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

A recovery driven by the mining sector

In 2020, the economy contracted due to the COVID-19 crisis. To limit the spread of the virus, the government announced a 12-month state of emergency in March 2020. Border controls were tightened, some travel was restricted, social distancing was encouraged, and a partial and then total lockdown was imposed in April. These measures have been progressively eased since June 2020 and were accompanied by a Health Response Plan (which received USD 7.5 million in funding from the World Bank) to fight the pandemic, while the central bank pursued an accommodative monetary policy, cutting the policy rate from 16.5% to 15% in March 2020, for instance.

Activity in the extractive industries (62% of exports) was impacted by weak global demand, but also by low iron ore production, as the government revoked the licenses of the international companies operating the Tonkolili and Marampa mining projects at the end of 2019. The agricultural sector (60% of GDP and 75% of the labor force) experienced a slight contraction in line with the decline in global demand for cocoa and coffee. Services, particularly transport, were hardest hit by the crisis, notably because of international and domestic travel restrictions.

In 2021, the recovery is expected to be driven by a strong expansion in the mining sector, particularly in the diamond and rutile segments as production steps up, notably at the Tongo diamond mine. The agricultural sector will benefit from higher prices in 2021 and increased investments under the National Development Plan (NDP). Higher food prices, which have not been offset by the drop in oil prices and exchange rate depreciation, are maintaining high inflation, which put a damper on household consumption (90% of GDP in 2019).


Consolidation of public finances has stalled

Prior to the COVID-19 crisis, the government's fiscal consolidation efforts under the USD 172 million (4.5% of GDP) Extended Credit Facility with the IMF (for 2018/2022) had led to an improvement in the public accounts, thanks to higher revenues and rationalization of public spending. The crisis resulted in an increase in public spending (26% of GDP in 2020 versus 20% in 2019) and a decline in public revenue (15.3% of GDP in 2020 versus 17.7% in 2019). In 2021, the government is expected to focus on revenue mobilization to limit the consequences of higher public spending. In June 2020, the IMF has disbursed USD 143 million under its Rapid Credit Facility to support Sierra Leone's virus response. Despite efforts in recent years to mitigate its increase, debt, which was already substantial, rose considerably because of the crisis, with 70% held by non-residents (mainly multilateral partners) in 2020.

The trade deficit (14.5% of GDP in 2020) is expected to narrow in 2021, with iron ore production set to resume early in the year following the resolution of the dispute, accompanied by an upturn in diamond production and bauxite and rutile exports. However, the country remains dependent on imports of energy, capital goods and food, since the agricultural system is mainly export-oriented. The services deficit (4.9% of GDP in 2020) and the income deficit (2% of GDP), linked to the presence of foreign investors, will also weigh heavily. FDI, which declined in 2020, shrinking by 53% compared to 2019, is expected to increase in 2021. Faced with this situation and the rising bill for food and medical imports, the country has appealed for help from international organizations, which has allowed it to maintain foreign exchange reserves equivalent to three months of imports.


The regime secures a majority in parliament

The Sierra Leone People's Party (SLPP) of President Julius Maada Bio dominates the political landscape. The All People's Congress (APC), the main opposition party, won the most seats in the March 2018 parliamentary elections. However, in May 2019, the country’s high court revoked the seats of ten APC deputies and replaced them with members of the SLPP, leaving the SLPP as the party with the largest number of seats. The government will therefore continue to implement the NDP (2019-2023), which gives priority to macroeconomic stability, infrastructure development and the maintenance of key social programs, including the flagship free education program, plus health and welfare. The government is also stepping up the 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 under the administration of former president Ernest Bai Koroma. A commission of inquiry was created in October 2018 and began hearings in February 2019. Several officials from the Koroma administration have already been arrested. The resolution of the dispute with SL Mining at the Marampa site, expected in early 2021, could improve the business environment, which had deteriorated after the licenses were revoked.


Coface (02/2020)
Sierra Leone