G20 Pushes Domestic Resources to Close Africa’s $1.7 Trillion Development Gap

As preparations intensify for the 2025 G20 Summit in Johannesburg, South Africa, on November 22–23, world leaders are focusing on new strategies to tackle the $4 trillion annual financing gap required to achieve the Sustainable Development Goals (SDGs). Africa alone accounts for $1.7 trillion of this shortfall—roughly 40 per cent of the global funding need.

The financing gap has nearly doubled from $2.5 trillion in 2015 to its current $4 trillion, creating a serious barrier to development across the continent. To address this, the G20’s Fourth International Conference on Financing for Development (FFD4) has placed Domestic Resource Mobilisation (DRM) at the centre of proposed solutions.

The African Tax Administration Forum (ATAF) highlighted that DRM can reduce Africa’s dependence on volatile external funding sources while restoring fiscal independence. In its latest report, ATAF noted that “the G20 under the South African Presidency has emphasised the importance of revisiting and prioritising Domestic Resource Mobilisation as a critical tool within the broader financing mix for achieving the SDGs.”

Currently, Africa’s tax-to-GDP ratio remains below the 15 per cent benchmark needed for sustainable development. However, ATAF estimates that raising this ratio by just one percentage point could generate an additional $35 billion each year—amounting to $350 billion by 2030—and significantly reduce the financing deficit.

Illicit Financial Flows (IFFs) remain one of the biggest threats to DRM. ATAF has called for comprehensive reforms, including better tax and trade policies, stronger tax and customs administrations, and broader tax bases. It also stressed the need to combat practices such as transfer mispricing and trade mis-invoicing, which strip African economies of critical revenues.

To boost cross-border cooperation, ATAF recommended measures such as unique taxpayer identifiers, stronger anti-corruption frameworks, and the automatic exchange of tax and customs information. Under South Africa’s G20 Presidency, efforts to tackle IFFs have gained traction, with the Development Working Group (DWG) now tasked with drafting voluntary, non-binding high-level principles to address the issue.

Funding constraints—including declining Official Development Assistance (ODA), insufficient public resources, and the heavy cost of borrowing—continue to slow SDG progress. The G20 DWG acknowledged that development financing is a shared concern for both finance and development ministers.

ATAF concluded that effective tax systems are not only critical to bridging Africa’s funding gap but also to advancing inclusive growth. It noted that reforms promoting gender equality and empowering women are central to sustainable DRM, making taxation a tool for broader social and economic transformation.