Investment Climate Advisory Services (2011). Washington, DC: The World Bank Group.

This report reviews how the World Bank’s Removing Administrative Barriers to Investment program significantly contributed to improving the business and investment climate in post-conflict Sierra Leone, and concludes with recommendations for improving business climates in other developing countries.

In February 2011, IFC Vice-President Thierry Tanoh wrote that “Today, the last UN peacekeeping contingent left Freetown.  Nine years after the end of hostilities, Sierra Leone is finally considered at peace again.  And indeed, the streets of the capital are vibrant.  Hope is visible in the faces of young and old alike.  There is no reason for Sierra Leone to be poor.  It is rich in minerals, including gold, diamonds, and iron ore.  It is a magnificent country with vast uncultivated lands, beautiful beaches and a rare fauna.  While signs of war have mostly faded, it is not hard to imagine how much further along the country could be.”

However, as the World Bank notes, “Sierra Leone’s few post-war investors have battled red tape, risk and underdeveloped resources” (5).  This report reviews how the World Bank Removing Administrative Barriers to Investment program assisted in the construction of a regulatory framework contributing to easier business and investment in post-conflict Sierra Leone.  In 2004, Sierra Leone asked the World Bank Investment Climate Advisory Services to advise it on ways to improve the business climate and stimulate economic growth.  Working in partnership with the UK’s Department for International Development, the 2004-2010 Removing Administrative Barriers to Investment Program was the result.  It aimed to streamline registration processes for new businesses, simplify tax policies, create forums for public-private exchange in areas such as financial sector reform and access to land, and market Sierra Leone as an attractive destination for investment, trade, tourism, and agribusiness.

These initiatives were successful.  The time required to register a business dropped from 26 days in 2004 to 12 days in 2011—less than Spain, South Africa, and the Bahamas.  The number of registered businesses rose from 369 to 861 between 2004 and 2009.  A “one stop shop” was created, with National Revenue Authority and Freetown City Council representatives located at the Business Registration Center in Freetown.  Due to policy streamlining and a taxpayer awareness campaign including text message blasts, radio advertisements, nightclub DJs, religious leaders, city billboards, and town criers, tax collection was also improved by 40%.  Significant room for improvement remains here, however, with only 6,593 taxpayers in the first quarter of 2010.  2010 tax revenues are forecasted to total 12.3% of GDP.  The Removing Administrative Barriers to Investment program also provided technical assistance to the Sierra Leone Investment and Export Promotion Agency created by law in 2007.

The program also advised Sierra Leone’s government in the development of four laws that have significantly improved the ease of doing business in Sierra Leone.  The Companies Act harmonized Sierra Leone with several international standards, the Bankruptcy Act streamlining bankruptcy processes, the Payment Systems Act facilitating electronic payments and conformance with ECOWAS monetary policy, and the Goods and Services Act replacing seven taxes with one.

IFC Resident Representative for Sierra Leone Mary Agboli reports that “The RABI Program got things going…  Through our work with our international and local partners, we have achieved a number of results in key areas, such as business start up, tax and customs reform, tourism and other investment and export promotion, public-private dialogue, and in the general business enabling environment—all in a very difficult environment.  This shows the government’s strong appetite for reform, and also helps lay the groundwork for future reforms” (10).  

Secretary General of the Market Women’s Association and informal sector representative on the board of the Sierra Leone Business Forum Marie Bob-Kandeh discusses the importance of these changes in Sierra Leone.  She reports, “I started out hawking on my head.  I had to leave very early in the morning, and then I would work all day.  It was difficult for businesspeople to develop companies in this country.  Laws prevented investment, even if you worked hard.  Even our own local people were distrusting each other because of bureaucracy.  Then after the 2007 Business Act so many things were amended, like the rule abolishing the payment of advance tax.  Some, like me, have registered since the Act.  My business is my own, that’s why I called it Rehoboth, a Biblical word: it’s my business so it’s my freedom.  Now that I have registered Rehoboth, I have the opportunity to apply for contracts.  I couldn’t do that before” (12).

The World Bank recommends several lessons from its experience in Sierra Leone.  First, start with the quick wins.  They argue that “Particularly in a post-conflict environment, tangible reforms that produce quick and meaningful results will attract support for a wider reform program.  To achieve quick wins and demonstrable results, it is important to move swiftly from analysis and assessment to implementation” (30).  Second, get on the ground.  A team on the ground speeds up reform implementation.  Third, foster good relationships with the government and beneficiaries.  Lobbying is beneficial.  Fourth, assist government capacity and coordination—specifically, across several ministries since it is seldom the case that one has responsibility for implementation.  Fifth, be ready to adapt the project timeline since post-conflict countries often face delays.  Sixth, develop a robust communications strategy communicating program successes.  Seventh, foster donor coordination and partnership.  Eighth, establish monitoring and evaluation as a critical program component from the outset.  Finally, look to peers for best practices.  For example, several Liberian reforms inspired Sierra Leone.