Reforming tax administration is crucial to addressing poverty, reducing the education backlog and achieving acceptable health services, Finance Minister Trevor Manuel said on Thursday.

Briefing the media in Pretoria, Manuel said phenomenal strides had been made in improving services and revenue administration.

This had been in part due to the increase in taxes being collected from all South Africans.

"It is no longer a money problem," he said.

However should revenue run out this could lead to borrowing from external resources, which was not ideal.

Earlier Manuel told the opening of the Tax Africa inaugural conference, that the challenges facing the continent included finding ways to escape the dependence on foreign assistance and indebtedness, and in many cases the unsustainable reliance on customs revenue.

Revenue administrations were an "indispensable condition" of this aim.

"The challenge is not simply to tax more, but rather to tax a larger number of citizens and enterprises more consensually."

Manuel said effective revenue administration contributed to a country more than simply filling its national coffers, but was an essential component of good governance.

"When states are obliged to bargain with their citizens over taxation, or cannot rely on coercion or external resources, then they must become more responsive to their citizens."

He said building and strengthening networks between African tax administrations was necessary and urgent.

"Much of what we have to confront within our respective borders can only be addressed effectively if we collaborate," he told the conference.

Deputy secretary general of the Organisation for Economic Cooperation and Development (OECD), Pier Carlo Padoan, agreed that dialogue by tax administrations in Africa was essential.

"Tax officials from developing countries increasingly participate in an organised global community of tax professionals, which enables them to bring back and adapt ideas for successful implementation," he said.

In the April the OECD issued its latest economic outlook for Africa and Padoan said it showed the continent was "at last" beginning to fulfil its economic potential.

In 2007 the continent registered a 5.7 percent Gross Domestic Product and indications were that the growth would only accelerate in 2008.

However the trend hid multiple realities that called for varied policy prescriptions.

For example, regarding oil exporters, the objective was economic diversification which would support growth when the oil ran out or receipts from it declined.

Governments needed to anticipate the decline in revenues with appropriate policies which included improving transparency and combating corruption, said Padoan.

"For oil importers the increasing price of fuels exacerbated by rising food prices will lead to a worsening of current account deficits.

"The danger is that the funding of deficits becomes over-reliant on loans which could lead again to the creation of unsustainable debt levels," he said.

Pressure of fiscal development may also become increasingly difficult to cope with.

Padoan said tax administrations played a key role in helping governments to meet the challenges.

Robust revenue growth of the tax base and better tax compliance would enable governments to finance the skills and infrastructure needed to generate employment-creating growth and help to eradicate poverty while at the same time maintaining fiscal sustainability.