Overseas Business Risk – Sierra Leone
Political and Economic
Sierra Leone, originally ‘Sierra de Lyoa’ meaning ‘Lion Mountains’, is a country roughly the size of Wales on the west coast of Africa. To the north and west is Guinea. To the southeast is Liberia.
Approximately a fifth of the 6.2m population live in the capital, Freetown. Situated on the western peninsular, Freetown is serviced by Lungi International Airport (most commonly reached by boat transfer) and the city centre sea harbour.
Since the end of an eleven year civil war in 2002, Sierra Leone has been rebuilding with the help of the UK and wider international community. The economy is growing (particularly on the back of mineral extraction) and following elections in November 2012, the Sierra Leone government is now focussing on an “Agenda for Prosperity” to maximise the benefits of political stability and this one off extractives boom for the economic future of the country and its population.
Sierra Leone has enjoyed ten years of political stability following the end of conflict. The third post-war elections in 2012 were the first to be run by the Sierra Leonean government with international partners in a supporting role. These credible Presidential, parliamentary and local elections were seen a remarkable turnaround in the small West African nation. Sporadic violence around political party activities still occurs, however these incidents are increasingly rare and localised.
With a strong executive, the central state is powerful but institutional reforms are incrementally improving decision-making. Decentralisation is slowly devolving more responsibility to localities giving citizens greater access to their government.
Complicated interrelationships between traditional and democratic structures can be difficult to navigate, leading to disputes over land ownership, workers’ rights and community development programmes. Many successful companies use local partnerships to understand how these groups interact.
Sierra Leone has strong historic links with the UK. British companies are currently playing a vital role in the country’s economic growth with significant representation in the extraction of iron ore. UK companies also operate in the wider extractives sector as well as the energy, construction, tourism and agricultural sectors.
Sierra Leone is on the GMT time zone, and an Anglophone and anglophile country. Since the start of 2012, the British High Commission in Freetown has signed an MOU on reducing and removing the barriers to business with the Ministry of Trade and celebrated the launch of the British Chamber of Commerce in Sierra Leone; underpinning a commitment to support growth of bilateral economic ties between the UK and Sierra Leone.
From 2007 to 2011, the economy has grown by an average of 5% but new iron ore production in 2012 drove GDP growth to 19.8% [source: IMF]. The economy remains small ($3.8bn in 2012) and dependent on donor aid until revenue from the increased mining and agricultural activities materialises. The potential offshore oil could be another commercial opportunity for Sierra Leone, if managed correctly.
Sierra Leone was ranked 140 out of 183 in the World Bank Doing Business 2013 survey, which analyses regularly costs and specific regulations that enhance or constrain investment, productivity and growth. This places Sierra Leone below Ghana (64) but above Liberia (149), Senegal (166), Cote D’Ivoire (177), Guinea (178) and Guinea-Bissau (179) in the region. Sierra Leone was however credited with being one of the top reformers in the 2011 survey.
Bribery and Corruption
Under the UK Bribery Act 2010 bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
In 2012, Sierra Leone was ranked 123 out of 176 in the Transparency International’s (CPI) with a score of 31 (0=highly corrupt, 100=very clean). An improvement on the 2011 score, this also places Sierra Leone above Cote D’Ivoire (130), Guinea-Bissau (150) and Guinea (154) but below Ghana (64), Liberia (75) and Senegal (94).
Corruption is common in Sierra Leone and appears in many forms and at most levels of society. Business deals can be vulnerable to corruption at the highest levels and poorly paid public servants exacerbate the problem. Businesses also face challenges from the tradition of patronage, counterproductive to fair and transparent business dealings.
Claims of corruption against the business community and government have been brought by local and international press as well as international businesses.
Sierra Leone’s Anti-Corruption Commission has some of the strongest powers, but whilst there have been some high profile cases it has limited capacity to enforce these powers or bring prosecutions. Local press are closely following notable ongoing cases involving public and private sector organisations.
There is a low threat from global terrorism. But you should be aware of the global risk of indiscriminate terrorist attacks which could be in public areas, including those frequented by expatriates and foreign travellers.
There is a possibility of retaliatory attacks in Sierra Leone due to its participation in the intervention in Mali.
Protective Security Advice
The greatest risk to short-stay travellers is from pick pocketing and mugging in Freetown. If you are staying for a longer period make sure property is secured properly and employ guards. Most crimes are unarmed, but weapons are increasingly used. The local police presence and response is limited. You should take the following precautions against crime:
avoid crowds and political demonstrations
avoid carrying valuables in public
use a vehicle if you need to travel after dark in Freetown
use a privately owned or rented vehicle rather than taxis or “poda-podas” (minibuses)
avoid walking alone on beaches, especially Lumley beach. Don’t use beaches after dark.
There are no restrictions on travelling around Sierra Leone. However, a successful trip to areas beyond the capital will require thorough planning. FCO staff only travel by day outside the Freetown peninsula and at moderate speeds using competent, well-rested drivers driving in vehicles suitable for travel on badly rutted, unmade roads. During the rainy season (May to October), rural roads can become difficult to use, even for off-road vehicles. Illegal roadblocks are sometimes put up by youths, who will often ask for a small donation for mending the road. Official checkpoints around the country may be manned by armed (official) personnel.
Lungi airport is situated on the far side of a wide estuary from Freetown. There are several transfer options from Lungi airport: road, ferry, Pelican water taxi and local boats/pirogues. None is without risk. FCO staff operate a policy of informed choice and use all of the transport options available with the exception of local boats/pirogues. If you plan to stay at one of the Lungi Airport hotels, book early, as rooms are extremely limited and in high demand. You should avoid transferring to/from the airport at night.
Medical facilities are poor. There is no reciprocal health care agreement between the UK and Sierra Leone and you should expect to pay for all medical treatment in advance. British nationals have been refused admittance to hospital without proof of ability to pay their medical bills. Make sure you have adequate travel health insurance and accessible funds to cover the cost of any medical treatment abroad, medical evacuation and repatriation. You should contact your insurance/medical assistance company promptly if you are referred to a medical facility for treatment.
There are no emergency services. You should carry basic medical supplies.
Rabies, Lassa fever, water-borne diseases, malaria and other tropical diseases are common to Sierra Leone. Vaccination against yellow fever is required to enter Sierra Leone.
Cholera is endemic in Sierra Leone and there are frequent outbreaks, particularly during the rainy season in areas where there is poor sanitation. You should drink or use only boiled or bottled water and avoid ice in drinks. There can be water shortages in the Freetown area especially at the end of the dry season (March to June).
As in many developing countries, law and regulation around intellectual property rights are very weak in Sierra Leone, with little done to enforce them. Small-scale traders selling counterfeit DVDs and CDs are the norm around Freetown and other cities.
Technology in Sierra Leone is in its infancy; hence, there is low risk of crimes relating to cyber security. As the communication sector matures so will the potential for crime.
Whilst progress is being made the Sierra Leone constitution still needs further reform to align with international Human Rights obligations. Homosexual acts are illegal in Sierra Leone. Issues remain with regards to gender equality, access to justice and ensuring media independence.
Organised criminal activity is primarily linked to the drugs trade, with Sierra Leone viewed by some groups as a transit point of narcotics trade into the EU from South America. Despite progress made by the Kimberley Process concerns over illicit activity in the diamond industry remain.
You should check the quality of any gems and/or minerals that you purchase before legally removing them from the country. All precious stones require an export licence. Any deals that appear too good to be true probably are.
For further information please contact:
Commercial Advisor, British High Commission Freetown
+232 (0)76 601 038
Topics: Insurance & Risk