The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
Sierra Leone, with an estimated population of 8.7 million people (2023 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 (FDI) 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. Economic activity dipped sharply in 2020 with elevated inflation and limited fiscal space. 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.
The economy was again recuperating from these disruptions when Russia further invaded Ukraine in February 2022. This unprovoked invasion contributed to rising inflation, especially fuel and food prices; deteriorating foreign exchange rate and reserves; disrupted supply chains; and worsening terms of trade, all severely impacting living standards. Significant debt-fueled government spending in advance of the June 2023 multi-tier elections exacerbated these impacts.
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 tourism prospects, and vast mineral resources, especially iron ore, diamonds, gold, rutile, ilmenite, and bauxite. Possibilities also exist in energy, water, telecommunications, and other public infrastructure. FDI is crucial to the country’s economic recovery. Therefore, there has been a continuous drive and policy focus on encouraging FDI into the country.
There are also opportunities for public-private partnership projects in energy, water, telecommunications, and other public 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) was re-elected for a second term in June 2023 in an election that credible international and domestic observers found was marred by logistical challenges and irregularities that called into question the integrity of the election results. An internationally facilitated mediated dialogue with the opposition All People’s Congress (APC) has ended an APC boycott of government institutions, reduced inter-party tensions, and created a number of vehicles for ongoing dialogue and dispute resolution, including an independent Electoral Reform Committee that is examining the conduct of the 2023 multi-tier elections and making recommendations to improve the legal framework for elections moving forward. The government has adopted as its development agenda the “Big Five Game Changers” contained in the SLPP’s 2023 election manifesto: food security and investment in agriculture; human capital development; youth employment; improved public service; and technology and infrastructure, especially in digitizing the financial sector and expanding the power sector.
During President Bio’s first term, his government took actions such as the enactment of the Arbitration Act 2022 and the establishment of the National Investment Bureau (NIB) with the aim to make it easier to invest and do business in Sierra Leone. There are, however, remaining legislative, institutional, and regulatory challenges to investment, including in the areas governance and rule of law, dispute resolution, and finance. Poor quality and limited public infrastructure also poses significant investment challenges as the country lacks the capacity necessary to support commercial activities. Challenges similarly persist in corruption, skilled labor, accessing land, high-interest rates, and contract enforcement.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.