Country Risk Rating

A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behavior. Corporate default probability is very high. - Source: Coface

Business Climate Rating

The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Intercompany transactions can thus be very difficult to manage in the highly risky environments rated D.


  • Significant mining resources (iron, diamonds, rutile, gold)
  • Coffee, rice and cocoa production
  • Financial support of the IMF
  • Tourism potential
  • Significant port activity that is set to expand


  • Vulnerable to weather conditions
  • Highly dependent on commodity prices
  • Corruption; inadequate protection of property rights
  • Hard for small and medium-sized enterprises to access credit
  • Inadequate infrastructure; failing health system
  • Risk of renewed Ebola outbreak
  • Extreme poverty and high unemployment

Current Trends

Slight slowdown in growth

Growth is expected to slow in 2020. Mining activity (62% of exports) could remain constrained by weak growth in iron ore production due to the cancellation of the mining permit of the Gerald group subsidiary that operated the Marampa mine. Diamond production should develop favorably, with the Tongo mine scheduled to be operational in early 2020. These contrasting performances in the mining sector should translate into a limited contribution to growth. In addition, growth will continue to be hurt by electricity supply constraints, a lack of infrastructure and a poor business environment, which will weaken investment in the sector. The resumption of publicly funded road projects and free education and health programs is expected to support public investment in 2020, while private investment will be boosted by foreign direct investment in agriculture (Dole has plans to invest USD 40 million) and fisheries. In addition, recent reforms to liberalize the input market by encouraging private sector participation in fertilizer and seed markets are expected to increase production. Private consumption will be supported by the expected recovery in agricultural production but could be weakened by inflation, which is high and exceeds the convergence criterion established by the West African Economic Community (maximum annual inflation rate of 10%). Accordingly, the central bank is expected to continue tightening monetary policy, a process that it began at the end of 2016, in order to curb the increase in inflation.

Further consolidation of public finances

In accordance with the Extended Credit Facility of USD 172 million (4.5% of GDP) signed with the IMF (over 2018/2022), the government will seek to meet its deficit and debt reduction targets, notably by cutting expenditure and optimizing revenue. The decrease in expenditure (22% of GDP) will come from better control of wages in ministerial departments and state agencies. Improvements to public procurement and prioritization of expenditure will also contribute. Most of the projected increase in revenues (14% of GDP) is expected to come from the introduction of electronic cash registers, careful collection of corporate and personal taxes and improved collection of arrears. Despite efforts to mitigate its increase, debt remains substantial, with 63% held by non-residents in 2018. Interest on the debt absorbs 13.7% of the State’s revenues.

In 2020, the trade deficit (14.6% of GDP in 2018) is expected to narrow, thanks to the increase in agricultural exports (palm oil, coffee and cocoa). These exports, along with fisheries (23% of exports), are expected to grow, supported by foreign direct investment flows in the agricultural sector. Exports in the extractive industries are expected to be moderate. However, the country remains dependent on imports of energy, capital goods and food products, as the agricultural system is mainly export-oriented. The services deficit (7.1% of GDP in 2018), as well as the income deficit (2.2% of GDP), linked to the presence of foreign investors, will also weigh heavily. The current account deficit is expected to be partly financed by FDI inflows (5.5% of GDP), particularly in agriculture and mining. Expatriate remittances, bilateral loans and grants (a total of 10.6% of GDP) will largely finance this deficit, which will help to stabilize the flexible exchange rate against the dollar and maintain reserve coverage at 3.5 months of imports in the medium term.

The government secures a majority in parliament

The ruling Sierra Leone People’s Party (SLPP) dominates the political landscape. It controls the presidency, under the leadership of Julius Maada Bio, and has a small majority in parliament. In June 2019, the country’s high court revoked the seats of ten MPs from the “All People’s Congress” (APC, the main opposition party) and replaced nine of them with SLPP members. The government will continue to implement the National Development Plan (NDP), which gives priority to macroeconomic stability, infrastructure development, the maintenance of key social programs, including the flagship free education program, plus health and welfare. The government is also stepping up its fight against corruption, which began at the beginning of its term. A report from the Ministry of Finance revealed several cases of misappropriation of public funds amounting to USD 1.036 billion, carried out under the administration of former President Ernest Bai Koroma. A commission of inquiry was established in October 2018 and began hearings in February 2019.


The suspension of SL Mining’s licence to operate the Marampa facility and the ban on exporting minerals could have an impact on the already poor business environment. Sierra Leone is ranked 163rd out of 190 countries in the Doing Business 2020 ranking.


Coface (02/2020)
Sierra Leone