09
Oct

Sierra Leone: Legal and Other Obstacles to Foreign Direct Investment

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Lecturer in Law, Fourah Bay College, University of Sierra Leone and Senior Advocate of Sierra Leone.

  1. Notwithstanding the natural attractions of Sierra Leone as an investment destination; foreign investors will nonetheless need to overcome certain obstacles.
  • The most visible of these is the lack of adequate social and physical infrastructure and historical under funding, in education, health, transport and telecommunications, coupled with the diversion of scare public resources caused by the unnecessary civil war, corruption and bad governance.
  • NO CAPITAL MARKET IN SIERRA LEONE

Sierra Leone has a small structure hidden somewhere in Freetown called a Stock Exchange which many Sierra Leoneans might not be able to locate or even tell you whether it is functioning. I hasten to say that Sierra Leone has no modern and well-structured Stock Exchange. Also we have no Capital Market no Security Exchange Commission or Financial Structures to attract or encourage Foreign Direct Investment (FDI) to Sierra Leone.

  • A STOCK EXCHANGE is now seen increasingly an essential financial structure for any economy. It is a view that Exchanges as Infrastructure that motivates the Nigerian, Ghanaian and Ivorian governments to encourage the establishment of Stock Exchanges in their respective countries which within a short period has revolutionized their capitalizations. 
  • NO MODERN ARBITRATION LAW – CAP 25 of the laws of Sierra Leone regulates Arbitration in the country. This law is very old and outdated.
  • It is a law existing in our law books that has outlived its usefulness it should now be completely repealed and replaced by a New and Modern Arbitration law. Investors and businessmen will have no regard for our present Arbitration Law and process as the law now needs a decent funeral. It really serves no useful purpose.
  • If Sierra Leone wants to attract foreign investors who will also choose International Arbitration to resolve Commercial Disputes, then the sooner Sierra Leone applies to be a member of the New York Convention the better our chances of encouraging solid and well-funded companies to do business in Sierra Leone. As membership of this Convention is a catalyst for foreign investors. 
  • NO PARTNERSHIP LAW – Sierra Leone has replaced its old company law Cap 249 which lasted for several years. The new Company Act is very good and comprehensive.
  • We also have a new Bankruptcy Act which will serve its desired purpose though lawyers and litigants make very little use of it. What we still lack is a Partnership Law. 
  1. The Law on Partnership dates from1890 which is still the applicable law in Sierra Leone, President Bio has on his frequent trips abroad to attract foreign investors, heard from some business concerns worldwide, that they would like to partner with some local companies or businesses to expand or consolidate their businesses in Sierra Leone or other countries in the Mano River Union.
  1. How can they enter into Partnership Agreements with our local companies if they will be subjected to an old Colonial 1890 Partnership Law? Surely this will drive them away as we live in a competitive world. We need a new Partnership Law.
  1. NO COMPETITION LAW OR ANTI-TRUST LAW – it has been established that Sierra Leone is on a stable path of economic recovery and has achieved some measure of economic and political stability. Moreover there are certain gaps reflected in lack of policies intended to prevent restrictive and abusive market practices, exploitation and unfair treatment of consumers.
  1. There is an absence of rules defining how the various economic actors (the government, private sector, producers, consumers and civil society) interact with each other in the sphere of economic and non-economic activity.
  1. It is further acknowledged that a body of rules (COMPETITION OR ANTI-TRUST LAW) which responds to the need to level the playing field between existing and future market participants is needed and that those same rules must resolve to protect small and medium sized businesses from exploitation and abuse by larger companies.
  1. LAND TENURE – CONVEYANCING AND LAW OF PROPERTY ACT 1881 – the present system of land tenure is an area of great concern to many Sierra Leonean and also the business community. The present system of Land Tenure is discriminatory and unconstitutional. It inhibits commercial and trading activity and is a disincentive to large scale foreign direct investment in the provinces. In particular and in Sierra Leone in general.
  1. To improve the system further and open up the system of ownership and transfer of land, the Non-Citizens Interest in Land Act should be repealed to encourage local and overseas investors.
  1. Individual land owners, purchase of land leases, and mortgages need a system of registration that guarantees certain in whatever interest they have in land. It is unbelievable but true that foreclosure proceedings in Sierra Leone especially by Commercial Banks are governed by the Conveyancing and Law of property Act 1881. An obsolete and outdated legislation that should now be given a decent burial.
  1. Sierra Leone now needs its own home grown and modern Conveyancing and Law of  Property Act to reflect modern day, Land Law, Mortgage Law and Property Law, proceedings and processes in the country. This is what countries like Ghana and Kenya have done with great benefits and opportunities for their citizens.
  1. INVESTMENT PROMOTION A NEW INVESTMENT CODE IS NECESSARY – President Bio’s New Direction Government has always stressed that its main impetus is to encourage private investment both domestic and foreign as an engine of economic growth.
  • Apart from the great efforts by the Ministry of Tourism and Cultural Affairs and other relevant Ministries, are not doing much to promote investment in Sierra Leone. 
  • Our Embassies and High Commissions are not doing effective Promotion and Marketing of Sierra Leone as expected.
  • The High Commission in Ghana is doing very well and I see our Ambassador to Turkey has hit the ground running.
  • Our very effective Minister of Information and her able Deputy need to inform Sierra Leoneans and the internal country who are the new Diplomats approved by the Bio administration and tell us about their Curriculum Vitae. We need more information about our Cabinet Ministers.
  • I am reliably informed that the Ambassador in the USSR, USA, South Korea, Nigeria and the European Union are Sierra Leoneans who have worked or lived in the diaspora for many years (which could be an asset) but what are they doing to promote investment and tourism to Sierra Leone. They should wake up and let’s start seeing results. 
  • Embassies of Rwanda, Ghana, Kenya and Botswana are promoting and advertising their countries and citizens regularly and effectively in CNN, BBC and FRANCE. We have to follow suit.
  • As we cannot offer separate touristic offices in many countries our diplomats should use the newspapers, magazines, Radio, TV and other forms of Investment potentials and Tourism facilities in the respective countries they are accredited to.
  • Our diplomats should talk to their Chambers of Commerce Confederation of Industries, Hotels, Tourist Officers and Business forum about Investment and Tourism in Sierra Leone.
  • SIERRA LEONE SHOULD HIRE LOBBYING FIRMS ABROAD – apart from efforts by the government of Sierra Leone and its diplomatic missions abroad, it would be necessary for Sierra Leone to hire lobbying firms abroad to advertise and market the potentials of investment in Sierra Leone and its benefits. Also to promote the great potential of Sierra Leone as a tourist destination. We could also advertise Freetown as a destination for Conferences and big meetings for ECOWAS and Mano River Union Organizations.Sierra Leone is a beautiful country with friendly and hospitable people, and we Sierra Leoneans should explain to others the attractions on our country so that other people can visit us.There are a few very effective lobbying firms based in Washington and South East Asia to lobby businessmen, industrialists and captains of industry to invest in Sierra Leone. Sierra Leone should also use adverts, TV and Radio commercials to advertise the country. Our diplomats should also lobby in accredited countries in their Chamber of Commerce/Industries.
  • EFFECTIVE LAW REFORM – we need to beef up the Law Reform Department in Sierra Leone, with more funding qualified, and experienced personnel and the necessary resources. We need to legislate for:
  1. A New Police Act
  2.  A Data Protection Act
  3. Cyber – Security Act
  4. New Tourism Act
  5. Sale of Goods Act
  6. Foreign Investment Act
  • SIERRA LEONE AND RATING – I have never seen Sierra Leone being rated like other African countries. Are we not yet qualified for Rating Agencies financially and economically rated. Does this not affect foreign investors coming to see what Sierra Leone can offer in terms of investment and trade?Lobbying firms such as Bell Potinger, Brown Lloyd and James, Hill and Knowlton are lobbying firms based in the USA who do lobbying for Rwanda, Uganda and South Africa. Rating Agencies such as Standard and Poor’s; Moody’s Fitch JCR (Japan Credit Rating Agency Ltd.) should start to rate Sierra Leone so that investors can know our potentials.

By Francis Gabbidon

28/09/2020. ISSUE NO: 7918