Financial Inclusion and Information Communication Technology on Tax Performance in Sub-Saharan Africa
Authors: Adeyemo Kingsley Aderemi , Adeyanju Ibukunoluwa Temiloluwa , Ekundayo Gbenga , Adegboye Alex , Ali Shahnawaz 
Published: December 2023

Purpose: The main objective of this paper is to determine empirically the impact of financial inclusion and Information Communication Technology (ICT) on tax performance in Sub-Saharan African countries; determine the extent to which the elements of financial inclusion have influenced tax performance of countries in Sub-Saharan Africa; and examine the role technology plays in impacting the performance of taxes in Sub-Saharan African countries.

Theoretical Framework: The existing theories that serve as a roadmap for the development of this study are Theory of Digital Diffusion and Theory of Margins. Digital transformation has an important impact on the operations and systems of every economy, which often triggers a positive effect on taxes. Diffusion innovation theory was initiated by Rogers in 1962. The Theory of Margin on the other hand, is a theoretical school that gives validity to the impact of financial development on product output. It suggests that more access to financial services and products is vital for high output and economic advancement.

Design/Methodology/Approach: The population considered in this study was 48 sub-Saharan African Countries from the period of 1999 to 2019. The methods used for the analysis consists of the descriptive and correlation analysis on the identified variables and a creation of financial inclusion index using the Principal Component Analysis to deal with multiclonality challenge amongst the financial inclusion proxies, it also adopted the two-staged least square estimation technique for the empirical analysis.

Findings: The study reveals inter alia that the variables for financial inclusion and ICT proxies are overwhelmingly positive and significantly impact on the tax performance (i.e., total tax revenue and the non-resource tax revenue as percentages of GDP), in sub-Saharan Africa and that the financial inclusion index has positive effect on tax performance in sub-Saharan Africa. We also observed that there is a positive relationship between technology and tax performance in sub-Saharan Africa.

Research Practical & Social implications: Policies should be formulated to engender enhancement of technology and more investment should be allocated to technology as it is discovered to drive financial inclusion and promotes tax revenue mobilization. In general, the findings indicate that policies are needed to engender an enhancement of technology and more investment should be channeled to technology as it affects financial inclusion and by logical extension, the promotion of tax revenue mobilization.

Originality/value: The challenge of tax implementation can be directly ascribed to an ineffective tax system. A tax management that is of high in superiority, helps to make the tax mobilization process more transparent and efficient, and also reduce the level of shadow economy, which main feature is non- remittance or payment of tax. This study reveals that a tax administration system can only operate effectively with the use of modern information technologies.