Attitude toward Foreign Direct Investment
The Government of Sierra Leone has a favorable attitude toward foreign direct investment (FDI), which it sees as critical to revitalizing the country’s economic growth. 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 Ebola outbreak placed enormous strains on the government’s resources and capacities, essentially depriving the country of funds needed for infrastructure investment, but Sierra Leone sees FDI as a catalyst for the country’s recovery from the outbreak.
The Ministry of Trade and Industry oversees trade policies and programs, while the Sierra Leone Investment and Export Promotion Agency (SLIEPA), established in 2008, 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 Public Private Partnership Act 2010 established a Public Private Partnership (PPP) Unit within the Office of the President.
While the government’s message is that the country is open to foreign investment, investors see many obstacles. Corruption is widely seen as endemic, affecting procurements, land rights, customs, law enforcement, judicial proceedings, and virtually all other governance and economic sectors. The government has a variety of initiatives to remove constraints on trade and improve the investment climate. Sierra Leone continues to integrate modern technologies into its mining and agricultural development strategies. In recent years Sierra Leone has constructed or rehabilitated a network of trunk and feeder roads, linking agricultural suppliers with markets and district headquarter towns. The government has also prioritized improvements to the country’s trade facilitation infrastructure, including simplifying procedures at land borders and the process to clear goods at the ports. Sustained economic growth will depend on Sierra Leone’s ability to diversify its economy, to tap into underutilized sectors like fisheries and agriculture, and to ensure that the country’s considerable natural resources are leveraged to improve the lives of all citizens.
Other Investment Policy Reviews
The WTO conducted a trade policy review for Sierra Leone in 2014. The UN Conference on Trade and Development (UNCTAD) last conducted an investment policy review for Sierra Leone in 2009.
Laws/Regulations on Foreign Direct Investment
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 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). Export licenses are required only for certain goods and materials. While the export of gold and diamonds must comply with internationally-accepted standards such as Kimberley Process certification, the permits required to export goods such as cocoa and coffee are issued automatically and at no cost.
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.
The Local Content Policy, adopted in 2012, promotes the utilization of locally-produced goods and locally-provided services, and the employment of Sierra Leonean nationals. While failure to follow the policy previously resulted only in a denial of investment incentives, the Sierra Leone Local Content Agency Act 2016 requires compliance. More information is available below in the “Performance Requirements” section.
The legal system generally treats foreign investors in a non-discriminatory fashion, though investors comment that judicial application of the laws is often subject to financial and political influence.
The Sierra Leone Investment and Export Promotion Agency (SLIEPA), http://investsierraleone.biz, can provide additional information about the laws and regulations applicable to foreign investments.
Sierra Leone has made significant progress in recent years in simplifying its business registration process. Registration is now managed by the Office of the Administrator and Registrar General (OARG), which provides a “one stop shop,” including an online application. The process involves 6 steps and takes on average 10 days. Additional information is available from the OARG’s website, http://www.oarg.gov/sl. SLIEPA also provides helpful step-by-step guidance at http://www.investsierraleone.biz.
SLIEPA supports potential and established investors in the country, and is responsible for implementing various government programs and initiatives to attract additional investment. The Public Private Partnership (PPP) Unit, established in 2010 within the Office of the President, is exploring public private partnerships in the areas of energy and infrastructure. Thus far, the PPP Unit has had limited success in reaching financial closure.
The government’s National Ebola Recovery Strategy establishes the groundwork for a 24-month agenda, to run through mid-2017. The strategy aims to restore economic growth and build on the work already done under the government’s five-year development framework, the Agenda for Prosperity. As the government moves forward, it seeks private sector partners for projects in agriculture, fisheries, tourism, transport, energy, and mining. Priority is given to projects that will provide rapid results.
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. There are limits to land ownership by foreign entities and individuals. These restrictions vary depending on location of the land being used, and are discussed in greater detail below.
The National Commission for Privatization was established in 2002 to facilitate the privatization of various state owned enterprises. With support from the World Bank, the commission has focused on privatization of the country’s port operations, and currently seeks investments in public private partnerships for port security, operations at Lungi International Airport, and other infrastructure projects. Sierra Leone is also in the process of privatizing its telecommunications gateway, which is currently held as a monopoly, and the operator of the undersea fiber optic cable, the Sierra Leone Cable Company (SALCAB). Privatization processes are open to foreign investors.
Screening of FDI
Sierra Leonean authorities do not screen, review, or approve foreign direct investments. Companies must register to do business in Sierra Leone, but the Embassy is not aware of any complaints that the registration process has been used to block particular investments or discriminate against particular investors.
Sierra Leone does not have a competition law. The European Union and the UN Conference on Trade and Development (UNCTAD) have supported the Ministry of Trade and Industry’s attempts to develop a competition policy, but the Parliament has not yet adopted relevant legislation.