Written by Dr Ibrahima Aidara

Introduction

The twin challenges of poverty alleviation and inequality reduction persist across West African countries. While economic growth has improved over the past two decades, despite the setbacks of COVID-19, the benefits have not been evenly shared. As countries pursue inclusive development, progressive taxation and social protection systems have emerged as critical tools to redistribute wealth, enhance social cohesion, and reduce vulnerability. Yet their effectiveness in West Africa is constrained by narrow tax bases, pervasive informality, weak institutions, and underdeveloped safety nets.

This article examines the role of progressive taxation and social protection systems in West Africa, analyses current practices and challenges, and offers policy recommendations for creating equitable fiscal and social contracts in the region.

Context analysis

Despite efforts to strengthen domestic resource mobilization, West African tax systems remain regressive in practice. Indirect taxes such as VAT and excise duties dominate the fiscal landscape, disproportionately affecting low-income populations. At the same time, social protection programs remain fragmented, underfunded, and often donor-dependent, and thus fail to provide a robust safety nets for the most vulnerable. This disconnect undermines the redistributive function of the state and weakens the legitimacy of taxation in the eyes of citizens. The central question, therefore, is: How can West African countries design and implement progressive taxation and effective social protection systems to reduce inequality and foster inclusive development?

1.1  Progressive Taxation and Redistribution

The theory of progressive taxation, rooted in the works of economists like Adam Smith, Arthur Pigou, and Thomas Piketty, posits that those with greater ability to pay should contribute a larger share of their income. Progressive taxes, such as personal income tax (PIT) and wealth taxes, are essential for equity and the financing of public goods. In the context of West Africa, however, several structural limitations persist:

• Personal income tax remains a minor source of revenue (e.g., less than 2% of GDP in many countries).
  • High informality (up to 80% of employment) limits taxable incomes.
  • Tax avoidance by elites and multinational corporations erodes equity.

1.2.  Social Protection as a Development Tool

The ILO (2017) defines social protection as a set of policies and programs aimed at reducing poverty and vulnerability. It includes social assistance (e.g., cash transfers), social insurance (e.g., pensions, health), and labor market interventions. Evidence shows that :

• Countries with robust social protection systems (e.g., Brazil’s Bolsa Família) achieve lower inequality and higher human development.
  • In West Africa, social protection expenditure averages less than 4% of GDP, compared to more than 10% in OECD countries.

1.3.  Fiscal Legitimacy and the Social Contract

Moore (2008) and the ICTD argue that taxation is not just a financial tool but also a governance mechanism. Progressive taxation, when paired with visible and effective social services, builds trust and enhances state legitimacy.

1.4.  West African Tax Systems: Structurally Regressive and Inequitable

West African tax systems remain structurally regressive, relying heavily on consumption-based taxes that disproportionately burden low-income populations.

–            Overdependence on Indirect Taxes:

In most countries in the region, Value Added Tax (VAT) and trade-related duties constitute the majority of tax revenues. For instance, in Senegal and Ghana, VAT accounts for over 30% of total tax receipts, despite imposing the same relative burden on both rich and poor consumers. This tax structure shifts the fiscal load away from higher-income earners and corporations onto everyday consumers, undermining equity.

–            Underperformance of Direct Taxes:

Direct taxes, particularly personal income tax (PIT) and corporate income tax (CIT), remain underdeveloped. In Nigeria, for example, the PIT-to-GDP ratio is below 1%, reflecting the limited contribution of higher earners to national revenue. Low coverage, limited administrative capacity, and widespread informality restrict the tax base.

–            Regressive Exemptions and Informality:

Generous tax exemptions and investment incentives often disproportionately benefit politically connected elites and multinational corporations, with minimal demonstrable impact on job creation or value-addition. Meanwhile, over 70% of the labor force operates in the informal economy, largely untaxed and outside the formal regulatory framework. This limits revenue mobilization and reinforces structural inequalities.

–            Ineffective Tax Progressivity:

Even where progressive tax instruments exist on paper, weak enforcement, loopholes, and low audit capacity diminish their redistributive impact. Additionally, limited taxation of property, wealth, and capital gains further restrict fiscal equity.

1. West African Social Protection Systems: Expanding but Fragmented and Inadequate The past decade has seen significant strides in social protection expansion, yet systems remain fragmented, under-resourced, and insufficiently institutionalized.

–            Limited Program Coverage and Depth:

Senegal’s “Bourse de Sécurité Familiale” is one of the more established conditional cash transfers (CCT) programs in the region, targeting approximately 300,000 poor households. While it has shown modest gains in school attendance and food security, its coverage remains low relative to national poverty levels, and funding is vulnerable to budget cuts.

Ghana’s Livelihood Empowerment Against Poverty (LEAP) program delivers unconditional cash transfers to vulnerable groups such as orphans, the elderly, and persons with disabilities. Despite its potential, LEAP struggles with limited geographic reach, targeting errors, and inadequate budget allocations, frequently depending on donor funding to ensure sustainability.

–            Emerging Health Insurance Initiatives:

Countries like Côte d’Ivoire, Burkina Faso, Senegal, and Togo have introduced universal health coverage (UHC) schemes, yet these face serious implementation barriers. The health insurance systems suffer from low enrollment, high out-of-pocket payments, and weak public health infrastructure, thereby limiting their effectiveness in reducing health-related vulnerability.

–            Fragmentation and Lack of Coordination:

Social protection systems across the region often consist of a patchwork of donor-funded programs, pilot initiatives, and ministerial schemes that are poorly coordinated. This limits the development of comprehensive national social protection floors and impedes scalability.

1.6.  Structural and Institutional Challenges

The shortcomings in both taxation and social protection are underpinned by deeper structural and institutional constraints:

–            Administrative and Technical Capacity Constraints:

Tax administrations in many countries lack the necessary technological tools, skilled personnel, and data systems to identify taxpayers, enforce compliance, and monitor revenue performance. Similarly, social protection agencies often lack robust registries and targeting mechanisms, thereby undermining both effectiveness and efficiency.

–            Disconnection Between Revenue and Spending Policies:

There is a persistent disconnect between tax policy and social spending, with limited integration of tax reforms designed to finance social protection directly. This weakens the redistributive potential of fiscal policy and limits the visibility of the social contract in the eyes of citizens.

–            Political Economy Constraints:

Attempts to tax high-net-worth individuals or introduce wealth and property taxes are often met with elite resistance, due to the concentration of political and economic power. This resistance hampers reforms that would enhance the progressivity of tax systems.

–            Erosion of Fiscal Legitimacy:

Widespread perceptions of corruption, low transparency, and poor service delivery reduce public trust in the state. Citizens are less likely to comply with tax obligations when they do not perceive tangible returns in the form of quality education, healthcare, or infrastructure. This in turn perpetuates a vicious cycle of low tax morale and weak fiscal capacity.

2.  Case Examples: Taxation and Social Protection in Practice

Examining recent policy experiences in Ghana, Senegal, and Togo reveals the tensions, innovations, and constraints that shape the implementation of progressive taxation and social protection systems in West Africa. These examples underscore the importance of coherent policy design, political commitment, and institutional capacity.

2.1.  Ghana: The E-Levy Controversy and the Politics of Regressive Taxation

In 2022, the Government of Ghana introduced the Electronic Transactions Levy (E-Levy), a 1.5% tax on all mobile money and electronic transfers above a threshold. The objective was to broaden the tax base by capturing revenues from the fast-growing digital economy, particularly the informal sector where tax compliance is low.

However, the levy faced immediate and widespread public backlash. Its flat-rate structure made it inherently regressive, disproportionately affecting low-income individuals who rely on mobile money for everyday transactions. Instead of promoting equity, E-Levy was perceived as an added burden on the poor, undermining its redistributive potential. Moreover, the policy suffered from:

• Weak communication strategies, failing to justify the levy by linking it to improved public service delivery.
  • Lack of transparency regarding revenue allocation , which fueled distrust.

• Low revenue performance, collecting less than projected due to behavioral shifts (users reverted to cash) and implementation issues.

The E-Levy example illustrates a broader challenge: expanding the tax net must go hand-in-hand with fairness and transparency. Tax measures that are seen as punitive, poorly targeted, or regressive can backfire politically and socially.

• Senegal: The Bourse de Sécurité Familiale and the Limits of Conditional Cash Transfers Launched in 2013, Senegal’s Bourse de Sécurité Familiale (BSF) is a conditional cash transfer (CCT) program targeting poor households, particularly in rural areas. It aims to promote human capital by conditioning payments on school attendance, civil registration, and health checkups. The program has achieved measurable social benefits:
  • Improved primary school enrollment and food security among recipient households.
  • Raised the visibility of the state in underserved areas, enhancing social inclusion.

However, the BSF also reflects deeper structural limitations:

• Limited coverage: Reaching approximately 300,000 households in a country where nearly half the population is considered poor, the program’s scale remains modest.
  • Irregularity of payments and operational delays undermine its effectiveness and credibility.
  • Dependence on donor funding, especially during early phases, raises concerns about long-term fiscal sustainability.

Importantly, the BSF lacks a direct fiscal linkage to domestic tax revenues, weakening its role as a redistributive tool. As such, better described as a social assistance initiative than as part of a comprehensive social protection system anchored in a national social contract.

2.3.  Togo: The Novissi Program and the Digital Future of Social Protection

Togo’s Novissi Program, launched during the COVID-19 crisis in 2020, stands out as an innovative example of technology-enabled social protection. It offered unconditional digital cash transfers to informal workers affected by lockdowns, using mobile money platforms and automated targeting based on voter ID, geolocation, and occupation data. Key achievements of the program include:

• Rapid deployment and wide coverage, disbursing over $23 million to more than 800,000 beneficiaries in the initial phase.
  • High levels of inclusion and transparency, facilitated by the use of digital tools and real-time monitoring.
  • Proof of the feasibility of digitally inclusive delivery systems, even in low-capacity settings.

However, Novissi was designed as a temporary emergency response and not integrated into a permanent social protection framework. The lack of institutionalization, legal backing, and recurrent funding mechanisms limited its long-term impact. Nonetheless, Novissi revealed the potential for digital infrastructure to overcome traditional delivery bottlenecks in social policy—particularly in identifying and reaching informal workers who are usually excluded from state services.

2.4.  Lessons from the Field

Across these case studies, several insights emerge:

• Policy design matters: Progressive goals must be matched by coherent policy instruments.

Regressive taxes or underfunded programs weaken redistributive impact.

• Fiscal legitimacy is key: Citizens are more likely to support taxation when there is transparency, fairness, and visible returns in the form of public services.
  • Innovation without institutionalization is insufficient: Digital tools offer powerful means for efficiency and inclusion, but without integration into broader systems, their impact remains limited.

• Sustainability requires domestic resource mobilization: Social protection cannot be scaled or sustained without a tax system that is both equitable and efficient.

3.  Public Policy Recommendations: Advancing Equity through Fiscal and Social Reform

To promote inclusive development and reduce inequality, West African countries must adopt a more integrated and strategic approach to progressive taxation and social protection. This requires addressing structural weaknesses, rebalancing fiscal priorities, and creating institutional mechanisms that enhance fairness, efficiency, and citizen trust.

3.1.  Deepen Progressive Taxation for Equitable Resource Mobilization

Tax systems across West Africa must be reoriented to reflect the principles of ability to pay and horizontal equity, while ensuring greater revenue generation.

• Broaden the personal income tax base by formalizing simplified tax regimes for informal workers. Presumptive taxation systems, designed to reflec sectoral realities, can enhance compliance while reducing administrative costs.
  • Introduce or reinforce wealth and property taxation as a cornerstone of progressive tax reform. This includes capital gains taxes, inheritance taxes, and real estate levies, supported by land registries and valuation systems to improve enforceability and transparency.
  • Rationalize tax expenditures and exemptions, which currently erode the tax base and favor elites and multinationals. Incentives should be conditional on measurable development outcomes (e.g., job creation, technology transfer) and subject to systematic evaluation.
  • Modernize tax administration and enforcement by investing in digital systems, taxpayer identification, and data integration. Linking national ID systems, banking data, and business registries can help identify underreported incomes and reduce tax evasion.

3.2.  Institutionalize and Scale Up Comprehensive Social Protection Systems

Social protection must evolve from fragmented, donor-dependent programs to universal, rights-based systems aligned with national development priorities.

• Establish national social protection floors in accordance with ILO Recommendation 202, guaranteeing access to basic income security, healthcare, and old-age pensions. This ensures minimum living standards and protects households from economic shocks shocks.
  • Link social protection financing to progressive taxation, creating an explicit fiscal contract that ties revenue mobilization to redistributive spending. Dedicated budget lines or ring-fenced funds can safeguard social spending from austerity pressures.
  • Strengthening targeting and delivery mechanisms using digital technology (e.g., interoperable social registries, mobile platforms) and community-based validation to reduce exclusion and leakage.
  • Move from project-based interventions to integrated systems, guided by clear legal frameworks, institutional mandates, and inter-ministerial coordination. This includes harmonizing social assistance, insurance, within a coordinated national strategy.

3.3.  Build Fiscal Legitimacy through Transparent and Participatory Governance

Without public trust, even technically sound fiscal policies risk failure. Legitimacy hinges on visible returns, accountability, and citizen engagement.

• Enhance transparency and public reporting on revenue collection, tax expenditure, and social spending. Open-access fiscal dashboards and citizen scorecards can foster accountability and strengthen tax morale.
  • Implement participatory budgeting at local and national levels to involve citizens in fiscal decision- making. This enhances responsiveness and ensures that public investments align with community needs.

• Launch “tax-for-services” communication campaigns that explicitly link tax compliance with tangible public goods (schools, clinics, infrastructure), particularly in underserved areas. This narrative can reframe taxation as a civic duty linked to visible collective benefit.
  • Develop fiscal pacts or social compacts during political transitions, reforms, or crises, ensuring that new taxes or austerity measures are accompanied by expanded protections and services for the most vulnerable.

3.4.  Strengthening Regional Cooperation and Solidarity Mechanisms

Given the integrated nature of West African economies, regional coordination is essential to avoid policy fragmentation and enhance collective resilience.

• Harmonize tax policies and administration across ECOWAS and UEMOA member states to minimize harmful tax competition and revenue leakage. Regional standards on corporate taxation, digital services tax, and wealth taxation can create a more equitable fiscal environment.
  • Establish a West African Social Protection Solidarity Fund, financed through coordinated levies (e.g., on extractive industries or cross-border trade), to support countries in scaling up safety nets during crises or fiscal shocks.
  • Promote peer learning and technical cooperation through regional platforms that share best practices, innovations, and data on tax policy, compliance, and social impact evaluations. This can enhance institutional capacity and accelerate harmonized reform across the region.

Conclusion

In West Africa, the promise of inclusive development hinges not only on growth but on how the fruits of growth are shared. Progressive taxation and comprehensive social protection systems are essential tools for promoting equity, stability, and sustainable development. While challenges remain, including informality, fiscal constraints, institutional weaknesses, there are clear pathways and inspiring innovations across the region.

By aligning tax justice with social justice, West African states can build a stronger fiscal social contract, empowering citizens, reducing inequality, and strengthening democratic legitimacy.