AGRICULTURE AND FISHERIES
SECTORS IN PERSPECTIVE
Agriculture is the backbone of the Sierra Leonean economy, with the sector accounting for an estimated 60.7% of GDP according to World Bank and OECD national accounts data, and employing around two-thirds of the national labour force.
Notwithstanding this, the sector’s vast potential is still largely untapped. Sierra Leone is endowed with approximately 5.4 million hectares of arable agricultural land, of which almost 75% is available for cultivation. The country boasts fertile soils and its ample rainfall averages roughly 3,800mm per year, making it one of the most humid countries in Africa. This climate supports a broad range of crops including rice, millet, cassava, mangoes and groundnuts, as well as livestock and cash crops, such as coffee, cocoa and palm oil. Crops of bananas, pineapples and sugarcane are also grown.
The GoSL sees agribusiness as a key driver of growth for the country and a critical area of focus for investment. It sees the potential for Sierra Leone to become a global agri-business export hub with tariff-free access to growing international markets. This vision will take advantage of Sierra Leone’s readily available land and sea resources and low domestic land and labour costs to work towards becoming one of Africa’s leading product points for value-added export.
In light of rises in global food prices and competition for arable land, the GoSL has developed the Le 8 trillion National Agricultural Transformation Policy 2019- 2023 (NAT 2023), a strategy that aims to put agriculture at the centre of Sierra Leone’s economic development. The GoSL aims to make Sierra Leone a global investment hub for major agribusiness exporters looking to secure production capacity, and also sees development in this sector as an eventual stepping stone to developing low-cost manufacturing platforms for other key export sectors, through the leveraging of agri-business processing capacity.
While small-scale subsistence farming currently dominates the sector, the GoSL is looking to FDI to boost productivity through mechanised commercial agricultural development and investments across the agriculture value chain. The GoSL aims to increase public funding for agricultural projects to 10% of its budget over the next two years while encouraging additional private sector investment alongside over US$200 million of funding which has been sourced from the World Bank, FAO, EU and other international and regional organisations. A number of commercial agricultural companies have been operating in Sierra Leone producing (or in the process of producing), bio fuels and energy, palm oil, timber, rice, seed sorghum, agri-machinery contracting services, growing and canning pineapples and processing and manufacturing juice concentrates. A number of these commercial enterprises have formed an organisation, CAPPA, whose membership is open to all commercial agri-business and processing companies. CAPPA both represents the interests of its members, to anticipate expectations and to innovate. CAPPA intends to raise awareness of modern commercial agriculture and farming techniques.
Fisheries are one of Sierra Leone’s lesser known sources of untapped wealth. They are a key source of exports and are believed to account for at least 12% of the country’s GDP, as well as providing livelihoods for over 500,000 people through direct and indirect means. This area, along with rice farming and soft commodities, is a central focus in the GoSL’s plans for the development of large-scale commercial agri-businesses, aimed at targeting regional and international demand. As part of this focus, the GoSL is currently reforming the licensing system of fisheries and seeking investors who will turn Sierra Leone into a regional fisheries hub.
LEGAL AND REGULATORY LANDSCAPE
Sierra Leone’s policy and strategic framework for the agriculture sector currently focuses on providing better quality and wider access to inputs and infrastructure, and improving storage and processing facilities to increase productivity, achieve food security and expand exports. The NAT 2023 aims to utilise research, innovation and linkages between local farmers and investors to drive these developments.
Investors should consider a number of areas of policy and regulation that impact the structuring and commercial viability of investments in the agriculture sector. These include land and water rights, environmental regulations, labour laws, local content requirements, and licensing and permitting requirements.
Land
As summarised in the Key Legislation Affecting Business In Sierra Leone section there are two distinct land tenure systems in Sierra Leone. In Freetown and the Western Area, title to land can be bought and sold under a freehold system. Outside of these areas, where much of the country’s agricultural land is situated, only leasehold interests in land can be bought and sold and reversionary title to the land is retained by indigenous communities, represented by local chiefs. Foreign investors are not permitted to own title to land under either system, but can lease land for a term of up to 50 years, renewable for a further 21 years, with land in Freetown and the Western Area limited to a lease of up to 21 years only by virtue of the Non-Citizen (Interest in Land) Act 1966.
For investors unfamiliar with customary tenure-based land systems in Africa, the involvement of local chiefs in the leasing process can be concerning and act as a deterrent to investment. Sierra Leone’s Law Reform Commission has been working on draft legislation to further harmonise the two distinct land tenure systems, facilitate access to land for responsible investment and develop a centralised land title registration system to reduce the prevalence of title disputes. The reforms could also establish new land commissions and committees responsible for the management of land titles to be established at the national, district, chiefdom and village levels. While the GoSL is prepared to assist foreign entities in negotiations with chiefs and landowners, the practicalities can be complex. In certain cases, the GoSL may also take a head lease on provincial lands and grant long sub-leases to agribusiness investors so as to mitigate any perceived risks of privity between customary land owners and foreign investors.
The GoSL is seeking to build on Sierra Leone’s natural strategic advantages by actively considering ways in which land tenure in rural areas can be modernised. In the future, government-owned land in rural areas may be made available for large-scale investment. Land banks to pool land for potential acquisition in order to promote domestic and foreign investment may be established and led by communities. In addition, the MTNDP sets out plans for the establishment of an autonomous National Land Commission to oversee land management and the production of urban development plans to guide the modernisation of Freetown and other major cities.
The leasehold rights of agribusiness investors are protected by the wideranging guarantees against expropriation set out in the IPA. To date, no claims appear to have been brought against the GoSL pursuant to these provisions under the IPA.
Water
Sierra Leone is one of Africa’s most water abundant countries, with total internal renewable water resources of around 25,000 cubic metres per capita per year. As is common in West Africa, in Sierra Leone water is considered a communal resource. Use rights are subject to recognition of the rights of others to the resource, and preservation of the water’s quality. A landholder may claim rights to a stream or other water source on his or her land. There are hurdles with respect to water use in Sierra Leone, as the country lacks a comprehensive legal framework governing its water resources. Notwithstanding the above, ascertaining which relevant permits and consents are required for water extraction poses a challenge to potential investors. The reform process of the water regulatory environment is still ongoing (as referred to in the Infrastructure section) and the establishment of a central body charged with managing the country’s water resources, the National Water Resources Agency. The objective of the Agency is to regulate, utilise, protect, develop, conserve, control and generally manage water resources throughout Sierra Leone. Improvement of the water infrastructure systems is a key focus of the Medium Term National Development Plan to 2023, through which the GoSL aims to increase nationwide water distribution, unbundle the water sector and improve collaboration and cooperation in water management.
Environment
Before initiating any agribusiness and/or fisheries project, investors are required pursuant to the relevant environmental laws to undertake an environmental social and health impact assessment, inform affected communities of the results of the assessment and address any community objection to a project through community consultative meetings and community sensitisation programmes.
The EPA has broad responsibility for ensuring private-sector compliance with environmental regulations in Sierra Leone, including environmental, social and health impact assessment procedures.
Where projects are financed by the international lending community, stricter environmental compliance, such as compliance with the Equator Principles and the IFC Performance Standards, will be required.
Although the primary environmental legislation applicable in Sierra Leone provides the environmental regulator with the power to promulgate regulations in respect of the control of effluent discharge and the release of hazardous and toxic materials, no such regulations have been enacted to date. That being said, the GoSL has expressed its intention to focus on environmental issues and it is hoped that a more robust environmental protection regime should become applicable in Sierra Leone in the near future. The EPA held a workshop in November 2017 on obsolete pesticides and related waste, and is compiling an inventory of the same for 13 agricultural districts in Sierra Leone as a prelude to their potential destruction.
Efforts are being made to combat deforestation through the establishment of a National Programme for Tree Planting and Reforestation, to which the GoSL has allocated initial funding of US$2.4 million in 2019. A procurement exercise is currently being carried out to appoint service providers to implement this programme. A National Timber Governance Agency is expected to be established in the near future to oversee the licensing of timber production and exports alongside the reforestation programme.
Labour
The Agribusiness Trade Council regulates labour relations within the sector. Labour regulation in Sierra Leone is relatively flexible and only certain aspects of working conditions for agricultural workers are regulated by law. For example, the national minimum wage mentioned in the Key Legislation Affecting Business In Sierra Leone section (currently Le 500,000 (c. US$60 per month)) and official daily working hours (currently eight hours) are mandated by the GoSL. Agricultural workers have the right to join a union and enter into CBAs under Sierra Leonean labour laws. In practice, working conditions for agricultural workers are largely governed by such CBAs with their employers. Productivity-based worker payment structures are widely applied and, subject to compliance with salary uplifts, there is no legal prohibition on compulsory overtime (although a full time employee can only work up to 10 supplementary hours a week).
Around 40% of the Sierra Leonean formal sector labour force is unionised (including mainly agricultural workers, mineworkers, and health workers). The National Union of Forestry & Agricultural Workers which forms part of the Sierra Leone Labour Congress (a prominent umbrella organisation of trade unions). Unions have the right to strike under national trade union laws, subject to giving 21 days’ notice to the GoSL. Having said this, there are no protections against discrimination against union members (on any grounds, including involvement in lawful strike action) in the current labour laws of Sierra Leone, and there is a long list of “essential services” in which the right to strike is prohibited or severely restricted.
Local Content Requirements
Sierra Leone has an investor-friendly approach to local participation. 100% foreign ownership is permitted in most sectors of the economy (exceptions, such as the mining sector, have been noted in Investing In Sierra Leone). Although Sierra Leone has adopted a national local content policy, and passed a Local Content Act which created the Local Content Agency, it is seen as necessary to ensure that there is sufficient linkage between the local economy and foreign companies or enterprises. At present, there is insufficient capacity in the local labour market to be able to supply goods and services to business undertakings. With the assistance of development partners such as the UN and DFID, the GoSL is building capacity in the local market.
Under the LCA, agribusiness investors are required to establish and support outgrower schemes for small-holder farmers to build the capacity of small and medium scale agriculture in rural areas in particular. SLIEPA guidance also indicates that agribusiness investors are “expected” to make social contributions to local communities as part of the negotiation of land leases. These may include community capacity building projects, infrastructure development and/or rehabilitation or the payment of royalties). There are no express legal requirements or consequences for a failure to make such contributions.
INVESTOR HIGHLIGHTS
The case for investing in agriculture in Sierra Leone is highly compelling, particularly considering the country’s vast availability of arable land and the GoSL’s strong focus on developing large-scale commercial agri-business. The newly formed National Water Resources Management Agency (NWRMA) has been formed to ensure effective management of Sierra Leone’s water resources and proposes to introduce a charge to agribusinesses for water utilisation. However, the sector also compares favourably against its counterparts in other comparable markets on a number of commercial variables, including labour costs and leasing costs for agricultural land. Resource-related costs are minimal. Despite the opportunity, hunger and malnutrition remain commonplace and it is reported that 80% of basic foodstuffs consumed in Sierra Leone are imported from abroad.
Agriculture is a key strategic growth sector for the GoSL. Increasing agricultural productivity is central to the GoSL’s long term strategic plans for growth and development. This is reflected in the GoSL’s efforts to create an enabling environment for agribusiness investors through numerous sector-specific investment incentives and the availability of wide-ranging investment facilitation assistance from SLIEPA. For example, tax incentives available to certain agribusinesses include a complete exemption from income tax for up to ten years from the time of investment and a 50% exemption from withholding taxes on dividends, as well as a complete exemption from import duties on agricultural inputs such as farm machinery, equipment and agro-chemicals and reduced import duties on other plant, equipment and raw materials. Export licences are required for certain agricultural products and a tax of 2.5% is applied on agricultural exports.
The NAT 2023 aims to double production in four strategic focus produce areas: rice, livestock, cash crops and forestry. The aim is to link large-scale investors with local smallholders to grow local production beyond subsistence farming. Investment is expected in mechanisation and technology, irrigation, input supply and data systems to drive institutional reform and innovation. A programme coordinating unit is being established at the Ministry of Agriculture and Forestry to oversee the implementation of the NAT 2023. The GoSL is looking to attract over US$1 billion of external investment in agriculture in the next five years.Key opportunities for investment include the strategic focus areas of the NAT 2023, as well as soft commodities such as cocoa, cashew nuts, coffee, fruits, timber, palm oil and even tobacco. Investment is being sought in the rehabilitation and expansion of existing plantations and estates, as well as agro-processing. There are plans to establish (tax free) export processing zones in the country, as well as an industrial and economic zone in Lungi. There are also significant opportunities and incentives for investments in the production, processing and marketing of domestically produced rice, Sierra Leone’s staple food, as well as livestock-rearing and slaughter facilities to cater for the increasing demand for meat, both of which are focus areas for the NAT 2023. Observers have commented on the potential benefits of increased irrigation in the country, with only a small fraction of the land physically suitable for irrigation currently so equipped. This is a key focus of the NAT 2023, which aims to implement large-scale irrigation projects over 100,000 hectares, together with improved water management methods. Increased focus on linked areas including research projects, new technologies, improved data systems and infrastructure strengthening is also expected to bring investment opportunities.
Sierra Leone is also emerging as a viable destination for CCS projects, with a number of major deals for carbon capture projects signed in recent years. Forestry and plantation activities in particular provide opportunities for foreign investors to earn credits under the Framework Convention on Climate Change Clean Development Mechanism that can be traded on the global carbon market. A number of further potential sites for CCS-driven investment projects have been identified. Furthermore, the GoSL is developing a strategic vision to make Sierra Leone Africa’s first zero-carbon middle-income economy by 2040 which, if implemented, will result in further opportunities in this area.
There are also opportunities for investment in Sierra Leone’s fisheries. The region is one of the world’s richest fishing grounds. Sierra Leone’s coastline (approximately 500km) and 30,000km2 continental shelf boast a commercially viable stock of fish. The fisheries sector contributes approximately 10% of Sierra Leone’s GDP, and fish constitutes around 80% of animal protein consumed by Sierra Leoneans. Total fish production is increasing year on year, with production more than doubling from roughly 60,000 tonnes to 150,000 tonnes in the past decade or so, but revenue generation is still far below its potential. According to the Ministry of Fisheries and Marine Resources, approximately 80-85% of Sierra Leone’s fish is caught by so-called artisanal fisheries (comprised of smallscale local fishermen) however; it is thought that this figure is declining due to the migration of people from the interior of Sierra Leone to the coastal areas.
A PPP for fish landing centres was signed in 2014. Fisheries are a priority for the GoSL and President Maada Bio has stated that the GoSL hopes to create a profitable fisheries sector that utilises resources in a sustainable manner through the construction of fish harbours with solar-powered cold chain facilities and the rehabilitation of existing landing sites, whilst also conserving the environment. The GoSL has recently signed an MOU with the Chinese Government for the construction of a new fish harbour and a partnership agreement with Iceland for a US$3.2 million project to improve fish smoke ovens, water and sanitation and hygiene, together with data monitoring and law of the sea capacity building. Further improvements in fisheries infrastructure and laboratory capacity are planned.
The Ministry of Fisheries and Marine Resources has also been considering ways to distribute fish products to cold stores in major regional centres. The Ministry has also begun to implement measures such as the suspension of licences for trawlers operating illegally in Sierra Leone. Due to the large volume of fish that each trawler is capable of catching, these suspensions have a huge positive effect on the local artisanal fishermen, who may otherwise see their catches depleted as a result of the illegal industrial trawlers. Changes to the fishing licensing system are also being developed and a fisheries stock assessment is currently being carried out to quantify the total resource so that quotas can be implemented and managed. According to the Tony Blair Institute for Global Change, if the sector is sustainably managed, fish has the potential to become Sierra Leone’s second export after minerals and 50,000 more jobs could be created in the next 5 years.
MANOCAP CASE STUDY
A good example is ManoCap’s investment in Sierra Fishing Company (SFC), Sierra Leone’s largest fish supplier. The investment case for Sierra Leone’s fishing sector is clear: 80 per cent. of Sierra Leone’s protein intake comes from seafood, and the country’s deep-water location provides an ideal platform.
KEY CHALLENGES
Sierra Leone’s agriculture is vulnerable to climatic hazards such as droughts, floods and changing rainfall patterns – threats which are widely expected to increase as a result of climate change. Infrastructure in many areas, and in particular the rural road network and electricity grid, will require sizeable investment in order to create a holistic enabling environment for agribusiness. An estimated 5,000km of road is required to meaningfully improve access to rural areas. In recognition of the problems, the GoSL is seeking, among other things, to improve land and water management and to increase livestock, food crop and cash crop production.
Supplies of fertilisers and pesticides are well below domestic requirements. Fires, which are used as a means of land clearance, can be problematic for those operating in the agriculture sector.
The National Platform for Disaster Risk Reduction and Climate Change Adaptation was created in 2011 and has seven sub-committees which cover fires and pest infestation, as well as a range of other socio-natural and man-made hazards such as mudslides, storms, and transport accidents. The Platform’s mandate includes lobbying the GoSL to commit and respond to disaster risk reduction through, among other things, the implementation of policies, standards and regulations by the relevant MDAs. In addition, vulnerability and capacity assessments are carried out in some key local risk areas with support from various NGOs to understand the nature and level of risks faced by the particular area. As outlined above, environmental impact assessments are systematically conducted for agribusiness and fisheries operations.
Food insecurity is pervasive, with around half of the population believed to lack access to sufficient nutritious food to live a healthy life. Chronic malnutrition remains widespread, with the prevalence of stunting in excess of the World Health Organisation’s ‘high’ threshold (>30). Food insecurity increases during the lean season (June to August). In the past, temporary export bans aimed at avoiding food shortages and price hikes were imposed on widely consumed staple foods such as rice and palm oil.
Sierra Leone is currently lacking a well-structured public sector “agricultural extension service”, which would help investors obtain technical information and manage risks through research and development, training and the use of extension agents to build connections between farmers, the GoSL planners, NGOs and the private sector. The benefits of such services are evident in Ghana’s cocoa industry, for instance.
Export quality controls in Sierra Leone could be improved. Exporters are required to obtain a quality certificate from the Ministry of Agriculture and Forestry, depending on the product.
In common with other West African countries, the principal challenge to the fisheries sector is illegal fishing, estimated to cost Sierra Leone US$29 million annually. Attempts have been made to curb this practice including a fisheries patrol boat and a satellite-based monitoring system, following investment from the World Bank’s West Africa Regional Fisheries Program. Fines are beginning to be more consistently imposed and collected for fishing infractions. The GoSL remains focused on reducing illegal fishing through regional and international cooperation and collaboration.
