Sierra

Leone Overall Rating: 65.74

Downloaded on 24 Mar 2022 09:24

FATF AML Deficiency List/EU High risk 90.0 / 100 International Sanctions 100.0 / 100
Last updated: 15 Jan 2019 16:03 Last updated: 21 Mar 2019 14:52

FATF MER Recommendations 10.58 / 100 US State ML Assessment 40.0 / 100

Last updated: 24 Apr 2019 12:32 Last updated: 12 Mar 2022 11:54

Terrorism 100.0 / 100 Corruption 37.67 / 100

Last updated: 12 Mar 2022 11:46 Last updated: 30 Jan 2022 11:12

Criminal Markets (GI Index) 46.0 / 100 Resilience (Governance, Regulatory and Political)
Last updated: 03 Mar 2022 08:18 Last updated: 03 Mar 2022 08:18
34.6 / 100

EU Tax Blacklist 90.0 / 100 Offshore Finance Center 90.0 / 100

Last updated: 03 Mar 2022 08:18 Last updated: 03 Mar 2022 08:18

Background
The British set up a trading post near present-day Freetown in the 17th century. Originally, the trade involved
timber and ivory, but later it expanded to slaves. Following the American Revolution, a colony was established in
1787 and Sierra Leone became a destination for resettling black loyalists who had originally been resettled in
Nova Scotia. After the abolition of the slave trade in 1807, British crews delivered thousands of Africans liberated
from illegal slave ships to Sierra Leone, particularly Freetown. The colony gradually expanded inland during the
course of the 19th century; independence was attained in 1961. Democracy is slowly being reestablished after
the civil war (1991-2002) that resulted in tens of thousands of deaths and the displacement of more than 2
million people (about one-third of the population). The military, which took over full responsibility for security
following the departure of UN peacekeepers at the end of 2005, has developed as a guarantor of the country's
stability; the armed forces remained on the sideline during the 2007, 2012, and 2018 national elections. In March
2014, the closure of the UN Integrated Peacebuilding Office in Sierra Leone marked the end of more than 15 years
of peacekeeping and political operations in Sierra Leone. The government's stated priorities include free primary
and secondary education, economic growth, accountable governance, health, and infrastructure.

Anti - Money Laundering / Terrorist Financing

FATF status

Sierra Leone is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist
financing standards in Sierra Leone was undertaken by the Financial Action Task Force (FATF) in 2007. According
to that Evaluation, Sierra Leone was deemed Compliant for 2 and Largely Compliant for 1 of the FATF 40 + 9
Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

Twelth follow-up report of Sierra Leone (2015)

The Tenth Mutual Evaluation Follow-Up report of Sierra Leone was presented at the 21st plenary session of GIABA
in May 2014 wherein progress made by the country in relation to compliance with FATF standards was
highlighted. Notable among the progress reported were measures taken in improving the resourcing of the
Financial Intelligence Unit, the initiation of a national sensitisation campaign to raise awareness on money
laundering and terrorism financing, exploratory discussions with key DNFBPs as a precursor to the roll out of
AML/CFT preventive measures within the sector, drafting of a consolidated Bank Examination Manual, installation
and usage of AML/CFT analytical software component of the Financial Crime and Compliance Management
system, intensification of Anti-Corruption strides to recover stolen funds, the endorsement of the National Counter
Terrorism Strategy by the National Security Council and reforms within the Immigration Department to strengthen
border controls anchored within the ECOWAS protocol on free movement of its citizens.

In view of the progress highlighted in the Tenth Follow-Up Report (FUR), the Plenary reached a conclusion that
Sierra Leone is indeed taking steps aimed at strengthening its AML/CFT regime however these steps were not
considered to have significant impact on compliance with SRI, SRIII and R36 which are key FATF
Recommendations. Sierra Leone was therefore enjoined to put in place mechanisms and procedures for
implementing UNSCRs 1267 and 1373 and ensure the ratification of the Palermo Convention without delay. In
addition, the country was requested to strengthen supervision to ensure that all reporting entities including
designated non-financial businesses and professions (DNFBPs) and non-bank financial institutions comply with
AML/CFT obligations and are monitored for this purpose.

This report catalogues the actions already taken to address the key deficiencies identified following the
presentation of the Tenth Follow-Up Report (FUR). The Parliament of the Republic of Sierra Leone on 24th July
2014 ratified the Palermo convention affirming the country’s commitment to the global call to the fight against
transnational organised crime. The ratified convention was deposited at the United Nations on 12th August 2014.
The said convention has already been domesticated in various legislative provisions including the ACC Act, 2008
and the AML/CFT Act, 2012.

Sierra Leone commenced a national AML/CFT risk assessment in May 2014 with the aim of identifying and
analysing the sources and drivers of money laundering and terrorism financing risks and inherent vulnerabilities.
The process is at it second phase as various working Groups constituted for the process are engaged in the
collection of relevant data and information. However, due to the outbreak of the Ebola Virus Disease in the
country, field activities for the administration of questionnaire and collection of other data stalled during the
second phase of the project.

Measures were taken by the Central bank to strengthen regulation on over the counter transaction on foreign
currencies whilst at the time embarking on a strategy of luring the informal money changers to regularise their
operation with the central bank. Over the period under review the central Bank of Sierra Leone relaxed
registration requirements for Bureau de Change which saw – money changers registering to operate Bureau de
Change thus bringing the activities of the illegal money changers under regulatory oversight.

The Anti Corruption Commission launched a national strategy to fight corruption within the public sector. This is
the first strategy that engaged all relevant stakeholders in the identification of gaps and design of counter
measures against graft in all Ministries, Departments and Agencies of Government. The strategy therefore confers
responsibilities on various MDAs with specific timelines.

The FIU conducted a total of nine (9) onsite examinations of commercial banks to assess their compliance with
AML/CFT standards. The examination highlighted weaknesses in Know Your Customer and Customer Due
Diligence, identification of PEPs and their subjection to enhanced due diligence, inadequacies in their AML policies
and control environment and documentation relating to outside wire transfers for imports. The respective banks
were requested to remedy the identified weaknesses within 90 days and the Central bank was duly informed to
monitor and undertake follow-up actions on the issues. As a demonstration of effective supervision, the bank of
Sierra Leone imposed penalties on five Commercial banks for various violations resulting in a total monetary fine
of Le260 Million or $59,000.

GIABA Annual Report 2013

Prevalence of Predicate Crimes: Corruption is still a serious challenge in Sierra Leone, and it is not certain
that management of the expanding economic and financial fortune will be transparent, accountable and
equitable. The country was ranked 119th out of 177 countries on the Transparency International CPI in 2013, up
from 123rd position. While this is an improvement, the ranking is still very low for a country that aspires to tackle
poverty. Of the 187 countries surveyed, Sierra Leone is 177th on the human development index, and there are
formidable challenges of achieving the MDGs in two years to the target 2015.

Nonetheless, the Anti-Corruption Commission has shown in 2013 that it can bite hard. Twenty-six court cases,
mainly against public officials, including police officers and civil servants, as well as individuals indicted for the
misuse of international donor funds, were fi by the Commission within the year. The Commission also started the
prosecution of several suspects for a serious case of bank fraud involving the Sierra Leone Shipping Authority, the
National Revenue Authority and some commercial banks, with an estimated value of about $9.3 million. Apart
from corruption, the country faces other serious crimes that can undermine the development promises of its
burgeoning financial sector.

In its Country Report to GIABA, Sierra Leone identified the following ML/TF predicate crimes as prevalent in 2013:
drug trafficking, corruption, tax fraud, smuggling of precious stones and metals, other investments, bank fraud,
and document forgery.

According to the INCSR (2013) report, smuggling of pharmaceuticals, foodstuffs, gold and diamonds occurs across
porous land borders. The country’s inadequately manned borders with Guinea and Liberia make Sierra Leone
highly vulnerable to the influx of criminals from across the region to collude with domestic criminals and engage
in the illegal trade of diamonds, arms, illicit drugs and timber. Since the landing of the infamous ‘cocaine plane’ at
Lungi Airport in July 2008 with 600 kg of cocaine, several automatic rifles and 339 rounds of ammunition on
board, Sierra Leone has been identified as a possible growing hub for drug transhipment from Latin America to
Europe.

The cases of corruption currently being prosecuted by the Anti-Corruption Commission also indicate that
corruption is a prominent crime. It is also a limiting factor in the fight against financial crimes as the bribing of
relevant law enforcement agents is likely to block basic scrutiny and investigations.

AML/CFT Situation: Sierra Leone’s progress in the implementation of AML/CFT measures has been noteworthy.
With assistance from the GIABA Secretariat, the country is making serious efforts to addressing the following gaps
in line with the directives of GIABA Plenary in May 2013.

i. Development of a mechanism to implement UNSCRs 1267 and 1373 and their succession resolutions;

ii. Adoption of an effective supervisory framework for relevant reporting entities; and

iii. Adequate resourcing of the FIU to facilitate its effective functioning.

Above all, Sierra Leone has shown a high degree of commitment to complying fully with international AML/CFT
standards. The country has been given up to May 2014 to report further progress made towards fully addressing
the remaining deficiencies. A high-level advocacy mission led by the Director General of GIABA was undertaken in
January 2013 to engage political authorities in the country on the implementation of the AML/CFT Act 2012. The
FIU of Sierra Leone received 114,728 CTRS and 11 STRs in 2013. Seven of the analysed STRs were sent to law
enforcement authorities, but there was no evidence of further investigation, prosecution or conviction.

Conclusion: Sierra Leone’s postwar recovery and political stability have created the enabling conditions for
economic growth in the country. The noticeable growth and the realization of the vision of becoming a medium-
income economy in the near future are predicated on the continuance of sound political and economic
governance.

However, the prevalence of corruption is an ominous threat to the fulfillment of that promise. Also, the emerging
activities of internationally organized criminals should be a warning of the dangers posed to financial stability
and the sustainability of the country’s hard-earned economic growth.

The authorities in Sierra Leone, therefore, have the obligation to protect the unprecedented economic and
financial gains the country has made in the last two years. To do so, they should sustain the current momentum
and as a priority endeavour to address the country’s remaining strategic deficiencies in its AML/CFT system.

The country should also further strengthen the capacity of its relevant agencies to investigate and prosecute
financial crimes, including ML/TF. Securing convictions for such crimes and confiscating the assets of convicted
criminals should also be areas of priority in order to deter would-be criminals.

US Department of State Money Laundering assessment (INCSR)

Sierra Leone was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics
Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

Sierra Leone is not a regional financial center. Loose oversight of financial institutions, weak regulations,
pervasive corruption, and lack of financial crimes enforcement has made the country vulnerable to money
laundering. Due in part to its large seaport, Sierra Leone is an attractive trans-sea shipment point for illegal drugs
and other forms of illegal commerce. Smuggling of pharmaceuticals, foodstuffs, gold, and diamonds occurs across
porous land borders. There is little evidence drug smuggling is a significant source of laundered money. The
small-scale artisanal diamond mining industry is exploited by domestic groups and individuals rather than by
transnational cartels. The trade in stolen automobiles, many originating in the United States, continues to be a
concern.

Most financial transactions, including currency exchanges and remittances, are unregulated and vulnerable to
money laundering. There is no indication money laundering activity in Sierra Leone is tied to the financing of
terrorism. After making limited progress in this area in 2014, Sierra Leone shifted its attention and resources in
2015 almost entirely to ending the Ebola outbreak. As a result, the country’s AML/CFT controls remain
underdeveloped and underfunded.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS

TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES
IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Are legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

KYC covered entities: Banks; financial leasing firms; money and currency exchanges; credit card, traveler’s check,
and other financial instrument dealers; investment companies; insurance, merchant, and investment banks; and
securities and commodities dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 15: January - October, 2015

Number of CTRs received and time frame: 92,757: January - September, 2015

STR covered entities: Banks; financial leasing firms; money and currency exchanges; credit card, traveler’s check,
and other financial instrument dealers; investment companies; insurance, merchant, and investment banks; and
securities and commodities dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 1: January - October, 2015

Convictions: 0 in 2015

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Sierra Leone is a member of the Inter Governmental Action Group against Money Laundering in West Africa
(GIABA), a FATF-style regional body.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Sierra Leone made progress in 2014, when the government began work on a national AML/CFT risk assessment.
However, the Ebola outbreak in 2014 caused a major shift in the government’s attention, priorities, and
resources. This has impeded progress on AML/CFT efforts, as it has affected virtually all government initiatives,
with new competition for already scarce resources and a complete stop to field activities for the national risk
assessment. Despite the significant challenges presented by the Ebola outbreak, Sierra Leone has made some
additional progress. The Parliament has enacted regulations for the implementation of UNSCRs 1267 and 1373,
through the Terrorism Prevention Regulation 2013, passed late in 2014.

In 2015, Sierra Leone dedicated additional resources to the Financial Intelligence Unit (FIU), notwithstanding the
Ebola crisis. The FIU anticipates completing its national risk assessment by July 2016 and expects the government
will then adopt a comprehensive national strategy addressing AML/CFT issues. The FIU has taken some steps to
ensure that financial institutions are in compliance with AML/CFT laws, including through onsite examinations of
some commercial banks. The government has also described plans to introduce AML/CFT requirements for some
designated non-financial businesses and professions (DNFBPs).

However, the FIU still lacks adequate staff and resources, with only 28 employees. While Sierra Leone’s
Directorate of Public Prosecution has given FIU personnel increased authority to prosecute certain crimes, the FIU
cannot meaningfully act on that authority because its legal staff consists of only one attorney.

The country’s Transnational Organized Crime Unit (TOCU) is now fully operational with 53 officers from 12 law
enforcement agencies, and has investigated 84 criminal cases, resulting in the prosecution of 59 individuals for
involvement in organized crime. In September 2015, Sierra Leone’s Ministry of Internal Affairs broke ground on
the construction of the TOCU’s new headquarters building. The TOCU is authorized to undertake complete
investigations and effect arrests, but general policing capacity, available technical and physical resources, and
understanding of the use of financial investigations and intelligence remain low.

There is a low rate of compliance throughout the financial sector, particularly among the commercial banks
headquartered in Nigeria. As it drafts a national action plan for AML/CFT issues, the FIU is considering ways to
require financial institutions to identify and monitor politically exposed persons (PEPs) and to more effectively
identify suspicious transactions. By relaxing its registration requirements for informal money changers, the Bank
of Sierra Leone has effectively encouraged those entities to invite new regulatory oversight, which has
strengthened the regulation of foreign currency transactions.

The Sierra Leone Police, National Revenue Authority, and Anti-Corruption Commission have very limited abilities
to investigate money laundering crimes. The Attorney General’s Office has limited investigative and arrest
powers. The lack of expertise also impedes the investigation of possible abuses related to informal and
unregulated financial activities, such as hawala networks, and possible ties between money laundering in Sierra
Leone and Lebanese traders. Corruption is a related concern.

Sierra Leone should adopt additional AML/CFT laws and regulations to fill gaps in the current regulatory scheme,
and should take steps to strengthen AML/CFT enforcement. The country should complete its national risk
assessment and adopt a national AML/CFT action plan as soon as possible. As part of that plan, Sierra Leone
should bolster its efforts to counter smuggling, tighten border controls, and adequately supervise those sectors
most vulnerable to money laundering. The government should also fully operationalize the FIU and provide
additional training for its staff. It should institute effective supervision of both DNFBPs and non-profit
organizations; work to ensure foreign exchange dealers implement customer due diligence measures and comply
with record-keeping requirements; and criminalize the financing of terrorism for any purpose, i.e., regardless of a
link to the planning or commission of a terrorist act.

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating (100-Good / 0-Bad)

Transparency International Corruption Index 34

World Governance Indicator – Control of Corruption 41

US State Department

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.

Reports

US State Dept Narcotics Report 2012

With its porous borders, poorly patrolled coastline, weak infrastructure, and deep poverty, Sierra Leone presents a
potentially attractive transshipment point for illegal drugs. The government’s efforts to combat the drug flow in
2011 continued to be hampered by resource constraints and limited operational sophistication. Sierra Leone’s
limited enforcement capacity, inadequate drug treatment and rehabilitation programs, and corruption often
impede its counternarcotics efforts.

Cocaine is the main drug transiting Sierra Leone. It moves through the country’s unguarded and unprotected
borders, both land and sea, from South America to Europe via intermediary points such as Guinea and Guinea-
Bissau. Small amounts of Southeast Asian heroin are also suspected of being shipped through Sierra Leone on
direct commercial flights from East Africa. Sierra Leone’s endemic corruption certainly facilitates trafficking, as
government officials and police and intelligence officers accept bribes, to turn a blind eye on trafficking, or even
engage in trafficking drugs themselves. As a matter of policy, however, the government of Sierra Leone does not
encourage or facilitate the illicit production or distribution of narcotics or launder proceeds from illegal drug
transactions. There is no evidence that any senior government official engages in, encourages, or facilitates the
illicit production or distribution of drugs. The only drug produced in Sierra Leone is marijuana. It is widely
cultivated and consumed locally, and is also transported to surrounding countries and to Europe. Increased
cannabis cultivation has given rise to food security concerns as farmers substitute it for subsistence farming.
Diversion of precursor chemicals is not a problem in Sierra Leone.

The National Drug Control Act of 2008 brought Sierra Leone’s laws into conformity with international conventions
and norms. It defined stricter penalties for all drug-related charges, contained mutual legal assistance provisions,
and authorized a budget appropriation to support prevention and control activities. Efforts to strengthen the law
began in 2010, but as of 2011 a revised law had not yet been passed. Sierra Leone is a party to all of the UN Drug
Conventions and the 1972 Protocol. The 1935 Extradition Treaty between the United States and Great Britain
remains in force between the United States and Sierra Leone. Sierra Leone is a party to the UN Convention
against Corruption. Though Sierra Leone signed the UN Convention against Transnational Organized Crime in
2001, it has yet to ratify it. The 2009 Maritime Counter Drug Bilateral Agreement promotes cooperation between
the U.S. and Sierra Leone for the purpose of suppressing illicit transnational maritime activity, including narcotics
trafficking.

The 2008 Drug Control Act also established a National Drug Law Enforcement Agency (NDLEA) to serve as the
focal point on policy issues and investigations. However, with limited staff and virtually no budget, it is a hollow
organization with no real capacity and no demonstrated successes. The vast majority of drug interdiction activity
is carried out by the Transnational Organized Crime Unit (TOCU), an elite inter-agency unit supported by the UN
Office of Drugs and Crime (UNODC) and other international donors. Donor agencies have helped TOCU increase
its capacity significantly since TOCU’s establishment. However, TOCU still needs continued training as well as
improved forensic capabilities, including a dedicated forensic laboratory. Sierra Leone’s plans to create a special
court dedicated to organized crime and narcotics issues with specially trained judges and prosecutors, supported
by UNODC, has not yet been implemented.

During the period October 2009 to June 2011, TOCU conducted 172 investigations, which led to 114 court cases;
the remaining cases were closed without any prosecutions. In the first half of 2011, TOCU conducted 45
investigations which led to 32 court cases. The vast majority of these cases were for cultivating, selling, and
trafficking in marijuana. There were also several charges for possession and sale of cocaine. TOCU also
investigated cases of suspected human trafficking and 419 financial scams.

U.S.-supported interdiction efforts were focused on the Joint Maritime Committee a kind of coast guard which
conducts patrols with three small cutters, donated by the U.S. Coast Guard and a larger Shanghai-class patrol
boat donated by the Chinese government. In 2011, U.S. Africa Command (AFRICOM) funded significant
infrastructure improvements at TOCU, including an automated ship identification system, two radars, and
improved Internet access. In addition, in 2011, the African Maritime Law Enforcement Partnership, a program of
the Africa Partnership Station administered byAFRICOM, conducted joint Sierra Leone/U. S. Coast Guard training,
surveillance, and law enforcement operations. These operations included the Coast Guard Cutter “FORWARD”
embarking a law enforcement team from Sierra Leone to locate and board vessels suspected of illegally
trafficking narcotics.

US State Dept Trafficking in Persons Report 2021

The Government of Sierra Leone does not fully meet the minimum standards for the elimination of trafficking but
is making significant efforts to do so. The government demonstrated overall increasing efforts compared to the
previous reporting period, considering the impact of the COVID-19 pandemic on its anti-trafficking capacity;
therefore Sierra Leone remained on Tier 2. These efforts included significantly increasing investigations and
prosecutions, allocating funding to an NGO for protective services, and adopting a new anti-trafficking national
action plan. However, the government did not meet the minimum standards in several key areas. Shelter and
services, especially for male victims, remained inadequate and limited to Freetown. The government continued its
moratorium on labor migration, increasing vulnerability to trafficking. Law enforcement did not investigate past
reports of corruption and official complicity in trafficking crimes.

TRAFFICKING PROFILE

As reported over the past five years, human traffickers exploit domestic and foreign victims in Sierra Leone, and
traffickers exploit victims from Sierra Leone abroad. Traffickers recruit victims largely from rural provinces to
urban and mining centers for exploitation in sex trafficking and forced labor in domestic service, artisanal
diamond and granite mining, petty trading, portering, making ceramics, rock breaking, quarrying, street crime,
and begging. Traffickers exploit victims in fishing and agriculture, and sex trafficking or forced labor through
customary practices, such as forced marriages. The government reported child sex trafficking—especially of
children from poor homes—was a serious problem, including at beaches and in nightclubs. Local demand fueled
the majority of child sex trafficking, although foreign tourists were also clients at beaches and in nightclubs. In
2018, an NGO reported Chinese-owned companies helped to fuel child sex trafficking in Freetown, citing
specifically workers on Chinese-owned fishing vessels who bring girls to their boats at night for commercial sexual
exploitation. Traffickers exploit traditional foster care practices called menpikin to convince parents to hand over
their children by promising to provide an education or better life but instead exploit the children in various forms
of forced labor including domestic servitude, street vending, mining, agriculture, scavenging for scrap metal,
okada (motorbike taxi) driving, and sometimes commercial sex. Traffickers exploit children from neighboring West
African countries in forced begging, forced labor, and sex trafficking in Sierra Leone, and traffickers exploit Sierra
Leonean children in Mali, Niger, and increasingly Guinea for forced labor and sex trafficking. School closures and
economic vulnerability due to the pandemic are increasing children’s susceptibility to exploitation, including in
commercial sex and forced marriage. In previous years, traffickers exploited Chinese, Indian, Lebanese, Kenyan,
Pakistani, and Sri Lankan men in forced labor in Sierra Leone. Cuban nationals working in Sierra Leone on medical
missions may have been forced to work by the Cuban government. Traffickers have exploited boys and girls from
Sierra Leone reportedly as “cultural dancers”—and possibly also for sexual exploitation—in The Gambia. Sierra
Leonean adults voluntarily migrate to other West African countries, including Mauritania and Guinea, as well as to
the Middle East and Europe, where traffickers exploit some into forced labor and sex trafficking. Sierra Leonean-
Kuwaiti trafficking networks fraudulently recruit Sierra Leoneans for education in Europe and the United States
but subject them to domestic servitude in Kuwait. Traffickers also exploit Sierra Leonean women in domestic
servitude in Oman, Iraq, Egypt, Qatar, and Lebanon. Traffickers move women through Guinea, The Gambia,
Liberia, and Senegal en route to exploitation in the Middle East. Since 2017, an international organization
repatriated at least 1,500 Sierra Leoneans from Libya and other Middle Eastern countries, some of whom were
victims of slavery and sex trafficking. In previous reporting periods, an international organization reported some
Libyan soldiers sold stranded Sierra Leonean migrants in their custody to Libyan and Middle Eastern traffickers.

US State Dept Terrorism Report

No report available

Economy / Investment Climate

Sierra Leone is extremely poor and nearly half of the working-age population engages in subsistence agriculture.
The country possesses substantial mineral, agricultural, and fishery resources, but it is still recovering from a civil
war that destroyed most institutions before ending in the early 2000s.

In recent years, economic growth has been driven by mining - particularly iron ore. The country’s principal
exports are iron ore, diamonds, and rutile, and the economy is vulnerable to fluctuations in international prices.
Until 2014, the government had relied on external assistance to support its budget, but it was gradually becoming
more independent. The Ebola outbreak of 2014 and 2015, combined with falling global commodities prices,
caused a significant contraction of economic activity in all areas. While the World Health Organization declared an
end to the Ebola outbreak in Sierra Leone in November 2015, low commodity prices in 2015-2016 contributed to
the country’s biggest fiscal shortfall since 2001. In 2017, increased iron ore exports, together with the end of the
Ebola epidemic, supported a resumption of economic growth.

Continued economic growth will depend on rising commodities prices and increased efforts to diversify the
sources of growth. Non-mining activities will remain constrained by inadequate infrastructure, such as power and
roads, even though power sector projects may provide some additional electricity capacity in the near term.
Pervasive corruption and undeveloped human capital will continue to deter foreign investors. Sustained
international donor support in the near future will partially offset these fiscal constraints.

Agriculture - products:

rice, coffee, cocoa, palm kernels, palm oil, peanuts, cashews; poultry, cattle, sheep, pigs; fish

Industries:

diamond mining; iron ore, rutile and bauxite mining; small-scale manufacturing (beverages, textiles, footwear)

Exports - commodities:

iron ore, diamonds, rutile, cocoa, coffee, fish

Exports - partners (2017):

Trade (US$ Mil) Partner share (%)

Netherlands 24 23.03
China 13 13.02
Cote d'Ivoire 13 12.19
Ghana 12 11.7
United Kingdom 8 8.25

Imports - commodities:

foodstuffs, machinery and equipment, fuels and lubricants, chemicals

Imports - partners (2017):

Trade Partner
(US$ share
Mil) (%)
China 180 16.78
India 84 7.82
Turkey 77 7.18
Belgium 69 6.43
United Arab Emirates 55 5.16

The above information relating to exports/imports is provided by the World Integrated Trade Solution (WITS), a
collaboration between the World Bank and the United Nations Conference on Trade and Development.

To access WITS for more detailed information into trade on a product by product / country by country basis,
please go to:
https://wits.worldbank.org/CountryProfile/en/Country/WLD/Year/2018/TradeFlow/EXPIMP/Partner/WLD/Product/all-
groups

Investment Climate

Executive Summary

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.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption
2019 119 of 180 http://www.transparency.org/research/cpi/overview
Perceptions Index
World Bank’s Doing
2020 163 of 190 http://www.doingbusiness.org/en/rankings
Business Report
Global Innovation
N/A N/A https://www.globalinnovationindex.org/analysis-indicator
Index
U.S. FDI in partner
country (stock 2018 $13 million USD https://apps.bea.gov/international/factsheet/
positions)
World Bank GNI per
2018 $490 USD http://data.worldbank.org/indicator/NY.GNP.PCAP.CD
capita

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.

Business Facilitation

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 http://www.cac.gov.sl/. SLIEPA
also provides useful guidance on starting a business, sector-specific business licenses, mining licensing and
certification fees, and marine resources and fisheries at http://sliepa.org/starting-a-business/ .

Outward Investment

Sierra Leone has no program to promote or incentivize outward investment but also places no restrictions on such
activity.

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 http://sliepa.org/ .

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.

Dispute Settlement

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.
Bankruptcy Regulations

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.

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.

Foreign Exchange

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.

Remittance Policies

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.

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.

Privatization Program

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.

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.

Investment Climate information provided by US State Department