Sierra Leone has come a long way since the civil war it experienced between 1991 and 2002. However, while the violence did negatively affect the economy and business environment in terms of the development of physical infrastructure, Sierra Leone’s reputation as a war torn economy remains one of the greatest hurdles for business today.[hidepost=9][/hidepost]
This is according to Basil Akinbinu, country manager for DHL’s operations in Sierra Leone. “One of the biggest challenges is the misconception about the state of insecurity, particularly for those who have never been to Sierra Leone,” he explained.
Today, things are looking like they are moving in a positive direction, according to Akinbinu, with a rise in consumer and investor confidence and a peaceful and stable political environment. “We had our last democratic election in November last year and it was generally regarded as peaceful, free and fair and this gives investors confidence,” added Akinbinu.
While the country is ranked at 140 out of 185 countries in the World Bank’s Doing Business 2013 report, there have been some improvements in recent years. For example, the country is ranked at 76 of 185 in terms of the ease of starting a business – it takes an average of 12 days to register a new company. This is a change from five years ago when it took almost a month to register a new business.
“The startup environment has improved,” Akinbinu said. “One of the problems of doing business before was a lot of administrative barriers but there have been a number of measures put in place to improve this. Now you don’t even need a lawyer to register your business; before you could hardly do it.”
He added that this has made starting a company more affordable. In addition, entrepreneurs no longer have to pay advance tax to start a business. Work and residency permits have also been streamlined. “Before, all these were challenges. So the startup and business environment has improved.”
However, basic infrastructure, like reliable access to electricity, is still a challenge to business and Sierra Leone is ranked by the World Bank as one of the top 10 most difficult countries in the world to gain access to electricity. The country’s Bumbuna hydropower plant was inaugurated at the end of 2009 with the aim to bring down the cost of business in the country with a much cheaper, sustainable and reliable source of energy.
The mining sector made real GDP growth in Sierra Leone leap from 6% in 2011 to 16.7% in 2012, with support from the agriculture, services and construction industries. With mining being a major economic driver and the recent discovery of oil, Akinbinu said that there are opportunities for mining related services. Other industries where he foresees growth are agriculture, construction and ICT.
While Freetown remains the largest city and administrative hub in Sierra Leone, Akinbinu noted that other cities in the country are beginning to develop as business centres, such as Bo and Kenema in the south. Makeni and Lunsar in the north are also developing around the mining industry and becoming increasingly important cities.
Advice for doing business in Sierra Leone
“First I would advise foreigners to be patient when doing business in Sierra Leone, as sourcing of local human resources can be very challenging,” explained Akinbinu. “You need patience to train… don’t assume that the way that it works out there in a developed economy is the same way here, and of course you can’t bring everybody from outside. You still need local talent.”
Akinbinu said foreigners looking to do business in Sierra Leone should also be aware that the West African country remains very much a cash economy, where credit and debit cards are not popular.
“In terms of getting business, networking is very important in Sierra Leone,” he continued. “It’s a small society, so you need to network. A lot of deals are clinched at the lunch table or over dinner… so you must be accessible and ready to network.”
Lastly, Akinbinu emphasised that the local people are usually friendly and accommodating to foreigners. “The people are warm and like foreigners, particularly if you try make an effort to speak the common language of Krio.”