As foreign aid recedes and Africa strives for economic self-determination, a surge of new thinking is transforming Ethiopia’s approach to financing national development. The recently released Mo Ibrahim Foundation report, “Financing The Africa We Want,” makes the case that the continent must maximize domestic resources—and in Ethiopia, much of that potential lies untapped within the tax system. Increasingly, Ethiopian policymakers, inspired by continental debates and global best practices, are turning their attention to modern technology as the key to a tax revolution.
The Mo Ibrahim Foundation sets the context bluntly: “The end of traditional aid is neither unexpected, nor the end of the world for our continent… The responsibility for delivering this vision belongs to us, not to any partner. The good news is we have the resources to make this a reality.” For Ethiopia, whose development agenda hinges on the realization of the African Union’s “Agenda 2063: The Africa We Want,” this means leveraging technology to boost tax collection, close revenue gaps, and fund national priorities from education to infrastructure.
Historically, Ethiopia’s tax-to-GDP ratio has lagged behind emerging-market peers, hovering below the African average. With external public debt rising and aid flows shrinking, the government faces mounting pressure to increase domestic revenue. According to the Foundation’s findings, Africa overall collects just 14% of its GDP in taxes, the lowest of any region in the world—a critical weakness when contrasted with the rapidly growing population and ambitious public investment targets.
For Ethiopia, the stakes are higher still: an expanding social safety net, the need to modernize basic infrastructure, and growing demands for public health and climate adaptation all rely on predictable, sustainable financing. Yet tax evasion, a large informal sector, and outdated tax administration have undercut the country’s revenue base.
In response, Ethiopia is increasingly embracing digital transformation in its tax system—a move directly aligned with the Mo Ibrahim Foundation’s call for leveraging new technologies to maximize domestic resources. Ministry of Revenue, with support from regional partners, has begun to roll out a range of digital innovations: such as E-filing and E-payment Systems, Mobile Money Integration and Digital ID and Biometric Registration.
One of the report’s critical focuses is on formalizing Africa’s vast informal sector, which accounts for an estimated 60-80% of employment in Ethiopia. Through digital tools like e-invoicing, point-of-sale (POS) devices, and simplified mobile registration, the government is gradually drawing small businesses into the formal tax net. These tools make tax registration less daunting for market traders and entrepreneurs, while analytics capabilities help tax authorities identify and integrate missed segments—without relying solely on in-person audits.
The adoption of data analytics and artificial intelligence by Ethiopian authorities is beginning to close historical loopholes. By cross-referencing digital payment records, bank accounts, and import/export data, officials can more efficiently identify under-reporting and illicit financial flows. According to the Mo Ibrahim Foundation, Africa as a whole loses around $90 billion a year to capital flight and tax evasion—more than it receives in aid. Ethiopia’s new digital ecosystem, if fully realized, could claw back a major portion of these lost resources.
However, the report makes clear that boosting tax collection is not only about technology. Trust in government, responsive service delivery, and public transparency are essential. “Ownership comes with responsibility and accountability,” Dr. Mo Ibrahim notes in his foreword. A survey cited in the report found that half of Africa’s citizens would accept higher taxes if government services improved—highlighting the link between effective tax collection, good governance, and public legitimacy.
By harnessing new technologies, Ethiopia stands to sharply increase its tax revenue, enabling greater investment in roads, schools, health care, and climate resilience. Progressive taxes on wealth and property, efficiently collected through digitized registries, offer a pathway to not only closing the country’s fiscal gap but also reducing inequality.
Moreover, technological modernization makes Ethiopia—and Africa as a whole—a more attractive destination for private and foreign investors, who value transparency and predictable regulatory frameworks. As the Mo Ibrahim Foundation report emphasizes, “Africa must own and define its financial agenda, grounded in governance, accountability, and regional integration.”
There are still roadblocks. Rural connectivity deficits, limited digital literacy, and resistance to formalization persist, and Ethiopia must continue investing in both digital infrastructure and taxpayer education. However, the current trajectory is unmistakable: with political will and technological innovation aligning, Ethiopia could become a leading example of how African nations can finance their own development—not out of necessity, but as an expression of sovereignty and ambition.
As donors step back, Ethiopia’s pivot toward digital tax collection offers a template for other African economies. The future, as outlined by “Financing The Africa We Want,” starts not with handouts, but with homegrown, technology-driven solutions that put Africans in charge of Africa’s destiny.
