As the world prepares for the 2025 G20 Summit in Johannesburg, South Africa, scheduled for November 22–23, the spotlight has shifted to Africa’s growing development financing shortfall.
With the global funding gap for achieving the United Nations Sustainable Development Goals (SDGs) now estimated at $4 trillion annually, Africa’s share alone accounts for $1.7 trillion, representing about 40 percent of the global requirement.
This staggering shortfall has become a pressing obstacle to sustainable development on the continent.
The Fourth International Conference on Financing for Development (FFD4) convened under the G20 framework has now identified Domestic Resource Mobilisation (DRM) as a central pillar for narrowing this gap.
The African Tax Administration Forum (ATAF) has consistently highlighted DRM as a more sustainable financing model compared to dependence on volatile aid flows, loans, or foreign direct investment.
A recent ATAF report notes that strengthening domestic tax systems would allow African governments to reclaim fiscal independence, improve budgetary stability, and fund inclusive growth initiatives.
Currently, Africa’s average tax-to-GDP ratio remains below the 15 percent benchmark considered necessary for achieving sustainable development.
Experts estimate that a mere 1 percent increase in tax collection efficiency could generate $35 billion annually, translating to about $350 billion by 2030.
This would drastically reduce the continent’s financing gap while enabling long-term investment in infrastructure, healthcare, education, and renewable energy.
One of the biggest threats to DRM in Africa is the persistence of Illicit Financial Flows (IFFs). According to the United Nations Economic Commission for Africa (UNECA), the continent loses over $88 billion annually through practices such as transfer mispricing, trade mis-invoicing, tax evasion, and corruption.
The ATAF has therefore recommended a multi-pronged approach to curb these losses. This includes:
Reforms in tax and trade policies.
Strengthening customs and revenue administration.
Broadening the tax base beyond the formal sector.
Tackling transfer pricing abuses by multinational corporations.
Leveraging digital systems for automatic tax and customs data exchange.
Enhancing anti-corruption frameworks and cross-border cooperation.
The South African Presidency of the G20 (Dec 2024 – Nov 2025) has placed IFFs at the heart of the agenda, successfully pushing the issue into the G20 Development Working Group (DWG).
Discussions are already underway to draft voluntary, non-binding global principles for combating IFFs — a move ATAF says will strengthen Africa’s ability to retain and reinvest its wealth.
Africa’s financing challenges are not solely a result of weak tax systems. They have also been exacerbated by:
Shrinking Official Development Assistance (ODA) from donor nations.
Rising costs of debt servicing.
Limited access to concessional loans.
The slowdown in private investment due to global economic uncertainty.
The G20 acknowledges that financing for development is no longer just a finance ministers’ conversation, but also a priority for development ministries.
The 2025 Johannesburg Summit will therefore emphasize the importance of blended financing models, combining public funds, private capital, and stronger domestic mobilisation.
Beyond numbers, experts stress that fair and progressive tax reforms can help address inequality. ATAF recommends that DRM strategies must go beyond revenue collection to support social goals such as:
Gender equality and women’s economic empowerment.
Expanding access to healthcare and education.
Promoting climate resilience and renewable energy transition.
Encouraging small and medium-scale enterprises (SMEs).
These reforms, if effectively implemented, would make DRM not just a financing tool, but also a catalyst for inclusive and sustainable development across Africa.
With Africa accounting for 40% of the global SDG financing gap, the 2025 G20 Summit in Johannesburg is expected to deliver a clear roadmap for mobilising domestic resources.
Analysts believe that if African nations adopt innovative tax systems, strengthen governance, and aggressively curb illicit financial flows, the continent could unlock hundreds of billions of dollars annually for its development priorities.
For Africa, the message from the G20 is clear: the key to closing its $1.7 trillion financing gap lies within its borders.