1. THE STRATEGY TO REDUCE THE COST OF DOING
BUSINESS IN SIERRA LEONE.
DR. RICHARD KONTEH, HON. MINISTER OF TRADE
AND INDUSTRY, Government of Sierra Leone
London, United Kingdom

2. How to make Sierra Leone a Top Reformer
Outline of the Presentation: Key Achievements
 Introduction/Background
 Overview of Doing Business Rankings from 2010 to
2011
 Six (6) targeted reforms that will make Sierra Leone one
of the Top Reformers in 2012
 Key Action Points to make Sierra Leone the Top
Reformer in 2012 as highlighted above
 Progress made in accordance with the Doing Business
Reform Action Plan 2012
 Monitoring and Evaluation: Reporting Mechanisms
 Communication of the achieved reforms – Slogan: 6
in 6 – Expect more to come
Private Sector Development

3. DOING BUSINESS RANKINGS FROM 2010 TO 2011 > THE WEST AFRICAN SUB-REGION
Position Country 2010 2011 No of Reforms
undertaken in 2011
1st Ghana 77 67 2
2nd Cape Verde 142 132 3
3rd Nigeria 134 137 0
4th Sierra Leone 148 143 3
5th Gambia 141 146 0
6th Burkina Faso 154 151 4
7th Senegal 151 152 0
8th Mali 153 155 3
9th Liberia 152 155 0
10th Togo 162 160 0
11th Ivory Coast 168 169 1
12th Niger 171 173 1
13th Benin 172 170 1
14th Guinea Bissau 175 176 1
15th Guinea 178 179 0
Private Sector Development

4. Sierra Leone is one of Sub-Saharan Africa’s most active reformers since 2007 to
present
Number of reforms as measured by Doing Business
Private Sector Development

5. Reform Target – 6 Major Reforms to make Sierra Leone
the Top-Most Reformer in 2012- to be completed and
implemented before 31st May 2011
Registering
Operation of Property- Streamlining
Fast-track Automation of Land of
Commercial Surveys and Construction
Courts Modernization of Permit
OARG Procedures
Reforms Critical for improving
Getting Credit Business Climate and if
implemented by 31ST May 2011 Closing a Business
Sierra Leone will become the
Top Ten Reformer
Starting a Trading across Payment of
Business borders- Taxes through
Consolidation of
banks
Asycuda,
Enactment of
Customs Bill 2010
Private Sector Development

6. Sierra Leone Doing Business Reform Action Plan 1st June 2010 – 31st May 2011
Key Actions that should be implemented so as to
make Sierra Leone the Top Reformer in 2012
Trade Facilitation Access to Credit
Reduction Terminate Establishment of an
New of Interim Credit
Customs Bill Secure the
INTERTEK Enact a Credit
fees/charge contract Reference Bureau.
ASYCUDA
s at the Reference Act
enacted
Quay New DIS Bureau issues reports
Starting a Business Construction Permits
Request Publish the
Liaison between Establish a One-
Installation of Automation of Technical Construction
FCC and OARG – Stop Shop for
the NRA TIN the OARG Assistance for Permit Mapping
setting up of FCC issuing
machine in the mapping out the processes and
cubicle in the Decentralization Construction
OARG Construction fees to the
OARG of the OARG Permits
permit processes Public
Private Sector Development

7. Key Areas for intervention by the Government so as to
make Sierra Leone a Top Reformer in 2011
Registering Property
Paying Taxes
Improve record
Keeping in the Amend the Reduce
OARG and the Automation Reduce time Recruitment
Surveys Compliance
Lands Surveys Act – to allow Of the To pay taxes Of more
Time by
Dept in the GSP Land Surveys By Training and Finance Staff
Allowing
MLCP&E Dept Educating tax By the
System Tax payment
payers NRA
At Banks
Enforcing Contracts Closing Business
Establish a fully-functioning fast-track Establish a fully-functioning fast-track
Commercial court Commercial court
- Purchase and Installation of equipments - Purchase and Installation of equipments
- Launch of the said Court - Launch of the said Court
- Appointment and Training of Judges - Appointment and Training of Judges
-Commencement of Sittings - Fully operational Corporate Affairs
-Sensitization of the Public Commission
Private Sector Development

8. DB Consultant Role
4 Key Related Areas that are presently being closely
monitored by the DB Consultant
Intellectual and Industrial Property Rights Reform
• Enactment of new Copyrights, Trade marks, Patents and Industrial
Designs Statutes > In Progress
Reform of Labour Laws
• This will not count in this year’s ranking BUT will definitely count in
2013’s DB ranking – Keep in mind
Development of a Competition Policy and Law
• Has great impact in regulating market entry and prevention of the abuse
of Dominance > In Progress as a draft Bill has been developed
Development of a Consumer Protection Policy and Law
• Very important > In Progress
Private Sector Development

9. Mile stones, Deadlines and Current Status - Progress
Doing business Reforms Milestones Current Status – 31st May Responsible
Indicator 2011 Institutions
1.A) Fully-functioning Ensure that there is a There is now a fully- FCC/OARG
One-Stop Shop for fully-functioning FCC functioning FCC
registration of cubicle/desk in the cubicle/desk in the
businesses OARG. OARG
1.B) Fully- Ensure the The NRA has installed NRA/OARG
functioning One- installation of the the Wide Area Network
(1) Starting a Stop Shop for NRA TIN machine at (WAN) at the OARG,
business registration of the OARG which had be
businesses connected to the TIN
machine at its head
office.
Completed
Automation of Ensure that business Following recruitment OARG
business names names registration of Data Entry Clerks,
search. data from 2000 to this exercise is ongoing
2005 and 2005 to
date are inputted.
Developing a website OARG Website OARG
Development exercise
is ongoing
Private Sector Development

10. Doing business Reforms Milestones Current Status as of Responsible
Indicator 31st May 2011 Institutions
Complete the Hire company to Completed as OARG/IFC/ICF
computerization of implement Nimba Research is
the business computerization carrying on the said
registry to allow project exercise
electronic checking
(Cont.) of the company Implement Automation of the OARG/IFC/ICF
Starting a name computerization OARG is ongoing
business and train staff at and training of
OARG some staff
completed
Develop and Achieved as a draft OARG/NRA/FFC/IFC
Implement a combined Business
combined Business Registration form
Registration form had been
developed
Continue Establish regional Ongoing. Provincial OARG/Part of the
decentralization offices for the office spaces had IFC Modernization
process registration of been identified. Programme
businesses. Exercise to amend
CAPS 255 and 256
is ongoing.
Private Sector Development

11. Doing business Reforms Milestones Current Status – 31st Responsible Institutions
Indicator May 2011
Improve record Ensure that Land Consultancy MLCP & E , OARG/ICF
keeping at the Surveys Dept in the contract for the Funded Project
Property Registry MLCP&E is fully automation of the
automated same had been
awarded to
(2)Digitalization/ TECHSULT.
Automation of Assessment of the
the Land Surveys hardware and
Dept in MLCP&E software facilities
completed and
now fully
operational
Crash training
program for Data
Entry Clerks
completed.
Automation is
ongoing
Digitalize the land Amend the Surveys The Surveys MLCP & E /Part of the
surveys Act (Amendment) IFC Modernization
Rules No. 2 of 2011 Programme
amending the
Surveys Act had
been enacted > Feb
2012.
Private Sector Development

12. Doing business Reforms Milestones Current Status – Responsible
Indicator 31st May 2011 Institutions
Develop an Establish a One- Due to drastic MWHI / NRA
informational Stop Shop for administrative
brochure describing issuing changes in the
the process of Construction MWHI, there is
obtaining a permit Permits now a fully-
and make the functioning One-
schedule of fees Stop Shop for
available to the issuing
(3) Streamlining public construction
construction permits ( 5 to 10
Permits Approval Days) - MWH&I,
Processes MLCP&E and NRA
Conduct process The Construction MWHI /MTI/ IFC
mapping and Permits issuing
prepare processes/procedur
informational es had been
brochures, publish mapped out and
brochure. brochures prepared
accordingly and so
too the Schedule of
Fees payable
thereof.
Private Sector Development

13. Doing business Reforms Milestones Current Status – 31st Responsible
Indicator May 2011 Institutions
Enact Credit Organize pre-legislative Pre-Legislation BSL/ SLBF/ Association
Reference Bill 2010 workshop for Hon. workshop held on of Commercial
Members of Banks/IFC/MTI
the 7th March 2011
Parliament.
Enactment of the Credit Reference BSL
Credit Reference Bill Bill enacted into
law on Tuesday,
(4) Access to 22nd March 2011
Credit Send the Credit On Thursday 20th BSL
Reference Act to His May, 2011, the
Excellency the Credit Reference
President for his Act 2011 was
presidential assent, signed by H.E. the
print and publish in President.
the gazette.
Establish an Interim Training officials on Interim Credit BSL / Donors
Credit Reference the operations of Reference Bureau
Bureau the Interim Credit has become fully
Bureau operational and it
Establish a Credit has started issuing
Reference Unit in credit reports.
BSL
Private Sector Development

14. Doing business Reforms Milestones Current Status – 31st Responsible
Indicator May 2011 Institutions
Reduce time to pay Launch Ongoing NRA/SLBF
taxes by training communication
and educating campaigns
taxpayers
Reduce compliance Approval of The Governing NRA
time by allowing tax payment of all Board of Directors
payments at Government taxes of the NRA has
(5) Paying taxes commercial banks in the various approved the
commercial banks payment of
Government taxes
in the various
commercial banks –
since the 27th May
2011
Sign Memorandum MOUs with 10 NRA
of Understanding commercial banks
with banks had been signed
Private Sector Development

15. Doing business Reforms Milestones Current Status – 31st Responsible
Indicator May 2011 Institutions
Establishment of a Setup equipments Completed MoJ, Judiciary /
fast-track for the court ICF funded project
commercial court
Computerize the Completed MoJ, Judiciary /
court ICF funded project
(6) Enforcing
contracts and
Launch of the fast- Fast-track MoJ, Judiciary /
Closing
track Commercial Commercial Court ICF funded project
businesses Court launched in
December 2011 by
H.E. the Vice
President
Appointment, Two judges were MoJ, Judiciary /
Training of Sierra appointed and ICF funded project
Leonean Judges and trained. On Friday,
commencement of 27th May 2011, the
sittings FTCC commenced
its 1st sitting. It is
now fully
operational.
Private Sector Development

16. Doing business Reforms Milestones Current Status – 31st Responsible
Indicator May 2011 Institutions
Following
Reduction of Demurrage Ensure Demurrage recommendation by the NRA / SLPA/BOLLARE
fees/days as well as other fees/days are Trade Facilitation Forum,
related port charges reduced/eliminated H.E set up a Special
Committee to look on
this issue, among
others. The Committee
recommended the
(7) Trading reduction of demurrage
across borders / fees, scanning fees and
port charges, among
Trade Facilitation others.
Securing of the Custom Construction of Perimeter fence around NRA
House (ASYCUDA) perimeter fence around Customs House at Cline
the Customs House Town has been
Installation of Air constructed.
Conditioners in the
ASYCUDA server room
Implementation of NRA has developed and NRA , DFID
ASYCUDA at the Lungi submitted a business
International Airport plan to that effect to
DFID. DFID has sent it to
UNCTAD before
contacting NRA on the
issue of funding
Streamline import and Ensure that Import and The Import and Export SLBF
export mapping Export Mapping processes had been
procedures Processes streamlined. mapped. SLBF has
printed and distribute d
the said Maps.
Private Sector Development

17. M&E Component
Monitoring and Evaluation Component of the Action Plan of the SL Doing
Business Reform
Action Plan Oct
2010 to 31st May
2011
Experience from Successful Reasons for the current progress.
Reformers - Rwanda
Leadership from the highest level DB Consultant monthly report is sent to
SLBF shared with MTI, PSA and IFC.
Weekly meetings with the Hon.
Minister and the Private Sector Advisor.
Bi-weekly meetings with the Chief-Of-
Staff and the Director, SPU and
Monthly meetings with H.E. the
President
Long term vision and clear goals This is a clear articulated DB Reform
Action Plan, that is home-made
Broad Reform Program to improve Ease For 2013, the Plan should include not
of Doing Business in Sierra Leone only DB wins but investment climate
reforms generally e.g. Competition and
Consumer Protection Laws reforms,
Continuous reforms in several areas More funds should be provided to the
MTI to continue monitoring the
achieved reforms
Private Sector Development

18. NEXT STEPS
• Monitoring and evaluation. Thanks for your kind
• Sustaining the reforms. attention, please.
• Online Visa processing.
• Online business registration. Dr. Richard Konteh
• Policy reforms – eg. Local Hon. Minister of Trade
Content policy. and Industry
• Infrastructural development.
• TRADE AND INVESTMENT
PARTNERSHIP FORUM – 16th
to 17th November 2011.

19. THE ROLE OF THE FINANCIAL
SECTOR IN FOSTERING TRADE AND
INVESTMENT IN SIERRA LEONE

20. PRESENTED BY
MR SHEKU SAMBADEEN SESAY
GOVERNOR, BANK OF SIERRA LEONE
AT THE GROWTH WEEK ORGANISED BY THE INTERNATIONAL
GROWTH CENTRE AND LONDON SCHOOL OF ECONOMICS
LONDON, UK SEPTEMBER 18-22,2011
Bank of Sierra Leone

21. Layout
• Background
• Sierra Leone Trade
• Sierra Leone's Financial Sector
• Savings and Investment
• Bank of Sierra Leone Initiatives
• Institutional Developments
• Conclusion
Bank of Sierra Leone

22. Background
• Sierra Leone covers an area of over 71,000sq km with a
population of over 5 million.
• Natural resources include mineral, marine, agricultural resources
and beautiful beaches.
• a land resource of which 75 per cent is suitable for cultivation, but
only 15 per cent is actually cultivated.
• 20 per cent of the cultivated land is devoted to cash crops mainly
coffee, cocoa and some palm oil.
• Sierra Leone also produces modest quantities of other agricultural
products e.g. piassava and ginger with potential for diversification
into other activities
• Prior to the rebel war in 1991, Sierra Leone was almost self-
sufficient in the production of rice, but with the advent of the
rebel war, rice production was severely affected as a result of the
fighting and displacement of people.
Bank of Sierra Leone

23. Background
• In the aftermath of the war in 2002, rice production has surged to pre-
conflict levels and by 2006 had more than doubled compared to 1990
pre-conflict levels
• Non-agricultural activities in Sierra Leone include mining, fishing and
small scale manufacturing.
• The mining sector is dominated by diamonds but with prospects of oil,
while iron ore, platinum, nickel, illeminite, bauxite, gold as well as rutile
mining have been on the increase.
• The mining sector also suffered from the rebel war especially with the
closure of rutile, iron ore and bauxite mines.
• Since 2002, the mining sector has been revived with investment from big
mining companies in activities such as diamonds, iron ore, rutile, gold, oil
and bauxite.
• The implementation of the Kimberly Process Certification Scheme for
diamonds and The Mining Lease Agreement have created a transparent
and stable atmosphere for mining activities.
Bank of Sierra Leone

24. Sierra Leone Trade
• Sierra Leone maintains an open trade regime with
partially liberalised capital accounts while the current
account is fully liberalised.
• Sierra Leone has adopted the ECOWAS Common External
Tariff (CET) thereby limiting the use of tariffs as a trade
policy instrument.
• Sierra Leone is also benefitting from schemes such as the
African Growth and Opportunity Act (AGOA) and the
Generalized System of Preferences (GSP).
• Sierra Leone's trade is concentrated in few markets, and
since 2000, the direction of trade structure has not
changed:
Bank of Sierra Leone

25. Sierra Leone Trade
Direction of Sierra Leone Exports Direction of Sierra Leone Imports
Others
Others Mid East
4%
8% 5%
USA EU
ECOWAS
6% 30%
12%
ASEAN
EU
26%
80%
ECOWAS
29%
EU ECOWAS Others EU ECOWAS ASEAN USA Mid East Others
Bank of Sierra Leone

26. Sierra Leone Trade
• Challenges to Trade
– complex and costly procedures for starting a business,
– the lack of quick dispute settlement institutions,
– outdated legal provisions with respect to land and
property ownership which do not reflect current realities,
– numerous and lengthy customs procedures which
increases cost of imports and discourages doing business
in Sierra Leone,
– poor infrastructure including energy, communications
and roads.
– The bulk of business activities are in the informal sector
which does not benefit from formal institutional support
particularly related to accessing finance.
Bank of Sierra Leone

27. Sierra Leone Trade
• Measures to Increase Trade In Sierra Leone
– The country has made strides to improve the
environment for doing business by implementing the
following reforms in four key areas:
• starting a business;
• dealing with construction permits;
• registering properties; and
• trading across borders.
– There have been a number of institutional and legal
innovations:
• particularly the development of the Companies and
Bankruptcy Act; and
• the Investment Promotion Act which gave rise to the setting
up of the Sierra Leone Investment and Export Promotion
Agency (SLIEPA) as the key gateway and source of information
Bank of Sierra Leone

28. Sierra Leone Trade
– a commercial court to fast track commercial disputes,
– the ASYCUDA++,
– a one stop shop for business creation,
– the introduction of GPS Technology and survey maps, and
– streamlined procedures for construction permits.
• The Bank of Sierra Leone in collaboration with SLIEPA is introducing the
export forms to encourage more exporters to use the banking system,
giving them increased access to export finance facilities including export
credit, export insurance and export guarantees which are essential to
producers and exporters, especially non-traditional exporters.
• All this fits into a wider campaign to get the informal sector to utilise and
benefit from banking services as the bulk of Sierra Leone’s productive
sector is in the rural areas where the use of the bank and other formal
channels for doing business and exporting products are still not widely
accepted out of fear or suspicion.
Bank of Sierra Leone

29. Sierra Leone Trade
• Sierra Leone has, in recent years been
improving in its import and export trade
thereby demonstrating the effectiveness of
its trade policies and reforms.
• However the global financial crisis of 2008
presented a setback from which the country
is slowly recovering.
Bank of Sierra Leone

30. Sierra Leone Trade
Sierra Leone Trade Openness
(Imports and Exports as % of GDP)
50.00
40.00
30.00
20.00
10.00
-
2001 2002 2003 2004 2005 2006 2007 2008 2009
trade openness
Bank of Sierra Leone

31. SIERRA LEONE’S FINANCIAL
SECTOR
• Generally, a country’s financial sector, in addition to its traditional
role of financial intermediation, is also key to the development of
trade and investment in an economy, through the following:
provision of information to buyers and sellers, settling trade
transactions, making advance payments, issuing letters of credit
and managing currency risks resulting from exchange rate
fluctuations.
• The financial sector of Sierra Leone, like other sectors, was hard
hit by the rebel war worsening the problems of a very shallow and
narrow financial system which was mainly urban based.
• The key function of the financial system was intermediation but
this was restricted to mostly the urban elite with trade and
investment receiving limited support through the provision of
basic facilities such as letters of credit, and provision of foreign
exchange.
Bank of Sierra Leone

32. SIERRA LEONE’S FINANCIAL
SECTOR
• The current financial system of Sierra Leone is dominated
by the banking sector and consists of thirteen (13)
commercial banks, nine (9) community banks, over
seventy foreign exchange bureaus, two (2) discount
houses, a stock exchange, twenty six (26) financial
services associations (FSA), six (6) microfinance
institutions and a mortgage savings bank .
• This constitutes significant progress compared to only four
(4) commercial banks, one (1) discount house, thirty one
(31) foreign exchange bureaus when the rebel war ended
in 2001.
• Financial innovations over this period include mobile
banking e.g. Splash and Zap, more bank branches, and
more automated teller machines.
Bank of Sierra Leone

33. SIERRA LEONE’S FINANCIAL
SECTOR
• The banking sector is skewed towards commercial banking
activities with very little in the area of investment or other
specialised banking activity.
• Activity on the stock exchange is limited, with only one listed
company.
• The Sierra Leone economy remains principally a cash-based
economy with high currency/narrow money ratio typically above
55 percent,
• Recent trends indicate a move towards other forms of payments
as the ratio has come down to around 50 percent.
• There is also evidence of financial deepening with the M2/GDP
ratio increasing from about 15 percent to over 26 percent over the
period 2001 to 2010.
Bank of Sierra Leone

34. SIERRA LEONE’S FINANCIAL
SECTOR
Financial Deepening and Currency Usage
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
M2/GDP Curency/M1
Bank of Sierra Leone

35. SAVINGS AND INVESTMENT
Savings in Sierra Leone
• Savings from within the official financial system are
low, but have been increasing since 2001.
• The reasons for the low savings range from mistrust
of the banking system, low interest rates, few
commercial banks and concentration of branches in
urban areas and low incomes.
• However, like most developing countries the informal
sector is also able to mobilise savings.
• The low levels of bank savings have resulted in
limited supply of funds being loaned out to the
private sector.
Bank of Sierra Leone

36. SAVINGS AND INVESTMENT
• However since the end of the war, there have
been marked improvements in the level of
formal savings through
– increased competition by banks to mobilise more
savings,
– greater financial literacy campaigns,
– government policies to pay workers through the
banking system, and
– expansion of bank branches into previously
“unbanked” areas.
Bank of Sierra Leone

37. SAVINGS AND INVESTMENT
Financial savings /GDP (%)
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sierra Leone savings /GDP
Bank of Sierra Leone

38. SAVINGS AND INVESTMENT
• With the increasing trend in savings,
commercial bank credit to the private sector
has also been increasing, but is low
compared to the other countries in the sub
region, particularly in the WAMZ region, in
spite of the influx of more banks.
Bank of Sierra Leone

39. SAVINGS AND INVESTMENT
Credit to the Private Sector WAMZ Region
45.00
40.00
35.00
The Gambia
30.00
25.00 Ghana
20.00 Guinea
15.00 Nigeria
10.00
Sierra Leone
5.00
-
2001 2002 2003 2004 2005 2006 2007 2008 2009
Bank of Sierra Leone

40. SAVINGS AND INVESTMENT
• The main recipients of commercial banks loans have been
manufacturing, commerce and finance, services and
construction, which reflect the economic rebuilding in the
aftermath of the war.
• There has been a recent shift in the direction of credit
towards the service sector, but commerce & finance along
with construction still remain major beneficiaries whilst
loans towards manufacturing have shrunk.
• It is important to note here that loans to agriculture,
forestry, fishing and mining sectors, that are potentially very
lucrative to the economy, have been minimal.
Bank of Sierra Leone

41. SAVINGS AND INVESTMENT
Bank of Sierra Leone

42. SAVINGS AND INVESTMENT
• Despite the low levels of credit, the banking
system retains a high level of non performing
loans (NPL), mostly above the 10 percent and
the cost of borrowing is high with interest rates
on loans and advances ranging between 24- 31
percent.
• The high NPLs is attributed to the lack of credit
information, and the inability of the judicial
system to speedily arbitrate between credit
institutions and loan defaulters.
Bank of Sierra Leone

43. SAVINGS AND INVESTMENT
Non Performing Loans as percentage of Gross
Loans
35
30
25
20
15
10
5
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Non Performing Loans
Bank of Sierra Leone

44. SAVINGS AND INVESTMENT
• Challenges to Investment
– Foreign direct investments (FDI) have also been very
low, even against other countries in the ECOWAS sub
region and almost negligible compared with the
average African country.
– The low FDI could be attributed to poor perception
of the country due to the rebel war, poor
infrastructure, weak macroeconomic fundamentals
and competition from neighbouring states.
– However the level of FDI is gradually increasing and
most of it, about 90 per cent, is directed towards the
mining sector
Bank of Sierra Leone

45. SAVINGS AND INVESTMENT
Foreign Direct Investments ($)
90000
80000
Cote d'Ivoire
70000
Ghana
60000
50000 Nigeria
40000 Senegal
30000 Sierra Leone
20000
ECOWAS
10000
0 Africa
2003 2004 2005 2006 2007 2008
Bank of Sierra Leone

46. SAVINGS AND INVESTMENT
• Domestic private investment is also low, mostly below 10 percent of
GDP, and has suffered even more from the global financial crisis.
• The main factor driving the low level of domestic private investment in
Sierra Leone is low level of savings.
• Other factors operating are limited access to finance especially in the
rural areas and the following:
– high costs of borrowing;
– lack of collateral for securing loans;
– limited range of financial products;
– high volume of non-performing loans;
– inadequate judicial procedures for loan recovery;
– inadequate credit risk evaluation mechanisms for bank clients; and
– high intermediation costs.
Bank of Sierra Leone

47. SAVINGS AND INVESTMENT
Domestic Private Investment (% of GDP)
12
10
8
6
4
2
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
domestic private investment
Bank of Sierra Leone

48. SAVINGS AND INVESTMENT
• Measures to Increase Investments
– The country can now boast of peace and stability, the observance of
fundamental human rights and respect for the rule of law.
– Since the end of the war, the country has embarked on a series of
reforms endorsed by the donor partners evidenced by the increased
levels of financial aid.
– Government has focused on improving the relevant institutions,
including the legal framework, to attract domestic and foreign investors,
as well as putting in place an encouraging and stable macroeconomic
environment.
– The commercial court should provide quick dispute settlement
mechanisms and hasten processes such as liquidation and business
closure.
– The Companies Act helped to ease the set up and registration of
companies as well as laying down guidelines for liquidation and closure
of companies.
Bank of Sierra Leone

49. SAVINGS AND INVESTMENT
• Measures to Increase Investments contd…
– The Bankruptcy Act deals with insolvency issues for non corporate
bodies.
– Under the General Law, the Business Start-up Amendment Act
details steps for easy start-up of businesses which are not
incorporated.
– Efforts are also underway to revise existing laws relating to land
ownership and collateral usage in order to allow more people
particularly the women to use land as collateral for obtaining loans.
– Government has an on-going privatisation programme involving up
to sixteen public enterprises across a wide range of sectors including
banks, utility companies, insurance and transportation companies
and even parts of the ports particularly the container handling
section.
Bank of Sierra Leone

50. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• These initiatives are in line with the Financial Sector
Development Plan (FSDP) and focus on creating an effective
and functioning commercial banking system, increasing
access to finance, improving the mobilization of long-term
funds for investment, establishing an enabling financial
environment in line with international best practice, through
legislative and regulatory reforms.
• Bank of Sierra Leone (BSL) as part of its responsibility in
partnership with the government is dedicated to
maintaining sound and stable macroeconomic conditions
but in addition to this, has also sought to develop a financial
system which can generate confidence and trust by all
stakeholders. Bank of Sierra Leone

51. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Given the problems highlighted, BSL as the apex
financial institution, is undertaking the following
initiatives to improve the landscape for more
savings and ultimately investment:
• BSL is spearheading a financial sensitisation
campaign to acquaint the general population on the
financial services available
• BSL has recently established the FSDP Secretariat for
coordinating all activities relating to the financial
sector with support from partners particularly the
World Bank, who made US$4 million available to
fund some components of the project.
Bank of Sierra Leone

52. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Access to Finance
– BSL has been actively involved in initiatives to enhance access to finance in
the rural areas which constitute mostly the informal but substantial
proportion of the economy.
– In addition to the increase in the number of banks, BSL has encouraged the
growth of a number of microfinance institutions (MFIs), Financial Services
Associations (FSAs), the opening of new branches of commercial banks, and
the introduction of mobile banking, to improve rural financial
intermediation.
– BSL is also encouraging the commercial banks to extend credit facilities to
SMEs.
– BSL has faciliated the establishment of six community banks to extend
banking activities into the rural areas not covered by commercial banks in
collaboration with International Fund for Agriculture Development (IFAD).
– Numerous micro-finance schemes are also being implemented to promote
small-scale enterprises and informal sector activities in manufacturing,
Bank of Sierra Leone
trade and services.

53. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Access to Finance (contd)
– Going forward, BSL is encouraging potential investors in the banking
sector to diversify from retail banking into other forms of banking to
give customers increased and improved options.
– In addition, BSL has provided foreign exchange to commercial banks
and importers through weekly foreign exchange auctions
– These auctions have increased the flow of foreign exchange and
provided the benchmark exchange rate for the other foreign
exchange markets in the system.
– The amount available for these auctions are being constantly
reviewed in line with the demands of the importers, but considered
against the limited foreign exchange reserves as the bulk of Sierra
Leone foreign exchange earnings are currently from donor inflows.
Bank of Sierra Leone

54. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Long Term Funding
– The Bank of Sierra Leone, with in the context of the FSDP,
intends to address the issue of lack of long term funds in
consultation with insurance companies, National Social
Security and Insurance Trust (NASSIT) and other potential
medium to long term fund holders to see how such funds
could be mobilized.
– The establishment of the stock exchange could serve as a
source of funds through the collective investment scheme. In
the meantime, the Bank is working closely with the Ministry of
Finance and Economic Development for the issuance of long
term bonds to assist Government in financing its development
programmes.
Bank of Sierra Leone

55. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Development of Specialised Institutions for Investment
– The Bank of Sierra Leone has also noted another area of
concern, which is the absence of specialized institutions that
finance activities in key sectors that contribute to growth, for
example in agriculture.
– To address this shortcoming, the Bank and the Ministry of
Finance and Economic Development are involved in efforts to
revive the National Development Bank, which initially existed
to provide funds for local activities such as agriculture, fishing,
small scale manufacturing and mining.
– This resuscitated bank will be able to provide longer term
funds for such projects on more flexible terms to investors.
Bank of Sierra Leone

56. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Credit Reference Bureau
– The problems of high cost of finance and the reluctance of banks to
lend outside an elite group remain.
– BSL has made substantial progress towards reducing the risk and
costs of borrowing by setting up a credit reference bureau.
– This will allow commercial banks to exchange information on
customers to reduce the incidence of nonperforming loans, high
interest rates on loans and eventually help stimulate private sector
credit flows.
– The Bill has since been passed by parliament and has received
presidential assent. The Bank of Sierra Leone is currently hosting the
bureau, which is now fully operational.
– This will be supported by the development of a collateral register, for
immovable collateral, in the near future.
Bank of Sierra Leone

57. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Legislative Reforms
– BSL has realised that various legislative and structural inadequacies still handicap
the financial sector.
– BSL has undertaken a series of reforms including a revision of the Bank of Sierra
Leone Act, with assistance from the IMF, consistent with a more independent
central bank.
– The Banking Act is being reviewed to provide a sound legal framework for the
banking system, protect the interests of depositors and to strengthen the Bank’s
supervisory, directive and enforcement powers to ensure the stability of the
banking system.
– New prudential guidelines have been introduced, to address issues relating to
capital adequacy, asset quality, liquidity, corporate governance, market risks, etc,
which will be strictly enforced.
– Guidelines for financial leasing have also been issued to enable businessmen and
investors to obtain assets for investment and trade without an outright purchase.
– The Other Financial Services Act has been revisited to incorporate the Stock
Exchange and deposit-taking microfinance institutions (MFIs) which are under the
supervision of the Bank. Bank of Sierra Leone

58. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Financial Sector Regulatory and Supervisory Reforms
– The Bank and the IMF has conducted a stress tests on the banking
system, and the results show that our banking system is fairly stable
and robust, but a number of banks were identified as being vulnerable
to certain shocks.
– BSL in response, is in strict compliance with the Basel Core Principles,
revising prudential regulations and guidelines, encouraging the
commercial banks to do self stress tests and develop their own
contingency manuals.
– BSL has a contingency plan for dealing with distressed banks and will be
signing a Memorandum of Understanding with the Ministry of Finance
and Economic Development for a national response to any financial
crisis.
– The Bank will also be putting in place a deposit insurance scheme which
will protect ordinary depositors, stabilize the liabilities of the banks and
ease any liquidation process. of Sierra Leone
Bank

59. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Financial Sector Regulatory and Supervisory Reforms (contd)
– Other supervisory reforms include shifting the supervisory strategy
from compliance based to risk focused supervision.
– BSL has adopted two complementary approaches to addressing
governance and risk management issues:
• Firstly, the Bank has focused on risk factors originating within the financial
system.
• Secondly, mechanisms are being adopted and implemented to address risks
originating mainly from unlicensed financial institutions.
– The introduction of the Electronic Financial Analysis and Surveillance
System (E-FASS) will make off site supervision more effective added
to current efforts to enhance the capacity in the Banking Supervision
Department.
Bank of Sierra Leone

60. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
– In an effort to make the financial sector more robust to finance large
projects, BSL has doubled the required minimum paid-up capital over a
five year period and most commercial banks are on course to meet this
minimum capital.
– Furthermore, the Bank has adopted the International Financial Reporting
Standards (IFRS) as its financial reporting framework with the commercial
banks being requested to do likewise.
– Sierra Leone is now a member of The College of Supervisors of the West
African Monetary Zone, an institution set up to coordinate and harmonize
supervisory information and practices among central banks of WAMZ
member countries.
– This initiative should assist in the monitoring of the activities of
commercial banks originating from the sub region or with a strong sub
regional presence. In this regard, joint supervision exercises involving the
Bank of Sierra Leone and the Central Bank of Nigeria have since
commenced. Bank of Sierra Leone

61. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Financial Sector Regulatory and Supervisory Reforms (contd)
– Another key development in the banking sector which will ensure
efficiency and transparency is the development of a revised Anti-
Money Laundering and Combating the Financing of Terrorism
(AML/CFT) Bill.
– The Bank of Sierra Leone has spearheaded The AML/CFT Bill 2009,
which has been approved by Cabinet and is now awaiting
parliamentary enactment.
– In the interim, the Bank has however been proactive and is enforcing
the current Anti-Money Laundry Act 2005 through its Financial
Intelligence Unit (FIU) and is working in close collaboration with the
Anti-Corruption Commission and is about to sign a Memorandum of
Understanding geared towards enhancing exchange of intelligence.
Bank of Sierra Leone

62. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Payment and Settlement System Reforms
– BSL realises the importance of a prompt and efficient payment and
settlement system to increase trade and investment.
– BSL with the support of its development partners, particularly the
African Development Bank (AfDB) and the West African Monetary
Institute (WAMI), has embarked on modernization of the payments,
clearing and settlement systems by implementing a SWIFT FIN Copy
Service, for the settlement of large value interbank transactions faster
and reduce the risk element.
– The infrastructure of the Bank is being upgraded to state-of-the art IP-
based data communication networks, supported by a reliable
uninterrupted power supply.
– Other measures involve deploying the payment system components of
core banking application, automated cheque processing (ACP),
automated clearing house (ACH), real time gross settlement and
scriptless security settlement.
Bank of Sierra Leone

63. Bank of Sierra Leone Initiatives to
Improve Savings and Investments
• Payment and Settlement System Reforms (contd)
– Arrangements are well advanced for the printing of cheques in
compliance with the West African Monetary Zone (WAMZ) cheque
standards for the implementation of the ACP/ACH components.
– To set the regulatory framework, the Bank, in collaboration with
WAMI, will prepare the Payments System Regulations which will
support the Payments System Act.
– The commercial banks have been brought on board and BSL is
reviewing the state of preparedness of the commercial banks for
connectivity in a bid to ensure the efficiency of the payment system.
– BSL has also embarked on implementation of a National Switch, in
collaboration with the commercial banks, to ensure interconnectivity
and interoperability among the banks.
– The deployment of fibre optic cable will be utilised for connectivity
between the commercial banks and the Bank of Sierra Leone.
Bank of Sierra Leone

64. Institutional Developments
• BSL has benefitted from IGC support to carry
out an assessment for restructuring the Bank
• Following this assessment a change
management structure was implemented
• This involved internal restructuring based on
qualifications and performance in addition to
the recruitment of professionals in areas of
ICT, procurement, accounting and in the legal
unit
Bank of Sierra Leone

65. Conclusion
• Sierra Leone has huge potential in terms of resources for trade
and investment but has been faced with a number of challenges
notably lack of infrastructure, low savings, lack of access to
finance by the bulk of the informal but productive sector and high
interest rates.
• In response, a number of structural and legislative reforms have
been undertaken by government and the Bank of Sierra Leone.
• The Bank of Sierra Leone’s policies and measures will not only
ensure the financial sector is more robust and stable but also
more conducive to trade and investment.
• Going forward, the Bank will be spearheading the development of
a collateral register as an additional instrument to ensure a safer
lending environment.
• THANK YOU
Bank of Sierra Leone