West African Country on the Move

Investors Eye Sierra Leone

January 25, 2010—The West African nation of Sierra Leone endured more than a decade of civil war from 1992-2002 that brought it to the bottom of many indices measuring issues from corruption to human development.  But that picture has changed. This impoverished nation has been posting impressive gains and is attracting significant interest from investors. The country rebounded strongly when the war ended.  Recovery continued into 2008 when real Gross Domestic Product (GDP) grew by an estimated 5.5 percent despite rising food and fuel prices. From 2009 to 2010, Sierra Leone moved up eight notches in the World Bank Group’s “Doing Business” rankings.

These developments have not gone unnoticed by the investment community, and the country is enjoying a resurgence of interest from investors looking for first-mover advantage. Sierra Leone offers significant potential in agriculture with high levels of rainfall and vast swaths of arable but uncultivated land. Fisheries, minerals, tourism, and infrastructure development are other areas ripe for investment. These opportunities were highlighted to more than 600 delegates attending the Sierra Leone Trade and Investment Forum held in London in November 2009. Nabil Fawaz, MIGA’s sector leader for agribusiness, manufacturing, and services attended the conference and noted “there is a lot of enthusiasm about Sierra Leone and a sense that responsible investors are very much welcome.”

MIGA for its part has observed a strong interest in Sierra Leone through fielding inquiries and seeing a significant increase in the number of preliminary applications of guarantee for investments in Sierra Leone. Fawaz sees this as a positive sign. “This means that there is investor interest, but investors and lenders are seeking risk-mitigation measures to ease their entry into the market.” Helping bring investment into countries after conflict is a cornerstone of MIGA’s mandate, and the agency has extensive experience in providing guarantees covering investments into countries such as Bosnia-Herzegovina, Mozambique, and Afghanistan.

The agency is currently insuring three small projects in Sierra Leone under its Small Investment Program and recently signed two contracts with private equity funds planning several small-scale investments in the country. One MIGA-supported project “Ice Ice Baby Ltd.” is providing the local market with crushed and cubed ice – an essential resource for the country’s booming fishing industry. Most of the ice is sold to local fish sellers as well as to the artisanal fishermen who are at sea for a couple of days and need ice to preserve their catch. Another project insured by MIGA is supporting the modernization and expansion of the Sierra Fishing Company. A key objective of the country’s overall fishing industry is to meet European Union export standards. MIGA is working with the World Bank to help the company achieve the required environmental, health and safety standards. Deniz Baharoglu, MIGA’s Social and Environment Team Lead notes, “helping investors meet high environmental and social standards is one reason they come to us. Not only do we offer our own expertise and guidance, but we can draw on the resources of the World Bank Group.”