aggressive situations or forces.

By stigmatizing and labeling jurisdictions with lower or less tyrannical tax codes as “tax havens,” the system inadvertently acknowledges that taxation is an unpleasant and aggressive force. This is particularly evident in today’s environment of confiscatory and oppressive taxes, from which individuals or businesses seek refuge. Moreover, the system unwittingly reveals that what is considered “normal” taxation—meaning non-tax havens—can be considered tax hells, compelling those who can escape to seek a haven, a place of safety and tranquility.

The label “tax haven” can be seen as a tactic designed to mislead the public, stigmatize non-tyrannical tax justifications, and legitimize increasingly confiscatory and oppressive tax codes. The current statist global order, established by Western imperialist states, features complex and heavy taxation—essentially creating tax hells. In this context, introducing the concept of a “tax haven” serves statist interests.

Mauritius has faced criticism for being a “tax haven” in Africa. However, it is not a tax haven in so far as other African countries, which paradoxically maintain heavy taxation policies, are tax hells. Like other non-less tyrannical tax justifications, Mauritius maintains a relatively lightweight and straightforward tax policy, making it less burdensome and extortive than the “normal” (i.e., confiscatory and oppressive) tax codes seen in much of Africa and the world.

Most individuals and businesses would prefer to live in a tax haven rather than a tax hell. It is not greedy or unethical to want to keep as much of one’s legitimately earned income as possible. It is human nature to desire to retain what one has earned, especially since most people invest substantial time and energy into their work, often facing considerable stress or strenuous conditions.

For instance, professions like boxing or mixed martial arts require not only hard work but also personal sacrifice. The sweat and sometimes blood that goes into earning an income make the desire to keep it more understandable. Using force to take away part of what someone has earned is unethical, uncivilized, and thuggish, amounting to extortion or robbery. This is a fundamental reason why a low tax burden is naturally appealing, and the injustice of heavy taxation should be a cause for indignation.

As remarked earlier, Africonomics maintains that taxation is inherently coercive, extortive, distortive, and oppressive—therefore, unethical and morally unacceptable. Taxation must be minimal to nonexistent to minimize confiscation, oppression, and injustice and foster economic prosperity, peaceful human relations, and civilization. Additionally, taxation, more so heavy taxation, conflicts with the African worldview’s principled and nonaggressive nature.

Heavy taxation is a distortive, destabilizing, and impoverishing policy. It causes instability, deters investment, hinders growth, debilitates the economy, and harms lives. In the case of Kenya, heavy taxation has not only proven destabilizing and impoverishing but also deadly. Instead of seeing Mauritius as a tax haven, other African countries should follow suit and adopt a minimal taxation policy, implementing a tax code that surpasses Mauritius’s attractiveness. This policy shift is crucial to foster economic development and prosperity.

If African leaders adopted Africonomics instead of Western economics, whose models have proven arbitrary, repressive, and ruinous, African economies could compete to offer the lowest tax burdens. This would contrast with the current confiscatory and oppressive tax codes in most African countries, many of which are more tyrannical than colonial taxation.

Conclusion

The concept of “tax haven” was introduced to stigmatize and undermine low-tax jurisdictions, given that much of humanity is tyrannically taxed. In truth, countries labeled as tax havens should be viewed as less- or non-tyrannical-tax countries. If relatively low-tax countries are tax havens, “normal” tax countries must be tax hells.

Heavy taxation is an unjust, distortive, destabilizing, and impoverishing policy. African policymakers should avoid taxing African economies into prosperity because a heavy taxation policy will invariably worsen economic conditions and hardship, increasing the risk of sociopolitical instability. African economies will not be the first to develop and prosper while maintaining government debt accumulation, currency debasement, and heavy taxation as policies. African policymakers must reconsider their tax policies and adopt minimal taxation to facilitate economic development and prosperity.

Taxation was minimal to nonexistent in most of precolonial Africa. Tragically, unlike most African kings and chiefs, postcolonial African governments have doubled down on the practice of permanent and oppressive taxation imposed by colonial governments, resulting in tyrannically taxed contemporary African economies. The confiscatory and oppressive tax codes of most African countries are a structural injustice in existing statist socioeconomic systems and have been a significant impediment to economic development. African leaders must move away from Western economic models, which have proven arbitrary, repressive, and ruinous. They should adopt Africonomics to create a new reality of integrated, stable, and thriving African economies.