Investment Climate of Sierra Leone
Sierra Leone’s economy proved resilient in the face of two major shocks in 2014/15 of Ebola epidemic and collapse of iron ore prices. Economic growth supported by new investments in mining, agriculture, and fisheries has resumed. The recovery underway, according to International Monetary Fund projections, is expected to remain sustainable over the medium term. Real Gross Domestic Growth (GDP) is projected to recover from -20.6% in 2015 to 5.4% in 2017. Consumer Price Inflation has increased from a base of 9.5% in December 2015, inflation reached 17.41% in December 2016. Exchange rate pressures remain unabated. The local currency (the Leone) had depreciated by 28.73% in December 2016 (year-on-year). The government has however been able to maintain foreign exchange reserves to at least 3.5 months. The IMF projects medium-term growth to pick up to around 6.5% by 2020 from 4.3% in 2016. Inflation is projected to decline to 7.5% by 2020
Why invest in Sierra Leone?
- Democracy has returned to the country after restoration of peace and successful elections.
- Participate in the development of the key sectors of mining, fisheries agriculture, infrastructure and small-scale manufacturing.
In 2012, Sierra Leone conducted its third democratic elections since the end of the 11-year civil war in 2002. President Ernest Bai Koroma is serving his second and final term, which ends in 2017. Elections will be held on March 7, 2018. The 1991 Constitution is being reviewed and a draft has been presented by the Constitutional Review Committee (CRC). The government is drafting a White Paper on it, which will be tabled in Parliament for ratification. Once Parliament has enacted the new Constitution, a referendum to vote on the new Law will take place.
Sierra Leone has an estimated population of 6.2 million up from 5.5 million in 2008 with average annual growth rate of 2.09%. Sierra Leone has a young population with 42% of its population under 15, and a rural population with 62% of people living outside of the urban areas. The current population of Sierra Leone is 6,705,465 in April 2017, based on the latest United Nations’ estimates.
Sierra Leone, with approximately 40% urban population in 2017 is experiencing its urbanisation without industrialisation that does not promote appropriate structural linkages and sustained transformation of the economy. The urbanisation rate is projected to reach 43.8% in 2030.
Doing business in
The highlights of World Bank score of doing business in Sierra Leone are summarised as follows;
|Topics||World Bank 2017 Rank||World Bank 2016 Rank||Change in Rank|
|Starting a Business||87||99||
|Dealing with Construction Permits||132||134||
|Protecting Minority Investors||87||85||-2|
|Trading across Borders||169||169||
The government is the in process of creating conducive environment for doing business.
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. Investors can withdraw any amount from commercial banks and transfer it into any freely convertible currency at market rates.
The existing legal system inherited from the UK protects property and contract rights and investors have access to the judicial system. In 2010, Sierra Leone created a Fast Track Commercial Court, which is charged with providing expedited resolution of commercial disputes. To date, the court has had minimal effectiveness due to resource limitations Arbitration clauses in contracts and foreign judgments are respected in the judicial system. Sierra Leone is a party to the Convention on Settlement of Investment Disputes between States and Nationals of Other States (The Washington Convention), which it ratified and put into force in October 1966. The Investment Promotion Act 2004 allows investment disputes to be referred to arbitration in accordance with UNCITRAL procedures or the framework of any applicable bilateral or multilateral investment agreement. Sierra Leone has been a party to the ICSID Convention since 1966.
Key development challenges
Creating a transformative manufacturing sector
Sierra Leone ranked 123 out of 176 countries surveyed and scored 30 points out of 100 on the 2016 Corruption Perceptions Index reported by Transparency International.
The security in Sierra Leonean has greatly improved and the country is generally quite calm. There is an underlying threat from terrorist attacks of public areas and therefore one has to be vigilant.
Unemployment and skilled labour
Latest figures not readily available.
Attitude to Foreign Direct Investment
A new Investment Code went into effect in 2005 that put Sierra Leone at par with western countries concerning the protection of investment. The detail of the specific investment incentives to be offered in specific sectors are being worked out. The Government has a favourable attitude toward foreign direct investment (FDI) for purposes of revitalizing the economic. President Koroma’s Agenda for Prosperity, a five-year roadmap to place Sierra Leone on the path to achieving middle-income status by 2035, recognizes that increasing investment will require a more supportive business environment. The Ministry of Trade and Industry oversees trade policies and programs, while the Sierra Leone Investment and Export Promotion Agency (SLIEPA) is the government’s lead agency in implementing initiatives to stimulate exports and investments, improve the investment climate, and promote the development of small- and medium-sized enterprises. 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 cases of expropriation, 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.
Restrictions on Foreign investment
There is no industrial policy that discriminates against foreigners nor are there sectors that are restricted for foreign investment. The Investment Promotion Act 2004 protects foreign entities from discriminatory treatment. The law creates incentives and customs exemptions, provides that investors may 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 in accordance with the rules of procedure of the UN Commission on International Trade Laws (UNCITRAL). Foreign companies may own or invest in Sierra Leonean entities, with limited exceptions. Small mining investments require a minority partnership with a Sierra Leonean company, the Sierra Leone National Carrier Ratification Agreement of 2012 provides preferential treatment in shipping to the Sierra Leone National Shipping Company, and the Petroleum (Exploration and Production) Act 2001 restricts licenses for petroleum exploration and production 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.
Foreigners cannot own land under either system, but they can lease land for terms of up to 99 years.
Intellectual Property (IP) Rights.
Sierra Leone has been a member of the World Intellectual Property Organization 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 also bound by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The government is taking steps to develop policy and laws that will bring it into compliance with The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Diamonds, titanium ore, bauxite, iron ore, gold and chromite.
The information about investment climate in Sierra Leone has been summarized to include the following;
Investment Authority of Sierra Leone
Investment guarantees in Sierra Leone
Investment Incentives in Sierra Leone
Investment opportunities in Sierra Leone
Natural Resources of Sierra LeoneDevelopment Partners of Sierra LeoneDouble Taxation Agreements involving Sierra LeoneExports of Sierra LeoneInternational Trade Agreements with Sierra LeoneTrading partners of Sierra LeoneShipping Status
Sources of information