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This blog was originally published on odi.org on 30 September 2025 here, and is reproduced with kind permission.
In Africa, the allure of abundant natural resources often masks a pressing challenge: how to ensure equitable revenue generation from the extractive industries. The tax administrations of resource-rich countries such as Sierra Leone, Liberia and Côte d’Ivoire face persistent obstacles in mobilising revenues from multinational mining companies. Weaknesses in legal and regulatory frameworks, inadequate administrative capacity and aggressive corporate tax strategies have left millions of dollars in potential revenue untapped. Addressing these issues is not just a matter of fiscal policy: it can also help countries gain some fiscal space and build up their economic resilience.
While African countries heavily rely on revenues from their extractive industries, significant amounts remain uncollected. Tax avoidance, fuelled by transfer mispricing and overly generous tax incentives, erodes an already narrow tax base. The challenges are compounded by political interference in bureaucratic processes, limited inter-agency collaboration with regard to information sharing and insufficient resources for verifying mineral pricing – a costly and complex process.
Sierra Leone and Liberia illustrate the critical need for specialised capacity within tax administrations. In these countries, multinational mining firms have been exploiting gaps in legislation and enforcement to bypass their fiscal obligations. This persistent non-compliance undermines domestic revenue mobilisation, deprives governments of crucial public resources for investment, and reduces their ability to respond to urgent spending pressures.
Recognising the urgency of the problem, ODI Global’s Country Partnerships programme was able to provide transformative technical assistance. At the request of the revenue authorities in each country, ODI Global supported the establishment of specialised units: the Extractive Industry Revenue Unit (EIRU) in Sierra Leone and the Natural Resources Tax Section (NRTS) in Liberia. Since 2015, these units have become vital forces in administering, auditing and collecting taxes from the natural resources sector.
The success of these units lies in their strategic approach. ODI Global’s embedded advisors provided hands-on training in risk-based auditing and compliance monitoring, as well as support in improving the regulatory environment for extractive industries taxation, tax policy evaluations in collaboration with the finance ministries and tax rule interpretation. Beyond technical expertise, the advisors nurtured an environment of cooperative compliance by encouraging the provision of key client management services to large mining companies. In Sierra Leone, the EIRU sensitised mining companies about new tax reforms such as the Extractive Industries Revenue Act 2018 and the Integrated Tax Administration System (ITAS). This meant that taxpayers were able to have a clear understanding of their tax obligations and compliance procedures; the cost of compliance and administrative burden reduced; and transparency and trust in the tax reforms improved- thereby improving voluntary compliance. It also engaged with mining companies in developing mineral royalty returns. In Liberia, the NRTS helped develop standard operating procedures for the shipment of gold dore agreed between a mining company and the government, represented by the Ministry of Lands, Mines and Energy and the Liberia Revenue Authority.
To ensure sustainability and continuity of the audit programme, the bulk of the day-to-day audit work was undertaken by the regular staff within the revenue authorities. The role of ODI Global’s embedded advisors was to provide guidance and oversight by identifying areas of non-compliance and incomplete and inaccurate reporting through risk-based audit and analysis, advising on the overall progress of the audit programme, troubleshooting specific issues and designing interventions to improve compliance.
The impact of this support has been substantial on several fronts.
Experience in Liberia and Sierra Leone has important lessons for other resource-rich countries in Africa. Substantive, reliable revenue from natural resources can create the fiscal space for governments to respond to urgent spending needs in the short run, and make necessary investments in the welfare and safety of their citizens in the longer run. Furthermore, effective tax compliance in the extractive sector is a driver of transparency, accountability and trust in public institutions. Strengthening governance in this critical sector aligns directly with the Sustainable Development Goals and the broader state-building agenda.
As multinational corporations continue to refine their tax strategies, the need for specialised and adaptive systems remains pressing. The experiences of Sierra Leone and Liberia underscore the importance of continuous capacity development and institutional collaboration.
The extractive industries have the potential to transform economies, but only if governments can harness their revenue effectively. By combining technical expertise, legislative reform, effective revenue management, transparency and accountability and cooperative compliance, Sierra Leone and Liberia have demonstrated how strategic tax administration can redefine the relationship between governments and corporations. Their journey serves as a blueprint for sustainable governance, proving that, with the right tools and partnerships, resource wealth can translate into economic resilience and shared prosperity.
Through its Country Partnership approach, ODI Global provided technical advice and capacity strengthening to revenue administrations in Liberia, Sierra Leone, Côte d’Ivoire and Guinea on taxation and tax auditing of the mining sector. This support was primarily provided through the deployment of long-term technical experts, who functioned as trusted resident advisors to the relevant departments within revenue administrations. This work was anchored in the ‘Regional Resource Governance in West Africa’ programme, led by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) with funding from German Development Cooperation.
Published on: 7th October 2025
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