By zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – A newly published Tax Exemption Report by the Budget Advocacy Network (BAN) has brought to light a concerning trend in Sierra Leone’s manufacturing sector: while the industry has experienced significant economic growth, its tax contributions remain disproportionately low. The report, titled “Tax Exemptions in the Industry Sector: Who Wins, Who Loses?”, underscores the fiscal risks associated with extensive tax exemptions and declining compliance within the sector.
Between 2018 and 2023, the manufacturing sector saw substantial growth, with its GDP value surging from NLe 3.56 billion to NLe 10.48 billion. However, despite this expansion, the sector’s contribution to total domestic revenue has remained stagnant, averaging less than 1% between 2021 and 2023. BAN’s analysis reveals that while manufacturing accounted for 14% of Sierra Leone’s GDP in 2023, its revenue share stood at less than 1%—a glaring mismatch attributed to widespread tax exemptions and weak compliance.
Within the broader industry sector, manufacturing contributes only 7% of total revenue collections, with Corporate Income Tax (CIT) making up 65% of its tax contributions. Yet, the report highlights a troubling pattern: as GDP contributions rise, tax revenue from the sector continues to lag, raising questions about the effectiveness of current tax policies.
Tax exemptions granted to the manufacturing sector have skyrocketed in recent years, further exacerbating the revenue shortfall. The report notes that revenue losses from tax breaks in the sector rose from NLe 7 million in 2018 to a staggering NLe 324 million in 2023. The biggest contributors to these losses have been exemptions on import duties and import GST, particularly in 2022 and 2023, alongside substantial Corporate Income Tax (CIT) exemptions.
BAN’s findings indicate that, like the construction sector, the manufacturing industry is losing more revenue through exemptions than it is contributing in actual tax payments. This trend is largely driven by government policies aimed at incentivizing industrial expansion, including initiatives to promote food self-sufficiency and local production. While such incentives are intended to stimulate economic growth, they are also significantly undermining domestic revenue mobilization.
The report raises pressing concerns about the long-term impact of these tax policies. While exemptions may attract investment and boost industrial output, their unchecked expansion poses a serious challenge to fiscal sustainability. BAN is calling for urgent reforms, including stricter compliance measures and a reassessment of tax incentives to ensure they align with national revenue goals.
As Sierra Leone seeks to strengthen its industrial base, policymakers must grapple with a critical question: how to foster manufacturing growth without compromising the country’s tax revenue. The findings from BAN’s report provide a crucial wake-up call for the government to strike a more sustainable balance between economic expansion and effective tax collection. ZIJ/1/4/2025
 has brought to light a concerning trend in Sierra Leone’s manufacturing sector: while the industry has experienced significant economic growth, its tax contributions remain disproportionately low. The report, titled “Tax Exemptions in the Industry Sector: Who Wins, Who Loses?”, underscores the fiscal risks associated with extensive tax exemptions and declining compliance within the sector.){kind=link}