How Government Debt, Inflation, and Taxes Impoverish African Economies

As first remarked in The Scale of Statism, one of our time’s most significant and detrimental misconceptions is the (scholarly and popular) view that the United States and other Western economies are capitalist systems with market economies. The West has projected itself as the stronghold of free-market capitalism while only partially adopting free-market economic principles. The United States, other Western countries, and the current global order are statist systems that lean more toward a socialist economy than a free-market capitalist one.

That is a crucial contextual fact. To most, the present statist world, with its excessive debt levels, rampant (monetary, asset, and price) inflation, heavy taxation, economic turmoil, stagnation, incessant geopolitical conflict, and other issues, is seen as a reflection of capitalism while the truth is that this ruinous situation is caused by statism.

Contemporary economies are state-managed, not market-driven (capitalism). It is time to rethink the established view that Western countries and the current global order are or have been capitalist systems. Moving away from this mistaken perspective and acknowledging the (heavily) statist nature of the current global order established by Darwinian Western imperial states would benefit human economic development, prosperity, peace, and civilization.

Another relevant aspect of the current global order is that it has been based on fiat monetary systems since 1971. Excessive debt, rampant inflation, and heavy taxation are features of the present statist global order rather than characteristics of African economies only. It is in this context of a statist and militarist global order and in the backdrop of Cold War geopolitics that most postcolonial African leaders embraced socialism, doubling down on the centralized, repressive, and autocratic government structures imposed by colonial rule. In this context, the state-managed approach to economic development has been adopted, with decades of evidence showing that it has been disastrous.

Consequently, post-neocolonial Africa (and the world) is characterized by heavily statist socioeconomic systems and autocratic governance. The state-directed, technocratic approach to managing economies has proven repressive and ruinous, leading to injustice, impoverishment, conflict, dependence, and other detrimental issues that mark postcolonial Africa. For decades, the recurring outcomes of prevailing statist systems have been the centralization of political and economic power, trapping African nations in a ruinous cycle of oppression, debt crisis, rampant inflation, instability, and stagnation that cause widespread human suffering.

Government debt, monetary inflation (currency and credit creation), and heavy taxation are central policies severely hindering African capital formation, economic development, and prosperity. Deficit spending, monetary inflation, and high taxes are destructive policies that destabilize and impoverish economies in Africa and around the world. African economies will not become stable and prosperous if African governments maintain government debt accumulation, fiat monetary policy, and heavy taxation as policies.

Detrimental Policy One: Government Debt

Government debt accumulation due to persistent deficit spending is a policy adopted by political figures of all stripes that destabilizes and impoverishes economies in Africa and worldwide. While excessive government debt levels are a global phenomenon primarily due to the current fiat, debt-based monetary system based on the United States dollar, the detrimental impact of government debt and deficit spending varies significantly across countries.

More diversified, productive, and developed economies such as the United States, Japan, Germany, and others have the relative economic stability and strength to absorb the harmful effects of government debt accumulation and deficit spending for longer, with adverse effects manifesting more insidiously than rapidly. In contrast, less stable, diversified, and developed economies typically face the destabilizing and impoverishing effects of government debt accumulation more rapidly and destructively, sometimes with deadly consequences, as the recent nationwide anti-government protests over excessive taxation in Kenya have shown.

Despite being a feature of the current statist global order, African policymakers should avoid accumulating government debt and engaging in deficit spending. They must prioritize fiscal solvency, as this is crucial for fostering stable and thriving African economies. Credit conditions have tightened and may continue for a while, even if the U.S. central bank were to embark on a (short-term) rate-cutting cycle. Belt and Road Initiative lending has also become restrained, signaling that the Chinese loan bonanza is effectively over.

Deteriorating economic conditions, both locally and globally, call for African governments to move away from the debt-based approach, a model promoted by the West, which has proven ruinous, and pursue solvency and sound economic policies to promote African economic stability and prosperity. The current wave of government debt distress in Africa and increasing debt servicing costs call for a fundamentally different approach, one that prioritizes fiscal solvency and sound economic policies.

Figure 1: The global government debt situation is grim. Government debt levels have increased significantly since the 2008 global financial crisis, contributing to an increasingly precarious socioeconomic situation in most countries today.

Compounding the perils and detrimental impact of government debt accumulation is that African countries face higher interest rates on their dollar-denominated debt than Western and other governments due to (real or perceived) political risk, regulatory uncertainty, and other factors. A 2024 report by the United Nations Trade and Development Commission, A World of Debt, observes:

Developing countries are now facing a growing and high cost of external debt. Debt service on external public debt reached US$ 365 billion in 2022, equivalent to 6.3% of export revenues. For comparison, the 1953 London Agreement on Germany’s war debt limited the amount of export revenues that could be spent on external debt servicing (public and private) to 5% to avoid undermining the recovery.

This dynamic is largely a result of high borrowing costs which increase the resources needed to pay creditors, making it difficult for developing countries to finance investments. Developing regions borrow at rates that are 2 to 4 times higher than those of the United States and 6 to 12 times higher than those of Germany.

Governments should take increasing debt servicing costs seriously because they significantly strain government finances and divert much-needed funds from essential services and sectors. This policy leads to a destructive cycle where the need for further borrowing to cover budget shortfalls and service the debt creates a cycle of more debt accumulation, monetary inflation, and higher taxes, worsening economic troubles.

Many African countries, particularly Zambia, Ghana, Ethiopia, Egypt, and Kenya, are again grappling with a debt crisis; some have partly defaulted on their Eurobond obligations. This destabilizing and impoverishing situation underscores the pressing need for African policymakers to abandon the policy of government debt accumulation and deficit spending to foster economic development and prosperity.

In an article tellingly titled The Poisoned Chalice of Debt, Mark Aguiar, a mainstream economist associated with the IMF, highlights essential facts about government borrowing and deficit spending that are relatively well-understood among free-market economists. Aguiar notes: “The data suggests that sovereign borrowing may actually leave citizens worse off, increasing volatility and lowering investment.” The longer conclusion reads:

The value of sovereign debt markets to the borrowing countries is ambiguous, whether viewed from the perspective of the data or quantitative models. With small differences over the rate of time discounting or risk-reward valuations, it may be that access to sovereign bond markets leaves economies worse off. The political economy distortions in many developing or emerging markets are severe enough that governmental access to global capital markets turns out to be counterproductive—increasing volatility and lowering investment. Even something like a lender of last resort that can unambiguously identify a panic may make things worse, not better.

Policymakers are not addressing the central issue of government overspending; instead, they are resorting to accumulating more debt, monetary inflation, and imposing a heavier tax burden. While politically expedient, this approach is causing economic instability and impoverishment and perpetuating structural injustices. The detrimental effects are evident as economic conditions deteriorate across the continent and globally.

African policymakers must discard this repressive and ruinous model to facilitate stable and thriving economies. If African leaders are committed to fostering African economic development, prosperity, and independence, they must abandon government deficit spending and prioritize solvency and sound economic policies.

A policy of government debt accumulation is insidiously destructive, leading to economic instability, deterioration, and social strife. This approach decreases the availability of capital for productive entrepreneurial activities, stifles private sector growth, raises borrowing costs, leads to monetary inflation and heavier tax burdens, bloats the state bureaucracy—which has its own set of detrimental consequences for society, undermines innovation and productivity, depresses wages, exacerbates wealth inequality, and hinders economic development and prosperity.

In other words, a policy of government debt accumulation and deficit spending leads to economic distortions, instability, and destruction, detrimentally impacting people’s lives. This policy aggravates the structural injustices of current statist socioeconomic systems.

The South Asian nation of Sri Lanka has been facing a severe economic crisis since 2019, leading to socio-political unrest. Sri Lanka is a cautionary example, a clear warning against the current policies maintained by governments in Africa and elsewhere. The devastating economic collapse in Sri Lanka, primarily caused by excessive government debt and deficit spending combined with other statist policies, should serve as a reminder of the need for a shift in economic policies in other countries, particularly developing ones.

The world is in debt distress, and many nations, notably in Africa, are on a precarious fiscal path. African governments appear unwilling to acknowledge the dangers of excessive debt and deficit spending, insisting on this destabilizing and destructive approach, which drives economies toward a more unstable and worsening economic situation.

The current wave of government debt distress in Africa could result in a more widespread debt crisis (again) if the policy of debt-based government spending is not abandoned. Credit conditions have tightened and may remain so for a while. The Chinese loan bonanza is over as China’s economic crisis deepens and geopolitical tensions rise. In this precarious environment of restrictive lending, increased uncertainty, and mounting debt-servicing costs, even African economies not presently facing debt distress will face difficulties raising funds from international debt markets.

This underscores the need for a fundamentally different approach to African economic development and prosperity, moving away from statism and Western models, which have proven repressive and ruinous. Africonomics provides a transformative economic model for achieving integrated, stable, and thriving African economies.

While a few African countries, such as Sudan, Eritrea, Cape Verde, Mozambique, and Egypt, have a debt-to-GDP ratio around or above 90 percent, the average debt-to-GDP ratio in Africa is relatively low at approximately 60 percent. This is significantly lower than the average debt-to-GDP ratio of more developed countries and other regions, many of which have surpassed the 100 percent debt-to-GDP ratio. Despite these relatively low government debt levels, African economies suffer the destructive consequences of this policy more quickly and incisively due to structural economic deficiencies.

Government debt accumulation is a destabilizing, impoverishing, and unjust policy that must be abandoned. African policymakers must adopt a market-driven approach to economic development to foster stable and thriving economies and achieve fiscal solvency and independence.

Hatab et al. remarks:

Nearly half of Africa’s economies are on the brink of debt distress. Unlike previous debt crises, the current one is characterised by a shift from multilateral to commercial and bilateral creditors, notably China, and the proliferation of Eurobonds. Pressured by heavy debt burdens, there is a risk that African governments divert funds from essential sectors such as education, health care and agriculture, causing a vicious cycle of stalled development, food insecurity, and an elevated risk of socio-political instability.

Government debt accumulation and deficit spending are central economic issues that politicians should not continue to overlook, as this policy destroys economies and lives. This model is destructive and cannot continue indefinitely. Even a large and advanced economy like the United States cannot maintain a policy of government debt accumulation and deficit spending without facing its ruinous consequences.

The destabilizing and impoverishing nature of debt-fueled government spending is increasingly evident in many countries worldwide. The detrimental effects of government indebtedness tend to be more severe and manifest faster in developing countries than in more developed ones. African policymakers are called to abandon the ruinous policy of government debt accumulation and deficit spending.

Below are ways in which government debt accumulation and deficit spending distort, destabilize, and impoverish economies:

1. Debt-driven government spending perpetuates autocratic state-led development models, which have proven unable to transform Africa's economic landscape. This model has led to the prevalence of centralized, confiscatory, and repressive government systems typically propped by Western and other lending organizations. After more than 50 years of attempts, it is clear that the state-directed technocratic approach to economic development has failed to foster stable and prosperous African economies, resulting in chronically unstable and troubled economies facing worsening economic conditions;
2. By perpetuating the autocratic state-led development model, government debt accumulation and deficit spending also perpetuate repression and structural injustices. This model traps African nations in a destabilizing and impoverishing cycle of recurring debt distress, rampant inflation, widespread corruption, economic instability, stagnation, and hardship. This model is further detrimental as it deters the adoption of sound economic policies that can foster integrated, stable, and thriving African economies—prolonging the ruinous cycle of tyranny, poverty, instability, and dependence;
3. The prevailing policy of government debt accumulation, a model established and promoted by Western governments and institutions, props up autocratic regimes, fueling widespread economic, political, and intellectual repression in Africa and around the world. It undermines the implementation of pro-market and free trade reforms, such as the African Continental Free Trade Area (AfCFTA), which is essential to adopting a collaborative approach to economic development among African societies. In other words, this policy exacerbates poverty, sustains autocratic governments—a hallmark of post-neocolonial Africa, maintains economic repression, and hinders African economic development and prosperity. The government debt accumulation and deficit spending policy leads to oppression, injustice, impoverishment, and socioeconomic instability;
4. Increasing debt servicing costs worsen the economic situation of tormented economies beset with currency depreciations, rampant inflation, forex volatility, stagnation, mass unemployment, and other longstanding issues created by the current autocratic approach of state-led development and state-managed economies. The detrimental impact of government debt accumulation is compounded by the fact that African countries pay much higher interest rates on their external debt than Western and other countries;
5. As the government accumulates more debt, this policy becomes increasingly destabilizing and destructive. It also typically leads to more and higher taxes to support the growing debt obligations. This results in a more confiscatory and oppressive tax regime. Heavy taxation is a detrimental policy that worsens economic troubles by further impeding economic development and prosperity, contributing to economic deterioration. Hindered economic growth perpetuates poverty, human suffering, and poverty-related deaths. African countries have some of the highest maternal and infant mortality rates globally. These and other tragic poverty metrics highlight the failure of the state-led economic development approach;
6. Like in other parts of the world, government spending in Africa is often plagued by embezzlement, overbilling, kickbacks, wastefulness, and other corrupt practices. This problem is evident in examples such as Kenya’s infamous “railroad to nowhere” and the misuse of funds from Chinese loans in countries like Angola, DR Congo, and others during the Chinese loan bonanza period (c. 2001 to 2021). Debt-driven government spending also tends to attract unscrupulous politicians who make unrealistic electoral promises to get to or stay in office, as well as special interest groups and opportunists seeking to profit from profligate government spending. This arrangement leads to continued government debt accumulation, deepening its detrimental effects;
7. Government debt accumulation exacerbates income-wealth inequality. Government spending, monetary inflation, and bloated state bureaucracy benefit the wealthy, corporate interests, political elites, and their associates to the detriment of the majority. Some of the most economically unequal countries in the world are found in Africa. The severe economic inequality that characterizes postcolonial Africa is one of the grievous consequences of the socialist and other statist systems maintained during the postcolonial period. Many wealthy Africans are political figures or individuals with direct or indirect ties to their government;
8. Government debt accumulation is detrimental to present generations and adversely impacts future generations. This policy leads to a situation where current and future generations suffer the consequences of government spending fueled by debt. These consequences include higher taxes, loss of purchasing power due to currency debasement, and an unstable and stagnant economy. As noted, government spending typically involves embezzlement, kickbacks, and other corrupt practices, which result in wasteful and counterproductive projects.
   
   Despite this, present and future generations bear the burden and hardships of grappling with price inflation, heavier taxes, intrusive and debilitating bureaucracy, repression, higher cost of living, inferior goods and services, and other longstanding issues afflicting African economies. Meanwhile, political elites, corporate interests, and their associates benefit at the expense of the broader population, who face confiscatory and impoverishing policies. Government debt accumulation is an unjust, destabilizing, and destructive policy;
9. Additionally, government debt is a crucial tool in the Western strategy of neocolonial control and continued domination of African countries. It is promoted and employed to trap African nations in oppression, poverty, dependence, and vassalage. While the West initially established the exploitation of debt to assert power and dominance for its advantage, other countries now utilize it to gain leverage over African governments.

African policymakers must abandon the autocratic state-led development model and government debt accumulation, which has proven repressive and ruinous, and adopt a market-driven approach to economic development in light of increasing debt distress, economic crisis, and worsening economic conditions. Africonomics presents a fundamentally different approach, offering a transformative economic model to foster a new reality of integrated, stable, and thriving African economies—leading to an independent and dignified postcolonial Africa. A goal African leaders have the moral obligation to pursue.

Detrimental Policy Two: Monetary Inflation

It is pertinent to address the widespread confusion about the nature and causes of inflation by clarifying the terms and types of inflation prevalent in today’s state-managed fiat currency economies. In this article explaining why the definition of inflation has been altered to indicate a general increase in prices across the economy, I wrote:

Monetary inflation is the artificial expansion of the money and credit supply (money printing), which is the original definition of inflation. Price inflation is a generalized though uneven rise in prices of goods and services across the economy, which is a primary and most noticeable consequence of monetary inflation. Asset price inflation is the artificial increase in financial asset prices resulting from a policy of monetary inflation.

There are more than 40 national currencies in Africa, most of which are highly unstable and unreliable—the lack of monetary stability and reliability hampers economic development and prosperity. The unstable, untrustworthy, and detrimental nature of African fiat currencies has been a principal destabilizing and impoverishing factor of the current statist socioeconomic systems, severely hindering African capital formation, economic stability, development, and independence.

Additionally, frequent volatility in exchange rates and arbitrary currency devaluations are longstanding monetary issues that continue to debilitate postcolonial African economies. These issues have aggravated the destabilizing and impoverishing effects of centrally managed monetary systems under the fiat dollar standard.

Post-neocolonial Africa has been tormented by severe monetary (and thus economic) instability, with rampant inflation, currency crises, erratic currency devaluations, currency resets, and even cases of hyperinflation (Angola, Zimbabwe, and more). This chaotic and impoverishing economic situation is not accidental or natural but rather an inherent consequence of centralized fiat monetary management. As a result, economic turmoil rather than economic stability has been the norm in postcolonial Africa, leading to continued stagnation, impoverishment, and hardship.

The monetary history of postcolonial Africa can be summarized in three words: turmoil and impoverishment. The current era of central bank-managed fiat monetary systems, or fiat monetary policy, continues to devastate economies worldwide, but it has been notably destabilizing and destructive to African economies. Decades of currency and credit printing, rampant price inflation, arbitrary devaluations, and forex volatility have had an immeasurable detrimental impact on the continent by severely deterring African capital formation, economic development, and prosperity.

Fiat monetary policy has not only hindered African capital formation, economic stability, and growth but has also been a significant factor contributing to African talent leaving the continent. It has also hampered economic development by repelling foreign capital, expertise, and talent instead of attracting them. In other words, fiat monetary policy has gravely hampered and continues to hamper African capital formation, economic stability, and prosperity.

Fiat monetary systems are cruel and oppressive, constituting a confiscatory structural injustice in existing statist socioeconomic systems. Fiat monetary practices, such as currency debasement and arbitrary devaluations, often directed from outside Africa, dispossess people of their hard-earned purchasing power and rob them of economic well-being. The adverse effects of these currency systems on Africa’s economic landscape and people cannot be overstated, as they have been a primary destabilizing and impoverishing policy of contemporary state-managed economies.

Figure 2: The present era of central bank-managed fiat monetary systems has been chaotic and ruinous for African economies.

Understanding that monetary inflation (currency and credit printing or currency debasement) has a severely detrimental impact on society and people's lives through various adverse effects such as price inflation, boom-bust cycles, and persistent economic instability is imperative. Monetary inflation can cause a catastrophic economic collapse through hyperinflation if used excessively to support ongoing government deficit spending.

Nonetheless, mainstream economists and most politicians are unlikely to acknowledge the unsustainable and ruinous nature of fiat monetary systems. This is primarily because it is in their interest to defend and justify these practices despite evidence from various countries and throughout history demonstrating the destabilizing destructive effects of fiat monetary policy.

Moreover, a policy of monetary inflation is unethical and fraudulent. It is a cruel and confiscatory structural injustice—an odious form of corruption institutionalized worldwide by the West led by the United States. A paragraph from a recent paper discussing the fraudulent and ruinous nature of fiat monetary systems reads:

Fiat monetary systems underpin the current statist and militarist global order established by Western imperial states. Although money and credit creation, also known as money printing, had been rampant before the remaining link to gold was removed by the Nixon administration in 1971, it became effectively institutionalized worldwide since then, as this fateful decision made the United States dollar and therefore, the world’s national currencies, completely fiat forms of money. Fiat currency systems are inherently problematic monetary arrangements with a track record of causing economic instability and devastation since their introduction during China’s Song Dynasty around the 10th century CE.

As the economist Ludwig von Mises warns:

If inflation could go on forever, there would be no point in telling governments they should not inflate. But the certain fact about inflation is that, sooner or later, it must come to an end. It is a policy that cannot last. In the long run, inflation comes to an end with the breakdown of the currency; it comes to a catastrophe, to a situation like the one in Germany in 1923 [or Angola in the 1990s, Zimbabwe in the 2000s, Venezuela more recently, among other cases].

A stable, reliable, and uncorrupted currency is crucial for economic stability and prosperity. Coupled with property rights, minimal taxation, the rule of law, and economic freedom, a stable and trustworthy currency, such as a commodity-linked currency system, encourages local capital accumulation and investment, fostering sound economic growth and prosperity. It attracts foreign capital and talent, further boosting sound economic development.

On the other hand, unreliable and inflationary currencies are destabilizing and lead to impoverishment. They cause rampant price inflation and economic instability, undermining capital formation and attraction and hindering investment, production, and growth, among other adverse effects. Capital formation, investment attraction, and productive, market-driven enterprise are crucial for economic development and prosperity. Economic development and prosperity are significantly stunted in nations with inflationary and unreliable currencies.

The fiat monetary practices of African governments perpetuate rampant price inflation, economic turmoil, stagnation, and hardship. This policy choice severely undermines African capital formation and investment, keeping the local pool of capital artificially at a dismally low level. African countries have become highly dependent on aid, loans, and foreign capital injections. The development aid model, consistently pushed by the West, leaves African governments increasingly in debt and at the mercy of foreign creditors. This erodes their sovereignty and increases their vassalage.

To compensate for fiscal shortfalls and manage debt obligations, African governments resort to more currency printing (and imposing heavier taxation), which further destabilizes and impoverishes the continent’s repressed and stagnant economies. This statist approach dispossesses people of their purchasing power and economic well-being, as the national currency is methodically and arbitrarily debased, taxes increase, and economic conditions deteriorate.

Understanding the foundational and central role money plays in enabling modern societies to function and thrive is key to comprehending the vital importance of a stable and reliable currency is for economic development and prosperity.

As explained in Money Demystified: Understanding Why, How, and What It Is, money is the cornerstone of indirect exchange societies and the fundamental good in the economy. It represents purchasing power, intermediates economic transactions, and communicates crucial information, incentives, and disincentives that guide economic decision-making and activity. Consequently, the economy becomes distorted, unstable, and troubled when the national currency is corrupted through artificial currency and credit manipulations. This corruption extends throughout society as government intervention and control expand, resulting in a bloated bureaucracy, repression, economic instability, and deterioration.

The detrimental impact of fiat monetary policy on society is subtle yet extensive and devastating, especially in Africa and other developing regions, where it has been particularly debilitating. The current era of centrally managed fiat monetary systems has been causing widespread economic turmoil and destruction long before the current global inflation crisis. A stable and trustworthy currency system like the nilar is essential for solving Africa’s longstanding monetary and economic woes. The existing fiat currency systems perpetuate tyranny, poverty, instability, and structural injustices, causing widespread suffering and destruction of lives.

Instead of waiting and hoping for an alleged BRICS currency, which may not materialize, African policymakers can replace the destabilizing and impoverishing fiat currency systems with a single currency: the nilar, a gold-based monetary system designed for African economies. This shift can bring much-needed monetary reliability and economic stability, ending the chaotic and ruinous era of fiat monetary policy. The nilar is a transformative economic model for building a new reality of integrated, stable, and prosperous African economies, leading to an independent and dignified postcolonial Africa.

Fiat monetary policy has been a destabilizing, impoverishing, and oppressive element of contemporary state-managed economies. Rampant (monetary, asset, and price) inflation, economic turmoil, dispossession, injustice, and impoverishment are ruinous consequences of existing fiat monetary systems. A sound currency system must be implemented for African economies to effectively root out rampant inflation, currency crisis, forex volatility, and other detrimental issues stemming from the current statist approach of fiat monetary policy. Africonomics offers the nilar.

Detrimental Policy Three: Heavy Taxation

Nnete Okorie-Egbe was a Princess from Akwete in Nigeria who led a women’s revolt against British colonial tyranny, particularly taxation, in 1929. Similarly, a famous Angolan folklore tale depicts a protest against Portuguese colonial taxation. Locals in the then village of Caxito reportedly sent an alligator with a bag of money in its mouth to the local colonial office to pay the imposed taxes as a form of protest.

Although this is most likely a myth, the tale’s significance is real, and it has been immortalized as an alligator monument in the now city of Caxito due to its strong symbolism and message. The message indicates that the local population resented and disapproved of the Portuguese imposition of taxation.

Figure 3: Princess Nnete Okorie-Egbe of Akwete, Nigeria. The Caxito anti-taxation monument in Angola.

Stories of anti-taxation protests are common across Africa. This is unsurprising because permanent and excessive taxation was imposed during colonial times. Note that while nominal levies or customary tributes were offered to kings and chiefs, taxation in precolonial Africa was minimal or nonexistent for the most part.

Colonial governments imposed permanent and confiscatory taxes, destroying this centuries-old non-coercive heritage and imposing extractive and tyrannical taxation. Sadly, postcolonial African governments have perpetuated this practice, resulting in increased levels of confiscatory and oppressive taxation throughout the continent. This policy is inconsistent with the principled and nonaggressive nature of the African worldview.

It is worth clarifying that contrary to prevailing misconceptions, precolonial Africa was not devoid of enterprising, trading, and productive economic activity. Africa’s economic heritage primarily consisted of free enterprise, free trade, and commodity (sound) money rather than centralized and autocratic governance or socialist-like arrangements. As the economist and economic historian George Ayittey points out (Africa Unchained, p. 31):

Markets were not invented by Europeans and transplanted into Africa. There were free village markets in Africa before the Europeans stepped foot on the continent. This is not a veiled attempt to rewrite history but a statement of fact. Timbucktu, Salaga, Kano, and Mombasa were all great market towns of yesteryear. It is rather bizarre and an act of unpardonable cultural sabotage for African governments to pursue strident anti-market policies. For example, rural market activity in Africa has always been dominated by women, and these women traders have always been free enterprisers. And free trade routes crisscrossed the continent even centuries before the arrival of the Europeans. Free village markets, free enterprise, and free trade have always been part and parcel of Africa's indigenous economic heritage.

As remarked, nominal levies or customary tributes were voluntarily offered to kings and chiefs in most precolonial Africa, with minimal or nonexistent overall taxation. In contrast, contemporary Africa is characterized by heavy taxation, a confiscatory, oppressive, and impoverishing policy enforced through state aggression.

Nationwide protests against overtaxation have tragically erupted in Kenya last and this year. The June 2024 anti-taxation protests were particularly tragic as it was more deadly than the 2023 demonstrations due to the militarist and violent response of the Kenyan government. Instead of listening to the popular demand and engaging with the youth, the government responded with a violent crackdown, using live bullets against unarmed and peaceful protesters.

Wanjiru Muthui, a female protester, took to her social media to express her distress over the tragic events:

l intended to share a message of hope today, but circumstances demand we address the brutal reality. We began our protests peacefully, united against the injustices of the Finance Bill 2024. Yet the response was brutal-bullets and teargas were unleashed upon us. Yes, some opportunists took advantage of the situation to destroy and steal property, and in some cases, citizens were angered by the betrayal of their representatives in parliament. But this does not justify the sheer scale of violence displayed by the police on unarmed civilians.

There are 7 confirmed killings, many injured, and others missing. Among the victims were doctors and paramedics who were attending to protesters. And that's not all. Last night, police carried out what can only be described as a massacre in Githurai. Numbers are still coming in, with estimates over 40 murders, including a woman simply selling fruits and vegetables. Irrefutable evidence through videos and images, along with police admissions, confirm over 758 rifle rounds were used on unarmed protesters in Githurai.

The President has labeled our calls for change as treason. If demanding justice and a better future is treason, then so be it. Our fight goes beyond the Finance Bill. We are fighting for the soul of our nation, for a future where leadership is accountable and the rights of the people are upheld. How can they justify using live bullets on people armed with handkerchiefs, water bottles, and phones? This is not right, and it must end.

Western statist economic models continue to devastate African economies and lives. The heavy tax burdens imposed on African economies by African governments are confiscatory and oppressive, and this policy significantly hampers African economic development and prosperity. Africa must decouple philosophically from the West and abandon statism to build a stable, prosperous, and dignified postcolonial Africa with Africonomics.

The current levels of taxation in Africa are so confiscatory and oppressive that they might resuscitate Nnete Okorie-Egbe to lead another tax revolt or make the then Caxito villagers so outraged that they might send not just one but one hundred alligators to the tax office in protest. Most precolonial African polities had minimal to no taxes. Most postcolonial African societies are heavily taxed, yet economic stability and prosperity are nowhere to be seen.

Business Insider Africa reports:

Corporate tax rates are generally higher in developing countries. In Africa, the average corporate tax rate is 27.5%—the highest of any region. Chad, Comoros, Equatorial Guinea, Guinea, Sudan, and Zambia all tie for the second-highest corporate tax rate in the world at 35.0%. Many countries in the region also rank as the worst for ease of doing business, with high start-up costs and multiple barriers to entry.

Flourishing businesses, particularly small and medium enterprises, are crucial for a nation’s economic development and prosperity and are the principal source of employment. Taxation should be minimal to promote capital formation, investment, and productive enterprise and attract foreign investment and talent. While politicians are not known for honesty and adhering to sound economic principles, it is essential to recognize that economic development and prosperity cannot be achieved with a policy of excessive taxation. African governments should avoid taxing their way to success, as no other economy has ever accomplished this, and they will not be the first.

Despite having some of the highest business tax rates globally, poverty remains widespread in Africa. Longstanding issues such as debt crises, rampant inflation, economic turmoil, and deterioration have noticeably deepened over the past decade. Contrary to the "Africa Rising" narrative, it has been another lost decade. Economic conditions continue to deteriorate across the continent, resulting in widespread protests and sociopolitical instability. This underscores the need for a fundamental change in economic policy choices.

Indeed, if heavy taxation and government spending were the keys to economic development and prosperity, Africa would be among the most economically prosperous regions in the world. Government deficit spending, high debt, and heavy taxation are policies that destabilize and impoverish African economies, perpetuating tyranny, poverty, instability, injustice, and dependence.

African leaders must prioritize African economic development and prosperity by abandoning Western economics and the state-directed approach to economic development, which has proven oppressive and ruinous, and embracing Africonomics. Africonomics offers a transformative economic model for achieving integrated, stable, and thriving African economies.

The burden of heavy taxation in Africa affects not only businesses but individuals also. Take, for example, the case of Ivory Coast, which imposes a staggering personal income tax rate of 60 percent, the highest in the world. Another instance is South Africa, which is among the top ten most heavily taxed globally. South Africa may have the most confiscatory and oppressive tax regime in Africa. These and other examples highlight Africa’s paradoxically tyrannical and impoverishing tax policies.

The problem of high taxes in Africa is made worse by the fact that many African governments have been steadily increasing tax burdens in recent years to generate more revenue and manage their debt. This policy, aimed at addressing problems that governments have caused and meeting the costs of servicing mounting debt obligations, aggravates economic distortions, stagnation, and impoverishment.

Developing countries struggle to repay their debts due to a lack of economic competitiveness and output, issues detrimentally exacerbated by government spending and debt accumulation. Increasing tax burdens in precarious economic conditions further impoverishes repressed and stagnant economies.

Taxation in Africa must be minimal to nonexistent, as this aligns with the principled and nonaggressive nature of the African worldview and its economic heritage of free-market systems. Most African kings and chiefs did not impose taxation on their people, let alone permanent and excessive taxes. Africonomics maintains that taxation is inherently coercive, extortive, distortive, and oppressive—therefore, unethical and morally unacceptable. Taxation must be minimal to nonexistent to minimize confiscation, oppression, and injustice and foster economic prosperity, peaceful human relations, and civilization.

Conclusion

Government debt accumulation has long been a policy choice of African governments during the post-neocolonial era due to persistent deficit spending and insolvency issues. This policy is severely detrimental as it distorts, destabilizes, and impoverishes economies in Africa and across the world. It reduces the availability of capital for productive entrepreneurial activities, stifles private sector growth, raises borrowing costs, and leads to monetary inflation and heavier tax burdens, which deepens economic woes. It also inflates state bureaucracy, breeding widespread corruption, undermining innovation and productivity, and hindering economic progress. These and other detrimental effects of government debt accumulation and deficit spending cause economic turmoil and deterioration, ruining lives.

The unstable, unreliable, and debilitating nature of fiat currencies has significantly hindered economic development and prosperity in Africa. Postcolonial Africa has been plagued by incessant currency problems and economic instability, which are not incidental but result from Africa's fiat currency systems under the fiat dollar standard. Decades of currency printing, rampant inflation, arbitrary devaluations, forex volatility, and currency depreciation have tormented African societies and severely undermined capital formation, economic development, and prosperity. African policymakers are called to abandon fiat monetary policy, which has proven destabilizing and ruinous, and adopt the nilar to foster integrated, stable, and thriving African economies.

Taxation was minimal to nonexistent in most of precolonial Africa. Tragically, unlike most African kings and chiefs, postcolonial African governments have doubled down on the practice of permanent and confiscatory taxation imposed by colonial regimes, resulting in tyrannically taxed contemporary African economies. The confiscatory and oppressive tax codes of most African countries are a structural injustice of existing statist socioeconomic systems and have been a significant impediment to economic development. Attempting to tax its way to prosperity has never been successful for any economy anywhere in the world. African policymakers must adopt a minimal taxation policy to facilitate economic development and prosperity.

Government debt accumulation, monetary inflation, and heavy taxation are individually distortive, destabilizing, and impoverishing policies. Combined, these policies constitute a cruel and devastating triple-barreled weapon that viciously oppresses the people, confiscates their hard-earned purchasing power, drains their economic well-being, and impoverishes society. In other words, government (deficit) spending, currency debasement, and high taxes are the main policy choices that distort, destabilize, and impoverish economies in Africa and globally.

Colonial and neocolonial statist models have caused and continue to cause severe economic, sociological, political, and moral harm to African societies. African leaders must prioritize African economic development and prosperity by abandoning Western economics and embracing Africonomics.