This report provides a technical analysis of the business environment in Sierra Leone and recommends a feasible reform agenda in the light of the political economy and the ability of donors to make a difference. Drawing on a wide range of existing diagnostics, as well as new analysis, this report forms a platform for a coherent donor approach to business environment reform during the period between now and the Presidential election in March 2018. Subsequently, this report can be used by donors to engage with government and the private sector.
Sierra Leone is one of the world’s top ten business reformers, having climbed into the top half of the Sub-Saharan index of ease of doing business within a 5-year period. However, with a low capacity government faced with a highly complex set of business environment problems, and an extremely wide-ranging policy agenda, the country scores poorly on measures of government effectiveness. There are many government ministries and agencies involved with private sector development/business environment, but there is limited coordination among them.
Sierra Leone has pushed through a wide range of legislative reforms and developed a plethora of policies associated with improving the business environment. But the record on implementation and of real impact is mixed. Some reforms have delivered — or at least are on the way to delivering — real change. Recent successful reforms can be categorised as (i) operational changes which do not challenge powerful vested interests and also, where the Government of Sierra Leone has capacity to deliver change, are often backed by donor funds and technical assistance, and (ii) deeper, more fundamental reform where there is political will, sometimes in response to a “critical juncture”.
The specific actions recommended are summarised as follows, with detail provided in the action plan at the end of this executive summary.
Approach (1): Continue to ‘chip away’ at bottlenecks where there is demonstrated traction and capacity
- Continue to support Companies Act reform
- Streamline registration of other business forms
- Continue to improve the Collateral Registry
- Develop the Fast Track Commercial Court as a ‘flagship’ court
- Address remaining bottlenecks at Freetown Port
Approach (2): Improve policy coherence, enabling a more focused and prioritised approach in a resource-constrained and low capacity environment
- Strengthen private sector engagement with Local Content Policy
- Develop coherent trade policy in light of WTO Trade Facilitation Agreement
- Develop and implement key sector policies (tourism and fisheries)
Approach (3): Focus on government change mechanisms (a) to exploit Presidential convening power, complemented by (b) strengthening core processes.
- (a) Improve GoSL policy enforcement / implementation by strengthening Strategy and Policy Unit and launching a “compact” between GoSL, private sector and donors to tackle complex and politically charged issues of key concern to private sector
- (b) Strengthen and improve coordination between Law Officers’ Department and Law Reform Commission
- (b) Instigate budget working group as part of the budget process
Approach (4): Improve private sector collective action
- Support market based/ problem driven approach to strengthening the demand side
- Instigate strategic dialogue between GoSL, private sector and donors through the “compact” proposed under approach (3) above, identifying a common reform framework
The suite of reforms proposed above (detailed in the action plan at the end of this executive summary) represents an initial agenda for reform, but new openings and opportunities are likely to emerge, particularly in the wake of the 2018 Presidential election. There is appetite on the part of donors engaged in private sector development in Sierra Leone for better co-ordination of their efforts. This report recommends that, at the very least, light touch coordination should take place through a regular donor/private sector meeting, which would enable donors at an operational level to be better informed about each other’s projects and plans. A donor/private sector group could also potentially become a platform for interaction with the Government of Sierra Leone on business environment reform and, more generally, on private sector development.