Ghana’s ability to mobilise domestic revenue has come under renewed scrutiny following figures indicating that the country’s revenue-to-GDP ratio stood at 15.7 per cent in 2025, compared with the Sub-Saharan African average of 20.1 per cent.
The figures have raised questions about Ghana’s capacity to generate revenue, strengthen its tax collection systems and create sustainable sources of funding for national development.
Speaking in a phone interview on Ahotor 92.3 FM’s Afternoon News, economist Professor Frank Yaw Gbadago explained that the tax-to-GDP ratio measures the proportion of a country’s economic output collected as tax revenue within a particular year.
He noted that the indicator provides an important picture of a country’s revenue-generating capacity and its ability to fund public services, infrastructure and development programmes.
Understanding the Tax-to-GDP Ratio
According to Professor Gbadago, the ratio is not simply about how much government collects in taxes. It also reflects the country’s broader economic capacity and its ability to mobilise resources for national development.
He explained that the relationship between tax revenue and Gross Domestic Product (GDP) carries several economic implications, particularly regarding how effectively a country utilises its resources to generate income.
The economist noted that a country’s revenue performance must also be considered alongside its investments in productive sectors, which can expand economic activity and create opportunities for future tax collection.
Importance of Investing in Human and Physical Capital
Professor Gbadago further highlighted the importance of investment in capital assets and human capital as part of efforts to strengthen the economy.
He explained that investment in physical assets, including infrastructure and productive facilities, can support economic activities and generate revenue for government in the future.
He also emphasised investment in human capital through education, skills development and capacity building, noting that people must be equipped with the necessary skills and opportunities to contribute effectively to national productivity.
According to him, a low tax-to-GDP ratio could point to challenges in the country’s ability to mobilise resources and invest adequately in areas that would strengthen its productive capacity.
Rethinking Ghana’s Revenue Mobilisation Strategy
Professor Gbadago’s comments highlight the need for a broader approach to domestic revenue mobilisation—one that goes beyond increasing tax collections to include policies that expand economic activity, encourage investment and improve productivity.
The discussion also raises questions about how Ghana can better convert its human and economic potential into productive activities that generate sustainable revenue for the state.
Ultimately, strengthening Ghana’s revenue base will require attention not only to tax collection, but also to the investments and economic conditions that enable businesses, workers and other productive sectors to generate wealth and contribute to national development.
Story by Beatrice Amoah