The G20 emphasizes domestic resource mobilization as a key strategy to reduce reliance on volatile external aid, especially as official development assistance declines and debt costs rise.

The 2025 G20 Summit in Johannesburg is addressing Africa's significant $1.7 trillion annual development financing gap, which is part of a larger $4 trillion global shortfall needed to meet the Sustainable Development Goals (SDGs).

This financing gap has widened from $2.5 trillion in 2015 to $4 trillion today, hampering development efforts across Africa and making domestic resource mobilization a critical focus under South Africa's G20 presidency.

The South African G20 Presidency, which runs until November 2025, has prioritized combating IFFs by developing high-level principles and a roadmap for voluntary measures to curb illegal financial practices.

Reforms in tax and trade policies, strengthening customs and tax administration, and international cooperation—such as automatic exchange of tax information—are vital to combat illicit financial flows (IFFs) that undermine domestic resource mobilization.

A key strategy discussed is increasing Africa's tax-to-GDP ratio, which is currently below the 15% threshold necessary for sustainable growth; boosting it by just 1% could generate an additional $35 billion annually, significantly reducing the funding gap.

A robust taxation system is essential for supporting SDGs in Africa, with reforms promoting gender equality and women's empowerment being integral to inclusive economic growth.

Illicit financial flows, including trade mis-invoicing, transfer mispricing, and tax evasion, siphon billions from African economies and pose a major obstacle to sustainable development.

Limited fiscal space in Africa, due to shrinking aid, tighter global credit, and rising debt servicing costs, underscores the need for increased domestic revenue to fund health, education, and infrastructure.

Challenges to achieving SDGs include insufficient funding, declining aid, high debt costs, and limited domestic resources, making reforms in tax and trade policies more critical than ever.