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China-Africa Trade Information Service
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China-Africa Trade Information Service
Image: World Atlas
Sierra Leone has abundant natural advantages. It has a strategic location on the Atlantic coast of West Africa, with one of the largest natural ports in the world. The country has 5.4 million hectares of fertile agricultural and forestry land, accounting for almost 75%, but it is still undercultivated. It also seeks to improve the development of its vast stock of fish, which is estimated to produce more than $ 100 million per year.
Rich deposits of a variety of important minerals lie beneath the ground, including iron ore (Sierra Leone is home to one of the world’s largest deposits containing an estimated 12.8 billion tonnes of iron ore reserves), bauxite (of which Sierra Leone has significant reserves, including a reserve at Port Loko of around 100 million tonnes) and rutile (Sierra Leone produced an estimated 120,000 tonnes of contained titanium dioxide in 2014, which accounted for roughly 14 per cent of total world production). Between 2009 and 2012 the value of Sierra Leone's natural resource exports exceeded US$1.2 billion, accounting for approximately 70 per cent of the country's total exports.
Notwithstanding the natural attractions of Sierra Leone as an investment destination, foreign investors will nonetheless need to overcome certain obstacles. The most visible of these is the lack of adequate social and physical infrastructure and historic underfunding in education, health, transport and telecommunications, coupled with the diversion of scarce public resources caused by the civil war of the 1990s.
Opportunities for immediate investment range from Sierra Leone's traditional strengths in mineral resources, to huge, largely untapped opportunities in agriculture and fisheries. There are also opportunities in biofuels and hydro-electricity along with serious potential in offshore oil and gas.
Energy
Sierra Leone needs to boost its power sector, especially to support the growing presence of mining companies. President Koroma has unrelentingly been pushing on the country’s massive electrification plan. He has accordingly has been open to foreign investors entering the energy sector, especially in the development of renewable energy. But it should be noted that the attractiveness of the sector will only hit full force once the government passes laws to bump up tariffs to reflect cost of production.
The GoSL is focused on increasing generation capacity and improving the transmission and distribution of power in the country. This presents numerous opportunities for investment in the sector.To address Sierra Leone’s low levels of installed power generation capacity, the GoSL has identified up to 27 potential hydropower sites, ranging from the US$580 million Yiben project, to smaller projects, including mini-hydro plants below 1 MW. In addition, the potential for solar power is as great as 2200kWh/m, according to the European Commission. Hybrid solar-hydro plants are being considered as a possible solution to managing reduced water levels during Sierra Leone’s dry season.
Natural Resources
Sierra Leone has large deposits of diamonds, gold, copper, nickel and iron ore, among others. Continued exploration efforts are required to assess commercial viability across the country and then to actually commercialize the minerals. Trade partners, including China and India, are hungry for these mining exports as their economies continue to boom.
Production remains below Sierra Leone's potential output and extensive reserves remain under-exploited.
Sierra Leone has made significant efforts to improve the integrity of its mining sector to meet modern standards, complying with the global standards of the Extractive Industries Transparency Initiative.
Discoveries of offshore oil fields by African Petroleum and Anadarko display significant potential. It estimates that oil production could start in 2017. Although the size of oil resources and the financial viability of extraction are not yet clear, estimates range from 500 to 700 million barrels of oil, and preliminary drilling indicates that the oil is of a high quality.
Infrastructure
This is the catch-all sector when discussing Sierra Leone. The government wants to boost rail construction, marine transport, and telecom among other sectors vital to the country's everyday functioning. High fuel prices, relatively lower urbanization, and decrepit transport generally stalls business, particularly in the mining sector. Mobile penetration hovers between 50% and 55% which means there is still a way to go for the country. Tourism facilities, such as parks and entertainment facilities, could help boost GDP if the government can find a way to initiate mutual beneficial public private partnerships with investors. The same can be said for the affordable housing sub-sector and the water supply.
