Sierra Leone, with an estimated population of 8.2 million people (2022 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 and a humid tropical climate.
Sierra Leone emerged from a decade-long civil war in 2002 and has been politically stable with remarkable religious tolerance among its people. Since 2002, the country economically outperformed other west African countries before it was struck by an outbreak of the Ebola epidemic in 2014. When the country emerged out of the Ebola scourge in 2015, the government turned to foreign direct investment (FDIs) to return the economy to the pre-Ebola growth trajectory.
Sierra Leone was recovering from the ravages of the Ebola epidemic of 2014-15 when the COVID-19 pandemic struck in March 2020 and took a heavy toll on the economy. The government’s quick and decisive response, which comprised the COVID-19 Health Preparedness and Response Plan and the Quick Action Economic Response Program (QAERP), focused on saving lives and livelihoods to prevent a more significant outbreak. The containment measures addressed broader economic and social concerns combined with strained debt. The government’s 2021 budget prioritized COVID-19 and was augmented by concessional support, primarily in the form of grants from development partners. According to the International Monetary Fund (IMF), in August 2021, Sierra Leone grappled with severe and persistent effects of the COVID-19 pandemic amidst signs of early economic recovery.
Economic activity dipped sharply in 2020 with elevated inflation and limited fiscal space.
Sierra Leone offers significant investment potential across numerous sectors. The country is rich in mineral reserves and natural resources with a favorable tropical climate, fertile soil advantageous for agriculture, extensive continental shelf with multiple varieties of fishery resources, a natural environment offering touristic prospects, and vast mineral resources, especially iron ore, diamonds, gold, rutile, ilmenite, and bauxite. Possibilities also exist in energy, water, telecommunications, and other infrastructure. FDIs are crucial to the country’s economic recovery. Therefore, there has been a continuous drive and policy focus on encouraging FDIs into the country.
There are, however, legislative, institutional, and regulatory challenges to investment, including governance, the rule of law, business and human rights, dispute resolution, finance, and banking. Poor quality and limited infrastructure also pose significant investment challenges as the country lacks the capacity necessary to support practical commercial activities. Challenges similarly persist in corruption, skilled labor, accessing land, high-interest rates, and contract enforcement. The government’s policy focus has been to address all these impediments and shape the economic fundamentals for investment to flourish.
Sierra Leone has potential in six primary areas: agriculture, fisheries, mining, tourism, energy, and construction. The country is endowed with a favorable tropical climate with a wide-ranging fertile soil advantageous for agriculture. It also provides an extensive continental shelf with numerous fishery resources, a natural environment offering touristic prospects, and vast mineral resources, especially iron ore, diamonds, gold, rutile, ilmenite, and bauxite. There are also opportunities for public-private partnership projects in energy, water, telecommunications, and other infrastructure. Opportunities further exist for investors to benefit from several preferential trade agreements. These include duty-free access to the Mano River Union market of more than 50 million, ECOWAS market of over 420 million, and the African Continental Free Trade Agreement of about fifty-four African countries with a combined population of more than one billion. The country also benefits from the European Union’s Everything but Arms initiative and the United States African Growth and Opportunity Act (AGOA).
President Julius Maada Bio of the Sierra Leone Peoples Party (SLPP), who ruled briefly as head of a military regime in 1996, replaced President Ernest Bai Koroma in April 2018. His administration took over a poverty-stricken and debt-burdened country with an elevated level of corruption and fiscal indiscipline. His development aspirations are outlined in the comprehensive medium-term National Development Plan (MTNDP) launched in 2019 to span through 2023. The plan is built on human capital development and economic diversification in agriculture, fisheries, and tourism to facilitate the country’s transformation from a fragile state to a stable and prosperous democracy that would achieve middle-income status by 2035. His foreign policy agenda prioritized economic diplomacy and he has traveled to many countries seeking and marketing Sierra Leone as an investor-friendly country. The government is calling on investors in all sectors of the economy as it looks for private sector-led economic growth and development.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies toward Foreign Direct Investment
The Government of Sierra Leone (GoSL) has a strong and positive attitude towards foreign direct investment (FDI) required to invigorate the country’s economic growth and development. The GoSL’s Medium-Term National Development Plan (2019-2023) sets a growth agenda to support economic diversification and competitiveness towards promoting and developing a viable private sector to increase participation in global trade.
The Sierra Leone Investment and Export Promotion Agency (SLIEPA) is the government’s lead agency established to oversee trade policy, improve the investment climate, and provide information on business registration, applicable incentives, and licenses. The Corporate Affairs Commission (CAC) supervises the registration of limited liability companies. Simultaneously, the Public-Private Partnership Unit, established in the Office of the President, facilitates, and streamlines all public-private partnership agreements.
A bill to establish a National Investment Board (NIB) awaits Parliamentary ratification. When established, the NIB will regularize the activities previously marred by bureaucracy and fraud. The NIB will create an Investment and Export Promotion Unit to replace SLIEPA, the Corporate Affairs Unit will take over the management of the Public Private Partnership Unit (PPPU) from the Office of the President, and establish a Business Facilitation Unit. The Investment and Export Promotion Unit will oversee trade policy and improve the investment climate, while the Corporate Affairs Unit will supervise and regulate company incorporation. The PPPU will promote, facilitate, and streamline all public-private agreements, whereas the Business Facilitation Unit will serve as a one-stop shop to facilitate the setting up of businesses and provide support and information to start and operate a business. The aim is to create a conducive and safer investment environment to end the corrupt ways investment has been handled in the past.
Sierra Leone allows foreign investors to compete on the same terms as domestic firms. The Investment Promotion Act of 2004 protects foreign entities from discriminatory treatment. The Act creates incentives and customs exemptions, provides for investors to freely repatriate proceeds and remittances, and protects against expropriation without adequate compensation. The Act further provides for arbitration under the UNCITRAL rules in the event of a commercial dispute. However, a draft arbitration bill, which incorporates the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), presently awaits Parliamentary domestication.
The diversification initiative of the GoSL is largely directed towards agriculture, fisheries, tourism, and infrastructure. The government is promoting sustainable investment in mechanized commercial agriculture, value addition, and agricultural research. The fishery sector is pushing for investment in lawful cultivation, commercial farming, and preservation of fish products. In the tourism sector, priority areas are investment in the hospitality industry, rehabilitation of historical and cultural sites, and promotion of tourism-based activities that link with the rural economy. The government focuses on public-private partnerships for major infrastructural projects in energy, water, roads, ports, and telecommunications, and encourages investments in local industries like agro-processing, other value addition industries, and small enterprise development.
Conversely, poor quality and limited infrastructure pose significant challenges to investment and practical commercial activity. The shortage of skilled labor, the slow legal system, the high level of corruption, and political violence are significant obstacles to FDI. However, Sierra Leone made significant reforms in simplifying the process of setting up a business, and the World Bank ranked the country 58 out of 190 countries in 2020. The country also migrated to the UNCTAD ASYCUDA World System to further enhance trading across borders. In addressing corrupt practices, the country progressed 14 places up in the Transparency International Corruption ranking from 129/180 in 2018 to 115/180 in 2021. Similarly, the government passed the Millennium Challenge Corporation’s indicator on the control of corruption four times in a row, from 71 percent in FY19 to 83 percent in FY22.
The disruption of COVID-19 has been widespread and has severely impacted the economy. To mitigate the shock and accelerate economic recovery, the government initiated the Quick Action Economic Response Plan (QAERP), which aimed at saving lives and sustaining livelihoods. QAERP maintained adequate stock of essential commodities, supported hardest-hit businesses and labor-based public works, and assisted local production and processing of food items. After the July 2021 review of Sierra Leone’s Extended Credit Facility, the International Monetary Fund underscored the government’s strong economic and health responses to mitigate the immediate impact of the crisis and safeguard macroeconomic stability.
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 correctional officers’ 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 must seek approval from the Corporate Affairs Commission to transfer shares.
Export licenses are required only for certain goods and materials. In comparison, the export of gold and diamonds must comply with internationally accepted standards such as Kimberley Process certification. The permits required to export goods such as cocoa and coffee are issued automatically and at no cost.
Small mining investments require a minority partnership with a Sierra Leonean company. The Sierra Leone National Carrier Ratification Agreement Act of 2012 mandates the use of the Sierra Leone National Shipping Company for 40 percent of all goods imported or exported from Sierra Leone. The Petroleum Act 2001 restricts petroleum exploration and production licenses to companies registered or incorporated in Sierra Leone.
Sierra Leone has also identified certain restrictions on foreign investment in its Schedule of Specific Commitments to the General Agreement on Trade in Services, from August 1995, which established limited restrictions on the business services, financial services, and maritime and airport sectors.
The Local Content Policy, adopted in 2012, promotes the utilization of locally produced goods and locally provided services and the employment of Sierra Leonean nationals. While failure to follow the policy previously resulted only in denying investment incentives, the Sierra Leone Local Content Agency Act 2016 requires compliance. More information is available below in the “Performance Requirements” section.
The 2016 local content policy requires investors to utilize local goods in place of imported goods, promote the employment of citizens, and develop the human capacity of these citizens through training.
The legal system generally treats foreign investors in a non-discriminatory fashion, though investors comment that judicial application of the laws is often subject to financial and political influence.
Other Investment Policy Reviews
The World Trade Organization (WTO) conducted a trade policy review for Sierra Leone in 2017. The UN Conference on Trade and Development (UNCTAD) last conducted an investment policy review for Sierra Leone in 2010.
Sierra Leone has progressed in simplifying its business registration process in recent years. The Corporate Affairs Commission 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: http://cac.gov.sl. The Sierra Leone Investment and Export Promotion Agency also provides helpful guidance on starting a business, sector-specific business licenses, mining licensing, and certification fees, and marine resources and fisheries.
Sierra Leone has no program to promote or incentivize outward investment and places no restrictions on such activity.
2. Bilateral Investment Agreements and Taxation Treaties
Sierra Leone has bilateral investment treaties with Germany, in force since 1966, the United Kingdom in 1981 and revised in 2001, China signed in 2001 but not yet entered into force, and United Arab Emirates, signed in 2019 but not yet in force. These treaties protect investors with fair and equitable treatment and defense against unlawful expropriation. 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, extended to Canada, Denmark, Ghana, New Zealand, Nigeria, and The Gambia. However, the Ministry of Finance plans to review all existing treaties and work on the requested treaties from Kenya and Qatar.
3. Legal Regime
Transparency of the Regulatory System
The Sierra Leone Parliament is the country’s supreme legislative authority. Generally, Parliament enacts bills that the President signs into law. The judiciary interprets and applies the laws to ensure impartial justice and provides a mechanism for dispute resolution. However, the regulatory system is not entirely 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.
A series of legislative reforms have been carried out since the second trade policy review in 2017 to create a conducive business environment and attract FDI. These include the Anti-Money Laundering Act, the Banking Act, the Bank of Sierra Leone Act, the Extractive Industries Revenue Act, and several Finance Acts, to name a few. To strengthen the legal, regulatory, and institutional frameworks, Sierra Leone established a 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 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 OGP, now led by the National Council for Civic Education and Development (NaCCED), made significant progress in access to justice, gender, education, and open Parliament, thereby assuring citizens of government’s commitment to provide for the public and to consolidate democracy. In 2020, Parliament passed the Independent Commission for Peace and National Cohesion law and repealed Part 5 of the Public Order Act of 1965 that criminalized libel. In 2021, the government enacted the Cyber Security and Crime Act, signed the abolition of the death penalty, created a fast-track court to try sexual offenders, and a Gender Empowerment Bill 2021 currently before Parliament for enactment.
The Audit Service Act of 1998 established the Audit Service Sierra Leone (ASSL) and further strengthened to carry out audits of all government entities, including statutory corporations and organizations, by the Audit Service Act of 2014.
Sierra Leone became a member of the Extractive Industries Transparency Initiative (EITI) in 2008, established the Sierra Leone Extractive Industries Transparency Initiative (SLEITI), and became compliant with EITI rules in 2014. In 2019, the EITI Board agreed that Sierra Leone had made meaningful progress in implementing the EITI Standard but should undertake corrective actions before the second validation in December 2020. However, in 2020, recognizing the challenges associated with the COVID-19 pandemic, the EITI Board introduced flexible measures in EITI implementation and tasked the multi-stakeholder group (MSG) to focus on ensuring EITII’s commitment to transparency and accountability.
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 with in 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 inconsistent measures 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 upheld the WTO Customs Valuation Agreement, which prohibits the use of arbitrary or fictitious values. However, it has 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 not a signatory to any plurilateral agreements concluded under the WTO but established a mission to the WTO in 2011. It ratified six multilateral investment agreements, including the International Center for Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA) Conventions, 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 local courts apply customary law to many disputes outside of the capital, Freetown. 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 as low as six months. In 2017, Sierra Leone hosted a commercial law summit to address gaps in the justice system, resulting in concrete recommendations in critical areas, including arbitration, anti-corruption and bribery, public-private partnerships, and reform of the court process. A draft arbitration bill will bring arbitration proceedings in Sierra Leone up to international standards when passed into law.
Foreign investors have equal access to the judicial system, which 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. However, 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 came 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 primary laws governing the registration of all businesses before commencing operations. The Corporate Affairs Commission (CAC) deals with the incorporation of companies. In contrast, 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 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 for customs exemptions, allows investors to repatriate proceeds and remittances freely, and protects against expropriation without prompt and adequate compensation. The law establishes a dispute settlement framework that will enable investors to submit disputes to arbitration under 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 specific procedures with the U.S. government in agreements signed on December 28, 1962, and November 13, 1963, whereby Sierra Leone authorities approved external investment guarantees in Sierra Leone. Additional information about the laws and regulations applicable to foreign investments is available on the SLIEPA website: https://www.sliepa.gov.sl/.
Competition and Anti-Trust Laws
Sierra Leone does not have a competition law. The European Union 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. This ministry oversees the regulation of anti-competitive practices. Whereas consumer protection has been passed, the cabinet has approved a competition policy but awaits parliamentary ratification.
Expropriation and Compensation
The Constitution authorizes the government to confiscate property only when necessary, in the interest 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 other 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 Disputes (ICSID) in 1966 to arbitrate investment disputes and enforce ICSID awards. Also, Section 13 of the Arbitration Act 1960, which is being reviewed, 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 presiding judge’s discretion.
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. Sierra Leone has added the New York Convention to the reviewed Arbitration Bill for parliamentary ratification.
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 asserting their investment interests. One company reported that the previous government denied regulatory approval for the firm’s acquisition of a Sierra Leonean entity 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 the licenses of two iron ore mining companies over disputed royalty payments and non-compliance with mining laws. This cancellation resulted in the government’s referral to international arbitration but failed to comply with arbitral rulings. The matter was, however, resolved in an out-of-court settlement.
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 compliant with international standards. The country does not have a central arbitral institution. Instead, arbitration is conducted on an ad hoc basis, including 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 of 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 public offices and 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.
After passing a Credit Reference Act in 2011, Sierra Leone established a Credit Reference Bureau within the Bank of Sierra Leone, mandating all financial institutions to give 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, transforming the financial inclusion landscape.
4. Industrial Policies
The Investment Promotion Act 2004 creates various incentives for foreign and domestic investors. 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 on its website at: https://www.sliepa.gov.sl/, and the Ministry of Finance provides a handbook on tax incentives for investment at https://mof.gov.sl/documents/handbook-of-tax-incentives-for-investment-in-sierra-leone/.
The Public-Private Partnership (PPP) Act of 2014 established the PPP Unit in the Office of the President to promote and increase private sector involvement in the development plan of the country, especially in public utility services and will ensure that PPP arrangements follow the Act. Since its establishment, the PPP Unit has engaged the private sectors to secure projects in energy, fisheries, health, housing, etc.
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 54 acres outside of the capital, Freetown. The SEZ policy accords businesses operating in the zone with a three-year tax holiday, duty and tax exemptions on imported goods, expedited government services including customs, immigration, registration, and guaranteed electricity and water supplies.
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, industrial, petroleum, manufacturing, agriculture, transportation, maritime, aviation, tourism, public works, fisheries, health, energy sectors, etc.
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. After five years, this ratio must increase to 60 percent for managerial and 80 percent for intermediate positions.
Preferential Treatment: Preference will be granted to a foreign business that partners with Sierra Leonean businesses over foreign companies with no equity share owned 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 specific amounts of local materials in critical 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 and public works contracts. The policy also offers domestic firms a preferential margin in government and private procurements.
The Local Content Agency enforces the local content policy. Companies must 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. In the provincial areas outside the Western Area, 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 supplement the national government’s judiciary, especially in rural areas. In 2020, the World Bank Doing Business Report ranked Sierra Leone 169 in the World Bank ease of registering property. 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 lengthy, unreliable, expensive, and do not guarantee the protection of the property user and or owner’s rights. In 2017, the cabinet approved a comprehensive national land policy 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 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 to protect Literary and Artistic Rights.
Despite its recognition of international standards, Sierra Leone’s intellectual property protection is limited. Laws pre-dating the colonial era allowed patents and trademarks registered in the United Kingdom to 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 http://www.wipo.int/directory/en/.
6. Financial Sector
Capital Markets and Portfolio Investment
Limited capital market and portfolio investment opportunities exist in Sierra Leone. The country established a Stock Exchange in 2009 to provide a place for enterprise formation and a market for trading 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 14 commercial banks, 66 foreign exchange bureaus, 18 community banks including Apex Bank, 39 credit-only microfinance, five deposit-taking microfinance, two discount houses, a home mortgage finance company, a leasing company, two mobile financial services providers, and a stock exchange. 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 takeover of 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 becoming more popular. 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 enhance mobile money services and e-commerce specifically.
In December 2021, the Parliament, upon the request of the Bank of Sierra Leone, passed into law the redenomination of the Leone bill. The bill authorizes the elimination of three zeros from the currency- Le 1,000 will now be Le1, and so on. The redenomination is planned to take place in 2022. According to the governor of the central bank, the move is to reduce transaction costs, standardize the Leones bill and save the cost of currency printing. The bank is now embarking on a sensitization campaign.
Sierra Leone suffers from a high inflation rate and deteriorating currency exchange rate. In December 2021, the annual national consumer price or inflation rate was 17.94 percent.
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 particular resolution framework for troubled financial institutions, establish a deposit insurance system, strengthen its capacity to supervise and oversee the non-bank financial institution sector, and facilitate the adoption of International Financial Reporting Standards (IFRS) both internally and across the financial industry.
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. The FIU 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 technical visits to 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. 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 Leone for all contracts and payments, prohibited individuals and other entities from holding more than U.S.$10,000 or its equivalent in any foreign currency, and travelers must declare foreign currencies of more than U.S.$10,000 or its equivalent. Violation 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 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 was delayed because of the collapse of the international iron ore prices in 2014-16, which coincided with the Ebola outbreak, both of which deteriorated the economy’s fundamentals.
7. State-Owned Enterprises
Sierra Leone has more than 20 state-owned enterprises (SOEs) mainly active in the utilities, transport, and financial sectors. There is no official or comprehensive government-maintained list of SOEs. 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. Some of these SOEs are governed by an independent board of directors, while the relevant government ministries supervise others.
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 privatizing the country’s port operations and other unsuccessful public enterprises. It continues to seek investments in public-private partnerships for SOEs with significant infrastructure, including telecommunications, energy, housing, etc. 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. For example, the Finance Act 2011 created a tax deduction for expenditures on social services outside the investment’s scope, such as the construction of schools and hospitals for community use. Community leaders generally expect businesses 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 corporate activities’ impacts on human rights and environmental protection.
In 2008, Sierra Leone enacted the Environment Protection Act (amended in 2010), which provides rules for various environmental matters, such as environmental impact assessment and the control of ozone-depleting substances, especially by mining companies. The act established the Environment Protection Agency (EPA), which is the authority on environmental issues and social matters related to issuing and administering environmental licenses for mining activities.
There are two systems of land ownership in Sierra Leone – the freehold and the leasehold. The freehold system operates in the Western Area and the leasehold in the provinces. Foreign investors cannot own land outright in Sierra Leone but can take leases for terms of not more than 55 years with an option to renew for a further period of 21 years; or 99 years for mining purposes.
In 2019, the GoSL canceled the mining licenses of two iron ore mining companies on the allegation of non-payment of royalties. One was subjected to international arbitration but was later withdrawn and resolved out of court.
Sierra Leone became a member of the Extractive Industries Transparency Initiative (EITI) in 2008, established the Sierra Leone Extractive Industries Transparency Initiative (SLEITI), and became compliant with EITI rules in 2014. In 2019, the EITI Board agreed that Sierra Leone had made meaningful progress in implementing the EITI Standard but should undertake corrective action before the second validation in December 2020. However, in 2020, recognizing the challenges associated with the COVID-19 pandemic, the EITI Board introduced flexible measures in EITI implementation and tasked the multi-stakeholder group (MSG) to focus on ensuring EITII’s commitment to transparency and accountability.
Corruption poses a significant 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. This law applies to all appointed and elected officials, close family members, and companies, whether foreign or domestic. The Commission launched a “Pay No Bribe” campaign in 2016, encouraging citizens to report corruption in the public sector.
In 2021, Sierra Leone ranked 115/180, improving two places from 117/180 (2020) in the Transparency International Corruption Index. In its efforts with respect to tackling corruption, the country moved up 14 steps from 129/180 in 2018 to 115/180 in 2021. Sierra Leone passed the Millennium Challenge Corporation’s indicator on the control of corruption four times in a row, progressing from 48 percent in FY2018 to 83 percent in FY 2022. The government completed the Commission of Inquiry probing corruption allegations into the past government of former President Koroma in March 2020. A white paper to implement the recommendations of the reports of the Commission of Inquiry is currently being implemented by the Ministry of Justice.
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 and provides sanctions for failing to submit asset declarations on time or falsified, inaccurate, or misleading information. It empowers the commissioner to prevent contracts that are not of national interest and increases penalties for offenses under the Act. Since then, the ACC has steadily pursued arrests, repayments, and convictions in 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 signed several information-sharing agreements with key government institutions, including the Audit Service Sierra Leone and the Financial Intelligence Unit. The ACC also conducted a substantial systems and processes reviews of public offices and public education and outreach activities across the country. In early 2022, the ACC introduced a reward and incentive scheme for informants, whistleblowers, and citizens who support the ACC in the fight against corruption; and is currently focused on aspects of alleged corruption in the 2019 and 2020 audit reports for Sierra Leone.
Resources to Report Corruption:
Francis Ben Kelfala, Commissioner
3 Gloucester Street, Freetown
+232 78 832131 & +232 78 321 321
Lavina Banduah (firstname.lastname@example.org)
Transparency International Sierra Leone
20 Dundas Street, Freetown
+232 79 060985 & +232 76 618348
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. It was deemed “free and fair” by international observers. The Sierra Leone Police, supervised by the Ministry of Internal Affairs, is responsible for law enforcement and maintaining security within the country, but it is poorly equipped and lacks sufficient investigative and forensic capabilities. The Republic of Sierra Leone Armed Forces (RSLAF) is responsible for external security and 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.
Sierra Leone, in 2020, made a historical “Freedom of Speech” move by repealing Part 5 of the Public Order Act of 1965 that criminalized libel. President Bio has also signed into law the abolition of the death penalty.
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 a government White Paper issued 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 implemented 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. The President blamed it on the opposition as trying to make the country ungovernable and raised concerns about peace and national cohesion. He cautioned that 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.
Sierra Leone has declared June 24, 2023, as the official date for the next presidential, parliamentary, and local council elections and will register voters for that election from September 3 to October 4, 2023. Thirteen opposition political parties have established a coalition, the Coalition Progressive Political Party (COPPP), to challenge the current administration in the next presidential election.
11. Labor Policies and Practices
Sierra Leone’s labor force is informal, unregulated, and lacking 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). 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 challenging to recruit and train enough workers. Youth unemployment is persistently high and will continue to grow due to high birth rates and changing demography.
Sierra Leone in 2016 enacted “The Local Content Policy,” stipulating quotas for investment in and employment of Sierra Leonean citizens in corporations operating in the country. The Sierra Leone Local Content Agency (www.localcontent.gov.sl) monitors compliance with the policy.
The Minister of Finance reviewed the national minimum wage from Le500,000 to Le600,000 Leones (approximately U.S.$60) per month effective January 2020 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 http://travel.state.gov. 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 without prior authorization, conduct legal strikes, and 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, employers have reportedly intimidated workers in some private industries 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.
The Employers and Employees Act of 1960, the Regulation of Wages and Industrial Relations Act of 1971, and regulations adopted by the Ministry of Labor and the Ministry of Health and Sanitation govern labor issues. Legal requirements are outdated and poorly enforced, while child labor remains widespread. 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, begging, charcoal burning, and fishing. 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 Employees Act 1960.
12. U.S. International Development Finance Corporation and Other Investment Insurance Programs
The passage of the Better Utilization of Investment Leading to Development (BUILD) Act in 2018 brought together the capabilities of the former Overseas Private Investment Corporation (OPIC) and USAID’s Development Credit Authority to establish the United States International Development Finance Corporation (DFC) in 2019, the development bank of the U.S. The Act restructured the DFC to be able to mobilize private investments to projects in emerging markets, advance U.S. foreign policy and improve lives. It provides investment resources for critical infrastructure and expands access to essential services such as energy, healthcare, food security, water and sanitation, financial inclusion, infrastructure, and technology.
The DFC operates in Sierra Leone under a bilateral agreement of 1961 and has partnered with the private sector to fund crucial challenges. It provided a loan guarantee in 2011 to an investment fund with agricultural projects committed funds to upgrade and expand mobile networks. It provided funds for Cordaid to increase access to finance for small and medium-sized enterprises and microfinance institutions. In 2021, It approved to fund the development of an 83.5 mega-watt gas-fired power plant in the capital Freetown, under a 20-year power purchase agreement.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source
USG or international statistical source
USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other