Since October 2021, YTJN has been implementing a project entitled "Amplifying Youth Voices in Revenue Mobilization, Allocation and

Utilization in East Africa‟ with support from the Open Society Initiative for Eastern and Southern Africa (OSIEA). This project aims at strengthening existing structures for youth engagement in revenue mobilization, allocation and utilization at national and regional levels and sharing useful information with youth about the importance of domestic revenue mobilization on a variety of media platforms that are accessible to them. 

In 2022, YTJN implemented a cycle of debates in Burundi, Kenya, Rwanda and

Tanzania around the central theme of “Amplifying youth voices against Harmful Tax Incentives in the East Africa Community” under the above named project. Consequently, youth in higher institutions of learning increased their knowledge on tax incentives and proffered solutions to their country governments ceding harmful tax incentives. For example youth recommended that East Africa countries should develop frameworks which guide the awarding, tracking and monitoring of tax incentives and they should align them with the East Africa Council of Ministers Directives on harmonization of tax incentives. 

YTJN is continuing with the implementation of this project in 2023. One of the interventions this year is organizing debates between youth in higher institutions of learning in Burundi, Kenya, Rwanda, Tanzania and Uganda in line with the African Union theme for the year 2023, “The Year of AfCFTA: Acceleration of the African Continental Free Trade Area Implementation”.  

Problem Statement

Domestic resource mobilization has become a concern for economies in the global south because of the changing international financial architecture. The reducing overseas development assistance (ODA) exacerbated by the multiple crises, like the COVID-19 pandemic, the adverse impacts of climate change, debt unsustainability, among other factors and the rising power of corporations have continued to necessitate governments in the global south to resort to domestic resource mobilization as a sustainable way to finance their development. The domestic resources have become fewer and fewer for most countries. The coming into force of the AfCFTA will see Tariffs on 90 percent of goods of State Parties reduced in equal annual installments until they are eliminated; 5 years for Non-least Developed Countries (NDCs) and 10 years for Least Developed Countries (LDCs). This is expected to present challenges for domestic resource mobilization management as countries will eliminate any duties on intra-African trade and adopt common external tariffs for intercontinental trade. 

In order to mitigate the loss of revenue losses during the implementation of the

AfCFTA, on March 10, 2023, the AfCFTA Secretariat and the African ExportImport Bank (Afreximbank) announced the launch of the AfCFTA Adjustment Fund in Kigali, Rwanda after the signing of the fund management agreement in relation to the Base Fund on 9th February 2022. The Adjustment Fund consists of a Base Fund, a General Fund, and a Credit Fund, which will work together to support African countries and the private sector in their adjustment process. The Base Fund will consist of contributions from State Parties, grants, and technical assistance funds to address tariff revenue losses as tariffs are progressively eliminated. It will also support countries to implement various provisions of the AfCFTA Agreement, its Protocols, and Annexes. The General Fund will mobilize concessional funding, while the Credit Fund will mobilize commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA [1]

The challenge with the Adjustment Fund is that it is supposed to consist of contributions from State Parties, the same State Parties who are unable to finance their budgets and are suffering debt crises. This poses a risk of plunging African countries into deeper debt distress and the youth will have to be shoulder this burden since they are likely to be alive for the longest time. It is also worrying that the fund will rely on grants, concessional funding and technical assistance funds in the face of the dwindling over-seas development assistance.

Further still, the resources required for the Adjustment Fund over the next 510 years are estimated at US$10 billion. However, Afreximbank has so far only committed $1 billion towards the AfCFTA Adjustment Fund. Despite the fact that this demonstrates its strong commitment to supporting economic integration and development in Africa, there is still a long way to go to attain the US$10 billion.

Several analysts have argued that taxes on increased economic activity on the continent will more than make-up for lost trade taxes in the medium to long term. However there is no assurance of such increased economic activity especially since the Regional Economic Communities on which the AfCFTA is anchored are still struggling to integrate economically despite several years of existence.