By zainab.joaque@awokonewspapersl.com
Freetown, SIERRA LEONE – Sierra Leone’s mining sector is the backbone of the nation’s economy, generating billions in revenue and sustaining thousands of livelihoods. However, a recent report by the Budget Advocacy Network (BAN) reveals a troubling paradox: while mining royalties and licenses dominate revenue streams, excessive tax exemptions continue to undermine the country’s financial health.
The report, titled “Tax Exemptions in Sierra Leone’s Industry Sector: Who Wins, Who Loses?”, highlights how the mining and quarrying subsector has been a major driver of economic growth. Between 2018 and 2023, its contribution to GDP skyrocketed from NLe1.75 billion to NLe13.84 billion, reinforcing its dominance in the industrial landscape.
Despite these impressive numbers, the sector’s tax contributions remain disappointingly low. From 2021 to 2023, non-tax revenues—mainly royalties and licenses—accounted for a staggering 71% of mining revenue, while direct income taxes made up just 24%. The remainder came from Customs duties and Goods and Services Tax (GST), with GST contributing a mere 5%.
The issue extends beyond mining. BAN’s report underscores a larger concern: Sierra Leone’s reliance on tax incentives has severely weakened domestic revenue generation. The country’s tax-to-GDP ratio hovers at 10.9%—well below the United Nations’ recommended 20% threshold for sustainable development. Each year, billions of leones are lost to tax exemptions, raising pressing questions about their effectiveness and fairness.
This situation has sparked debate on the long-term sustainability of tax breaks. While businesses benefit, the government struggles to fund essential services, from healthcare to infrastructure. The consequences were particularly evident in 2020 and 2022 when economic shocks—exacerbated by the COVID-19 pandemic—led to sharp revenue declines.
Recognizing these challenges, the National Revenue Authority (NRA), in partnership with BAN and the Ministry of Finance, is pushing for greater transparency in tax policy. Plans are underway to publish detailed records of tax incentives, allowing for public scrutiny and accountability. These reforms are a critical step toward ensuring that tax policies serve national interests rather than corporate gains.
As Sierra Leone grapples with balancing economic growth and revenue collection, one thing is clear: without urgent reforms, the country risks losing billions in potential revenue—funds that could transform public services and drive sustainable development. The mining sector may be booming, but until tax policies are restructured, the nation will continue to struggle with revenue shortfalls. ZIJ/28/3/2025
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