In Sierra Leone, goods are distributed from the manufacturer through wholesalers to retailers, though some manufacturers and wholesalers do sell directly to retailers. Generally, wholesalers import goods in bulk from the manufacturers, clear the goods through customs and transport them to their stores, from where they then distribute to the retail market. Some wholesalers operate both as a wholesale and as a retail operation with chains of small shops serving as retail outlets including supermarkets.
Using an Agent or Distributor
Extreme caution must be exercised when hiring the services of a local business to serve as a partner, agent, or distributor in selling U.S. goods or providing U.S. services to local retailers or consumers. A legal representative is recommended to observe the country’s legal and regulatory requirements and to ensure the partner, agent, or distributor is reliable and has the resources to perform the service. The U.S. Embassy’s Commercial and Economic Section and the American Business Council are good points of contact with the local business community. Also, Embassy Freetown is a Partner Post providing a range of fee-based services to help U.S. companies identify and evaluate suitable partners, agents, or distributors in the country. The Gold Key Service or International Partner Search are services that can assist U.S. businesses to identify legitimate prospects to serve as local as partners, agents, or distributors.
Establishing an Office
All formal business entities do require a legal registration and a business license to operate in the country. The Corporate Affairs Commission (CAC) registers and licenses companies, while the Office of the Administrator and Registrar General (OARG) deals with sole proprietorships and partnerships. Foreign companies are not restricted in opening an office in Sierra Leone. The first step, however, is for a foreign investor to formally register their business and be issued a license to operate. In registering a business, an address must be indicated. Both the CAC and OARG operate a one-stop shop for investors. In the 2020 World Bank Doing Business Report, Sierra Leone scored 91.3 percent and ranked 58 out of 190 countries surveyed in the ease of starting a business indicator. They indicate that the procedures for registering a business have been reduced to five steps and the time to an average of eight working days. In summary, the standard steps include check on the uniqueness of the company name and collect the company registration form, register the company with CAC and secure a Taxpayer Identification Number (TIN), pay registration fees, register employees with social security, and make a company seal.
Franchising is not a common business practice in Sierra Leone and people are not familiar with the concept. The embassy is unaware of any U.S. firm franchise arrangements in the country. However, the GoSL has indicated that it would welcome U.S franchises in the country, especially well-known fast-food franchises.
Direct marketing is an uncommon business practice in Sierra Leone. The lack of the necessary infrastructure such as an effective transportation system, a reliable postal service, unlimited internet penetration, sufficient electricity, and a reasonable level of literacy makes the practice challenging. However, radio, television, and newspaper advertisements and billboards are commonly used methods.
Joint ventures combine resources, talents, and skills by investors to engage in providing commodities through an agreement to share responsibilities, profits, losses, and the operations of the business. Joint ventures between foreign investors and local firms promote technology and knowledge transfer and improve local content. They facilitate access to land which is most times challenging for foreign investors. The government is encouraging joint ventures to promote technology, knowledge, and skills transfer. Hence the Sierra Leone Local Content Policy accords foreign businesses that partner with Sierra Leonean businesses a preferential margin in government and private procurements.
U.S. businesses interested in doing business in Sierra Leone are advised to undertake detailed due diligence on prospective partners, agents, distributors, etc., and to hire the services of an attorney or accounting firm. However, the U.S. Embassy does provide fee-based commercial services including International Partner Search, International Company Profile, and Single Company promotion, which would provide background information on prospects.