Housing Finance in Sierra Leone
Overview
This profile is also available in French here.
To download a pdf version of the full 2022 Sierra Leone country profile, click here.
In 2021, the Republic of Sierra Leone (Sierra Leone) had a projected total population of 8,141,343 and an estimated urban population of 3,531,063 (43% of the population), with a 3.1% annual growth rate in urban population. Freetown is the country’s capital and biggest city, as well as its primary urban and commercial center. The development of buildings on the slopes is a recent and concerning occurrence. This has resulted in widespread deforestation and the development of dwellings on wet areas and forest reserves.
The economy is expected to increase 3.2% in 2021 after contracting 2% in 2020, boosted by greater mining and agriculture exports and the return of iron ore production. Fuel and food price hikes lowered 2022 growth projections from 5.9% to 3.6%. Higher import costs and currency rate depreciation pushed 2022 inflation from 12% to 22.1% (end-of-period). Sierra Leone’s inflation is sensitive to global food and fuel costs, and inflationary pressures have risen since mid-2021. This was due to increasing agricultural investments and government assistance for SMEs via the Sierra Leone Microcredit Scheme (MUNAFA Fund) and the Bank of Sierra Leone’s Le500 billion (US$40 million) special credit facility.
Total bank assets and deposits rose 20.8% and 23.2% in 2021. Nonperforming loans rose 2.5 percentage points to 15.2% of total loans. Most significant financial soundness indicators stayed above required criteria during the first quarter of 2022. Growth in monetary aggregates slowed, suggesting a fall in currency in circulation and bank reserves.
In 2021, the mortgage interest rate in Sierra Leone was 21%. A regular 50 kg bag of cement costs SLL 120,000 (US$ 8.29) in local currency.The average monthly rental fee for a freshly constructed home by a professional developer or contractor is US$1727.
Despite the government’s strong commitment to enhancing energy capacity, investments and private sector involvement in the industry have been minimal. Obtaining cost-effective risk financing has been cited as a significant obstacle, particularly for renewable energy. The nation’s legislative framework is open to the admission and establishment of foreign investment. After paying their taxes, foreign investors are permitted to transfer cash (earnings) from overseas, including dividends paid to a parent business established outside Sierra Leone. The repatriation of earnings is a further advantage for international investors.
Find out more information on the housing finance sector of Sierra Leone, including key stakeholders, important policies and housing affordability:
- Macroecoomic Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Legislation
- Opportunities
- Availability of Data on Housing Finance
- Green Applications for Affordable Housing
- Webistes
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2022 edition, which has up-to-date profiles for 55 African countries.
Download yearbookSierra Leone
Macroecoomic Overview
The Republic of Sierra Leone (Sierra Leone) had an estimated total population of 8,141,343[1] and an estimated urban population of 3,531,063[2] (43% of the population)[3] in 2021, with an annual urban population growth rate of 3.1%.[4] The capital, and largest city, is Freetown, which is also the country’s major urban and economic centre.
Freetown is home to a growing number of the country’s population, with a recent and worrying phenomenon being the expansion of housing into the foothills. This has resulted in mass deforestation and housing construction on wet lands and forest reserves. Torrential rains saturate the soil, which in turn triggers rapid movement of rain or debris causing land and mudslides. Mudslides and landslides, coupled with overcrowding in the dense clusters of homes in Freetown, have resulted in loss of lives, livelihoods and houses in recent years.[5]
The country has high levels of poverty (56.8% in 2018), of income inequality, and of youth unemployment, which are all attributable to overall slow growth and the lack of economic diversification.[6] Small and medium enterprises (SMEs) dominate the domestic private sector in Sierra Leone as they constitute 90% of all activity and provide livelihoods to approximately 70% of the population.[7] However, most SMEs operate in the informal sector and only 10% of SMEs are registered – reflecting the high prevalence of informal or unregistered businesses in the country.[8] The agriculture sector dominates the country’s formal economy and accounts for a large proportion of gross domestic product (GDP) and employment. The sector employs around 54.9%[9] of the country’s working population, making it one of the primary growth drivers. Other key sectors include services and industry, with each contributing 31.1%[10] and 5.2% to GDP respectively.[11]
The economy is estimated to have grown by 3.2% in 2021 after a contraction of 2% in 2020,[12] with growth being
driven on the demand side by higher exports from mining and agribusiness, and on the supply side by the resumption of iron ore production alongside recovery in other sectors. Manufacturing was the fastest-growing sub-sector, expanding by 12.3 % in 2021 after contracting by 6.7 % in the previous year. This was a result of its benefiting from the government’s support to SMEs through the Sierra Leone Microcredit Scheme (MUNAFA Fund) and Bank of Sierra Leone’s Le500 billion (US$40 million) special credit facility, as well as from increased agribusiness investments.[13] A surge in international fuel and food prices set back projected growth for 2022, with the revised rate being down to 3.6%, from 5.9% at the time of projection by the International Monetary Fund in July 2021.[14] Inflation is estimated to have declined to 11% in 2021, from 13.4% in 2020.[15] For 2022, inflation has been revised from 12% to 22.1% (end-of-period, 2022) due to higher import prices and exchange rate depreciation[16], even though the exchange rate remained relatively stable in 2021. Domestic inflation is vulnerable to global food and fuel prices in Sierra Leone and inflationary pressures have accelerated since mid-2021, driven by the post-pandemic rebound in consumption and global supply chain disruptions.[17]
Sierra Leone is 92 on out of 180 countries in the 2021 Global Climate Risk Index[18] with a Climate Risk Index (CRI) score of 85.83. The CRI indicates a level of exposure and vulnerability to extreme events, which countries should understand as warnings in order to be prepared for more frequent and/or more severe events in the future.[19] Sierra Leone is highly vulnerable to climate change, experiencing high temperatures, inconsistent weather patterns and recurrent storms, floods, mudslides, and a rising sea level.[20] Residents living in extreme poverty in Freetown are most exposed to the impacts and burdens of climate change, such as rising sea-level and temperatures, as well as the increasing intensity of rainfall.[21] Sierra Leone has adopted a National Climate Change Policy and its Medium- Term National Development Plan 2019–23 which underscores the need for aligning environmental, climate, and economic development plans to mitigate the causes of global warming and assist citizens adapt.[22]
[1] The World Bank (2021). United Nations Population Division. https://data.worldbank.org/indicator/SP.POP.TOTL?locations=SL (Accessed 4 September 2022).
[2] The World Bank (2021). United Nations Population Division. https://data.worldbank.org/indicator/SP.URB.TOTL?locations=SL (Accessed 4 September 2022).
[3] The World Bank (2021). United Nations Population Division. (Accessed 4 September 2022). https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?locations=SL
[4] The World Bank (2021). United Nations Population Division. https://data.worldbank.org/indicator/SP.URB.GROW?locations=SL (Accessed 4 September 2022).
[5] International Institute for Environment and Development. (2020). Loss And Damage From Climate Change Has Pushed Sierra Leoneans Far Beyond Their Ability To Adapt. https://www.preventionweb.net/news/loss-and-damage-climate-change-has-pushed-sierra-leoneans-far-beyond-their-ability-adapt (Accessed 4 September 2022).
[6] African Development Bank. (2022). African Economic Outlook 2022 https://www.afdb.org/en/documents/african-economic-outlook-2022 (Accessed 5 September 2022) Pg. 189.
[7] https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf (Accessed 4 September 2022).Pg 16.
[8] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg. 35.
[9] The World Bank. (2021) Employment in agriculture (% of total employment) (modeled ILO estimate) – Sierra Leone, The World Bank Group, https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?locations=SL (Accessed 4 September 2022)
[10] The World Bank. (2021) Employment in agriculture (% of total employment) (modeled ILO e estimate) – Sierra Leone, The World Bank Group, https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?locations=SL (Accessed 4 September 2022)
[11] The World Bank. (2021) Services, value added (% of GDP) – Sierra Leone, The World Bank Group, https://data.worldbank.org/indicator/NV.SRV.TOTL.ZS?locations=SL (Accessed 4 September 2022)
[12] African Development Bank. (2022). African Economic Outlook 2022 https://www.afdb.org/en/documents/african-economic-outlook-2022 (Accessed 5 September 2022) Pg. 189.
[13] The World Bank (2022). Sierra Leone: Leveraging SME Financing as Engine of Economic Growth and Job Creation. https://www.worldbank.org/en/country/sierraleone/publication/afw-sierra-leone-leveraging-sme-financing-as-engine-of-economic-growth-and-job-creation (Accessed 4 September 2022).
[14] African Business (2022). IMF Staff Completes Staff Level Agreement on the Fifth Review of the Extended Credit Facility for Sierra Leone and Conducts the 2022 Article IV consultation. https://african.business/2022/06/apo-newsfeed/imf-staff-completes-staff-level-agreement-on-the-fifth-review-of-the-extended-credit-facility-for-sierra-leone-and-conducts-the-2022-article-iv-consultation/ (Accessed 5 September 2022).
[15] African Development Bank. (2022). African Economic Outlook 2022 https://www.afdb.org/en/documents/african-economic-outlook-2022 (Accessed 5 September 2022) Pg. 189.
[16] African Business (2022). IMF Staff Completes Staff Level Agreement on the Fifth Review of the Extended Credit Facility for Sierra Leone and Conducts the 2022 Article IV consultation. https://african.business/2022/06/apo-newsfeed/imf-staff-completes-staff-level-agreement-on-the-fifth-review-of-the-extended-credit-facility-for-sierra-leone-and-conducts-the-2022-article-iv-consultation/ (Accessed 5 September 2022).
[17] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 2.
[18]The Global Catastrophic Risk Institute (2021) Global Climate Risk Index 2021 https://www.germanwatch.org/sites/default/files/Global%20Climate%20Risk%20Index%202021_2.pdf (Accessed 5 September 2022) Pg. 46.
[19]The Global Catastrophic Risk Institute (2021) Global Climate Risk Index 2021 https://www.germanwatch.org/sites/default/files/Global%20Climate%20Risk%20Index%202021_2.pdf (Accessed 5 September 2022) Pg. 3.
[20] African Development Bank. (2022). African Economic Outlook 2022 https://www.afdb.org/en/documents/african-economic-outlook-2022 (Accessed 5 September 2022) Pg. 189.
[21]African Cities. (2022) Breaking the cycle of housing deprivation in Freetown’s informal settlements. https://www.african-cities.org/breaking-the-cycle-of-housing-deprivation-in-freetowns-informal-settlements/ (Accessed 4 September 2022).
[22] African Development Bank. (2022). African Economic Outlook 2022 https://www.afdb.org/en/documents/african-economic-outlook-2022 (Accessed 5 September 2022) Pg. 189.
Access to Finance
The central bank in Sierra Leone (Bank of Sierra Leone) is 100% state-owned. The objective and functions of the Bank of Sierra Leone as set out in the Bank of Sierra Leone Act, 2011, are to formulate and implement monetary policy, financial regulation and prudential standards and to license, register, regulate and supervise financial institutions in the country.[1] The authorities are working to strengthen the regulation of the banking sector in Sierra Leone, including, with World Bank assistance, on improving the governance of the two state-owned-banks, being Sierra Leone Commercial Bank and the Bank of Sierra Leone. Sierra Leone’s financial sector is underdeveloped, with a capital-adequacy ratio of 41.8% against a regulatory minimum of 15%.[2] The overall number of financial service access points is low and concentrated in the urban areas. As of 2020, Sierra Leone had a total of 105 Automated Teller Machines (ATMs) across 8 of its 14 banks, of which 3 banks had 5 or fewer ATMs in total.[3] Most of these financial access points are concentrated in the capital city of Freetown and other urban centres.[4]
Around 87% of the economically active population in Sierra Leone (mostly residing in rural areas) does not have access to formal finance.[5] Sierra Leone is primarily a cash-based economy, with only approximately 8% of women and 15% of men in 2018 being estimated to have bank accounts.[6] Formal financial services in Sierra Leone have been concentrated in the Western Province, which houses more than 50% of the region’s bank branches. Until 2019-20, Sierra Leone had around 15 credit-only microfinance institutions (MFIs), three deposit-taking MFIs, and 17 community banks[7] operating in the country, primarily serving the rural population. Consequentially, a large majority of the population rely on informal sources of credit. However, with rapid mobile phone penetration, the country is witnessing increasing digital financial services (DFS) which are becoming more mainstream. In 2018, there were approximately 11 DFS providers in Sierra Leone (9 banks and 2 Mobile Network Operators (MNOs). MFIs are the primary provider of brick and mortar-based financial services in poorer regions and offer small and microloans to marginalised and underserved communities and groups.
Digital finance is not diversified in Sierra Leone, and mobile money remains the main driver of DFS.[8] MNOs dominate the market, with 72% of the total active DFS accounts being with MNOs.[9] Bank and mobile network operator integration, and application programming interface (API) sharing, are increasing among industry players. Most financial institutions in the country now offer bank-to-wallet and wallet-to-bank services, and a large number of providers now share their APIs with other players in the sector. Fintech firms have also started to innovate in this area. While the legal and regulatory framework for advancing DFS has been strengthened over the past years, additional regulatory and policy reforms are required. The recently gazetted NPS Act covers the spectrum of important payment system issues, including recent innovations in the market such as fintech, payment systems oversight, and remittances among others.[10]
The banking system remained relatively stable in 2021 despite an increase in nonperforming loans. During 2021, total banking system assets and customer deposits increased by 20.8% and 23.2%, respectively.[11] The ratio of nonperforming loans (NPLs) to gross loans increased by 2.5 percentage points to 15.2%.[12] The commercial banks` average lending rate increased to 19.81% in March 2022 from 19.77% in February 2022, while the savings deposit rate remained unchanged at 2.27% in March 2022.[13] Growth in monetary aggregates moderated during the first quarter of 2022, reflecting in part a decline in currency-in-circulation and banks’ reserves with the Central Bank. Credit to the private sector declined by 1.59% in the first quarter of 2022, after expanding by 8.27% in the fourth quarter of 2021.The banking sector remained relatively stable during the first quarter of 2022, as most of the key financial soundness indicators remained above their minimum thresholds. However, although the NPL ratio declined marginally from 15.23% in the fourth quarter of 2021 to 15.13% in the first quarter of 2022, it remained above the minimum regulatory limit of 10%.[14]
[1] Bank of Sierra Leone. https://www.bsl.gov.sl/About_Us.html (Accessed 17 September 2021).
[2] African Development Bank. (2022). African Economic Outlook 2022 https://www.afdb.org/en/documents/african-economic-outlook-2022 (Accessed 5 September 2022) Pg. 189.
[3] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 52.
[4] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 52.
[5] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf (Accessed 4 September 2022). Pg 18.
[6]UNCDF. Sierra Leone: The State of Digital Financial Services in 2018. (2019) https://www.uncdf.org/admin/editors/ArticleItem/Index/4838?articleTitle=sierra-leone-state-of-the-digital-financial-services-in-2018#:~:text=For%20instance%2C%20only%208%25%20of,Boosting%20Agriculture%20and%20Food%20Security . (Accessed 4 September 2022).
[7] U.S Department of State (2020) Investment Climate Statements: Sierra Leone. https://www.state.gov/reports/2020-investment-climate-statements/sierra-leone/ (Accessed 4 September 2022).
[8] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 47.
[9] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf Pg 18.
[10] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 50.
[11] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 20.
[12] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 20.
[13] bank of Sierra Leone. Monthly Economic Review Volume 26| Issue 03. https://bsl.gov.sl/MER%20March%202022.pdf (Accessed 5 September 2022) Pg. 11.
[14] Bank of Sierra Leone. (2022) Monetary Policy Statement. https://bsl.gov.sl/Monetary%20Policy%20Statement.pdf (Accessed 4 September 2022) Pg. 4.
Affordability
Poverty in Sierra Leone, which is associated with poor living conditions, overcrowding and poor public policies adversely affects the ability of poor people to earn enough to afford decent housing. In 2018, the overall poverty rate in Sierra Leone was 57%, with a total of 10.8% of the population living in extreme poverty. As in many developing countries, poverty rates are higher in rural areas than in the urban centre of Freetown (72.4% compared to 18.5%, respectively). This indicates that poverty in the country remains a largely rural issue.[1] Three districts have been identified as having the highest incidence of multidimensional poverty in the country: Pujehun (87.2%), Koinadugu (86.5%), and Tonkolili (85.4%).[2]
First Bank of Nigeria Limited (FirstBank) is a Nigerian premier commercial bank with two branches in Freetown, operating through FBN Bank Sierra Leone, formerly registered as International Commercial Bank (ICB). The bank offers a mortgage for buying a first home, construction and renovation. The home loan is available to individuals with verifiable and steady income flow and is for a maximum tenor of 20 years, requires a minimum down payment of below 30% and the property to be financed must be for residential and not commercial purposes.[3] HFC Mortgage & Savings Bank offers a minimum mortgage rate of 22% and a maximum mortgage rate of 28% for a period of 20 to 35 Years.
The prevailing mortgage interest rate in Sierra Leone in 2021 was 21%.[4] The price of the cheapest, newly built house by a formal developer or contractor in an urban area in local currency units is SLL 1 151 600 000 (U$80 000) and the size of this property is 110-120 square meters.[5] The construction labour cost per square meter in local currency units for the cheapest, newly built house averages SLL500,000 per month (US$34,54) and the total construction cost per square meter in local currency units for the cheapest, newly built house averages SLL 15 000 000 (US$1 036). A standard 50kg bag of cement in local currency units costs SLL 120,000 (US$ 8.29).[6] The typical monthly rental price for the cheapest, newly built house by a formal developer or contractor in local currency units is SLL 25 000 000 (US$ 1727).[7]
[1] UNICEF. 2020. A Business Case and Fiscal Space Analysis For Social Protection In Sierra Leone. https://www.unicef.org/sierraleone/media/426/file/BCFSA-2019.pdf.pdf (Accessed 4 September 2022). Pg. 8.
[2] Statistics Sierra Leone. Sierra Leone multidimensional poverty index 2019. https://www.statistics.sl/images/StatisticsSL/Documents/Sierra_Leone_MPI_2019.pdf (Accessed 4 September 2022). Pg. 2.
[3] FBN Bank Sierra Leone. https://www.fbnbanksierraleone.com/personal-banking/loans-and-mortgages/personal-home-loan/#1457947296685-89b04a4b-7441ca15-0bdf033e-6226 (Accessed 4 September 2022).
[4] Statista (2020). Prevailing mortgage interest rates in Africa in 2020 by country. https://www.statista.com/statistics/789843/mortgage-interest-rates-africa-by-country/ (Accessed 4 September 2022).
[5] Interview conducted with Solomon Osman Bangura , an employee of Kabor Properties, on 29 August 2022. Kabor Properties . https://www.kaborproperties.com/ (Accessed 29 August 2022).
[6] https://www.dangotecement.com/sierra-leone / (Accessed 29 August 2022).
[7] Interview conducted with Solomon Osman Bangura , an employee of Kabor Properties, on 29 August 2022. Kabor Properties . https://www.kaborproperties.com/ (Accessed 29 August 2022).
Housing Supply
Sierra Leone faces challenges in providing decent affordable housing for the poor. The capital city Freetown, is situated on steep hills leading inland. In Freetown, older two-storey wooden houses have been replaced by structures built largely of concrete blocks, with corrugated iron or cement-asbestos roofs. In 2018, overall, 79.5% of households constructed the house in which they dwell and only 1.7% of households purchased their dwelling.[1] Rural village houses in the various provinces are traditionally made of sticks with mud walls and thatch or grass roofs and may be circular or rectangular in shape.[2]
Access to electricity is a challenge, both in terms of reliability and affordability. There is limited availability of
the electricity grid outside of Freetown and a few other major cities. The price of electricity is high due to key gaps in the country’s electricity transmission infrastructure.[3] The gap in infrastructure not only impacts people’s ability to access services, but also impedes job creation and poverty reduction.[4] The low energy access levels in rural areas are primarily due to transmission challenges and the country’s energy needs are hugely under-served, with approximately 100 MW of installed power capacity by 2019-20.[5] Recognising the inadequacies, the government has aimed to increase renewable energy (solar and hydro) contribution capacities and the government also aims to increase its energy transmission from 25% (2019) to 60% by 2023.[6] A significant population of Sierra Leone lack access to essential water and sanitation services. Of the total population, only approximately 16% have access to vital sanitation services, with only 42% having access to essential water services.[7]
The World Bank approved a SLL535 billion (US$41.1 million) International Development Association (IDA) grant to support the establishment of an efficient and accessible land administration system in Sierra Leone in June 2022. World Bank assessments had revealed that only a tiny percentage of land in the rural and urban areas are mapped and recorded while institutional arrangements are opaque. The project will therefore help to strengthen the country’s legal and institutional framework in the sector by financing the implementation of the core aspects of the 2015 National Land Policy, including the registration of customary and freehold land tenure.
The Sierra Leone Land Administration Project is aligned with the government’s Gender Equality and Women’s Empowerment Policy (2020), which identifies lack of access and ownership of land for women as a key issue.[8] Sierra Leone operates a dual land tenure system where land in the Western Area is administered under freehold tenure while customary land in the provinces is covered by customary tenure systems. The project seeks to ensure equal tenure rights and access to land for women and girls by addressing the outdated legal framework, thereby closing identified legal gaps, and updating and harmonising the legal framework for the land administration sector. The project was prepared in close coordination with the Food and Agriculture Organization (FAO) of the United Nations, which has supported the implementation of the Voluntary Guidelines on the Responsible Governance of Tenure in Sierra Leone(which are principles and practices that governments can refer to when making laws and administering land, fisheries, and forests rights.).[9]
[1] Statistics Sierra Leone. (2018). Sierra Leone Integrated Household Survey (SLIHS) Report 2018. https://www.statistics.sl/images/StatisticsSL/Documents/SLIHS2018/SLIHS_2018_New/sierra_leone_integrated_household_survey2018_report.pdf (Accessed 4 September 2022). Pg. xxxvi.
[2] Oni, Y. (2021) Sierra leone to commence construction of 5000 affordable housing units. Construction Review Online By Africa for Africa. https://constructionreviewonline.com/news/sierra-leone-to-commence-construction-of-5000-affordable-housing-units/ (Accessed 4 September 2022).
[3] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf. (Accessed 4 September 2022). Pg 46.
[4] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf. (Accessed 4 September 2022). Pg 46.
[5] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf. (Accessed 4 September 2022).Pg 19.
[6] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf. (Accessed 4 September 2022).Pg 19.
[7] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf. (Accessed 4 September 2022).Pg 21.
[8] Jobomax Global. Jobomax launches new affordable housing in Sierra Leone (2 March 2022) https://www.prnewswire.com/news-releases/jobomax-launches-new-affordable-housing-in-sierra-leone-301498136.html (Accessed 4 September 2022).
[9]Jobomax Global. Jobomax launches new affordable housing in Sierra Leone (2 March 2022) https://www.prnewswire.com/news-releases/jobomax-launches-new-affordable-housing-in-sierra-leone-301498136.html (Accessed 4 September 2022).
Property Markets
Land administration in Sierra Leone is complicated. There are two types of land tenure: colonial land or freehold land, and customary land or leasehold land. Foreigners cannot own land under either of these systems but they can lease land and property for up to 99 years. There is no land titling system to validate ownership, so lease rights are hard to secure.[1]
In the World Bank 2020 Doing Business indicators, Sierra Leone is ranked 163 out of 190 countries. It takes 56 days to register a property in Sierra Leone compared to 51.6 days in sub-Saharan African countries. The cost of registering property is 10.6% of the property value in Sierra Leone compared to 7.3% in sub-Saharan African countries.[2] For more than 30% of Freetown households, access to housing takes place in one of its 60 informal settlements in a “panbody” shack, which is a small room made of zinc or a zinc room. Rent can cost anything between Le 60 000 (US$ 6) and Le 120 000 (US$ 12) per month and to have access to one of these, tenants need to advance two years’ rent.
[1] Global Property Guide (2007). Sierra Leone: Overview. https://www.globalpropertyguide.com/Africa/Sierra-Leone (Accessed 4 September 2022).
[2] World Bank Doing Business. Ease of Doing Business in Sierra Leone (2020) https://www.doingbusiness.org/en/data/exploreeconomies/sierra-leone#DB_rp (Accessed 4 September 2024).
Policy and Legislation
The weakness of the land administration system has contributed to an environment where collection of taxes remains difficult; land markets are distorted; and urban planning and disaster risk management is undermined.[1] Customary land is land held under customary tenure and is mostly the property of indigenous land-owning families. Traditional leaders are not landowners but serve as trustees of such family property, this is complicated by variations in customary land practices among different ethnicities and that there is limited strategic coordination between the traditional conflict-resolution institutions, civil society initiatives and the statutory courts.[2] Although a legal framework exists that affirms that customary land in the provinces cannot be bought or sold, there are no safeguard mechanisms, protective oversight or redress mechanisms for dealing with violations. There is a general absence of well-established cadastral boundaries, and this is often complicated by corruption, mismanagement and gender-based discrimination. In Sierra Leonne nearly all ethnic groups practice patrilineal decent, with respect to succession, marriage and other family matters. Legal reform in 2007 removed the customary prohibition against women owning property and made men and women equal in the distribution of estates, but the law is seldom implemented. In many cases, women are denied the right to own land and inherit land upon her husband’s death, with the latter being dependent on whether she bore children with the husband or willingness to remarry the male relations of her deceased husband.[3]
The Sierra Leone Collateral Registry is an initiative of the Bank of Sierra Leone with support from the International Finance Corporation (IFC) to improve access to finance. The Collateral Registry, originally established under Part II of the Borrowers and Lenders Act, 2014, has undergone an overhaul after the enactment of the new Borrowers and Lenders Act 2019.[4] It is a web-based system that allows lenders to search for any registrations relating to prior security interests, as well as perfect and establish the priority for their security interests over movable and immovable assets provided as collateral. The Collateral Registry facilitates the use of movable and immovable property as collateral that may remain in possession or control of the borrowers and thereby improves access to secured finance. The priority among competing security interests is generally established according to the time of registration. However, inconsistent enforceability of credit agreements constrains credit provision. In practice, collateral is mostly employed as a symbolic pledge since it does not provide sufficient protection against credit risk. Financial institutions consistently report constraints to repossession and realisation of collateralised assets.[5] Sierra Leone lacks a modern credit reporting system. The Bank of Sierra Leone operates the Credit Reference Bureau (CRB) manually via an Excel spreadsheet and the establishment of a digital credit registry would help with the digitisation of the underwriting process by credit providers.
[1] The World Bank. International Development Association International Finance Corporation Multilateral Investment Guarantee Agency Country Partnership Framework For Republic Of Sierra Leone For The Period FY21-FY26. https://documents1.worldbank.org/curated/en/851731590804122431/pdf/Sierra-Leone-Country-Partnership-Framework-for-the-Period-FY21-FY26.pdf. (Accessed 24 September 2022). Pg 95.
[2] The World Bank. International Development Association International Finance Corporation Multilateral Investment Guarantee Agency Country Partnership Framework For Republic Of Sierra Leone For The Period FY21-FY26. https://documents1.worldbank.org/curated/en/851731590804122431/pdf/Sierra-Leone-Country-Partnership-Framework-for-the-Period-FY21-FY26.pdf. (Accessed 24 September 2022). Pg 95.
[3] The World Bank. International Development Association International Finance Corporation Multilateral Investment Guarantee Agency Country Partnership Framework For Republic Of Sierra Leone For The Period FY21-FY26. https://documents1.worldbank.org/curated/en/851731590804122431/pdf/Sierra-Leone-Country-Partnership-Framework-for-the-Period-FY21-FY26.pdf. (Accessed 24 September 2022). Pg 95.
[4] Sierra Leone Collateral Registry. https://www.slcr.gov.sl/ (Accessed 4 September 2022).
[5] The World Bank (2022). Sierra Leone Economic Update 2022 : Leveraging SME Financing and Digitization for Inclusive Growth (English) https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099150006152211874/p1779940663f6b09308f080e2eaa3e7e4c2 (Accessed 4 September 2022). Pg 4.
Opportunities
Despite a strong commitment by the government to improve energy capacities, investments and private sector participation in the sector have been limited. Securing affordable risk capital has been identified as a critical challenge, primarily for renewable energy. To this end, the government aims to promote the sector through a number of initiatives, such as developing a comprehensive regulatory framework for mini-grid developers, promoting investments through financial incentives to investors in the renewable industry, and inviting independent foreign power producers.[1] The country has an open legal regime for the entry and establishment of foreign investment. There are no sectoral restrictions on foreign ownership of Sierra Leonean assets or businesses. Another aspect of benefit for foreign investors pertains to the repatriation of profits. Foreign investors are free to transfer funds (profits) from abroad after duly paying their taxes, and this includes dividends paid to a parent company incorporated outside Sierra Leone.[2]
The country needs to complement ongoing domestic revenue mobilisation efforts by deepening ongoing financial sector reforms to support domestic credit market growth.[3] Sierra Leone is on a development trajectory towards achieving middle-income status by 2035. Housing investment offers major investment opportunities that can boost GDP if the Government of Sierra Leone can develop an adequate policy tool to drive foreign and domestic investments in the housing industry in Sierra Leone.
[1] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf (Accessed 4 September 2022).Pg 19.
[2] Intellecap. Promoting A Resilient And Inclusive Private Sector In Fragile Contexts – Sierra Leone (2021).
https://www.intellecap.com/wp-content/uploads/2021/05/Promoting-a-resilient-private-sector-Sierra-Leone-May21-1.pdf. (Accessed 4 September 2022). Pg 67.
[3] The African Development Bank. African Economic Outlook 2021. https://www.afdb.org/en/documents/african-economic-outlook-2021 (Accessed 17 September 2021). Pg. 162.
Availability of Data on Housing Finance
Data on housing finance in Sierra Leone is not easily accessible. The Bank of Sierra Leone provides data on credit and interest rates. However, specific data on mortgage and mortgage rates in the housing sector is not available. Commerce & Mortgage Bank Sierra Leone Limited and FBN Bank Sierra Leone collect data associated with home loan mortgage finance, but this data is not disaggregated and is kept confidential by these financial institutions. Sierra Leone Property Solutions and Global Property Guide record data on properties in the country available for sale, purchase and rent. Sierra Leone Urban Research Centre records data on informal settlements in the country.
Green Applications for Affordable Housing
In Freetown, it is estimated that 66.6% of the population live in one or two rooms and that one in five residents sleep in a room with 10 or more people. 30,000 households depend on unsafe drinking water sources (2022. Homeleone). Approximately only 16% of the population have access to basic sanitation services, while 58% have no access to basic water services (2021. UNICEF). Sierra Leone also struggles with access to necessary infrastructure such as electricity and mostly relies on non-renewable energy resources. Sierra Leone has one of the lowest electricity access rates in the world with the national electrification rate being approximately 26%, and only 6% in rural areas (2021. Sustainable Energy for All). The production and use of energy are concentrated in the household sub-sector, with almost 65% of lighting generated by inefficient, battery-powered torches or lanterns. Fuelwood provides nearly 90%of the domestic energy needs of heating and cooking (2021. Intellecap).
Webistes
ACAPS Sierra Leone www.acaps.org
Trading Economics www.tradingeconomics.com
International Monetary Fund www.imf.org
Bank of Sierra Leone www.bsl.gov.sl
Know Your City www.knowyourcity.info
