A powerful economic debate is once again taking center stage after a U.S. senator warned that excessively high taxes—often imposed to meet Western loan conditions—are choking economic growth across Africa. Local economic experts in Nigeria have now joined the discussion, saying the senator’s remarks reflect the harsh fiscal reality confronting African economies trapped between rising debt and stifling tax regimes.
In the senator’s words, “Poor African countries have the lowest wage workers in the world. Yet companies like Nike can’t put factories there because of oppressive tax rates. Taxes have killed any possibility of economic development—they’ve killed any hope of these countries ever helping themselves.”
He cited Tanzania’s 30% income tax rate—applied at just $475 of annual income—plus a 20% Value Added Tax (VAT) on goods, calling it a textbook example of how well-intended fiscal discipline has strangled private sector growth. “Those high tax rates make it impossible to build capital in those countries. So nothing gets built—not factories, not roads, not anything,” he said.
The senator argued that these high rates were designed to assure Western lenders such as the International Monetary Fund (IMF) and World Bank that African nations could repay their debts. “The tragic unintended consequence of our good intentions toward Africa,” he added, “is that we’ve encouraged those countries to lock themselves into a gruesome economic depression.”
Nigerian Economists Echo the Concern
Reacting to the remarks, Nigerian economists say the warning should serve as a wake-up call for the continent’s policymakers. Economist and financial analyst Celestine Ukpong described the senator’s statement as “a brutally honest reflection of the African fiscal crisis.”
According to Ukpong, “Nigeria’s current debt service-to-revenue ratio exceeds 70%, yet the country continues to borrow aggressively while expanding its tax net. Without real productivity growth, higher taxes only suffocate businesses. We’re borrowing to survive instead of borrowing to invest.”
Similarly, Dr. Ngozi Akande, a Lagos-based fiscal policy expert, argued that Nigeria’s recent tax reform efforts—though intended to improve compliance and revenue generation—risk discouraging investment if not balanced with a pro-growth strategy. “Tax reform should not mean tax increase. The government must prioritize widening the base and reducing rates to stimulate economic activity,” she said.
The Borrowing–Taxation Dilemma
Nigeria’s public debt hit record highs in 2025 amid falling oil revenues and mounting social spending. To reassure creditors, the government introduced new tax enforcement measures through the Finance Act and the Tax Reform Implementation Committee, led by fiscal expert Taiwo Oyedele.
While these reforms aim to simplify the tax system and reduce evasion, business owners say the implementation remains harsh in practice. “The informal sector is already overtaxed through multiple levies at the state and local government levels,” noted Dr. Akande. “Over-regulation and aggressive collection only deepen poverty and discourage entrepreneurship.”
Experts warn that without genuine fiscal discipline and export-led growth, the combination of high taxes and ballooning borrowing could mirror the “debt dependency spiral” described by the U.S. senator.
A Call for Fiscal Reawakening
The senator’s call for tax cuts and debt forgiveness found resonance among Nigerian analysts who believe Africa needs a fresh development model—one centered on capital formation, job creation, and industrialization rather than revenue extraction.
Ukpong concluded, “Africa doesn’t need more charity or loans—it needs policy courage. We must build wealth from within. Tax cuts that attract investors and empower small businesses could do more for Africa’s future than any foreign aid package.”
As Nigeria and other African nations grapple with rising debt costs and sluggish growth, the global debate over taxation and development continues to intensify. The question remains: can the continent find the balance between fiscal responsibility and economic freedom—before its growth potential is permanently stifled by the very policies meant to save it?
Amid rising debt and new tax reforms, Nigerian economists back a U.S. senator’s warning that Africa’s high taxes are strangling growth and investment. Experts urge Nigeria to shift from debt dependency to pro-growth fiscal policies.
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