Sierra Leone, with an estimated population of over 7.9 million people (World Population Review), is located on the coast of West Africa between the Republic of Guinea in the north and northeast, the Republic of Liberia in the south and southeast, and the Atlantic Ocean on the west, with a land area of 71,740 square kilometers. Since the civil war ended in 2002, the country has been politically stable with extraordinary religious tolerance among its people. Sierra Leone presents potential opportunities for investment and engagement. The March 2018 democratic transition in the presidency concluded with a runoff that recorded 81 percent registered voter participation. President Julius Maada Bio, who ruled briefly as head of a military regime in 1996, replaced President Ernest Bai Koroma on May 12, 2018. His “New Direction” doctrine promised a comprehensive reform agenda to revamp the economy and overturn the persistent imbalances on the current account, currency depreciation, high inflationary pressure, untenable debt distress, and high unemployment.
Sierra Leone’s economy remains heavily dependent on mineral resources, including significant deposits of iron ore, rutile, bauxite, and diamonds. Real gross domestic product (GDP) growth hit 20.1 percent in 2013, but the economy came to an abrupt halt in 2014, with the largest Ebola outbreak in history. This outbreak coincided with a slump in global commodities prices, which contracted the economy by 21.1 percent in 2015. The end of the outbreak allowed a modest recovery of 6.3 percent in 2016 with massive budgetary disparity caused by high public expenditure over revenue. This deficit compelled the government to implement austerity measures that slashed spending across the board and temporarily froze disbursements on most government projects. However, the measures failed to increase revenue collections or accumulate the expected savings, as economic growth slowed to 3.5 percent and inflation up at 18.3 percent in 2017. As the country continued to seek significant budget support from foreign donors, the International Monetary Fund (IMF), in June 2017, approved a three-year Extended Credit Facility (ECF) to help address the macroeconomic weaknesses but was suspended in December 2017. Consequently, development partners withheld their budgetary support to the government.
The economic landscape was challenging when the new administration took up governance in March 2018. Nonetheless, to achieve fiscal sustainability and medium-term growth objectives, the new government took up the challenges of revenue mobilization and expenditure control and initiated a re-activation of the suspended ECF with the IMF, to overcome emerging challenges and improve the prospects for growth projected to rebound to 4.8 percent in 2019. In February 2019, the government launched a medium-term National Development Plan (MTNDP) to span 2019 – 2023. The government hopes the plan, built on human capital development, economic diversification, and increased competitiveness in agriculture, fisheries, and tourism, will facilitate the transformation of the country from a fragile state to a stable and prosperous democracy that achieves middle-income status by 2039.
Foreign Direct Investment (FDI) plummeted in 2014/15 following the Ebola outbreak and the fall in commodity prices. After the outbreak, the flows sprouted to reach USD 599 million from its lowest level of USD 129 million in 2017 and with volatile inflows attributable to mining multinationals. According to UNCTAD’s 2020 World Investment Report, the stock increased to USD 2 billion by end of 2018 as the country was seeking to attract investment in agriculture, fisheries, tourism, natural resources, and through public-private partnerships for projects in energy, water, telecommunications, and other infrastructures. Sierra Leone, endowed with substantial natural resources, had long relied on its mineral industry, dominated by countless miners, as minerals account for more than 80 percent of exports and contribute 2.7 percent to GDP. The current President is reviewing mining contracts and considering changes to the law that would ensure the country benefits from its natural resources, a promise he made during his campaign. In 2019, the government canceled the mining licenses of the two major iron ore companies – the Chinese’s Shandong Iron & Steel Company and the U.S.-owned Gerald Group’s Sierra Leone Mining Company. The GoSL claimed that the companies were not paying all royalties. In 2020, Gerald Group subsequently brought a lawsuit against the government in an international tribunal. The government refused to recognize international arbitral rulings against it and was not complying with legal determinations, until in May 2021, when Gerald Group reached a settlement with the government. Mining operations are expected to resume in mid-2021.
While these issues do not necessarily reflect any discriminatory treatment of U.S. interests, they do underscore the challenges of all foreign businesses operating in Sierra Leone. Despite these issues, Sierra Leone offers great investment opportunities, and the government is looking for investment in all sectors of the economy and hopes for economic growth and development to be led by the private sector. To achieve this, the government continues to focus on improving the business environment to attract new foreign direct investments. Opportunities exist for investors as the country benefits from duty-free access to the Mano River Union market of more than 30 million, the African Continental Free Trade Agreement of about fifty-four African countries with a combined population of more than one billion, the European Union’s Everything But Arms initiative and the United States’ African Growth and Opportunity Act (AGOA) treaty. Achieving sustained economic growth will depend on Sierra Leone’s ability to diversify its economy, tap into under-utilized sectors like agriculture, tourism, and fisheries, and exploiting the country’s considerable natural resources in a manner to improve the lives of all citizens.
|TI Corruption Perceptions Index||2019||119 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||163 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||N/A||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country (stock positions)||2018||$13 million USD||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||$490 USD||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
Policies toward Foreign Direct Investment
Sierra Leone presents a favorable attitude toward FDI, which is critical to spurring the country’s economic growth and development. The Sierra Leone Investment and Export Promotion Agency (SLIEPA), supervised by the Ministry of Trade and Industry, is the government’s lead agency established to oversee trade policies, improve the investment climate, and stimulate investments. SLIEPA also provides information on business registration and assists investors in securing the relevant incentives and licenses.
In the World Bank ease of doing business report, Sierra Leone ranked 163 among 190 countries in 2020 and 2019, down from 160 in 2018, though the overall score (48.74) increased by +0.15 . For 2020, the World Bank highlighted challenges in access to credit, resolving insolvency, access to electricity, and construction permits but noted improved performance in payment of taxes and cross-border trade, with significantly improved performance in starting a business. The business registration process has been simplified into a one-stop-shop, the customs clearance procedure has been further simplified to improve on the country’s trade facilitation infrastructure, and the major seaport extended to accommodate more vessels.
The shortage in skilled labor, the lack of infrastructure, the slow legal system, the high level of corruption, political violence, and serious social disorder due to socio-economic disparities are major obstacles to FDI. Although the legal system is just and fair with foreign investors, the judiciary is often subject to financial and political influences as the enforcement of the law is a challenge. The government is constructing major roads leading to district headquarter towns and rehabilitating feeder roads linking agricultural suppliers to urban markets. In tackling corruption, the country progressed 10 places up in the Transparency International Corruption ranking from 129 out of 180 in 2018 to 119 out of 180 in 2019 and further up 2 places (117out of 180) in 2020. The country passed the Millennium Challenge Corporation’s indicator on the control of corruption scoring 71 percent in 2019, 79 percent in 2020, and 81 percent in 2021, though it failed in 2018 (49 percent).
The current administration continues to assure investors that the country is open to foreign investment and is make some efforts to address corrupt practices in procurements, land rights, customs, law enforcement, judicial proceedings, and other governance and economic sectors. Sierra Leone now focuses on investments through public-private partnerships to undertake major infrastructural projects in power, water, roads, ports, and telecommunications. The government launched the Medium-Term National Development Plan (2019-2023) in which it sets out a growth agenda and is developing a national Trade and Investment Strategy to support economic diversification, competitiveness, and continental integration geared towards promoting and developing a competitive private sector to increase participation in global trade.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activities. Foreigners are free to establish, acquire, and dispose of interests in business enterprises. However, foreign investors cannot invest in arms and ammunition, cement block manufacturing, granite and sandstone excavation, manufacturing of certain consumer durable goods, and military, police, and prison guards’ apparel and accouterments. Furthermore, there are limits to land ownership by foreign entities and individuals; the limitations vary depending on the location of the land being used and are discussed below in the “Real Property” section.
Sierra Leone has few specific restrictions, controls, fees, or taxes on foreign ownership of companies that can outrightly own Sierra Leonean companies subject to certain registration formalities. However, investment in mining of less than $500,000 is an exception as this requires a 25 percent Sierra Leonean holding. Foreign technical and unskilled labor can be used but approval must be sought from the Corporate Affairs Commission for the transfer of shares.
Sierra Leone has made progress in recent years in simplifying its business registration process. The Corporate Affairs Commission (CAC) now manages the registration of limited liability companies and provides a “one-stop-shop” including an online business registration system. The entire process involves five steps and takes on average ten days. Additional information is available from the CAC’s website at SLIEPA also provides useful guidance on starting a business, sector-specific business licenses, mining licensing and certification fees, and marine resources and fisheries at .
Sierra Leone has no program to promote or incentivize outward investment but also places no restrictions on such activity.
2. Bilateral Investment Agreements and Taxation Treaties
Sierra Leone has three bilateral investment treaties with Germany, in force since 1966, the United Kingdom in 1981 and revised in 2001, and with China, signed in 2001 but not yet entered into force. These treaties are meant to protect investors with guarantees of fair and equitable treatment with protection against unlawful expropriation. This was however being violated by the GoSL when they did not comply with the rulings of the International Chamber of Commerce in a mining dispute with a U.S./UK registered firm. However, in May 2021 this matter was resolved. Though not yet in force since signing in 2001, China and Sierra Leone reaffirmed their commitment to deepening the relationship by a memorandum of understanding signed when President Bio visited China in 2018.
Sierra Leone also benefits from its membership of the Economic Community of West African States (ECOWAS) and the Trade and Investment Framework Agreement with the United States, signed in 2014 with no bilateral taxation treaty. Double bilateral taxation treaties exist with Norway, South Africa, and the UK, which is extended to Canada, Denmark, Ghana, New Zealand, Nigeria, and The Gambia. The Ministry of Finance is however reviewing all existing treaties and working on requested treaties from Kenya and Qatar.
3. Legal Regime
Transparency of the Regulatory System
Parliament is the country’s supreme legislative authority. Laws are enacted by Parliament and signed by the President. The Judiciary interprets and applies the laws to ensure impartial justice and provides a mechanism for dispute resolution. However, the regulatory system is not fully consistent with international norms. Laws and regulations are developed at the national level, and the Constitution requires publication of proposed laws and regulations in a government journal, the Gazette, for 21 days.
Series of legislative reforms have been carried out since the first trade policy review in 2005 to enhance a conducive business environment and attract FDI. These include the Business Registration Act, the Investment and Export Promotion Agency Act, which established the Sierra Leone Investment and Export Promotion Agency (SLIEPA), the Anti-Corruption Act, the Bankruptcy Act, the Companies Act, the Goods and Services Tax Act, the Customs Administration Act, the Payment Systems Act, the Debt Management Act and several Finance Acts, to name a few. To strengthen the legal, regulatory, and institutional frameworks, Sierra Leone established the fast-track commercial court, the Credit Reference Bureau, the Corporate Affairs Commission, revised the legislation of company activities and developed the Local Content Policy.
Also, Sierra Leone has taken steps to promote and improve regulatory transparency. The Right to Access Information Commission was established in 2014 to make government records information available to the public and imposes a penalty for failure to make information available. Sierra Leone joined the Open Government Partnership (OGP) in 2014, an initiative that empowers citizens to fight corruption, and promotes transparent and accountable governance. The Audit Service Sierra Leone, headed by an Auditor General, was established by the Audit Service Act of 1998 and further strengthened by the Audit Service Act of 2014, to carry out audits of public accounts of all public offices, including statutory corporations and organizations set up partly or wholly out of public funds. Sierra Leone joined the Extractive Industries Transparency Initiative (EITI) in 2008, became compliant with EITI rules in 2014, made progress in implementing EITI Standards, and was required to undertake corrective actions before the second validation due in December 2020. The Public Financial Management Act of 2016 reformed the budget process and improved transparency in the expenditure of public funds, while the Fiscal Management and Control Act of 2017 directed government ministries, departments, and agencies (MDAs) to transfer all revenues into the Treasury Single Account, domestically referred to the Consolidated Revenue Fund (CRF), which was fully complied within 2018 on the executive order of President Maada Bio.
International Regulatory Considerations
Sierra Leone joined the General Agreement of Tariff and Trade (GATT) in 1961 and the World Trade Organization (WTO) in 1995. Sierra Leone is committed to the multilateral trading system and has not notified the WTO of any measures that are inconsistent with the WTO’s Trade-Related Investment Measures (TRIMs) obligations. It acceded to the Kyoto Protocol in 2006 and the International Convention on the Simplification and Harmonization of Customs Procedures otherwise referred to as the Revised Kyoto Convention in 2015. It became a contracting party to the International Convention on the Harmonized Commodity Description and Coding System (HS Convention) in 2015. It replaced its pre-shipment inspection with a destination inspection in 2009 and notified the WTO of the Agreement on Trade facilitation in May 2017. The Customs Act of 2011 upholds the WTO Customs Valuation Agreement which prohibits the use of arbitrary, or fictitious values, but continues, in practice, to use these values. It has however not notified the WTO of its sanitary and phytosanitary legislation required for the international movement of any plant materials or products or any state-trading activity.
Sierra Leone is neither a signatory nor an observer to any of the plurilateral agreements concluded under the WTO, but being firmly committed to its obligations, it established a mission to the WTO in 2011. It had ratified six multilateral investment agreements, including the International Center for Settlement of Investment Disputes (ICSID) Convention and the Convention establishing the Multilateral Investment Guarantee Agency (MIGA) so that foreign investments in Sierra Leone are covered against non-commercial risks such as currency transfer risks, expropriation risks, risks of war and civil disturbance, and repudiation risk.
Legal System and Judicial Independence
The legal system is derived from the English common law system, but outside of the capital, Freetown, local courts apply customary law to many disputes. The courts provide a venue to enforce property and contract rights. The country does not have a consolidated written commercial or contractual law, and disparate pieces of legislation sometimes lead to the uneven treatment of commercial disputes.
The Superior Court of Judicature consists of the Supreme Court, the Court of Appeal, and the High Court while the lower courts consist of the magistrate court and the local courts. In 2010, Sierra Leone created a Fast-Track Commercial Court to reduce the duration of commercial cases to a minimum of about six months. In 2017, Sierra Leone hosted a commercial law summit to address gaps in the justice system, resulting in concrete recommendations in key areas, including arbitration, anti-corruption and bribery, public-private partnerships, and reform of the court process. There is now a draft Arbitration Bill which when passed into law will bring arbitration proceedings in Sierra Leone up to international standards.
Foreign investors have equal access to the judicial system, which in practice, is slow and often subject to financial and political influence. However, Sierra Leonean courts may acknowledge foreign judgment from specific jurisdictions with reciprocal enforcement arrangements with Ghana, Nigeria, Guinea, and the Gambia. Generally, Sierra Leonean courts do not apply foreign law, but foreign judgment can be enforced when registered with the high court, though the registration may be refused when enforcement is contrary to public policy.
On depositing its instrument for accession to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), Sierra Leone became the 166th state party to the convention which will come into force in January 2021. Recommended during the inaugural Commercial Law Summit of May 2017, the accession will promote FDI by resolving disputes by arbitration without interference from local courts and will enforce arbitral awards consistently and predictably.
Laws and Regulations on Foreign Direct Investment
The Companies Act of 2009, the Registration of Business Act of 2007, and their subsequent amendments are the main laws governing the registration of all businesses before commencing operations. The Corporate Affairs Commission (CAC) deals with the incorporation of companies, while the Office of the Administrator and Registrar General (OARG) deals with sole proprietorships and partnerships with the process streamlined into a stop-shop.
Sierra Leonean law generally ensures that foreign investors may compete on the same terms as domestic firms. The Investment Promotion Act 2004 protects foreign entities from discriminatory treatment. The law creates incentives, customs exemptions, provides for investors to freely repatriate proceeds and remittances, and protects against expropriation without prompt and adequate compensation. The law establishes a dispute settlement framework that allows investors to submit disputes to arbitration under the rules of procedure of the UN Commission on International Trade Laws (UNCITRAL).
Sierra Leonean authorities do not screen, review, or approve foreign direct investments. Companies must register to do business in Sierra Leone, and there are no reports that the registration process has blocked investments or discriminated against investors. In the case of investment guarantees, the government established certain procedures with the U.S. government in agreements signed on December 28, 1962, and November 13, 1963, whereby Sierra Leone authorities approve external investment guarantees in Sierra Leone. Additional information about the laws and regulations applicable to foreign investments is available on the website of SLIEPA at .
Competition and Anti-Trust Laws
Sierra Leone does not have competition law. The European Union (EU) and the United Nations Conference on Trade and Development (UNCTAD) have supported the Ministry of Trade and Industry’s attempt to develop a competition policy, as this ministry oversees the regulation of anti-competitive practices. A competition policy and a consumer protection policy have been approved by the cabinet, but parliament is yet adopted the relevant legislation.
Expropriation and Compensation
There is no history of expropriation in Sierra Leone, though the government has threatened such action against a foreign investor following a commercial dispute under arbitration in an international tribunal. The Constitution authorizes the government to expropriate property only when it is necessary in the interests of national defense, public safety, order, morality, town and country planning, or the public benefit or welfare. In such cases, the Constitution guarantees the prompt payment of adequate compensation, with a right of access to a court or another independent authority to consider legality, determine the amount of compensation, and ensure prompt payment.
ICSID and New York Convention
Sierra Leone became a party to the International Convention on the Settlement of Investment Dispute (ICSID) in 1966 to arbitrate investment disputes and enforce ICSID awards. In November 2018, Parliament approved a motion authorizing Sierra Leone to accede to the convention and to domesticate the provisions in its legal system. While it has been ratified in parliament, domestication is still pending. Sierra Leone deposited its instrument of accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) to become the 166th state party to the 62-year-old Convention in January 2021. Also, Section 13 of the Arbitration Act 1960 allows foreign arbitral awards to be registered in Sierra Leonean courts and enforced in the same manner as a domestic judgment or court order. However, registration of foreign arbitral awards is not automatic but instead left to the discretion of the presiding judge.
Investor-State Dispute Settlement
Investment disputes in Sierra Leone can take a long time to resolve, given the slow pace of bureaucracy, and substantial court backlogs. In 2016, the Embassy received multiple reports of cases where U.S. companies experienced challenges in asserting their investment interests. One company reported that the previous government denied regulatory approval for the firm’s acquisition of a Sierra Leonean entity in part because preference should be given to Sierra Leonean buyers. However, in 2018, the new administration overturned the decision and granted regulatory approval for the U.S. company to take over. The cancellation of two iron ore mining company licenses over disputed royalty payments and non-compliance with mining laws has resulted in the referral of the government to international arbitration. However, the government had continuously failed to comply with arbitral rulings.
International Commercial Arbitration and Foreign Courts
The Arbitration Act 1960 allows investors to arbitrate disputes, but the procedures outlined in the law are outdated and not in compliance with international standards. The country does not have a central arbitral institution, and instead, arbitration is conducted on an ad hoc basis, including through pre-trial settlement conferences and alternative dispute resolution mechanisms before the Commercial and Admiralty Division of the High Court. The Investment Promotion Act 2004 allows investment disputes to be referred to arbitration following UNCITRAL procedures or the framework of any applicable bilateral or multilateral investment agreement. Judgments of foreign courts can be enforced under the Foreign Judgments (Reciprocal Enforcement) Act 1960, provided the country has a bilateral or reciprocal enforcement treaty with Sierra Leone. The Public-Private Partnership Act, 2014 also provides for international arbitration in Sierra Leone.
The Bankruptcy Act 2009 establishes a process of bankruptcy for individuals and companies. Bankruptcy is a civil matter, but it may disqualify an individual from holding certain elected and public offices and from practicing certain professions. The Bankruptcy Act 2009 also encourages and facilitates reorganization as an alternative to liquidation. The World Bank ranked Sierra Leone 162, with a score of 24.7, in the ease of resolving insolvency in 2020.
Following the passing of a Credit Reference Act in 2011, Sierra Leone established a Credit Reference Bureau within the Bank of Sierra Leone, mandating all financial institutions to pass all information regarding loan applications for credit history checks. The credit history checks will detail all outstanding loans, when and where a loan was taken, and the repayment history guiding financial institutions in their loan decision. The Bureau now operates a digital identification system to control credit information and ensure citizens have secure and complete ownership of their data and information thereby transforming the financial inclusion landscape.
4. Industrial Policies
The Investment Promotion Act 2004 creates various incentives for foreign and domestic investors, and SLIEPA compiles information about the benefits and incentives available in various sectors. In particular, these are investment and employment, research and development, value-added manufacturing and training expenses incentives; incentives provided for businesses engaged in agriculture, airlines, fish farming, infrastructure, liquefied petroleum gas and cookers, mineral and petroleum, petroleum refinery, pharmaceuticals, photovoltaic systems, poultry, tourism; and income tax deductions for disabled persons, women and youth employment and skills development, and social services like schools and hospitals, etc. SLIEPA provides details of these investment incentives at http://sliepa.org/investment/why-sierra-leone/investment-incentives/. In May 2019, the National Revenue Authority provided details on tax incentives at https://www.nra.gov.sl/sites/default/files/Final%20Magazine%20MRP%2029-5-19.pdf.
Foreign Trade Zones/Free Ports/Trade Facilitation
In conjunction with First Step, a subsidiary of U.S.-based development organization, World Hope International, the government established a Special Economic Zone (SEZ) in 2011 on 50 acres near Freetown. The SEZ policy accords businesses operating in the zone tax holidays import duty exemptions and expedited government services including customs, immigration, and registration.
Performance and Data Localization Requirements
The Sierra Leone Local Content Agency Act 2016 promotes foreign investors’ utilization of the domestic private sector. The act applies in the mining, petroleum, manufacturing, agriculture, transportation, maritime, aviation, tourism, public works, fisheries, health, and energy sectors.
The local content policy is meant to boost the economy by leveraging the power of local industries and citizens through their participation in the economy. It targets several issues including:
- Employment of nationals: All foreign businesses must employ Sierra Leoneans, at least 20 percent of the managerial and 50 percent of intermediate positions, and this ratio must increase over time to stand at 60 percent for managerial and 80 percent for intermediate positions after 5 years.
- Preferential Treatment: Preference will be granted to a foreign business that partners with Sierra Leonean businesses over foreign businesses with no equity share own by Sierra Leonean entities.
- First Consideration: Foreign businesses must give Sierra Leoneans first consideration for employment and training.
- Use of local goods and services: Firms should give preference to Sierra Leonean goods when they are of equal or comparable value. Companies must use certain amounts of local materials in key sectors but if there is inadequate local capacity to meet the law’s target, the Ministry of Trade and Industry may issue a waiver.
- National preferences in contracts: The policy gives first consideration to Sierra Leonean companies for mining and petroleum awards and licenses, as well as public works contracts. The policy also gives domestic firms a preferential margin in government and private procurements.
The local content policy is enforced by the Local Content Agency. Companies are required to submit local content plans to demonstrate compliance, and violations are subject to fines, the loss of investment incentives, and civil forfeiture.
5. Protection of Property Rights
There are two systems of land tenure in Sierra Leone. The Western Area, the former British colony of Sierra Leone which includes Freetown, operates under a freehold system. Outside the Western Area, in the provincial areas, the land is governed under a leasehold system where local communities retain ultimate control. Foreigners cannot own land under either system but can lease land for terms of up to 99 years. In leasehold areas, local Paramount Chiefs control the land and may enter joint ventures with investors to develop or use the land in ways that serve the interests of the local communities.
The Constitution protects property rights, but the rule of law is fragile and uneven across the country. In the absence of an effectively functioning legal framework, property rights and contracts are not adequately secure. Mortgages and liens are possible but rare, and generally involve high-interest rates and short loan periods. There is no land titling system, and traditional tribal justice systems still serve as a supplement to the national government’s judiciary, especially in rural areas. In 2020, the World Bank Doing Business Report ranked Sierra Leone 169 in the world for ease of registering property, as the process takes approximately 56 days with seven procedures and costs about 11 percent of the property’s value.
The Land Administration system currently inhibits successful problem resolution. The survey system is manual and land survey technologies are outdated and inaccurate. Property management procedures are long, unreliable, expensive, and do not guarantee the protection of the rights of the property user and/or owner. In 2017, the cabinet approved a comprehensive national land policy meant to improve and strengthen land laws and administration within the land tenure systems in the Western Area and the provinces. The policy, which awaits parliamentary action, is intended to enhance the abilities of institutions to be able to acquire land for responsible investment and promote sustainable socio-economic development. While the new policy seeks to gradually formalize land transactions while respecting the customary systems, the 2019–23 Medium-term National Development Plan recognizes that land ownership rights and obligations are necessary to attract foreign investment.
Intellectual Property Rights
Sierra Leone has been a member of the World Intellectual Property Organization (WIPO) since 1986 and a member of the African Regional Intellectual Property Organization (ARIPO), the common intellectual property body for English-speaking African countries, since 1980. As a member of the WTO, Sierra Leone is bound by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Sierra Leone has not ratified the WIPO Copyright Treaty or the Berne Convention for the Protection of Literary and Artistic Rights.
Despite its recognition of international standards, Sierra Leone’s protection of the intellectual property is limited. Because of laws pre-dating the colonial era, patents and trademarks registered in the United Kingdom can be extended to Sierra Leone. Efforts to update the country’s legal framework have thus far included the Copyright Act 2011, the Patents and Industrial Design Act 2012, and the Trademark Act 2014. Nonetheless, legal protections remain outdated and incomplete, and government enforcement is minimal due to resource and capacity limitations.
Sierra Leone has not been listed in the U.S. Trade Representative (USTR) Special 301 Report or the Notorious Markets List. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at .
6. Financial Sector
Capital Markets and Portfolio Investment
Limited capital market and portfolio investment opportunities exist in Sierra Leone. The country established stock exchange in 2009 to provide a place for enterprise formation and a market for the trading of stocks and bonds. The exchange initially listed only one stock, a state-controlled bank but in early 2017, it had three listings that expressed willingness to trade their shares at the exchange.
Sierra Leone acceded to the IMF Article VIII in January 1996, which removed all restrictions on payments and transfers for current international transactions. The regulatory system does not interfere with the free flow of financial resources. Nonetheless, foreign, and domestic businesses alike have difficulty obtaining commercial credit. Foreign interests may access credit under the same market conditions as Sierra Leoneans, but banks loan small amounts at high-interest rates. Foreign investors typically bring capital in from outside the country.
Money and Banking System
Sierra Leone’s banking sector, supervised by the central bank of Sierra Leone, consists of 13 commercial banks, 69 foreign exchange bureau, 17 community banks, 32 credit-only microfinance, 5 deposit-taking microfinance including Apex Bank, 2 discount houses, a home mortgage finance company, a leasing company, three mobile financial services providers, and a stock exchange. More than 100 bank branches exist throughout the country, with activity concentrated in Freetown. The banking system currently has seven correspondent banks. While the commercial banking sector is characterized by poor performance with significant financial vulnerability, the central bank of Sierra Leone in 2018 approved the take over a commercial bank acquired in 2016 by a foreign investor.
Foreign individuals and companies are permitted to establish bank accounts. The use of mobile money is taking a central place in money transfers. Other electronic payments and ATM usage are available in urban areas but limited in rural settings, while the Bank of Sierra Leone is set to roll out a “national payment switch” to facilitate connectivity among different banks’ electronic systems. Telecommunications companies are upgrading to specifically enhance mobile money services and e-commerce.
As part of structural reforms in the banking sector under the Extended Credit Facility of the International Monetary Fund, the Bank of Sierra Leone pledged to establish a special resolution framework for troubled financial institutions, establish a deposit insurance system, strengthen its capacity to supervise, oversee the non-bank financial institution sector, and facilitate the adoption of International Financial Reporting Standards (IFRS) both internally and across the financial sector.
Inadequate supervisory oversight of financial institutions, weak regulations, and corruption have made Sierra Leone vulnerable to money laundering. While the country’s anti-money laundering (AML) controls remain underdeveloped and underfunded, the Financial Intelligence Unit (FIU) completed a national risk assessment in 2017 and is currently working with the Economic Crime Team of the Office of Technical Assistance, U.S. Department of the Treasury to enhance its capacity with a series of technical visits in 2018 and 2019, and others scheduled for 2020 with the FIU. The GIABA (a French acronym for Groupe Intergouvernemental d’Action Contre la Blanchiment d’Argent en Afrique de l’Ouest, which in English is, ‘The Inter-Government Action against Money Laundering in West Africa’) and the EU also funded a workshop on designated non-financial business and professions on Anti-Money Laundering and Combating Financing Terrorism (AML/CFT) preventive measures.
Foreign Exchange and Remittances
Sierra Leone has a floating exchange rate regime and the currency, the Leone, has depreciated slowly over the years mainly due to the increasing demand to finance current consumption and a decreasing inflow of foreign currency resulting from decreased exports and remittances.
In August 2019, the government-mandated the exclusive use of the Leones for all contracts and payments, prohibited individuals and other entities from holding more than USD 10,000 or its equivalent in any foreign currency, and travelers must declare foreign currencies of more than USD 10,000 or its equivalent. Contravention of these directives is punishable by law as stipulated in the 2019 Bank of Sierra Leone Act. In late 2020 however, an acute shortage of domestic currency hit the market, compelling the central bank to order sufficient domestic currency to meet the market demand and lifted the restriction on foreign currency holdings to mitigate the effects of the scarcity.
The Investment Promotion Act 2004 guarantees foreign investors and expatriate employees the right to repatriate earnings and the proceeds of the sale of assets. There are no restrictions placed on converting or transferring funds associated with investments, including remittances, earnings, loan repayments, or lease payments for as long as these transactions are done through the banking system.
With the approval of the Bank of Sierra Leone, investors can withdraw any amount from commercial banks and transfer the funds into any freely convertible currency at market rates. The exchange rate is market-determined, and the Bank of Sierra Leone sometimes conducts weekly foreign exchange auctions of U.S. dollars, but only commercial banks registered in Sierra Leone may participate. Sierra Leone is a party to the ECOWAS Common Currency, the ECO, and efforts to introduce this common currency are being given serious consideration, though it has repeatedly been delayed.
The law provides that investors may freely repatriate proceeds and remittances. The Embassy is not aware of any recent complaints from investors regarding the remittance of investment returns, or any planned policy changes on this issue.
Sovereign Wealth Funds
Sierra Leone has not established a sovereign wealth fund which was legislated under the 2018 Extractive Industries Revenue Act and the 2016 Public Financial Management Act. The implementation has been delayed because of the collapse of the international iron ore prices as well as other minerals in 2014-16, which also coincided with the Ebola outbreak, both of which deteriorated the fundamentals of the economy, especially in the extractive sector.
7. State-Owned Enterprises
Sierra Leone has more than 20 state-owned enterprises (SOEs). These entities are active in the utilities, transport, and financial sectors. There is no official or comprehensive government-maintained list of SOEs. However, notable examples include the Guma Valley Water Company, the Sierra Leone Telecommunication Company, the Electricity Distribution and Supply Authority, the Electricity Generation and Transmission Company, the Sierra Leone Broadcasting Corporation, the Rokel Commercial Bank, the Sierra Leone Commercial Bank, the Sierra Leone Produce Marketing Company, to name but a few.
Sierra Leone is not a party to the Government Procurement Agreement within the WTO Framework. SOEs may engage in commerce with the private sector, but they do not compete on the same terms as private enterprises, and they often have access to government subsidies and other benefits. SOEs in Sierra Leone do not play a significant role in funding or sponsoring research and development.
The National Commission for Privatization was established in 2002 to facilitate the privatization of various SOEs. With support from the World Bank, the commission has focused on the privatization of the country’s port operations, and currently seeks investments in public-private partnerships (PPPs) for port security, telecommunications, and other infrastructure projects. Privatization processes are open to foreign investors and could be integrated into plans for better capitalizing the stock exchange in Freetown via new equity listings.
8. Responsible Business Conduct
The government encourages companies to engage in responsible business conduct, and SLIEPA seeks investors who will undertake corporate social responsibility (CSR) projects. Sierra Leone does not have a set of standards or policies for CSR, but the law provides various incentives. Community leaders generally expect businesses operating in areas outside of Freetown and the Western Area, where local Paramount Chiefs control the land, to engage in projects to support the communities’ social and economic well-being, human capital development, and physical infrastructure. Throughout the country, there is limited awareness of the impacts that corporate activities might have on human rights and environmental protection.
Department of State
- Country Reports on Human Rights Practices;
- Trafficking in Persons Report;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
- North Korea Sanctions & Enforcement Actions Advisory
Department of Labor
Corruption poses a major challenge in Sierra Leone and is particularly endemic in government procurement, the award of licenses and concessions, regulatory enforcement, customs clearance, and dispute resolution. Sierra Leone signed the UN Convention against Corruption in 2003 and ratified it in 2004. The country is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The Anti-Corruption Commission (ACC), established in 2000, has the authority to investigate and prosecute acts of corruption by individuals and companies. The Anti-Corruption Act of 2008 makes it criminal to offer, solicit, or receive a bribe, and this law applies to all appointed and elected officials, close family members, and all companies whether foreign or domestic. The Commission launched a “Pay No Bribe” campaign in 2016, which encouraged citizens to report corruption in the public sector.
In its efforts at tackling corruption, the country progressed 10 places up in its Transparency International Corruption ranking from 129/180 in 2018 to 119/180 in 2019, and further up 2 places (117/180) in 2020. Sierra Leone passed the Millennium Challenge Corporation’s indicator on the control of corruption scoring 71 percent in 2019, 79 percent in 2020, and 81 percent in 2021, though it failed in 2018 (49 percent). Sierra Leone ranked third out of 35 African countries surveyed on government’s effectiveness in the fight against corruption. Corruption declined from 70 percent in 2015 to 40 percent in 2020 according to the Afro Barometer report, and 92 percent of respondents say the fight is on the right course according to a national perception survey conducted by the Center for Accountability and Rule of Law in 2020.
In April 2018, President Bio established a 12-member Governance Transition Team to conduct a stocktaking of the government of former President Ernest Koroma. The report documented a high level of fiscal indiscipline and alleged corruption and recommended a commission of inquiry of all MDAs, and for the supreme audit authority to carry out forensic audits of specific sectors. These sectors included agencies relating to energy, telecommunications, the National Social Security and Insurance Trust, and roads. A white paper to implement the recommendations of the reports of the Commission of Inquiry is currently being implemented by the Ministry of Justice. It is hoped that the outcome of the implementation will make corrupt practices very unattractive for would-be perpetrators.
In 2019, the GoSL passed an Anti-Corruption Amendment Act which increased the powers of the ACC in the fight against graft. It protects witnesses and whistleblowers, provides sanctions for failing to submit asset declaration on time or with falsified, inaccurate, or misleading information. It empowers the Commissioner to prevent contracts that are not of national interest and increased penalties for offenses under the Act. Since then, the ACC has steadily pursued arrests, repayments, and convictions in both the private and public sectors. As of April 2020, the ACC had recovered millions of dollars in misappropriated funds, and prosecuted corruption cases leading to convictions of present and former public officials and private citizens. The Chief Justice established a Special Court to adjudicate corruption cases while the ACC has signed several information-sharing agreements with key government institutions, including the Audit Service Sierra Leone and the FIU.
Resources to Report Corruption:
Francis Ben Kelfala, Commissioner
3 Gloucester Street, Freetown
+232 78 321 321
Lavina Banduah (firstname.lastname@example.org)
Transparency International Sierra Leone
20 Dundas Street, Freetown
+232 79 060 985 & +232 76 618 348
10. Political and Security Environment
Sierra Leone is a constitutional republic with a directly elected president and a unicameral legislature. In March 2018, the opposition Sierra Leone People’s Party (SLPP) presidential candidate, Julius Maada Bio, won the fourth cycle of presidential elections since the civil war ended in 2002 and it was deemed “free and fair” by international observers. The Sierra Leone Police (SLP), supervised by the Ministry of Internal Affairs, is responsible for law enforcement and maintaining security within the country, but it is poorly equipped and lacked sufficient investigative and forensic capabilities. The Republic of Sierra Leone Armed Forces (RSLAF) is responsible for external security but also has some domestic security responsibilities to assist police upon request in extraordinary circumstances. The RSLAF reports to the Ministry of Defense and the Office of National Security. Civilian authorities maintained effective control over the security forces.
There is tension between social, political, and cultural institutions over power and resources. Policies and positions are sometimes sought for control over public finances. The government launched three Commissions of Inquiry (COI) to probe into the governance activities of the immediate past administration which created further tensions. The COI was concluded in March 2020 and the government came up with a White Paper in September 2020 assuring citizens of the full implementation of the recommendations, which included recovery of all monies and confiscation of all assets as detailed in the COI reports. At the outbreak of Covid-19, the government implement nationwide restrictions and curtailed movement to reduce the risk of the infection. Enforcement provoked sporadic violent clashes around the country, leaving some people dead, many hospitalized, and property destroyed. Though the President blamed it on the opposition as trying to make the country ungovernable, concerns about peace and national cohesion were raised as reverting to the dark days of the war will only make things very difficult for Sierra Leoneans.
Sierra Leone’s relations with the neighboring countries of Guinea and Liberia are peaceful. However, Guinea laid claim over the border village of Yenga, in the Kailahun District of Sierra Leone despite the several meetings between the Presidents of the two countries. There have been isolated incidents of politically motivated violence during and after the 2018 national and local elections.
11. Labor Policies and Practices
Sierra Leone’s labor force is informal, unregulated, and lacking in specialized skills. Approximately 90 percent of laborers work in the informal sector, predominantly in subsistence or other small-scale agriculture. Sierra Leone’s labor force was devastated by the country’s civil war of 1991-2002, and the formal employment sector has yet to recover to pre-war levels. The war led to significant migration out of the country and destroyed the nation’s education system. In a country where educational institutions once earned the moniker “the Athens of Africa,” adult literacy was estimated at 43 percent in 2018 (data.worldbank.org) and businesses identify significant shortfalls in skilled professionals due to limited vocational training. While the government is developing Technical and Vocational Education and Training (TVET) programs, foreign investors find it difficult to recruit and train enough workers. Youth unemployment is persistently high and will continue to grow due to high birth rates and changing demography.
The national minimum wage was reviewed upward by the Minister of Finance in November 2019 from Le500,000 to Le600,000 Leones (approximately USD 60) per month and applies to all workers, including those in the informal sector. The law requires paid leave and overtime wages, but enforcement is ineffective and there is no prohibition on excessive compulsory overtime. Employers can dismiss workers with limited notice and severance. Foreign employees must obtain work permits from the Ministry of Labor and Social Security, and most countries’ nationals must have visas. Additional information is available from the Embassy of Sierra Leone in the United States and at . Government policies regarding the hiring of Sierra Leonean nationals are described above in the “Performance and Data Localization Requirements” section.
The law allows workers to join independent unions of their choice without prior authorization, to conduct legal strikes, and to bargain collectively. The Ministry of Labor and Social Security estimates that approximately 35-40 percent of workers in the formal economy are unionized, including agricultural workers, mineworkers, and health workers. The law allows unions to conduct their activities without interference, and the government generally respects this right. However, in some private industries, employers have reportedly intimidated workers to prevent them from joining a union, and there is no legal protection against employers’ discriminating against union members. Unions have the right to strike, although the government requires 21-day prior notice. Collective bargaining is widespread in the formal sector and most enterprises are covered by collective bargaining agreements on wages and working conditions.
Labor issues are governed by the Employers and Employees Act 1960, the Regulation of Wages and Industrial Relations Act 1971, and regulations adopted by the Ministry of Labor and the Ministry of Health and Sanitation. Legal requirements are outdated and poorly enforced while child labor remains a widespread problem. The law limits child labor, allowing light work at age 13, full-time nonhazardous work at age 15, and all work at age 18. Child labor is more prevalent in agriculture, artisanal gold and diamond mining, granite quarrying, sand mining and construction, domestic service, street hawking, and begging, charcoal burning, and fishing, and the laws against child labor are not effectively enforced. The Ministry of Labor and Social Security attributes the ineffective enforcement to a lack of funding and the inherent difficulties of monitoring child labor in the informal sector. Also, the International Labor Organization has identified discrepancies between provisions in the Child Rights Act 2007 and provisions of the Employers and Employer Act 1960.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Host Country Statistical source||USG or international statistical source||USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other|
|Host Country Gross Domestic Product (GDP) (USD)||N/A||N/A||2019||$4.12 billion||www.worldbank.org/en/country or https://www.theglobaleconomy.com/Sierra-Leone/|
|Foreign Direct Investment||Host Country Statistical source||USG or international statistical source||USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other|
|U.S. FDI in partner country ($M USD, stock positions)||N/A||N/A||2019||$12 million||https://ustr.gov/countries-regions/africa/west-africa/sierra-leone|
|Host country’s FDI in the United States ($M USD, stock positions)||N/A||N/A||N/A||N/A||https://ustr.gov/countries-regions/africa/west-africa/sierra-leone|
|Total inbound stock of FDI as % host GDP||N/A||N/A||2017||14.83%||https://www.theglobaleconomy.com/Sierra-Leone/|
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
Economic and Commercial Section
U.S. Mission Sierra Leone
Southridge, Hill Station
Freetown, Sierra Leone +232 99 105 500 +232 99 105 500