Domestic Resource Mobilization (DRM) is the process by which a country raises and manages resources within its economy, primarily through taxation, non-tax revenues, natural resource rents, and domestic savings, to finance public goods and services, reduce dependency on external aid, and strengthen fiscal sovereignty. Its core objective is to expand fiscal space for inclusive development, ensure debt sustainability, and reinforce the social contract between citizens and the state.
Effective DRM in developing economies rests on six interrelated pillars: (1) policy and legal frameworks, (2) institutional and administrative capacity, (3) public financial management and governance, (4) technological and digital systems, (5) subnational and local government capacity, and (6) citizen engagement. Together, these elements create the foundation for equitable, efficient, and transparent domestic revenue generation.
Over the past decade, I have worked extensively in the field of DRM, co-authoring critical assessments and supporting reforms in Liberia. Significant contributions include Benchmarking Liberia’s Tax Administration (2017) under the USAID Revenue Generation for Governance and Growth Project, Social Impact Studies for VAT Implementation (2022) through the EU/ECOWAS initiative.
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In 2022, at the Liberia National Road Fund, I contributed to strengthening the institution’s fiscal framework and sustainability by leading domestic resource mobilization initiatives, including designing road-user charge mechanisms, estimating potential revenue growth from toll roads and axle loads in three corridors (Cape Mount, Nimba, and Grand Bassa Counties), reviewed tax expenditures on government projects to identify potential savings, and enhancing transparency, accountability, and recommended better alignment with expenditure priorities.
A separate contribution was also made by the Liberia Domestic Resource Mobilization (LDRM) Report (2016) produced by the Pragma Corporation under USAID Liberia, which provided evidence for key policy and operational reforms. From 2023 to 2025, as Senior Policy Advisor on the USAID LEAD Project, Liberia’s foremost DRM expert (Molley Kiazolu) and international practitioners collaborated with Liberia’s leading economic policy institutions to accelerate DRM implementation and broaden fiscal space.
This work engaged the Legislature, civil society, anti-graft institutions such as the LACC, PAC, GAC, and CENTAL, and fiscal authorities including the LRA and MFDP. While these efforts advanced policy dialogue and strategic interventions, momentum was curtailed due to the early closure of the USAID LEAD program.
Beyond formal studies, Liberian technical experts have contributed to numerous internal assessments and joint engagements with economic policy institutions, consultants, and development partners, all focused on strengthening Liberia’s DRM framework.
These initiatives consistently emphasize structural reforms and innovative approaches to enhance fiscal self-sufficiency, strengthen tax administration, broaden the revenue base, deepen financial markets, promote domestic savings, and improve transparency and citizen trust. Yet, despite years of analysis and technical support, Liberia continues to lag in achieving its institutional DRM objectives.
Persistent challenges, including heavy reliance on external aid, low tax compliance, shallow financial markets, limited domestic savings, and fragile citizen state trust, continue to constrain fiscal sovereignty, undermine inclusive growth, and expose the economy to external shocks. Overcoming these gaps is essential for advancing DRM, achieving fiscal independence, and building a resilient pathway toward sustainable national development.
The Government of Liberia’s capacity readiness to drive DRM, revenue growth, and fiscal sustainability depends on an integrated set of policy, institutional, human, technological, and governance enablers. Drawing on international best practices from the IMF, World Bank, ATAF, and OECD, and Liberia’s fiscal context, critical issues include:
Policy and Legal Frameworks
Liberia faces a weak legal and policy environment for taxation. Outdated laws and regulations fail to capture emerging economic realities such as digital commerce, informal trade, and cross-border transactions. Excessive exemptions and discretionary incentives granted to select actors erode the tax base, limiting revenue mobilization.
Moreover, the lack of harmonization with regional standards under ECOWAS and West African Monetary Zone (WAMZ) creates inefficiencies in trade facilitation, customs administration, and investment regulation, further constraining fiscal potential.
Institutional Capacity
Revenue-generating institutions are constrained by insufficient staffing, limited technical expertise, and high turnover, which undermine compliance enforcement, audit effectiveness, and large taxpayer management. Interagency coordination is often weak, with fragmented policy implementation and underdeveloped specialized units such as fiscal policy, transfer pricing, and natural resource taxation. These gaps limit effective DRM and institutional accountability.
Public Financial Management and Governance
Weak budgeting, poor revenue forecasting, and fragmented reporting systems reduce resource allocation efficiency. Perceived inadequate service delivery diminishes voluntary tax compliance, perpetuating a cycle of low revenues and constrained government investment in essential services. Corruption and governance deficits exacerbate losses, as discretionary exemptions and elite capture of concessions reduce fiscal fairness, while oversight bodies often lack autonomy or capacity to enforce compliance.
Technological and Administrative Systems in Liberia’s DRM Framework
In 2019, while serving as Senior Advisor on the USAID RG3 Project, we introduced the first suite of digital taxation innovations aimed at modernizing Liberia’s revenue administration. These initiatives included e-filing, return filing, e-payment, and taxpayer registration systems, as well as decentralized revenue collection through nine commercial banks.
A dedicated data-processing center was established to manage a ten-year paper-based backlog, and mobile payment systems were piloted for all taxes and selected fees. Despite these advancements, adoption remains limited, particularly within the informal sector.
Customs operations at various border posts still rely on outdated processes, resulting in persistent revenue leakages. The predominance of informal economic activity further constrains formal revenue mobilization and limits fiscal sustainability.
Subnational Revenue Capacity
Subnational revenue capacity presents significant challenges in Liberia. County and municipal authorities face structural limitations in the collection of property taxes, market dues, business licenses, and other local fees. Many local governments lack the technical skills, training, and modern systems necessary to efficiently administer these revenues, which weakens their contribution to the national revenue base.
Delays, ambiguities, and inconsistencies in revenue-sharing mechanisms further reduce incentives for local governments to mobilize resources effectively. These challenges undermine fiscal decentralization, limit subnational fiscal autonomy, and constrain the potential of local governments to play a meaningful role in domestic resource mobilization.
Decentralized public financial management systems are also underdeveloped. Weak accounting, auditing, and reporting practices at the county and district levels hinder transparency, constrain oversight, and reduce the efficiency of resource allocation. Without strengthening institutional capacity at the local level, efforts to expand the tax base, increase compliance, and achieve national DRM objectives remain severely limited.
Adoption of Digital and Technological Solutions
The effective mobilization of domestic resources in Liberia increasingly depends on the adoption of digital and technological solutions. Modernizing fiscal infrastructure through technology can enhance efficiency, strengthen compliance, and improve transparency in revenue collection. Tools such as e-filing, e-payment systems, integrated taxpayer databases, and GIS-based property valuation systems are essential to expanding the tax base, reducing revenue leakages, and reinforcing the overall effectiveness of the DRM framework.
Integrating digital solutions with capacity-building initiatives at both national and subnational levels is critical. Combining modern technology with improved skills and institutional processes, Liberia can strengthen local and national revenue administration, enhance accountability, and create a more sustainable, resilient system for mobilizing domestic resources.
Technological Integrations Include
- Property Valuation and GIS Enabled Systems
Geospatial and property valuation technologies allow for more accurate assessment of real estate and local government levies, which are critical for expanding subnational revenue mobilization. GIS-enabled property mapping enables county and municipal authorities to systematically identify taxable properties, improve compliance, and forecast local revenue streams with greater precision. This integration strengthens fiscal decentralization, empowers local governments, and enhances DRM outcomes at the subnational level.
- Data Interoperability and Integration
Effective DRM requires robust data exchange across government and financial institutions. Linking the Liberia Revenue Authority with commercial banks, the business registry, land registries, and NASSCORP enhances third-party data verification and cross-referencing of economic activity. Such interoperability reduces opportunities for underreporting, strengthens tax compliance, and provides a foundation for accurate fiscal forecasting, risk-based compliance monitoring, and evidence-driven policy design. This improves both the integrity and efficiency of Liberia’s revenue administration system.
- Digital Inclusion Tools for MSMEs and Informal Sector Operators
Given Liberia’s large informal economy, digital inclusion is critical for widening the tax net. Mobile-based tax services provide simplified e-payment, registration, and reporting platforms tailored to micro, small, and medium enterprises and informal sector operators. Reducing barriers to entry into the formal system and incentivizing compliance, these tools expand the tax base, foster financial inclusion, and strengthen the social contract between the government and its citizens. Over time, this builds public trust in institutions and enhances the legitimacy of the DRM framework.
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Political Commitment and Stakeholder Buy-In
The success of DRM reforms in Liberia is heavily dependent on sustained political commitment and multi-stakeholder support. However, this remains weak due to several constraints. High-level political commitment is inconsistent, with reforms often undermined by short-term political cycles and shifting leadership priorities. This hinders continuity and diminishes the effectiveness of long-term fiscal strategies.
Parliamentary oversight is also limited. The Public Accounts Committee and the Committees on Ways and Means often lack the technical expertise, financial resources, and enforcement authority required to ensure compliance or provide meaningful scrutiny of revenue management. At the same time, dialogue with the private sector remains inadequate. Poor engagement with key stakeholders including the Liberia Chamber of Commerce, informal market associations, and small and medium enterprises means that tax reforms are not well adapted to the realities of the economy, reducing compliance and buy-in.
Equally concerning is the lack of effective public awareness campaigns. Citizens are not sufficiently informed about the benefits of DRM or the broader importance of voluntary compliance. Without strong political leadership, inclusive stakeholder dialogue, and sustained citizen engagement, DRM reforms struggle to gain legitimacy and traction, leaving Liberia’s revenue systems vulnerable to inefficiency and evasion. Combined with high dependence on donor funding, these constraints weaken fiscal autonomy and hinder long-term revenue planning and economic resilience.
In my opinion as policy advisor, achieving sustainable DRM in Liberia requires a coordinated strategy encompassing legal reform, institutional strengthening, technological modernization, enhanced public financial management systems, citizen engagement, and subnational capacity development. Strengthening these pillars is critical for broadening the revenue base, improving fiscal stability, and supporting inclusive and resilient economic growth.
Senior Advisor on Governance, National Policy Development and Institutional Reform Professional
