Shadow economy and tax revenue in Africa

The paper explores the effects of shadow economy on tax revenues, in the case of several African countries, based on a panel-model approach. The dataset covers the period 1999-2007. The main results reveal that the change in shadow economy has a significant and negative impact on change in tax revenues. In other word, when the shadow economy tends to extend, the level of tax revenues decreases. These outputs show that the African governments, in order to maximise the collected tax revenues, should better “control” the shadow economy phenomenon.