The Commercialisation of Agriculture in Sierra Leone: Options
for the Legal and Regulatory Framework
Beatrice Chaytor
Table of Contents
1
INTRODUCTION
4
1.1
Background
4
1.2
Purpose of the Legal Options Paper
5
2
THE ROLE OF AGRICULTURE IN SIERRA LEONE’S SOCIO-ECONOMY
6
2.1
Government’s Priorities
7
2.2
General Agriculture Policies
7
2.3
Key Issues and Policy Options for the Overall Approach to Agriculture in Sierra Leone
3
POLICY AND LEGAL FRAMEWORK FOR INVESTMENT IN AGRICULTURE
10
11
3.1
Tax Structure
11
3.2
Procedures and Restrictions affecting Agricultural Trade
13
3.3
Investment Policy
15
3.4
Key Issues and Policy Recommendations for Incentives in Agriculture
19
3.5
Access to Finance
19
3.6
Key Issues and Policy Recommendations on Agricultural Finance
26
4
COMPLEMENTARY MEASURES TO SUPPORT INDUSTRIALISATION
27
4.1
Intellectual Property Rights
27
4.2
Competition Policy
28
4.3
Environmental Policies
28
4.4
Agricultural Services
29
4.5
Labour Policies
30
5
STRUCTURES FOR COMMERCIALISING AGRICULTURE
30
5.1
Investment and Export Promotion Agency
30
5.2
Farmer based organisations
31
5.3
Establishment of Producer Companies: Lessons from the Indian Experience
35
2
5.4
Public-Private Partnerships for Investment in Agriculture
35
5.5
Key Issues and Policy Recommendations on Structures for Commercialising Agriculture
35
6
ACCESS TO LAND FOR AGRICULTURAL DEVELOPMENT
36
6.1
Land Tenure
36
6.2
Land Acquisition
37
6.3
State Lands
40
6.4
Registration of Title vs. Registration of Conveyance
41
6.5
Implications of Land Tenure for Commercial Agricultural Development
42
6.6
Key Issues and Policy Options for Access to Land for Agriculture
46
7
REGIONAL AND INTERNATIONAL CONTEXT
47
7.1
The World Trade Organisation
47
7.2
Economic Community of West African States (ECOWAS)
52
7.3
The Economic Partnership Agreement
53
7.4
Key Issues and Policy Options for Sierra Leone’s Agricultural Trade
54
8
POLICY CONCLUSIONS AND RECOMMENDATIONS
55
ANNEX 1:
58
ANNEX 2
61
ANNEX 3: TERMS OF REFERENCE
65
ANNEX 4
67
3
1 INTRODUCTION
1.1 Background
1.
Sierra Leone has abundant natural resources, good rainfall and vast acres of land
suitable for a variety of agricultural products. Yet Sierra Leone has ranked bottom of the
Human Development Index for the past four years and is seen by some of its
development partners as a fragile State, whose legacy of war continues to cast a shadow
over its future.
2.
That said, there are signs that there is growing political will for key sectors of the
economy such as agriculture to play an increasing role in lifting the majority of the
population (and predominantly in rural areas) out of the grinding poverty that has been
their lot for decades. Agriculture is a prominent theme in Sierra Leone’s PRSP and the
Ministry of Agriculture, Forestry and Food Security (MAFFS) has a vision for the further
development of the agricultural sector seeking to make agriculture the “engine for
socio-economic growth in Sierra Leone”. Donor intervention in the sector is increasing
and there are efforts by both NGOs and private sector in cultivation, quality standards,
marketing and export of agricultural commodities. All this bodes well for Sierra Leone’s
agricultural development.
3.
However, since the 1970s, agricultural development has not been pursued in a
comprehensive manner, and the policy and institutional support to it has been
piecemeal. There are a number of initiatives on agriculture; however there is a distinct
lack of an overall coherent policy framework to guide all these initiatives. Some policies
are arbitrary or contradictory as will be shown below. Experiences over access to land
for large scale agricultural development have been inconsistent and fraught with
difficulty. Financing for the private sector, including agriculture enterprises, over the
years has been dwindling and is now costly and short term, or non-existent. Moreover,
Sierra Leone is missing out on some existing opportunities for increased regional and
international trade through lack of compliance with sanitary and other quality standards,
especially in key crops such as cocoa and coffee.
4.
Sierra Leone is now faced with a rapidly globalising world which currently is in the
midst of a major economic crisis. Global value chains dominate international trade
networks, by turn integrating or marginalising economies. All this will require a
complete paradigm shift in the way the country thinks about agriculture, its role in
social and economic progress, and the opportunities for human and technological
advancement. The focus for agriculture in Sierra Leone should be on the development of
productive capacities which generates capital accumulation, technological change,
structural change, employment creation and poverty reduction. This is not the
responsibility of one Ministry alone. It requires a concerted national effort.
4
5.
The Ministry of Agriculture, Forestry and Food Security (MAFFS) with the support
of development partners is designing a National Sustainable Agriculture Development
Plan (NSADP). The Plan is being developed in the context of the Comprehensive Africa
Agriculture Development Programme (CAADP) of the New Partnership for Africa’s
Development (NEPAD). There is general recognition that regional and international
processes may have implications for the country’s agricultural sector, and moreover,
that population growth, environmental and economic factors are likely to have a
significant impact on the growth of the sector in Sierra Leone. Tax and fiscal policy, the
judicial system, financial sector policies, land use planning, tourism development, trade
policy, forestry regulations and science and technology issues all have implications for
the sustainable development of agriculture.
1.2 Purpose of the Legal Options Paper
6.
The GoSL has recognised that past laws and by-laws have impacted on the extent
of investment in agriculture in the country. In the context of the development of the
NSADP, this paper seeks to contribute key policy conclusions and recommendations for
moving the agricultural sector towards a more commercial orientation. The terms of
reference are set out in Annex 3 to the paper. The paper is structured as follows: Section
2 takes a brief look at the role of agriculture in Sierra Leone’s socio-economy, identifying
a broad agricultural policy. In Section 3, the paper reviews the current tax and
investment incentives relating to the agriculture sector. Taking a holistic approach, the
paper considers complementary measures in Section 4 that would be necessary for
commercialising agriculture in Sierra Leone. Section 5 considers the role of institutional
structures such as farmer based organisations in developing the agricultural sector. Land
tenure issues are examined in Section 6 and Section 7 provides perspectives from the
regional and international context. In each substantive section, policy recommendations
are presented as pointers towards the final key policy recommendations set out in
Section 8 which will feed into the NSADP. The paper does not seek to set out a definitive
legal and regulatory framework for agriculture, but presents selected options which may
be considered in the elaboration of such a framework in the NSADP.
5
2 THE ROLE OF AGRICULTURE IN SIERRA LEONE’S SOCIOECONOMY
7.
Agriculture is a key economic sector in Sierra Leone accounting for around 44 per
cent of GDP in 2007.1 During the decade of civil unrest and conflict (1991-2002),
agricultural activities were disrupted throughout Sierra Leone. For decades, despite
fluctuations in output, labour-intensive subsistence agriculture has maintained its
dominant role in the economy. The sector is predominately rain-fed; the main food
crops are rice, cassava, sweet potato, sorghum, millet, and benniseed (small oval seeds
of the sesame plant). Agricultural activity is carried out by nearly two thirds of the
population in mainly small, family farms (with women as the predominant labour force),
which use traditional methods with few inputs and a low degree of mechanisation.2
Farmers depend on the Government and non-governmental organisations (NGOs) for
their supply of seeds; the surface area planted is largely determined by the assistance
capacity of these agencies.
8.
In the past, Sierra Leone was a net exporter of a number of agricultural
commodities including cocoa, coffee, ginger, palm kernels, piassava, rubber, and rice.
Presently, the situation is the reverse, with Sierra Leone a net importer of rice and some
other food crops, and some parts of the country are still dependent on food aid.
9.
However, domestic food production has steadily increased and estimates show
that the share of households with adequate food consumption has increased from 56%
in 2005 to 71% in the 2007.3 The level of rice self-sufficiency in the country increased
from 57.4% to 71% between 2002 and 2007.4 The production of roots and tubers
(mainly cassava and sweet potato) is currently far in excess of the national requirement
for fresh consumption. In general, the production of the country’s major food crops (rice,
cassava, sweet potato and groundnut), livestock (cattle, goat and sheep) and domestic
fish rose from 2002 to 2007.5 In terms of exports, cocoa now has a growing presence in
Sierra Leone’s international trade statistics, due to recent efforts to improve quality and
increase levels of production. The total value of agricultural exports in 2007 was
US$13.67 million, a modest increase from US$ 12.8million in 2006.6 Of this figure, cocoa
accounted for US$ 11.36 million of agricultural export earnings in 2007. However,
agricultural exports fell to US$6.4 million in the first half of 2008 from US$ 8.6 million in
the same period in 2007.
1
Draft Poverty Reduction Strategy, 2008-2012, An Agenda for Economic and Social Empowerment,
Republic of Sierra Leone (‘Sierra Leone Draft PRS’).
2
Normally only manual tools.
3
SL Draft PRS, Section 6ff.
4
Ibid.
5
Sierra Leone PRSP Progress Report, IMF Country Report No 08/250, July 2008.
6
Bank of Sierra Leone Statement of Accounts 2007.
6
10. Sierra Leone’s Diagnostic Trade Integration Study (DTIS) undertaken in 2005-2006
reviewed agriculture, agro-industry and forestry as key themes for the development of
Sierra Leone’s competitiveness and integration into the global trading system.7 It found
that Sierra Leone could once again become competitive in certain agricultural
commodities. Moreover, the DTIS notes that the development of agricultural exports
will be critical in determining the growth of rural livelihoods and moving farming
communities into the market economy.8
2.1 Government’s Priorities
11. The GoSL has signalled that agriculture is now a priority sector for the economy.
This is evidenced through the attention given to it in the second PRSP (PRSP II), where it
is asserted that “economic development and poverty reduction in Sierra Leone will only
be sustained with developments in the agricultural sector”.9 In addition the GoSL’s 2009
budget identifies a prime objective as: “to accelerate economic growth by scaling up
investment in agriculture and infrastructure as well as improving the business climate.”10
Moreover, Le3.4 billion is allocated in the domestic capital budget to support various
agricultural projects.11 In addition, some development partners, notably the African
Development Bank, the Islamic Development Bank, the International Fund for
Agricultural Development, the European Commission and the World Bank are providing
a total of Le37.7 billion, to fund various agricultural projects in support of the GoSL’s
priorities on agricultural development. The priority in agriculture is therefore increased
productivity and competitiveness. The development of the NSADP is a contribution
towards this prime objective.
2.2 General Agriculture Policies
12. According to the PRSP, support to agriculture has been focused on reducing
poverty and food insecurity, which is in accordance with Millennium Development Goal
1. Policies have therefore concentrated on small-holder farmers, and less attention has
been paid to medium and large scale farming.12 Extension services have therefore
targeted improvements in agricultural production from small farms and have not
supported the growth of agro-industry in the country. The Sierra Leone Produce
7
See Sierra Leone: Adding Value through Trade for Poverty Reduction, DTIS, November 2006. Also at
www.mtisl.org/programmemes
8
Sierra Leone DTIS, p. 28.
9
Sierra Leone Draft PRS, p. 50.
10
An Act to Provide for the Services for Sierra Leone for the Financial Year 2009 (GoSL Budget 2009), para.
7.
11
According to the Minister of Finance, the total amount of domestic resources allocated to the
agricultural sector for 2009 is 64 percent higher than the amount allocated in 2008. See GoSL Budget 2009,
para. 18.
12
Sierra Leone Draft PRS, pp 54-55.
7
Marketing Board (though imperfectly operated) was intended to serve a variety of
functions, including research and the provision of services which supported
technological upgrading of export crops. However this institution was dismantled as a
consequence of economic liberalisation and privatisation.
13. Research effort since then has been patchy and has not focused on the needs of
the agro-processing firms, including adaptive research on enhancing variety and
ensuring the availability of fruit, vegetables and other crops all year round. There are no
obvious policies on technology dissemination and technological upgrading for improved
agricultural productivity. Science and technology infrastructure targeted at the
agricultural sector over the years has declined and is fragmented. Public funding for
research institutes, universities and technology policy coordination bodies has
traditionally been low or non-existent. It is worth noting that the GoSL will provide Le2.2
billion to the Sierra Leone Agricultural Research Institute (SLARI) in the present budget,
however, it will take some time for this investment to begin to show results. The
disconnection between public research and development institutes and productive
sectors is a constraint on learning and technological adaptation at the enterprise level.
More research that meets the needs of the agro-processing sector needs to be
conducted, including adaptive research on enhancing variety, and ensuring availability
of fruits and vegetables all year round. The scope of the agriculture extension policy also
needs to be broadened to benefit the agro-processing sector. There is a need for an
inclusive policy action that caters to the needs of the majority of the rural agroprocessing firms. Low value addition capacity in the agricultural sector emphasises the
need for policy support institutions that can help ensure that urban populations get
access to well processed, quality domestic rice, and that quality of export crops will be
increased.
14.
15. The Ministry of Agriculture’s stated vision is to make agriculture the engine of
socio-economic growth and development in Sierra Leone. To do this the Ministry will
focus on a two-pronged approach: on the one hand seeking to promote food security
and poverty alleviation and on the other, private sector development and growth.13 To
this end, the MAFFS has elaborated a number of key interlinking objectives and
aspirations for this goal, including inter alia: enhancing increased agricultural
productivity and production; promoting crop diversification; assisting small-farmers to
get organized for market economy; reducing imports; and promoting sector
infrastructural development such as roads, markets, and post-harvest facilities.
16. In seeking to increase agricultural productivity and diversification, MAFFS will
assist in the widespread use and dissemination of agricultural machinery such as
tractors, power tillers and harvesters; the establishment of supply chains for inputs
13
Synopsis, Vision and Strategy for Agriculture Sector Development in Sierra Leone, Joseph Sam Sesay,
Minister of Agriculture, Presidential Retreat, Bumbuna, 11-13 January 2008.
8
such as fertilizers, pesticides and high yielding seed varieties such as NERICA; the
increase of irrigation facilities to expand cropping cycles year round; the enhancement
of agro processing marketing and distribution; and the encouragement of increased
cultivation of food crops with farmer-based organizations of small-scale farmers and
with medium to large scale farms.
17. Private sector participation in agriculture will be promoted by creating an enabling
environment that is attractive for the private sector to invest in agriculture, including
access to financial services, physical infrastructure such as roads and community
markets, and post harvest storage facilities.
18. In 2004, the Ministry of Trade, in partnership with UNIDO developed a programme
of support to SMEs in order to:


support the post-conflict national reconstruction based on bottom up SME
development strategies for poverty reduction, particularly the increase in food
supply
address the poor capacity of micro, small and medium scale enterprises in Sierra
Leone to manufacture, supply and service appropriate equipment and machinery
for the agricultural and agro-processing sectors, and to generate employment in
the industrial sector
19. The programme developed growth and production centres around the country;
encouraged skills development among micro and small businesses; and facilitated trade
by linking production centres to strategic marketing and distribution depots, and to
export markets abroad.14 Machinery and technology for use and adaptation in local
food industry was designed; and food processing (fruit juices, marmalades, jams,
industrial starch, etc) took place.15
20. In order to further address the issue of availability of equipment and technology
for manufacturing and industry, a Memorandum of Understanding was signed between
the Government of Sierra Leone and the National Research Development Corporation of
India that was designed to transfer technology, machinery and tools for use in: fruit
processing, food products, agro processing, packaging materials, light engineering,
cooling systems, agricultural implements, and utilities. It is unclear what the status of
this project is as well as the status of the growth and production centres.
14
The programme developed 5 growth centres in: Bo (marketing of arts & crafts, gari processing, tin
smithery); Pujehun, Binkolo, Kpandebu; Rotifunk, and a production centre (AMPC) in Freetown.
15
See www.mtisl.org/programmes
9
2.3 Key Issues and Policy Options for the Overall Approach to Agriculture
in Sierra Leone
Issue: The use of agriculture as an engine of Sierra Leone’s growth requires a
comprehensive approach to the entire economic structure of the country, rather
than a piecemeal sectoral approach.
Policy Recommendations:
 A paradigm shift which places the development of productive capacities at the
heart of national agricultural policies to promote economic growth and poverty
reduction. This approach has been promoted by UNCTAD and has been used by
other international institutions including the UN Economic Commission for Latin
America and the Caribbean. 16 This is similar to the Japanese approach to
economic development, which has been so influential in spawning a variety of
East Asian development models.17
 An integrated development model for agriculture focusing on inter-sectoral
dynamics in rural and non-rural activities, which sustain the inter-relationship
between primary, secondary and tertiary agricultural sectors.
 Specifically, measures to support and stimulate simultaneous investments in
agriculture, agro-industry and agricultural services along the value chain of the
promising sectors.
 Promotion of exports, to stimulate upgrading and increased local value-added of
available natural resources.
 Making constant agricultural growth linkages, e.g. development of local food
processing industries through forward linkages from agriculture (development of
manufacturing experience and skills); or increasing demand for local consumer
goods and simple capital goods, stemming from the rising incomes associated
with agricultural productivity growth provides a major stimulus for microenterprises to transform into small firms.
16
See Developing Productive Capacities, The Least Developed Countries Report 2006, UNCTAD; and
Productive Development in Open Economies, ECLAC, 2004.
17
Cases in point include Korea, Singapore, Taiwan, Malaysia and Thailand.
10
3 GENERAL POLICY AND LEGAL FRAMEWORK FOR INVESTMENT
IN AGRICULTURE
21. If agriculture is destined to play a central role in the development of Sierra Leone’s
economy, laws and policy on investment and tax should directly address inward
investment in the agriculture sector. The current tax structure and investment policy
have a direct bearing on the medium and long term investments in the sector.
3.1 Tax Structure
22. Unless taxes are carefully crafted, they may represent distortions that are harmful
to the agricultural sector. The main fiscal instruments for this purpose include the
Income Tax Act 2000,18 the Finance Acts of 2006 and 2007, and Sierra Leone’s tariff
regime which effectively implements the ECOWAS Common External Tariff (CET).
3.1.1 Import Duties
23. Materials directly related to production in most agriculture related sectors face
few import duties. Raw materials, plant and machinery (tractors and appliances,
harvesters, veterinary drugs and implements) may be imported at a duty rate of 5
percent. There is an import duty rate of 20 percent for intermediate and 30 percent for
final goods. The import duty on rice has been lowered from 15 to 10 percent.
24. All commercial imports are subject to an additional ECOWAS levy of 0.5 percent of
the CIF value for imports from non-ECOWAS countries. In addition, a 3% withholding
income tax is levied on most common imports.
25. Pre-shipment inspection (PSI) is applicable to all imports above US$2000 and has
recently been reduced to 1.10% of the FOB value of goods or $225 whichever is higher.
For rice imports, PSI is 0.25% of the FOB value. A special fund has been established
whereby 0.15% of the 1.10% PSI charge is to be put aside and used for enabling the
Customs Department to acquire internet technology and IT systems. Agricultural goods
of tariff heading 1 through 8 are exempted from PSI. Petrol attracts a standard excise
duty of 30 per cent. This cost is an important factor in the costs of all other inputs, as
well as marketing and processing costs.
26. It will be important to determine in which category of import duties, capital goods
fall. At first glance, it seems they would attract a duty rate of 5 percent. However, closer
examination determines that capital goods needed for agriculture probably would be
imported at rates of 20 or 30 percent. Imports of capital goods are the main source of
innovation for many firms in least developed countries (LDCs) like Sierra Leone, and are
18
As amended by the Income Tax Amendment Acts 2004 and 2005.
11
a major source of their technological effort. This is because of the possibility of
technological learning and adaptive innovation by local firms associated with the
technology embedded in those goods (‘reverse engineering’). Evidence from studies by
UNCTAD has found that the composition of capital goods imports by LDCs to a large
extent mirrors changes in their productive structure and trade specialisation as well as
their overall level of technological development. 19 In recognition of the possible
anomalous situation of the tariff treatment of capital goods used in the manufacture of
agro-industrial products, the Minister of Finance has stated in the 2009 budget:
“…we are also aware that certain raw materials for some manufacturing industries are
in the form of finished intermediate or finished products, which can be sold directly to
consumers. As such, over the years, companies whose raw materials fall under this
category have been paying duty rates applicable to intermediate or finished products,
which is higher than the duty rate of 5 percent applicable to raw materials and capital
goods. To ensure fairness and encourage domestic production, where goods are
imported as raw materials and it could be proved that they are being used solely for
that purpose, they would attract the duty rate of 5 percent applicable to raw material
imports”.20 (emphasis added)
3.1.2 Other Taxes
27. All imports incur a sales tax of 15 percent.21 Only baby food, tea, computers,
generators, plants and machinery are exempted from this. There is a domestic sales tax
of 15 percent of the taxable value on domestic output; and exemptions apply only if the
output is exported. However, companies with turnover of less than Le 200 million (US$
6,656) are exempt from paying domestic sales tax on outputs. Instead, such companies
are required to pay sales tax only on imported inputs.
3.1.3 Export Taxes
28.
There are few incentives for exports. These are limited to:
 Duty draw back system for imported inputs for all exports;
 Elimination of export taxes for export oriented industries (with the
exception of cocoa and coffee (Section 3.2);
 Exemption from excise tax for 75 percent of export output22
19
Knowledge, Technological Learning and Innovation for Development, The Least Developed Countries
Report 2007, UNCTAD
20
GoSL 2009 Budget, para. 115.
21
Finance Act 2006, s.5.
22
The excise tax is 30 percent.
12
3.1.4 Income Taxes
29. A corporate tax of 30 percent is payable by all companies; and this would include
agro-processing companies. Income earned from rice and tree crop farming is exempt
from tax for a period of 10 years from the date the activity starts. The threshold for
income tax on employment income is Le 1.25 million, while the top marginal rate of tax
for employees, self-employed and property owners is 30 percent, which applies to most
small-scale farmers. Non-ECOWAS businesses must pay a payroll tax of Le1 million per
head while for ECOWAS citizens attract a charge of Le100,000. The amount of
investment allowance to be deducted from business income is 5 percent on the new
purchase in the first year of operation. Repatriation of after tax profits or dividends is
subject to the payment of withholding tax of 10 percent. Foreign owned businesses may
repatriate not only 100 percent of their profits but are also permitted to repatriate the
original loan or interest payment thereon, know-how fees and other services at the
exchange rate prevailing at the time of repatriation. A capital allowance deduction is
allowed for depreciation of a taxpayer’s depreciable assets.
3.2 Procedures and Restrictions affecting Agricultural Trade
30. In addition to these tariffs and taxes, imports and exports are subject to a number
of port, stevedoring, demurrage and other fees associated with shipping which add to
the cost of doing business for firms. In contrast, Sierra Leone’s nearest neighbours,
Guinea and Liberia operate free ports,23 effectively making Sierra Leone products
uncompetitive. Add to this the costs of transportation, the absence of logistical
infrastructure (storage and warehousing facilities), and the present landscape for
commercial agriculture appears challenging.
31. Most export taxes were eliminated in 1993. However, exports of cocoa and coffee
products remain subject to a levy, currently set at 2.5% of the f.o.b. export value,
payable to the Government via the Ad Hoc Committee on Produce. The Chamber of
Commerce, Industry & Agriculture issues a mandatory certificate of origin and certifies
other export documents against payment of a Le50,000 (US$16.5) fee for exports to
ECOWAS countries and to the EC.24
32. Export restrictions and licensing: Export restrictions are maintained for a variety of
reasons including health, safety, and environmental protection. A special permit issued
by the Ministry of Agriculture is required for the export of plants and charcoal.25 A
phytosanitary/fumigation certificate must be issued by the MAFFS certifying that
shipments of perishable goods meet the relevant international health requirements, or
23
Liberia is an official free port, while Guinea operates a free port de facto.
It may be interesting to explore whether this levy could be applied by the proposed Chamber of
Agriculture with the funds from the levy going to support SLARI’s research on cocoa and coffee.
25
The Agricultural Act (Public Notice No. 66 of 1974) - (cap 185), 12 December 1974; and the Rural Area
Act (Public Notice No. 16 of 1990) - (cap 75), 31 December 1990.
24
13
have been fumigated with the prescribed chemicals under international requirements.
The Ministry charges a fee for fumigating the goods, as well as for issuing the certificate.
33. For some time, the GoSL has maintained a ban on the export of palm oil; recently
it has extended this to include the export of rice. The rationale for this appears to be
short term scarcity of these commodities in the domestic market. However, bans are an
imperfect instrument for rectifying structural market failures, and should always be
temporary where they are unavoidable. Moreover, in this case, it pits the interests of
small rural farmers against those of urban consumers; this undermines one of the
central tenets of the move towards agricultural productivity. In effect, producers are
penalised for increased production.
34. Import restrictions: A special permit, issued by the Ministry of Agriculture is
required for the import of plants, seeds, soil other than sterilized peat and special
rooting compost, and any material mixed with any soil.26
35. Generally, export procedures are rather cumbersome and need to be streamlined
and simplified. Table 1 presents the export procedures for all sectors in Sierra Leone.
Table 1: Export procedures in Sierra Leone
26
1.
The exporter submits sales contract/pro-forma invoice as proof of an export order to
Customs Department.
2.
The exporters fill out Exports Forms C1 and C2. These forms are prepared in seven sets. A
repatriation of export proceeds form, addressed to the exporter's local bank, is also filled
out. The forms are given to the exporter.
3.
The exporter submits both forms C1 and C2 to his local bank. The local bank completes the
repatriation form, signs and stamps it, confirming that export proceeds will be collected by
the bank.
4.
The exporters of agricultural products (cocoa, coffee, piassava, kola nuts, ginger, and
cashews) go to the Sierra Leone Commercial Bank to pay 2.5% of the export value into the
"marketing fund account" of the Ad Hoc Committee on Produce, as required. This amount is
payable in U.S. dollars or in the currency of the pro-forma invoice/sales contract if not
denominated in U.S. dollars.
5.
The exporter armed with all the documents and receipts from steps 1 to 4 proceeds to the
Chamber of Commerce and applies for a mandatory Certificate of Origin which is issued for a
fee of Le 50,000 (US$16.50), only for agricultural products.
6.
The exporter returns to the Custom Department and submits all forms and receipts from
steps 1 to 5.
7.
The Customs Department issues a EUR I Forma to the exporter. Permission is then granted to
the exporter to export his products.
8.
The following institutions/departments are required to witness the stuffing/loading of the
The Agricultural Act (Public Notice No. 66 of 1974) - (cap 185), 12 December 1974.
14
goods into the container(s): (i) customs department; (ii) shipping agency; (iii) produce ad hoc
committee; (iv) produce inspection division; (v) bureau of standards, and. (vi) insurance
company (only for c.i.f. contracts).
9.
a
b
The goods are transferred to the port of loading and loaded on board a ship.
10.
The exporter collects bill of ladingb from ship's master.
11.
The exporter presents all shipping documents to local bank or posts them to the buyer,
depending on the terms of trade.
Form required for exports to the European Communities and ACP Countries.
Bills of lading are usually issued in sets of three originals and three nonnegotiable copies. When goods are carried by air, an air-consignment note will
be issued. Both documents are issued free of charge.
Source:SLEDIC (undated), The Beginners' Guide to Exporting.
3.3 Investment Policy
36. Apart from the specific taxes and charges mentioned above, there is no overall
investment policy for Sierra Leone.
3.3.1 Investment Promotion Act
37. An Investment Promotion Act was enacted and entered into force on August 2004,
replacing the 1969 legislative framework, and other laws.27 The Act is designed to
promote and attract both domestic and foreign investment for production and valueadding activities; to improve export and provide employment opportunities; and
generally to create an environment conducive to private investment and to provide for
other related matters. It is worth noting that the package of incentives which should
accompany the Act and give it effect did not get passed by Parliament.
38. The Investment Promotion Act covers all sectors; the Act opened up for foreign
participation sectors such as mining (including artisanal), manufacturing, transport,
brick-making, and retailing. Additional special provisions relating to investment in
fisheries, mining, banks and other non-bank financial activities, and tourism activities
are contained in sector-specific Acts. The legal framework encourages competition by
ensuring national treatment in virtually all areas for all private and public-sector
investors. As from 1996, there have been no limits on foreign capital participation in
sectors now covered by the Investment Promotion Act. Sierra Leone has provided more
favourable payroll tax rates for investors employing ECOWAS citizens, and fiscal
incentives in agri-processing activities with a requirement for 60% local input or value
added.
27
The Non-Citizens (Trade and Business) Act of 1969.
15
3.3.2 Proposed Incentives
39. The Investment Promotion Act would implement tax incentives as provided for in
the income tax regulations (See Annex 1) mentioned above. Because the package of
incentives has not been passed by Parliament, past tax benefits will remain in place until
the legislation is passed. The proposed list to be annexed to the Investment Promotion
Act is to divide the territory into two zones (Zone A – Western Sierra Leone; and Zone B
all other regions in Sierra Leone). Capital allowance for the reconstruction of the
country, and incentives such as duty and tax exemptions could be increased. Incentives
in the tourism sector may be increased, and an allowance may be created for special
research and training expenses.
40. Investors are guaranteed freedom to do business (choice of suppliers, clients,
provision of services); free entry, residence, movement, and exit of expatriates, and
their families, subject to observance of the rules in force; freedom of management;
freedom to transfer capital, including profits and dividends duly accounted for, and
funds acquired as a result of the transfer or cessation of the enterprise’s activities,
subject to the legislation in force; no expropriation measures28; and the right to
settlement of disputes resulting from interpretation or application of the Act.29
41. As pointed out, the incentives bill developed in 2004 is yet to be enacted. This
situation needs to be addressed. The tax incentives for agri-processing activities
requiring 60% of local input or value added to the product, could potentially be an
important encouragement to manufacturing and agro-processing when coupled with
the low import duties for capital goods for agri-business (now clarified at 5 percent).
Added to the fact that investors in rice farming and tree crop farming pay no corporate
tax for the first 10 years of operation, this could potentially be an attractive package for
investors in large scale commercial agriculture.
42. The 2009 GoSL budget outlines specific concessions to the agriculture sector. For a
start, the definition of qualifying expenditure is to include:
 Plant and machinery used to pursue crop cultivation, animal farming,
aquaculture, and agricultural or pastoral pursuits
28
A guarantee that the State of Sierra Leone will not take any measure to expropriate investments it has
made, subject to special cases for public purposes as laid down in the terms of the National Constitution
and laws. Expropriation measures include either taking over the majority company shares or the
operation of the company. Compensation will be as directed by the International Court for the
Settlement of Investment Disputes (ICSID).
29
If any dispute between an investor and a non governmental party in respect of an enterprise is not
settled amicably, the matter is referred to the relevant legal authority in Sierra Leone for settlement, in
accordance with laws and regulations governing such transactions.
16
 Constructing access roads, bridges, buildings and structural improvements on
land for the purpose of crop cultivation, animal farming, aquaculture, inland
fishing and other agricultural or pastoral pursuits
43. In view of the time lag between start-up and processing activities, integrated
agricultural projects qualify for investment allowance of 60 percent for five years after
expiration of a tax holiday on expenditure incurred for processing operations. 30
Moreover, corporate tax for the first ten years will be zero percent consistent with the
Income Tax Act. Import duty on agricultural input is also zero percent but subject to the
implementation of ECOWAS CET. Payroll tax for non available skills is subject to an
exemption for the first two years of employment subject to an extension to a maximum
of three years. In addition to the incentives available for the agricultural sector, agro
processing enterprises will have reduced import duty on immediate goods at half of the
prevailing rate of 20 per cent. 31
44. These incentives should be built upon and mainstreamed into more long term
approaches for investment in the sector; in particular they should be included in a new
comprehensive package of incentives attached to the Investment Promotion Act 2004.
Without such an approach incentives become arbitrary and uncoordinated, instead of
being structured and targeted. It has been observed that further incentives and tax
deductions may be negotiated with the Ministry of Agriculture. However, such a
situation encourages rent seeking and leaves much discretion in the hands of Ministry
personnel. Moreover, individual incentives negotiated may not be honoured and
implemented by the tax collection agency (NRA). The optimum position would be to
have clear and permanent incentives specifically targeted and set out in legislation or
policy which is on public record and available to all potential investors.
3.3.3 General Business Environment
45. In making decisions about the location of investment, investors consider the entire
business environment and not merely isolated incentives. Thus the focus should be on
the general business environment which will also impact on the development of
commercial agriculture.
46. In Sierra Leone’s Vision 2025, private sector-led growth is singled out as a strategy
that will drive trade and a competitive liberal economy. In the medium term, this
aspiration can only be sustained by the country’s economic performance, which should
generate the resources required to sustain new systems and structures established as
part of specific reform programmes, including the agricultural sector development plan.
Furthermore, it is clear, as is recognised by the PRSP ll, that improved economic
30
31
GOSL 2009 Budget, para 151.
GoSL 2009 Budget, paras. 151-154.
17
performance will be determined by the success or otherwise of the private sector in
generating wealth and associated employment.
47. Impediments to private sector growth have begun to be removed. In 2007, two
new pieces of legislation were passed, the Business Registration Act 2007 and the
General Law (Business Start Up) Amendment Act 2007. The legislation on business startup has reduced the time, number of steps and the costs required to set up new
businesses. The second piece of legislation deals with the merger of work and residence
permits. Under the project to simplify business operations, customs procedures have
been markedly simplified, involving the reduction of documentation, reduction of
duplication, elimination of unnecessary steps, and the introduction of a risk-based
system for customs inspections. At the same time, the advance tax to the National
Revenue Authority (NRA) has been removed, which eliminates the need for businesses
to pay one fourth of their taxable income prior to registering their business.
48. The table below shows the rankings for Sierra Leone and other Mano River Union
countries in the World Bank Doing Business Index. Since 2004, Sierra Leone has made
incremental progress in the DBI rankings.
Table 2: Sierra Leone and MRU countries in the Doing Business Index
Sierra Leone: Doing Business Indicators, 2009 (181 countries)
Mano River Countries
Other than Sierra
Sierra Leone
Guinea
Liberia
Côte d'Ivoire
Leone (average)
Starting a business
Dealing with licenses
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
53
169
163
145
53
160
132
141
145
177
162
157
163
170
168
110
131
109
88
177
172
131
142
59
115
165
146
167
160
139
145
150
148
155
124
68
144
166
156
146
154
125
127
140
108
Overall rank
156
171
157
161
163
Source: World Bank, Doing Business Index, 2009
49. That said, there is a perennial problem with the enforcement of contracts due to
the difficulties with the justice system. Therefore the transaction costs for many
company and commercial undertakings are high. The proposed establishment of a
Commercial Court should contribute towards addressing this problem.
18
3.4 Key Issues and Policy Recommendations for Incentives in Agriculture
Issues: Tax and other economic instruments need to be used as incentives for
catalysing investment in agriculture without creating rent-seeking unproductive
entrepreneurship. The general business environment is a critical factor in the
investment decisions of domestic and foreign investors.
Policy Recommendations:
 With the paradigm shift towards a value chain approach to productive capacities,
investment policies and the tax structure should target each part of the value
chain in agricultural production, agro-processing and agricultural services.
 The incentives package designed to be attached to the Investment Promotion
Act should be revised to be reflect the new incentives outlined in the 2009 GoSL
budget.
 The reforms in the general business climate should be further deepened to
provide a level playing field, certainty and predictability for domestic and foreign
investors.
 Sierra Leone should take advantage of the flexibilities in the WTO Agreement on
Agriculture to provide protection for infant agriculture industry (See Section 7).
3.5 Access to Finance
50. Despite recent reforms in the private sector development area, there nevertheless
remains a missing link. Many studies and surveys point to access to finance and the
associated financial environment as major hindrances to the development of the private
sector.
3.5.1 The Sierra Leone Financial Sector Landscape
51. The Sierra Leone financial sector is relatively small, but with some recent
movement in the number of players, the sector could see substantial growth over the
next few years.32 The banking presence outside Freetown, although growing, is still thin.
Access to rural and agricultural finance has proven to be a challenge for various reasons
including high cost, perceived limited market potential, limited know-how in terms of
agricultural finance, limited access to long-term finance, lack of clarity in rural land
titling making collateralization of land difficult. The nature and characteristics of
agricultural production mean that sustainable and long term funding for its growth and
32
By the end of 2008, Sierra Leone had 16 commercial banks, mainly comprising of new entrants from
Nigeria.
19
development will be required. Many aspects of agricultural production and agroprocessing involve considerable risk. In addition, much of the agricultural production in
the country is in the hands of small holders and SMEs, which are considered too small
and too risky for the types of loans provided by the banks. For this reason, the approach
taken towards financing of agriculture should be long term and comprehensive.
52. However, commercial banks are risk averse and do not routinely lend to small
farmers and SMEs. Indeed high rates on Treasury bills provide no incentive to banks to
lend to the private sector, particularly to those investing in agriculture. In effect, there is
a ‘crowding out’ of the private sector from available financial services. This contributes
to limit the range of financial products available and restrict access to financial services
for agricultural enterprises. High lending rates (of close to 30 percent) discourage
investment despite excess liquidity in the banking system.
3.5.2 Risks in Agricultural Finance
53. Most banks are willing to lend only against certain fixed assets that serve as
collateral or that provide sufficient guarantees. Banks typically require collateral such as
real estate that is easy to sell or liquidate in the event of default. On the other hand, the
collateral that most farmers, processors and traders can offer, such as inventories, may
be difficult to sell, especially where markets are located abroad or the commodities are
not well graded. Even where the borrowers are able to provide collateral, the banks may
impose fixed repayment schedules that do not reflect cash flows and cash flow risks in
agriculture.
54. Credit providers are extremely wary of supplying funds to producers, processors
and exporters in Sierra Leone because they perceive the risk of default as being high. Yet,
the poorer producers, processors and agricultural traders are, the more constrained
they are in their ability to obtain credit and finance. This is because they have little land
and few capital resources to fall back on in the event of emergency. Ironically, their
vulnerability makes them poor credit risks.
55. As a result of these financial constraints, it is difficult to organise production and
processing efficiently. Cash flow is always a problem. The most profitable techniques are
unavailable because the machinery cannot be purchased. This results in lack of
competitiveness, especially in export markets. Exporters are unable to effectively trade
with large buyers and users because they do not have sufficient capital to provide
deferred payment terms on their own account as required by such users. Lack of
investment in processing and storage also leads to high losses and the inability to meet
standards. Without working capital, farmers are forced to sell at harvest time, when
prices are low. Thus it is difficult to break the cycle of poverty since lack of capital leads
to low income which contributes to lack of capital.
20
3.5.3 Sources of Agricultural Finance
56. In the past, a number of financial institutions played a role in rural and agricultural
finance, such as the National Development Bank, the National Cooperative
Development Bank and the Post Office Savings Bank. The National Development Bank
(NDB) owned by government, used to undertake project financing with a credit line
from the African Development Bank, but high costs and a large number of nonperforming loans resulted in severe liquidity problems. The National Cooperative
Development Bank (NCDB), also owned by government, in pre-war years, provided
financial services to a large number of cooperative societies across the country. The
Postal Savings Bank was established in 1990 and its operations mainly comprised of
savings from small depositors, salary accounts for employees of small businesses, and
loans to depositors. However, none of these institutions are viable contenders at the
moment in the provision of financial services for agriculture.
57. Subsidised lines of credit were provided through agricultural projects and the NDB,
often with the support of donors under various integrated rural development projects.
However, default rates were high and the credit schemes were unsustainable without
donor support. This, coupled with the failure of the NDB has had a huge negative effect
on the development of the financial sector in rural areas. Also, a credit guarantee
scheme, used to operate through a Credit Guarantee Fund, which was designed to
encourage the commercial banks to direct part of their portfolio of loanable funds to
small borrowers, especially in the agricultural sector. The objective was to enhance the
supply of credit to priority sectors while providing the participating financial institutions
some guarantee against future losses. The Fund would guarantee 80 per cent of
commercial bank loans to agricultural and agri-business projects. About 61 percent of
the approved loans went to agricultural projects.
58. At the same time, an Export Credit Guarantee Scheme (ECGS) was established,
with the objective of encouraging financial institutions to provide credit to individuals or
groups in the export business, particularly exporters of non-traditional products such as
pineapples, horticultural products, gari and batik. The ECGS guaranteed participating
commercial banks 66 2/3 per cent of any amount in default by the exporter because of
insolvency or protracted default. Although the ECGS was fairly innovative, the
commercial banking community never really gave it wholesome support citing the high
costs of lending small amounts to numerous and widely dispersed enterprises. Valuable
lessons should be learnt from these experiences. The issue of default needs to be
tackled through financial education programmes for farmers and SMEs, as well as
arbitration procedures for the quick recovery of debts in the absence of a strong and
effective justice system. In addition, it is important that the main interlocutors in the
finance system: the commercial banks, become partners in any future credit guarantee
schemes.
Micro-Finance Schemes
21
59. A number of microfinance institutions (MFIs) currently service the rural and low
income markets, providing small loans and credit to traders and farmers. Similarly, selfhelp groups called “Osusus” are formed to provide credit among people with similar
incomes and social status. This grouping is more prevalent among the women of Sierra
Leone. Some Village Savings and Loans (VSL) schemes operated by CARE International
and other NGOs have also proved useful in remote areas. In this way, microfinance
institutions have been most successful in reaching rural areas, with 48% of their
outreach outside of Freetown. However, supply only covers a fraction of demand,33 and
the demand for credit is higher than for savings. Moreover, microfinance is insufficient
to meet SME needs especially for long term loans.
60. The limited interventions to farmers have been achieved only through linkages
with private sector initiatives. As such, in the short term, expansion in rural areas will
need to be closely linked with private and public rural development initiatives. It will be
necessary for financial institutions to be informed of investments and projects in order
to assess how financial services may be offered. Only in this manner, can financial
services support rural economic development.
Community Banks
61. The GoSL has established a number of Community Banks in rural areas to provide
improved access to finance for rural communities, including micro-finance.34 However,
these banks are weak and need substantial restructuring if they are to continue to play a
role in deepening financial services across the country. Some commercial banks, such as
Union Trust Bank, have started forming associations with the Community banks in order
to further leverage their presence in rural areas. This is a welcome development since it
can address the anomalous situation where Community banks and MFIs do not have
enough funding to grow, whilst several commercial banks have excess liquidity due to
their investments in treasury bills. That said, Standard Chartered Bank through a
specialised off-shore team of agricultural lending experts, is appraising loan proposals
for two large agricultural investment projects. It offers loans ranging from $2 million to
$10 million.
NASSIT
62. The National Social Security and Insurance Trust (NASSIT), the national pension
fund, along with general insurance companies could be important potential sources of
medium and long-term capital for agricultural development. So far, NASSIT has
restricted its asset portfolio to investments in government securities and real estate,
although there are indications that the institution is prepared to review the agricultural
situation with a view to investment.
33
6% for loans and 8% for money transfers.
Four banks are in operation, with four more planned to be established. An IFAD supported project
would see the establishment of six more Community Banks.
34
22
3.5.4 Current Initiatives Implicating Agricultural Finance
63. The current draft of the Ministry of Agriculture’s agricultural development
strategy calls for a long-term financing vehicle dedicated to agricultural credit. The
agricultural sector within Sierra Leone is working on a plan to convince commercial
banks to serve agricultural businesses. A proposal has already been made in this respect
by a number of stakeholders for the establishment of a dedicated agricultural finance
bank.35
64. In this respect, the Private Sector Development Strategy Programme (PSDSP) of
the Ministry of Trade and Industry proposes to motivate banks to lend to Micro, Small &
Medium Enterprises (MSMEs) by establishing a pilot partial credit guarantee scheme
that will reduce the risk the banks face in advancing loans to MSMEs. The programme is
to be known as Salone BEST - Salone Business Expansion Scheme Trust.36 Management
of the scheme will be implemented by a designated organisation that will receive
technical assistance from the programme. The reduction in the risk from a loan default
provided by the partial guarantee should result in lending at significantly reduced cost,
i.e. a lower interest rate. Salone BEST guarantee will not exceed 40% of the value of
each loan ensuring that the banks remain committed to the scheme.
65. Salone BEST will provide a partial guarantee against loans made to MSMEs of
between Le3,000,000 (US$ 1,000) and Le30,000,000 (US$ 10,000) from the Participating
Lending Institutions (PLI) for a wide range of business needs, including buying assets and
providing funding for working capital. Ideally, Salone BEST is designed to guarantee two
types of loans:
i) Small loans for working capital purposes up to a duration of 12 months.
ii) Larger loans for investment in fixed capital for a period of up to 3 years.
35
Report of the Agricultural Finance Technical Sub-Committee on Financing Private Investment in
Agriculture.
36
Salone BEST – a pilot loan guarantee scheme targeted at assisting the expansion of micro and small
businesses, Concept Note 12 January 2009
23
Box 1: How will SALONE BEST work?
1. An MSME applies for a loan directly to the PLI. The PLI assesses the loan
applying its standard lending criteria.
2. The PLI assesses the quality and adequacy of collateral, and determines
whether it requires the partial guarantee of Salone BEST.
3. The PLI completes the necessary loan application procedures and presents a
summary of recommended applicants to the Scheme Manager Salone BEST
for a “No Objection” to proceed. The response of the Scheme Manager will
be given by the end of the working day following the day the request for “No
Objection” is received otherwise the PLI may proceed with finalising the loan
application.
4. Salone BEST Scheme Manager issues a guarantee in favour of the PLI for the
loan(s) concerned.
Source: Salone BEST Concept Note, 12 January 2009
66. The Salone BEST Concept Note identifies the key gap in the availability of finance
is between small, NGO funded microfinance and loans provided by the commercial
banks, and declares that it is this gap that Salone BEST is intending to close.37 The
Concept Note further asserts that in order to ensure that Salone BEST is not misapplied
as an umbrella for difficult loans;
 The participating bank will be required to rigorously apply its standard loan
evaluation criteria;
 The borrower need not know that the loan is being partially underwritten under the
scheme and;
 The participating bank will request from the Scheme Manager a “no-objection” to
proceed with all loans awarded under Salone BEST.38
67. The Salone BEST programme has not yet begun operations due to delays with the
establishment of its institutional structure. 39 While the programme is a welcome
addition to a more robust and effective financial services sector, the loans it will
guarantee are small and the programme depends on the active participation of the
commercial banks.40
68. The Ministry of Agriculture manages a $6.3 million IFAD-funded project with the
objective of expanding rural finance, through the establishment of new Community
37
Ibid.
Ibid.
39
The scheme was due to start on 16 March 2009
40
Apparently, EcoBank, Pro-Credit, Rokel Commercial Bank, and Guaranty Trust Bank have already shown
serious interest.
38
24
Banks. In addition, both the MTI and the MAFFS are collaborating on a US$30 million
World Bank-funded rural and private sector development programme that is intended
to:
 Consolidate domestic supply chains for specific crops and products
 Improve rural market infrastructure to address critical infrastructure
needs for select products
 Provide technical assistance and knowledge management in order to
improve access to market information and identification of opportunities
This programme has had some initial teething problems and is to be redesigned to
ensure successful implementation.
69. Presently, reform of the entire financial sector in Sierra Leone is being addressed
through a comprehensive Financial Sector Development Plan (FSDP) coordinated by the
Bank of Sierra Leone.41 The FSDP seeks to address the needs of long term funding for
agricultural finance through, inter alia, the establishment of a private finance
company.42 Sierra Leone’s development partners should be requested to pool their
resources through a basket fund to support the establishment and operation of such a
finance vehicle that would provide long term finance for a variety of sectors including
agriculture. In the short term, the IFAD- funds could be used in this vein.
70. The MAFFS, the MTI, the Ministry of Finance, and the Bank of Sierra Leone should
all work closely together on the solutions to long term finance for agricultural
development in order to avoid duplication and to ensure that resources are used
optimally.
3.5.5 Special consideration for crop insurance
71. Risk in agricultural lending is greater than other types of business lending because
of the potential for systemic risk either due to crop failure or a sudden change in prices
on the international market for export crops. While risk is not the most immediate
constraint in terms of agricultural lending (as cost and long-term funding have been
cited by all financial institutions), it will eventually become a concern as the other
constraints are addressed through innovations, mobile technology and the new
financing vehicle.
72. Weather-based crop insurance and price insurance could eventually be important
tools to encourage agricultural lending through mitigating systemic risk. Such insurance
would need to be re-insured either regionally or internationally. While the demand for
this is not immediate, it will take time to gather the necessary information to
41
See Bank of Sierra Leone, Report of Experts’ Workshop on the Financial Sector Development Plan, 20 th
February 2009.
42
Financial Sector Development Programme, Financial Sector Strategy 2009-2013.
25
appropriately assess risk of crop failure due to weather, such as trends in rainfall and
other indicators. With the onset of climate change, this kind of insurance will become a
crucial part of the puzzle for agricultural finance. If Sierra Leone is to be able to offer
such insurance within the next decade, it will be important to start to gather
information from the outset of the agricultural development plan.
73. Experts estimate that crop insurance is likely to be a long term need, and
particularly important in the future to protect farmers from vulnerabilities, and promote
lending.43 Crop insurance can be indexed to price or weather. Price indexed insurance is
typically offered for export crops, such as coffee which could be affected by drops in the
international prices. Weather indexed insurance covers loss due to poor weather
conditions. More preparation would be needed to monitor and assess rainfall and
weather patterns throughout the country so as to inform the risk level and pricing. All
this presupposes a level of planning and product development prior to launching for sale
on the market.
3.5.6 Leasing
74. In addition to providing cash and equity for agricultural investments, given that
SMEs have little access to long term finance for the purchase of equipment, there is also
a need for companies to lease out machinery and equipment to farmers and other
business people. This provides economies of scale and reduces the need to buy costly
machines. The Other Financial Services Act 2001, as amended 2007, provides for leasing
activities. Such provisions could guide the establishment of private companies in this
business area to provide access to capital equipment for farmers and SMEs.
3.6 Key Issues and Policy Recommendations on Agricultural Finance
Issues: Access to finance for farmers and SMEs is difficult and costly, and many are
unable to provide sufficient collateral for loans. Long term lending for agricultural
development is non-existent. Microfinance solutions are inadequate for the
characteristics of agricultural development.
Policy Recommendations:
 Financing for agriculture must be long term and comprehensive. MAFFS should
work with the Bank of Sierra Leone in the design of the Financial Sector
Development Plan.
43
See Access to Finance and Rural Finance in Sierra Leone, Eileen Miamidian.
26
 A financing vehicle for long term lending to the agricultural sector, such as the
proposed agricultural finance bank, should de established as a matter of urgency.
Such a finance institution should provide subsidised lines of credit for farmers
and smallholders.
 An export credit guarantee scheme should be designed and established in the
medium term to provide support to exporters of traditional and non-traditional
export commodities.
 In the long term, insurance companies should be encouraged to develop
packages of crop insurance for farmers and SMEs in agricultural production.
 Other long term solutions include establishment of credit unions to encourage
savings, provision of trade finance, and development of long term bonds by the
finance institutions.
4 COMPLEMENTARY MEASURES TO SUPPORT
INDUSTRIALISATION
There are a number of policy measures ancillary to the development of productive
capacities in the agricultural sector in Sierra Leone.
4.1 Intellectual Property Rights
75. Despite the fact that SMEs and smallholder producers in Sierra Leone have low
innovative capacity, it is worth exploring the role that intellectual property rights (IPRs)
could play either as a direct incentive for innovation or as an indirect incentive enabling
knowledge generation and spillovers (through various technology transfer mechanisms
such as licensing, imports of equipment or government-firm technology transfer). IPRs
have application not merely in agro-processing but also in plant breeders’ rights; access
to genetic resources for use in cosmetics and pharmaceutical products; and agricultural
research. In other developing countries, IPR strategies are an important part of
industrial policy and commonly include the following types of interventions:
 Provision of access to patent information systems and databases for
researchers and businesses.
 Awareness raising activities on the value and uses of IPRs for universities
and the private sector
 Subsidized IPR registration services for small enterprises to encourage
acquisition of patents and trademarks;
27
 Provision of business advisory services to small enterprises on integration
of IPR management strategies within the business model and marketing
plans (e.g. use of trademarks to support brand development).
76. The Ministry of Trade and Industry has developed an IPR policy and from that, a
few pieces of legislation on patents, copyrights and trademarks have been drafted. It is
imperative that this draft legislation is enacted without delay. Further policy and
legislation will also be needed on protection of plant varieties and plant breeders’ rights,
geographical indications and access to genetic resources. Moreover a specific strategy
to promote innovation and creativity through IPRs systems for agri-business is
warranted.
4.2 Competition Policy
77. Sierra Leone does not yet have a competition policy or regime. Yet, many market
failures such as restrictive business practices or collusion and cartels are symptoms of
the absence of a competition law and institutional framework. To reduce the incidence
of the abuse of dominant positions or other types of monopoly behaviour in agriculture
and to provide protection for smallholders and farmers, legislation on competition
should be enacted.
4.3 Environmental Policies
78. Environmental management is vital for the sustainability of agricultural yields and
productivity. There are a few key areas where Sierra Leone may be vulnerable and
needs to take action.
4.3.1 Climate Change
79. Although Sierra Leone does not suffer from severe weather and natural disasters,
agriculture nevertheless will be affected by climate change in a number of ways, some
of which are direct, while others are more indirect. Direct effects are loss of forest cover,
soil erosion, increasing semi-arid conditions, water scarcity, increased prevalence of
pests and change in weather patterns (such as longer or unpredictable rainy season).
The indirect effects are loss of soil productivity, reduced agricultural land, loss of species,
ecological stress, food insecurity, hunger, malnutrition, exacerbation of income and
economic inequalities, and generally the non-achievement of the Millennium
Development Goals. This scenario means that it is imperative for GoSL to develop a
comprehensive climate change policy which includes mitigation and adaptation
measures, as well as using carbon-off sets and carbon credits to address the looming
climate change crisis. A comprehensive planning policy which includes well developed
warning systems is also critical for the agriculture sector.
28
Issue: Climate Change could negatively affect Sierra Leone’s prospects of using
agriculture as an engine for socio-economic growth, by reducing agricultural
productivity, disrupting land use patterns, and increasing food insecurity.
Policy Recommendation: Develop a comprehensive policy on climate change together
with regulations on use of carbon credits to encourage reforestation and afforestation.
4.3.2 Biodiversity and Forest Resources
80. Sierra Leone is rich in plant and animal life, as well as being well endowed with
diverse natural ecosystems. Agricultural production and other human activities have
increasingly impacted on the natural ecosystems and their biodiversity. With nearly 28
categories of protected areas in representative ecosystems, the area still represents less
than 4 percent of the total land area of the country.44 Most of these protected areas
suffer from inadequate protection in law, due to a number of constraints relating to
human, technical and financial resources. A number of Sierra Leone’s agricultural
commodities are tree crops, which need to be coordinated closely through management
of forests. In addition, Sierra Leone’s agro-biodiversity assets consist of some 70 crop
species, including edible fruit trees, oil palm and other crops with economic value. The
maintenance of biodiversity is therefore specifically linked to agricultural productivity
and diversity. The NSADP should therefore include specific reference to Sierra Leone’s
National Biodiversity Action Plan which has been developed by the Department of
Environment in the Ministry of Lands.
4.4 Agricultural Services
81. In terms of agricultural development, Sierra Leone should not limit itself merely to
products, but also think about agricultural services for which the country could develop
a competitive advantage. The services sector makes a direct and significant contribution
to GDP and job creation, and provides crucial inputs for the rest of the economy, thus
having a significant effect on the overall investment climate in the country, which is an
essential determinant of growth and development. The share of services in Sierra
Leone’s GDP increased from 18.2% in 1995 to 25.1% in 2003.45 During the period 20052007, the services sector contributed a constant average of 40% of GDP.46 The sector
accounts for 5-15% of total employment. Agricultural services such as research or
extension services not only play a role in domestic production, but can be traded. In this
way, export of agricultural services can help Sierra Leone to expand its productivity
outputs in agriculture where it has a comparative advantage, thereby creating jobs,
44
Biodiversity Status and Trends in Sierra Leone, Republic of Sierra Leone and UNDP, 2003
Sierra Leone Trade Policy Review Report, February 2005, Section 2.
46
Sierra Leone PRSP Progress Report, IMF Country Report No 08/250, July 2008.
45
29
contributing more to GDP and generating foreign exchange. Agricultural services exports
could thereby become an important part of the country’s growth strategy.
4.5 Labour Policies
82. The labour force is an important productive resource for Sierra Leone, and a key
challenge in the agricultural sector is to ensure that the labour force is more fully and
productively employed. Most workers in agriculture have to earn their living using their
raw labour with rudimentary tools and equipment, little education and training, and
poor infrastructure. Labour productivity in agriculture is low and there is widespread
under-employment. Creating productive employment opportunities for the expanding
labour force is not only a major economic and social problem; it is also a major
economic opportunity. If the latent energies and enterprise of under-utilised labour are
harnessed, it should be possible not only to reduce poverty but to accelerate economic
growth.
83. The role of technical colleges, universities and other higher learning institutions
are critical in this respect. Their curricula should be aligned as closely as possible with
the main promising commodities in agricultural production and agro-industry. There is
also a role for private companies in the development of skill sets and knowledge
networks; universities and research institutes should form partnerships with private
companies to deliver the skills required in the work force. Moreover policy initiatives are
required in order to translate individual capabilities into organisational capabilities so
that human resources available in the agricultural sector can be harnessed appropriately.
5 STRUCTURES FOR COMMERCIALISING AGRICULTURE
84. In the absence of large-scale private enterprise, or groups of small holders, rural
agriculture has attracted a number of interventions from a variety of players, including
the GoSL, local and international NGOs working with local farmers and small holders,
mainly on subsistence levels. However, in the commercialisation of agriculture there is
no substitute for private companies and it is imperative to explore the role of other
players in this respect.
5.1 Investment and Export Promotion Agency
85. The former Sierra Leone Export Development and Investment Corporation
(SLEDIC) has been restructured and formed into a new institution called the Sierra Leone
Investment and Export Promotion Agency (SLIEPA). The functions of SLIEPA are (a) to
encourage and promote the development of agricultural production and other activities
oriented towards export; (b) to encourage the diversification of export goods; (c) to
encourage and promote investment opportunities in all sectors of Sierra Leone’s
30
economy; and (d) to facilitate the export oriented operations of small scale producers
and manufacturers. SLIEPA is also responsible for implementing the provisions of the
Investment Promotion Act 2004; therefore it has a crucial role to play in the efforts to
place agriculture in Sierra Leone on a more commercial footing.
86. For instance, in export development, SLIEPA could assist agricultural companies
with market entry and penetration where there is already market access, e.g. EBA (EU)
and AGOA (US); identification of new markets for existing products, e.g. China, South
Africa, Brazil; and the development of new products for both traditional and new export
markets. SLIEPA’s list of priority sectors for investment in Sierra Leone include
agriculture – both cultivation and agro-processing which includes food and beverages,
cocoa and coffee, fruit canning, commercial cotton, fertiliser production and processing
of edible oils, such as palm oil.47 In this regard, SLIEPA should work closely with MAFFS
and the MTI to develop investment and export development packages in agriculture
that would be attractive to domestic and foreign investors in the short and medium
term.
5.2 Farmer based organisations
87. The need for farmer groups, as business units, co-operatives, or similar structures,
as the only way to consolidate volume and work to improve quality of products is now
acknowledged. Usually, farmers or other individuals who share common interests
organise themselves into organisations; they are known as Community or Farmer Based
Organisations (CBOs/FBOs). They represent the interests of their members and are
usually accountable to them. Most of their activities are rural-based and they cooperate
with the GoSL or MAFFS to stimulate rural employment, raise incomes and improve
living standards. To date, these groupings have taken two forms – informal and formal.
5.2.1 Informal Farmer-based Organisations
88. These are “social organisations with an economic purpose which are not
registered as business entities with the government, and therefore not registered as
bodies corporate before the law”. Informal groups play an important role in facilitating
training, education, and accessing credit from NGOs and donor funded programmes.
These groups are effective at supporting their members’ self-employment activities
through mutual aid, and access to development assistance programmes. Most rural
development agencies work closely with these informal groups for training and
technology transfer, and to facilitate credit for farming, trade and food processing
activities. 48
47
See an Investors Guide to Sierra Leone, September 2004, SLEDIC
For further information on these groups, see Agriculture Sector Review and Agricultural Development
Strategy Vol 1, Ministry of Agriculture, Forestry and Food Security, in collaboration with FAO, IFAD, UNDP
and World Bank, TCP/RAF/2904, (‘MAFFS Agriculture Sector Review’) section 2.2ff.
48
31
5.2.2 Formal Farmer Based Organisations
89. Farmers in Sierra Leone have recently been organised into formal farmers
associations, limited liability companies, and cooperatives.49 The farmers’ associations
offer a good potential for reaching the farmers in the rural areas since they are fairly
representative of their farming communities. They are well placed to support the
mobilisation of village groups to access needed inputs and services in the farming
communities.
90. FBOs are membership organisations created by farmers (or other groups) to
provide services to them, with objectives that include:
(i)
(ii)
(iii)
Expansion of access and better management of natural resources - the basic
means of production (i.e. access to land, forest, pastures and water
resources).
Improved access to services, credit and marketing outlets, processing, by
leveraging them as a result of their representative and advocacy activities, or
their financial clout.
Making their voices heard on decision-making processes in which resource
allocations are determined, as well as policies that affect the context in
which they produce, market, transform, and export their products. In larger
numbers, farmers gain bargaining power and can have a more effective input
in decision-making processes that affect their lives.
5.2.3 National Federation of Farmers of Sierra Leone (NAFFSL)
91. Farmers in Sierra Leone have formally organised themselves into local farmers’
associations or co-operatives to facilitate their cooperation in crop production,
processing and marketing activities as well as all other operations associated with fish
and livestock. The National Federation of Farmers of Sierra Leone (NaFFSL) is an
umbrella organisation of “approved” farmer based organisations in Sierra Leone.50
NAFFSL is intended “to function as an apex body of the approved FBOs to defend
members’ morale (sic) and material interest at grass-root level (villages, chiefdoms,
wards, district, and national) and International level by development actions,
constructive dialogue, lobbying, advocacy and experience sharing to meaningfully
engage farming as a business.”51
92. Traditionally, farmers associations such as the National Association of Farmers in
Sierra Leone have worked very closely with technocrats mainly in the Ministry of
49
The Cooperative Societies Act 1977 is in need of review and amendment in order to assist with
restructuring the Cooperative societies in Sierra Leone.
50
Article 1.3, NAFFSL Constitution. These include the National Farmers Association of Sierra Leone;
National Farmers Cooperative Union- Sierra Leone; Agricultural Business Units/Farmer Field Schools;
District Women’s Farmers Cooperatives
51
Article 1.4, NAFFSL Constitution.
32
Agriculture, the Co-operative Department, NGOs, agricultural research institutions etc,
offering agricultural extension and other delivery services to them. The establishment
of NAFFSL is likely to have a positive impact on this relationship, with a stronger voice
for the farmers’ organisations. The stated vision of NAFFSL is “to be an umbrella farmers’
organisation of Sierra Leone, a framework of reference, of dialogue and coordination,
sharing vision and action, which offers better services and security to the members and
which influences the policies and strategies as regards sustainable rural development at
all levels.” NAFFSL will take a keen interest in commercial agriculture as outlined in its
Box 2: Aims and Objectives of the NAFFSL
Article 2: The Federation shall concern itself with all matters affecting all farmers in
Sierra Leone through the approved FBOs and shall act accordingly with respect
therefore as may be considered expedient to:
2.1 Act as private sector to play a key role in the Nation’s agricultural development
processes.
2.2 Ensure that committed grass-root farmers are identified, and organised into legal
FBOs and empowered to work as a Federation for the good of all its members.
2.3 Promote and defend the value of competitive and sustainable agriculture
practices which shall be at the disposal of peasant farmers and agricultural
producers.
2.4 Support and supervise the consultation and structuring of peasant farmers and
agricultural producers.
2.5 Favour dialogue and cooperation between Federation and Government and
foreign organizations.
2.6 Inform and confirm the members of the approved FBOs.
2.7 Establish subsidiary agro-companies / industry and enter into joint venture
partnership with bilateral and multilateral organisations for the purpose of
carrying on the business of the Federation.
2.8 Promote National HIV/AIDS/STDs and other farmers’ health awareness and
preventive measures through effective sensitization programme.
2.9 Promote, maintain peace, unity and cooperation amongst members with similar
aspirations.
2.10 Do any other business deemed necessary as approved by the Federation.
objectives (See Box 2).
Farmer Field Schools
93. Farmer Field Schools (FFS) are schools where the fields and the village
environment provide the learning places in which adult education methods are applied.
Originally developed in Asia for promoting the uptake of Integrated Pest Management
33
system in rice farming, FFS are now being used in many developing countries to
empower farmers’ groups to acquire, adapt and act upon knowledge on many other
aspects of farming and rural life relevant to their particular needs.52 Originally FFS were
facilitated by government extension staff but in recent years the trend has been to
encourage and train farmers to become facilitators, with the government services and
NGOs offering training, referral and monitoring services. Farmer Field Schools have been
set up by different NGOs in various communities throughout the country, offering
technical training, access to inputs and markets for crops, with varying degrees of
success.
CORAD/LINKS Programme
94. The Consortium for Rehabilitation and Development (CORAD) which has been
working together since mid-2003 is currently implementing two programmes supported
by a US Cash Grant and a Title II Grant to restore agricultural-based livelihoods, improve
food security and build community resiliency.53
95. Building on the successes and lessons learned from a previous Title II programme,
CORAD is in its third year of implementing a 3 year USAID funded “Promoting Linkages
for Livelihood Security and Economic Development” (LINKS) Programme to expand
economic activities in rural communities and to re-establish agricultural input and
output marketing linkages between these communities and the mezzo and national
level market players.
96. The Livelihood Expansion for Asset Development (LEAD), the current Title II
programme, is specifically designed to add value to the LINKS programme by building on
the foundations established by a previous Title II programme the Developmental Relief
Programme (DRP) in the rural areas in the agriculture and health sectors with new
activities that leverage impact; specifically target and enable poor farmers and
economically marginalized youth to undertake new or expanded livelihood activities;
expand community resiliency with improved linkages to health services, community
water and sanitation, agricultural infrastructure and community-managed safety nets
and to empower community-based groups to practice and promote principles of good
governance.
97. In its effort to build community resilience and ensure a market led development
process CORAD has been using the FFS as a vehicle for development in the
implementation of both the LINKS and LEAD programmes.
52
Agricultural Sector Review, pp
Assessment of CORAD Farmer Field Schools in Sierra Leone, July 2008, Enterprise Development
Solutions.
53
34
5.3 Establishment of Producer Companies: Lessons from the Indian
Experience
98. The success of the FFS and other farmer organisations is hampered by the
uncertainty over their status in law. As mentioned above, they are not bodies corporate.
They are therefore unprotected by the law, limiting access to finance as well as their
ability to engage in formal commercial activities. Current policies make it difficult to
formally register farmers groups as anything but cooperatives or associations. When
there are large numbers of individuals in an organisation, complications might exist in
incorporating a company limited by shares.
99. The experience of farmer based enterprises in India is instructive. The Indian
Companies Act 1956, as amended by the Act of 2003, makes provision for a separate
legal entity called Producer companies. These are mainly farmer based organisations,
which are given legal status to operate as commercial entities. Producer companies are
therefore bodies corporate. In the same way, in Sierra Leone, FFS and other informal
FBOs could be constituted as Producer companies under the new draft Companies Act.
Although the Companies Act is largely fully drafted, an amendment may be made to it
and submitted to Parliament at the same time as the main Act, through a Notice of
Amendment. Annex 1 provides an outline of the main provisions that could be
incorporated into the Companies Act (as amended). In order to move this forward
without delay, the Minister of Agriculture could table a Cabinet Paper on this, with a
proposal for the drafting of the relevant sections to be attached as an amendment to
the Companies Act.
5.4 Public-Private Partnerships for Investment in Agriculture
100. There is now a general trend towards public-private partnerships in agriculture.
This may be developed between public research institutes and agro-processing and
other agricultural firms, or in the case where clustering is fostered, between
government provision of physical infrastructure such as warehouses and storage
facilities (on the one hand) and groups of small firms (on the other). Public-private
partnerships could also take the form of cooperation between government and large
firms in state plantation farming linked to factory production of agro-processed foods.
5.5 Key Issues and Policy Recommendations on Structures for
Commercialising Agriculture
35
Issues: The major actors in agriculture development are donors or the government
rather than the private sector, and the latter’s participation needs to be urgently
increased at all levels: small, medium and large scale. The network of small farmers
could be an effective vehicle for modernising agriculture in Sierra Leone and needs
further definition and support to enable improved production and exports of quality
agricultural products.
Policy Recommendations
 The new SLIEPA should collaborate with the MAFFS and the MTI to produce
selected investment and export development packages to attract domestic and
foreign investors to agriculture.
 Public-private partnerships in agriculture, particularly on infrastructure and
research, should be encouraged through the use of fiscal and other instruments.
 A new type of company called ‘Producer Company’ (specific to agriculture and
similar fields) should be established through an amendment to the pending
Companies Act, which should be drafted without delay. In this respect, the
Minister of Agriculture should present a Cabinet Paper on this issue at the next
available Cabinet meeting.
 The Cooperative Societies Act 1977 should be reviewed and redrafted in
accordance with the modern functions and roles of cooperative societies.
6 ACCESS TO LAND FOR AGRICULTURAL DEVELOPMENT
6.1 Land Tenure
101. Sierra Leone has a land mass of which 850,000 hectares is arable; land in the
provinces excluding the Western Area makes up over 90% of that land mass. However,
land tenure in Sierra Leone is characterised by a dual ownership structure. The Western
Area including the Freetown Peninsula is governed by an English system of land
ownership which includes fee simple conveyances, mortgages and leases. Freetown and
its environs was a Crown Colony. History shows that this area was bought by the British
from King Naimbana in 1788 for the benefit of the free community of settlers, their
heirs and successors (the Krios). The Krios settled in these areas and acquired ownership
and possession of the purchased area. This was a large area and it follows that the areas
unoccupied and uncultivated became or remained Crown land. Thus, land in these areas
36
is either owned by individual families or is Crown land. Communally owned land does
not exist in the Western Area.54
102. Land in the rest of the country (i.e. the majority of the agricultural land) is held in
communal ownership under customary tenure and is controlled by traditional rulers
who administer it on behalf of their communities in accordance with customary
principles and usage. Though there are minor differences among the various ethnic
communities, the general trend is that land is considered a divine heritage, which the
sprits of the departed ancestors expect to be preserved and handed down to future
generations. 55
The responsibility to ensure the preservation of the land and
subsequent enjoyment by future generations therefore rests on the community as a
whole. A community is, however, not a very well defined entity. It could range from a
small family to an entire tribe. The absolute interest in land vests in families. In other
words, it is the land-owning family, which deals in its land.56 The paramount chief is
regarded as the custodian of the land on behalf of the entire Chiefdom but decisions
regarding the land are the preserve of heads of the various land owning families. One
very important consequence of the fact that the absolute interest in land is vested in the
family is that it invests every member of the family with an inherent right to the
occupation and use of any part of the family land. In areas where shifting cultivation is
practiced for instance, except where the individual family member cultivates perennial
crops, the land available for farming is shared by the family head at the beginning of
each farming season to all family members.
103. In terms of access to land for commercial use generally, the problem with the
customary land law system in the Provinces is -:
1.
2.
3.
4.
5.
Identifying what the custom is
Ascertaining who to talk to: whether it is paramount Chief, council of chiefs
or family members
Securing all the consents
Assessing what actually has been transferred in terms of land area, etc.
The absence of enforceable legal documents to back up a purchase or grant.
6.2 Land Acquisition
104. Due to the differences in legal status, the practice of otaining land also differs
between the Western Area and the Provinces. Nevertheless, land may be acquired for
any purpose by private individuals or corporate bodies. Rather, it is the process which
may be a deterrent to serious investment. In Freetown and its environs, because the
land is held in freehold ownership, a person seeking to acquire land will negotiate with
54
Maurice Garber, Whose Land is it Anyway? Garber and Co, Freetown. 2007.
See MAFFS Agriculture Sector Review, p. 138ff.
56
Ibid.
55
37
the landowner to reach agreement on a sale (usually of the freehold) at a specific price
based on the size, quantity and location of the land. Once agreement is reached, the
land is then surveyed. The site plan is taken through the Validation Process in the
Ministry of Lands. After the Validation Process, a solicitor draws up a deed of
conveyance, which is then registered in the Deeds Registry at the Office of the
Administrator and Registrar-General (OARG).57
105. While Sierra Leoneans can acquire fee simple title in the Western Area, non Sierra
Leoneans can only acquire leaseholds. The Non-citizens (Interests in Land) Act, 1966
(No. 30 of 1966) introduces limitations on the interests foreigners may acquire in land in
the Western Area. Section 3 of the Act prohibits a non-citizen of Sierra Leone from
acquiring a freehold interest in land in the Western Area. Non-citizens are also barred
from acquiring interests longer than twenty-one years in land in the Western Area
without first obtaining a licence from a Board comprising the Minister of Lands (as
Chairman), the Ministers of Trade and Industry, Finance, Development, and the
Attorney-General. In this way, the law acts as a disincentive to investors in urban
development and effectively infringes the rights of land owners in Freetown to deal in
their lands.
106. In the Provinces, there are two basic processes involving town lands and farmland
though there are some minor differences among the various tribal areas. Differences
also exist among family members and strangers. Where an individual family member
requires land for farming, s/he will approach his/her family head at the beginning of the
farming season and will be allocated a piece of land for his/her use. However, it is
unclear whether the proceeds of the harvest from his/her labour are exclusive or to be
shared with the family.
107. For “strangers” which include non-family members who are nationals of Sierra
Leone58 and foreigners generally, the procedure involves the person requiring the land
to call on the Paramount Chief to make the request for land; they will usually do this in
the company of a citizen of the community. The Paramount Chief then directs them to
the land-owning family whose land they require. All negotiations are done with the
family head and the principal elders; the Paramount Chief is not expected to be
present.59 The required monies are paid to the family head.
108. Where the land required is for the cultivation of annual crops, usually no money is
paid but at the end of each farming season the farmer must give some token produce of
the farm to the family head; this is usually the equivalent of a bushel or two of rice and
the purpose is to remind the farmer that he is a tenant of the family. The family head
then gives the Paramount Chief part of the money received.60 However, the interest
57
See section 6.4 for a discussion about the pitfalls of the registration of conveyances.
But not the Krios, Kroos or Akus. See section below.
59
However, the usual practice is that the Paramount Chief plays an important role in the land transaction.
60
See MAFFS Agriculture Sector Review, p. 141ff.
58
38
conveyed in this transaction is not clear. The grantee of such land can occupy and use
the land for as long as they wish to remain in the community. In addition they must be a
worthy member of the community, participating in all activities and generally be on
good terms with the Paramount Chief and the land-owning family. In effect, despite the
appearance of a clear process of acquisition, much discretion about the status of the
land still rests with the family and the Chief. Such a situation does not provide the
certainty and predictability which is required for large commercial investments.
109. In some cases, the families grant leaseholds. In such situations, the procedure is
the same as described above except that after the payment of the money to the landowning family, a surveyor is employed to demarcate the land and prepare a site plan.
This goes through the validation process and is signed by the grantor and the grantee,
the Paramount Chief, the Survey and Lands Division in the Ministry of Lands and
Housing, and the Town Council. In addition, a deed of conveyance is prepared by a
solicitor and may sometimes be registered in the Deeds Registry. No freehold interests
can be granted in farmlands. The laws governing acquisition of land in the Provinces
date back to Colonial times and are clearly discriminatory.61 Section 3(1) of Cap. 122
states “No land in the provinces shall be occupied by a non-native unless he has first
obtained the consent of the tribal authority to his occupation of such land”. Section 4
states “No Non-native shall acquire a greater interest in land in the provinces than a
tenancy for a term of fifty years . . . for a second or further term not exceeding twentyone years.”
110. Some Sierra Leonean citizens, such as the Krios, Akus and Kroos are categorized as
non-natives by the above statute and are thus deprived of customary land rights even in
the provinces. The two provisions should be repealed without further delay. In effect,
the impact of the two sections is to discourage any serious investor from investing in the
Provinces. Leases are inherently terminable, and an investor who has invested time,
effort and money is potentially vulnerable where the investment is tied to a short term
lease. Issues of litigation and enforcement of contractual provisions against Tribal
Authorities are problematic as is the proper forum for such actions.
111. The multiplicity of interested parties when dealing with large tracts of land in the
provinces is also a particularly thorny issue frequently encountered by mining
companies. Even the government is sometimes frustrated in its attempt to acquire large
tracts of land for development purposes. This is compounded by the lack of proper
documentation confirming ownership and possession when dealing with family owned
property. In Nigeria, the Land Use Decree 1978 was passed which vested all land in the
Nigerian government subject to certificate of occupancies being granted to purchasers
and grantees. This Act to a large extent resolved the problem of inalienable customary
land and opened up all land to title ownership and development throughout Nigeria.
61
Such antiquated laws, designed in colonial times to divide and rule, cause resentment and undermine
social cohesion in the country.
39
6.3 State Lands
112. Can the fragility of the land tenure system in the Provinces be mitigated by the
intervention of the GoSL, by buying up large tracts of land to make available to large
scale investors? The situation is unclear. There are two types of State lands in the
country: Crown Lands (in the Western Area) and Government Reservations (in the
Provinces). Crown Lands comprise lands which have been acquired “for the service of
the Colony” under the Public Lands Ordinance, 1898 (Cap 116), and lands which were
“claimed as Crown Lands” under the Unoccupied Lands Ordinance, 1911 (Cap 117). The
Crown Lands Ordinance, 1960 (No. 19 of 1960) specifically defines Crown Lands as: “all
lands which belong to the Crown by virtue of any treaty, cession, convention or
agreement, and all lands which have been or may hereafter be acquired by or on behalf
of the Crown, for any public purpose or otherwise howsoever and land acquired under
the provisions of the Public Lands Ordinance and includes all shores, beaches, lagoons,
creeks, rivers, estuaries and other places and waters whatsoever belonging to, acquired
by, or which may be lawfully disposed of by or on behalf of the Crown.”
113. Under the Public Lands Ordinance, 1898 the government can acquire any land in
the public interest simply by publishing a declaration in the Gazette and informing the
owners of the land accordingly. The Ordinance also provides for the payment of
compensation to those affected by the declaration. Such lands are taken over by the
State and are managed and controlled by the State.62 Though the Ordinance does not
expressly state this, its provisions demonstrate clearly that the Ordinance does not
apply to the Provinces.
114. The Unoccupied Lands (Ascertainment of Title) Ordinance, 1911 (Cap 117) states
that whenever it appears to the government that any land is unoccupied for upwards of
12 years, the government can declare such land to be Crown Land and proceed to
control and manage such lands as public lands. There is evidence that this provision may
be misunderstood by some village headmen and chiefs in the Western Peninsula who
are assigning land through conveyances and leases to unsuspecting buyers. Until there is
a proper devolution of authority to the Local Council from Central Government to
distribute crown land on behalf of the state, these grants and conveyances of vacant
land are of no legal effect.63 Admittedly with a prolonged period of occupation, (12
years) land can be acquired by prescription. However, it is doubtful if prescription rights
can be acquired over Crown land and against the government; rights of prescription
normally inure to the benefit of the individual and are not an unincorporated entity.64
From a practical point of view also, should such documents prove to have no legal effect,
62
This usually happens in the case of construction of a road or other physical infrastructure, or in the case
of a mining development.
63
Legal Opinion from Maurice Garber, Garber and Co, 2008.
64
Maurice Garber, Whose Land is it Anyway. p. 4.
40
this sends a powerful negative signal to potential investors about the process and
validity of conveyances in Sierra Leone.
115. Government Reservations are lands leased from traditional authorities. Section 9
of the Concessions Ordinance, 1931 (Cap 121), empowers Government to acquire
interests in land of any size for periods longer than 99 years. It is unclear whether, but
unlikely that, this includes freehold interests given that the system does not allow
transfer of land through freehold. Lands acquired in this way are referred to as
Government Reservations. Such lands were usually reserved as residential quarters for
government employees, offices for the machinery of government, forest reserves, etc.
6.4 Registration of Title vs. Registration of Conveyance
116. Notwithstanding a formal system of land ownership in the Western Area, many
families inherited property without properly documenting their lineal transfer of
ownership. The problem was compounded by a failure of successive governments to
introduce and implement a system of land registration of title. In the case of Seymour
Wilson v Musa Abess, (1979) the late Chief Justice, Livesey Luke commented about this
problem which was causing a plethora of land lawsuits. He stated “In my opinion,
registration of an instrument under the Act confers priority over other instruments
affecting the same land which are registered later. Registration of an instrument under
the Act does not confer on the purchaser, mortgagee etc. title nor does it render the title
of the purchaser indefeasible.” In other words, although each land owner has their own
conveyance, the fact that it is registered does not denote good title.
117. To compound the problem, land surveys are usually plotted using beacons which
are unfortunately removable. In the absence of a digitally drawn G.P.S. mapping, many
owners are unable to track the exact coordinates of their land once the beacons have
been removed. In some cases, neither the GoSL nor the public are truly aware of who
owns what land and neither side has the requisite title instrument to back up their claim
to ownership. Presumably, the government relies on its assertion that the land is Crown
land and shifts the onus to the private individual to show that the land in question is not
state land but private land. The law however is that he who claims ownership must
prove it. Unfortunately, Sierra Leoneans do not have a culture of taking the government
to court so where they occur, many of these claims of state land ownership are not
challenged. Those that have proof spend years in court, effort and money trying to claim
what is rightfully theirs.
41
6.5 Implications of Land Tenure for Commercial Agricultural
Development
118. The existing land tenure system is just adequate for the kind of small-scale
subsistence agriculture currently prevalent in the country. However, where Sierra Leone
is competing with other countries in the sub-region and worldwide for foreign direct
investment, the land situation bears closer scrutiny and review to ensure that land is put
to productive use for the benefit of the current and future generations of farmers and
businesses in the country.
119. Hernando de Soto, a Peruvian economist estimated that the value of rural land
ploughed or grazed by African farmers, which they did not formally own; or owned but
had no formal title was worth over $30 billion dollars. Customary or informal land
ownership effectively undermines the ability of rural communities to make their lands
productive. Babashola Chinsman in his book “Uncommon Thinking” referring to the
situation in Sierra Leone, explains “The most crippling effect of poverty stems not from
the inadequacy of incomes, but from a lack of assets”65 He goes on to explain: “Even
the land on which most of them live or depend for their livelihood, is often not secured
by proper title, leaving them without any assets”.66 The irony is that the prime asset
which many rural communities have, which is land, remains locked in a system of
ownership which leaves them effectively poor, i.e. without assets. This explains the
urgency of many Sierra Leoneans to buy up land in the Western Area which has a formal
system of land ownership.
6.5.1 Security of Title
120. The freehold system has obvious advantages, which may assist in agricultural
development. In the first place, the freehold interest provides its owner security from
dispossession – an overriding advantage over the communal system of ownership.
Freehold confers ownership and not mere use-rights. Moreover, one can transfer the
freehold interest without any hindrance, either inter vivos or by testamentary
disposition. It is therefore inheritable and ensures security and sustenance to the
landowner’s survivors. Acquisition of interests in the Provinces does not confer any of
these advantages. It has been acknowledged that even where land has been lawfully
acquired from traditional authorities, the beneficiaries could be dispossessed for a
number of reasons including (a) if they challenged the interest of their landlords, (b) if a
new chief was installed who considers the grantee a threat or an enemy for whatever
reason, and (c) if at some future date the community felt it needed its land. It is unclear
whether the interest acquired from the communal owners is registrable67 and capable
of being inherited.
65
Babashola Chinsman, Uncommon Thinking, p.17.
Ibid, p. 23.
67
There have been some instances of registration of leases on Provincial lands, but this is not common.
66
42
121. For large-scale commercial farming, it appears that there already exists some
movement towards formal arrangements under which farmers acquire longer term
leases on land. This is permitted in accordance with the Concessions Ordinance, 1931
(Cap 121). Section 5 of the Ordinance provides for Tribal Authorities to alienate land for
cultivation only under the Ordinance or under the Protectorate Land Ordinance, 1927
(Cap 122) except that all alienations made under Cap 121 should receive the assent of
the Governor.68 Section 9 of the Ordinance limits the interest that could be alienated by
the Tribal Authority in land larger than 50 acres to 99 years except where the land is
alienated to the GoSL for a public purpose. In many cases, these leases have been
arranged informally between the farmer and the family head and only a few have
formally been registered in the Deeds Registry.
122. One simple way, in the short term, to provide security of title to land in the
provinces would be to recognise and routinely register leasehold interests.69 These are
different from mere leases (whether short or long term) currently used in Sierra Leone,
which are sort of tenancy agreements. A leasehold interest on the other hand is a legal
interest in land, which lasts for a number of years, entitles the holder to quiet
possession of the land and which can be passed on to one’s successors after death. The
lease could be for either bare land (ground lease) or developed land (occupational lease)
and it is a condition in all leases that the leaseholder pays a rent to the landlord.
123. In the case of a ground lease, the rent reserved in the lease is a ground rent, which
is usually minimal and does not reflect the true value of the land. This is because, as is
the case in all leases, on the expiry of the lease, the leaseholder must surrender the land
and all fixtures on it to the landlord. For the purposes of agricultural development, the
fixtures may be in the form of structures or economic trees cultivated by the
leaseholder. The landlord and the leaseholder may also agree to some conditions
(covenants), which may be inserted in the leasehold document to guide their relations.70
In the case of Sierra Leone’s agricultural development, the optimum approach would be
to provide leasehold interests in land for terms of 50, 75 and 99 years, in order to
provide security of title and investment.
6.5.2 Access to Credit
124. Secure title makes assets fungible, so the absence of formal documents of title
precludes loans and financing from banks. Also, banks cannot provide farm credit based
on the current system of land holding because they do not consider the existing system
provides sufficient security on which farm credit could be advanced. The individual’s
68
Nowadays, this would probably be the President.
Leasehold interests are used in many Commonwealth countries, including the United Kingdom which
has routinely used them to provide access to land absent of the freehold. Should the freehold interest be
available, it is then the subject of sale through a routine property transaction.
70
MAFFS Agriculture Sector Review, p. 145.
69
43
usufructuary estate does not provide the needed security, because the individual cannot
mortgage the land on which s/he works without the consent of the family head and
even where s/he can obtain the consent, the financial institution cannot sell the land to
a third party who is not a member of the family should the farmer default in payment.
Where there are good property laws, almost anyone can use a house or a piece of land
as collateral to raise a loan. The key issue here is the transformation of land into a
useful economic asset. However, given that the issue of land tenure is a politically
sensitive one, care must be taken in crafting alternatives to the present system in the
Provinces.
125. As noted above, a simple solution would be the recognition in law of leasehold
interests in land in Sierra Leone. One of the advantages of the leasehold interest is that
it is a valuable asset which may be bought, sold or inherited. It is acceptable by banks
and other financial institutions as collateral for credit. Because it is a legal relationship
recognised by the law and enforceable by the courts, it provides the leaseholder with
sufficient security to enable them to plan their agricultural investments. A major
advantage to the lessor is the fact that while the leasehold interest generates periodic
incomes to them, at the end of the lease the land and everything on it reverts to them.
They can then occupy the land themselves or lease it to another tenant.
126. Another similar approach to the transformation of land into economic assets can
be found in Tanzania, where a solution to this particular problem was found, which may
be instructive for Sierra Leone. In Tanzania, the underlying system of communally
owned land has been kept intact. An additional system has been superimposed on top
of the communal system; a system of user rights which are tradable and capable of
being mortgaged. After a mapping exercise to determine what land was lying
unproductive, the government of Tanzania re-classified certain land in order to establish
a system of user rights. Such user rights are transferred to individuals and firms on
payment of a land grant or fee, usually a one-off payment. Under the terms of the right,
a particular user has rights similar to that of an owner. The land is transferable and can
be leased and mortgaged, and may be inherited. The title to the user right is registered
in a permanent Register of Title as would be the case with a freehold interest. Sierra
Leone could consider adopting this system of user rights both to provide security of title
to farmers and to provide a way for their rights over land to be more collateralised, and
therefore capable of being put to productive use.
6.5.3 Security of Investments
127. During the Agriculture Sector Review process, it was found that the traditional
landowners in the Provinces indicated a willingness to accept the leasehold interest as a
basis of alienating land to investors while at the same time securing the interests of
unborn generations. However, they found difficulty with the duration of the leaseholds.
Some of the traditional landowners preferred shorter leasehold periods of up to 25
44
years while others accepted that the duration should be long enough to enable the
investor to recoup their investment.71 A minimum fifty-year duration would certainly
be adequate since it would give sufficient time for investors to realise their investments
in perennial crops. It is necessary, however, that adequate safeguards are built into the
system to secure the interests of both the lessor and the lessee. The following clauses,
among others, could be considered for insertion into the leasehold agreements:
 renewal of the lease for appropriate periods;
 adequate rents (either ground rents or economic rents)
 periodic rent reviews
 a specific period of the lease beyond which, if the land is not put to the
required use, the lessor may re-enter and resume possession of the land;
 lessees would not be able to assign, sublet, mortgage or otherwise part
with possession of the land without the consent, in writing, of the
lessors,72 such consent not to be unreasonably withheld.
128. Other issues that would require further examination in the case of leasehold
interests include the nature of the legal relationships that should be created. For
example, should ground rents be charged, such that at the end of the lease, the land
and all its fixtures would revert to the landlord? Or should economic rents be charged
with the result that at the end of the lease either the leaseholder removes all fixtures on
the land or the landlord pays them for such fixtures if they so desire? The latter was the
relationship envisaged under Section 11 of the Protectorate Land Ordinance, 1927 (Cap
122).
6.5.4 Promoting Joint Venture Partnerships in Agriculture
129. One of the easiest ways to open up agricultural land to more commercial
investment would be to consider promoting joint ventures in agricultural development.
The Investment Promotion Act 2004 permits 100 per cent foreign ownership of
companies. Yet at the same time, in a contradictory measure, foreigners cannot buy
land in the Western Area, and the land tenure system in the Provinces is an uncertain
minefield in terms of investment. This undermines a fundamental goal of the GoSL: to
promote private sector investment in the country.
130. For many foreign or Diaspora businesses seeking to establish business in Sierra
Leone, a joint venture with a local company would be the most feasible way to establish.
Such companies would want to invest in some sort of fixed assets, such as land or
buildings. A rationale for a Sierra Leonean partner to enter into such joint ventures
would be to obtain capital for further investment in the business or farm. Making the
land fungible (i.e. an asset convertible to cash), in the ways suggested above, would
enable the land to be put up by the Sierra Leonean partner/farmer as a contribution to
71
72
See MAFFS Agriculture Sector Review, p. 140
To prevent speculation by land speculators. See Agriculture Sector Review, p. 142ff.
45
the joint venture. This land component of the joint venture could be extremely valuable,
enabling a major stake in the joint venture company for the Sierra Leone partner
(farmer).
6.6 Key Issues and Policy Options for Access to Land for Agriculture
Issues: The uncertainties inherent in the land tenure system militate against the
productive use of land, particularly for agricultural use. Titles to land in Sierra Leone
represented through conveyances, are uncertain, and require proper registration.
Farmers and other landholders in the Provinces are unable to use their land for
collateral thus their access to credit and finance is limited. Security of investments in
land for agricultural use also requires improvement.
Policy Recommendations:
 Establish central G.P.S based mapping of not only the Freetown Peninsula
area but also the Provinces, including Crown land and Government
reservations, in order to determine the status of the available land for
cultivation and development. This will enable centralised planning which will
ensure the smooth introduction of utility lines, access roads, pipes, drainage
etc to assist in the transformation of idle land into structured economic
assets.
 Immediately establish an additional system of property interests in land in
Sierra Leone known as leasehold, and give it legal status through enactment
of legislation.
 Repeal the law prohibiting ownership of land in Sierra Leone by foreigners
subject to a residual oversight by government where large tracts of land are
being bought by non-Sierra Leoneans.
 Once the State Lands have been mapped, establish a system of user rights
over this type of land. Establish a registration system for user rights which
enables them to be tracked and monitored.
 Establish land regulations with clear rights and responsibilities of
communities and traditional leaders regarding their role in the process or
land acquisition, including zoning, community preservation areas for
watersheds, spiritual or ecologically sensitive areas.
46
 Immediately implement a system of ‘Title Registration’ based on the GPS
mapping for freehold and leasehold title to property in Sierra Leone. Once a
landowner’s title is duly registered, s/he would be conclusively regarded as
the true owner of the property interest.
 Establish a mechanism, such as a Lands Tribunal or Lands Arbitration Board
that will adjudicate initially the claims of competing land ownership and
enforce land agreements/contracts, subject to a right of appeal to the courts.
7 REGIONAL AND INTERNATIONAL CONTEXT
131. There are a number of regional and international developments which have
implications for Sierra Leone’s agricultural sector.
7.1 The World Trade Organisation
132. Sierra Leone’s membership of the World Trade Organisation (WTO) presents both
opportunities and challenges. That said, Sierra Leone may be able to exploit the Doha
Round to its advantage, by first focusing on where it could have comparative advantage
which could be turned into a competitive advantage in agricultural products. Sierra
Leone could use the Doha Round to gain better access to foreign markets, not merely in
the developed countries but also in the fast growing markets of large developing
countries, such as China, India, South Africa and Brazil. Although some of these markets
are heavily protected through tariff and non-tariff barriers, China for instance has
provided Sierra Leone with fairly comprehensive market access through a trade
agreement. Some of the other larger developing countries could be persuaded to do the
same thing. The WTO Hong Kong Declaration of December 2005 calls on all developed
countries (and those developing countries in a position to do so) to extend duty and
quota free market access to least developed countries.
133. Sierra Leone already has preferential access to its current main overseas trading
partners. The EU offers duty free and quota free access to all products under its
Everything but Arms (EBA) initiative, for an indefinite period. For its part, the US
operates the African Growth and Opportunity Act (AGOA) which offers duty free access
for most but not all products, until 2015.73 These schemes however, have not been as
effectively used by Sierra Leone; its main agricultural exports are cocoa and coffee, and
to some extent ginger, which already qualify for duty free access. Therefore Sierra Leone
should be exploring the export of other products which may be eligible under these
schemes. Sierra Leone should concentrate on the promotion of exports of new products,
73
The Chinese agreement is basically similar to the AGOA, with a list of mostly finished goods which Sierra
Leone does not currently produce.
47
particularly agro-industrial products in order to make the shift to a more diverse export
base.
Box 3: Sierra Leone in the WTO
As a small least developed country (LDC) within the WTO, Sierra Leone is
marginalised in international trade. Due to logistical and financial constraints, it does
not participate effectively either in the routine work of the committees and other
bodies of the WTO or in the multilateral trade negotiations of the present Doha
Round. Agriculture is under negotiation through a review of the Agreement on
Agriculture. LDCs like Sierra Leone are not required to make any commitments in the
negotiations. Instead, developed countries and developing countries must make tariff
cuts based on an agreed formula. For Sierra Leone’s purposes, the most important
issue to follow in the negotiations is the combination of domestic support (which
lead to the huge exportable surpluses) and export competition, i.e. subsidies and
credits, to farmers in developed countries. Export subsidies/credits distort markets
and affect the terms of competition between producers in various countries.
Developed countries are required to cut all export subsidies, trimming both the value
of support given and the quantity of subsidised exports. Another issue for Sierra
Leone’s consideration is the use of the flexibilities in the Agreement on Agriculture
for its own advantage. In particular, Sierra Leone should make use of the provision on
special safeguards to provide protection for infant industry and fledgling agricultural
enterprises.
134. At the same time, the opportunities for Sierra Leone for major exports under
these schemes are undermined by restrictive rules of origin. The basic rule of origin
under AGOA requires that 35% of the price of the product be due to activities in Sierra
Leone or other AGOA beneficiaries.74 This precludes the export of finished products
derived from processing inputs imported from non-AGOA countries, and there is limited
scope for sourcing competitive inputs domestically or even regionally. A relatively high
74
AGOA authorizes the US President to provide duty-free treatment under GSP for any article, after a
determination that the article is not import sensitive when imported from African countries. On
December 21, 2000, dutyfree treatment under GSP was extended to AGOA eligible countries for more
than 1,800 tariff line items in addition to the standard GSP list of approximately 4,600 items available to
non-AGOA GSP beneficiary countries. The additional GSP line items which include such previously
excluded items as footwear, luggage, handbags, watches, and flatware were implemented after an
extensive process of public comment and review. Sub-Saharan African beneficiary countries are also
exempted from competitive need limitations which cap the GSP benefits available to beneficiaries in
other regions.
48
value added requirement makes it particularly difficult for countries with low labour
costs such as Sierra Leone.
135. Sierra Leone should push (in alliance with other countries) for non-restrictive rules
of origin to apply (as in the case of apparel under AGOA), which allows it to use third
country inputs in the making of finished products from Sierra Leone (cumulation). This
would also help with developing and sustaining value addition in agriculture. For
instance, a 10% value added rule or regional cumulation would make a significant
different to making effective the market access granted under AGOA and EBA. This
coupled with the 60% local content rule in Sierra Leone’s package of incentives would
help to promote investment in agro-industry.
136. Sierra Leone should therefore take a strategic approach towards international
trade and its membership of the WTO. Effectively, Sierra Leone should use the WTO as a
component of its export strategy for agricultural products and services. In the first place,
it should decide which agricultural products (both traditional and non-traditional) it will
seek to develop its competitive advantage. It should then identify which WTO
Agreements and provisions affect its market access in such products. Where negotiation
is on-going on such provisions, it should seek to influence the negotiations in order to
increase market access in the markets of both traditional and new trading partners. In
other areas such as SPS and rules of origin, Sierra Leone should take a bilateral and
diplomatic approach to resolving market access issues with trading partners, particularly
where interpretation of provisions and flexibility are concerned. In effect, Sierra Leone
should seek to use international trade to support capital accumulation, technological
change, structural change, employment creation, and poverty reduction. In other words,
not just maximise trade but maximise the beneficial effects of trade.
137. The optimum situation would be for Sierra Leone to establish a presence
(permanent mission) in Geneva to defend the country’s interests on trade policy issues.
However, given that these negotiations are extremely time consuming and that Sierra
Leone, with other competing priorities, may have a limited ability in the short term to
influence the outcome of negotiations in its favour, it would do well to associate itself
with the decisions and concerns of regional groupings in the WTO, such as the African
Caribbean and Pacific (ACP) group, the African group, and the least developed country
(LDC) group, in order to defend its interests.
7.1.1 Compliance with Sanitary and Phyto-Sanitary Measures
138. One of the most important issues in development of agricultural trade is sanitary
and phytosanitary (SPS) standards. Sierra Leone has only limited and isolated capacity to
manage food safety, agricultural health and environmental risks. Thus, market access for
many of Sierra Leone’s agricultural products is eroded due to weak SPS standards and
poor quality assurance systems. Cases in point are cocoa and fisheries products.
49
However a distinction should be made between quality issues and SPS measures. A
product may not necessarily face any mandatory SPS standards, but may still be subject
to quality issues in the importing country. This is the case for cocoa, which has been
discounted in European markets on the basis of quality. On the other hand, a product
may be of sufficient quality, yet has to comply with strict SPS standards set by the
importing country. This is the case for fish from Sierra Leone, for which specific
mechanisms must be set up to prove compliance with SPS standards established by the
EU. It should be noted that according to the WTO Agreement on Sanitary and Phytosanitary (SPS) Measures, a country can maintain higher SPS standards than international
standards. This is the EU’s justification for its high SPS standards on food generally.75
139. At the same time, distinctions should be made between standards set by public
and private institutions. International trade in agricultural products is increasingly
affected by the establishment and maintenance of privately run standard setting bodies.
This is the case for many organic products. Many of these standards are driven by the
market based on consumer preferences and tastes. They are typically higher than the
official standards, and involve rather burdensome and costly procedures for compliance.
For instance, compliance would involve up-front investment in infrastructure,
equipment, management systems, and human capital. They also typically include certain
recurrent costs such as inspection and testing. Although government run standards are
subject to the rules of non-discrimination in the WTO,76 privately run standards are not,
yet they may have a greater impact on market access for Sierra Leone’s agricultural
products than the standards officially set by governments.
140. The bedrock of Sierra Leone’s agricultural export development should be
compliance with SPS standards and quality requirements. Yet, Sierra Leone has no law
on SPS or other food safety standards. Under the Standards and Trade Development
Facility, a six agency initiative hosted by the WTO, a project proposal has been discussed
which seeks to develop the institutional structures and the regulatory framework for
compliance with SPS standards in Sierra Leone. This process is being led by the Sierra
Leone Standards Bureau. As a matter of urgency, Sierra Leone should seek funding for
the implementation of this programme, with a priority on the drafting of legislation on
SPS systems and management.
7.1.2 Sierra Leone Standards Bureau
141. Sierra Leone has rather rudimentary institutional capacity for management of
standards. The Sierra Leone Standards Bureau (SLSB) is the coordinating body for all
75
The EU maintains very high SPS standards on all food products (usually known as the ‘farm to fork’
policy) in which it requires the traceability of the food all along the value chain.
76
According to the Agreement on Sanitary and Phytosanitary Measures, an SPS measure should not
arbitrarily or unjustifiably discriminate between countries where the same or similar conditions prevail.
Neither should the measure be applied in a manner which would constitute a disguised restriction on
international trade. SPS Agreement, Article 2.
50
standards issues in the country. However, many public and private institutions should be
involved in the setting and enforcement of standards. The SLSB, under the supervision
of the Ministry of Trade and Industry, develops and adopts standards, is responsible for
inspection of goods and provides testing and quality control services. Although its
current efforts are focused on consumer protection, since its mandate is to ensure the
safety of food consumed in Sierra Leone, the SLSB (in collaboration with MAFFS) should
quickly turn its attention to the standards of goods exported from Sierra Leone. In such
case, the challenge for Sierra Leone would be to facilitate the emergence of standards
infrastructure in the medium term which supports export diversification into new,
higher value-added products where standards are critical to market access.77
142. As a WTO member, through the development of legislation and institutional
structures, Sierra Leone should therefore seek to comply with both the SPS and TBT
Agreements. One of the requirements of the agreements is for the establishment of
both TBT and SPS enquiry points.78 The SLSB has been nominated as the TBT and SPS
enquiry point for Sierra Leone. However, an effective notification and enquiry point
requires trained staff and the technical and logistical resources to undertake interagency and inter-ministerial contacts and coordination and the necessary flow of
information. SLSB will need technical assistance to obtain the necessary training and to
establish the required systems and internal lines of communication needed for the
notification and enquiry roles for both the TBT and the SPS to be effectively undertaken.
In the medium term, the SLSB in conjunction with MAFFS and SLIEPA should establish an
information centre for Sierra Leonean agricultural exports regarding information on
standards in overseas markets.
143. The SLSB does not have its own laboratory. Generally in Sierra Leone, laboratory
capacity is weak. As part of the development of SPS infrastructure, Sierra Leone should
build capacity in testing services. Here the SLSB should separate its consumer protection
role from that of trade and export facilitation. Exporters of new products will require
internationally recognised conformity assessment services for testing, inspection and
certification. Conformity assessment procedures can be developed for specific products
or sub-sectors. Sierra Leone should approach its development partners to explore the
development of a laboratory, possibly based in the University of Sierra Leone which
already has some basic infrastructure but no equipment. The benefit of a University
based lab is that it can also be used to improve teaching through practical lab
experience. An increase in the number of scientists with practical experience would be
of relevance to firms in the longer term which could develop their own testing capacities
and to private labs that would emerge as the economy develops and diversifies. 79
77
SL DTIS, p. 114.
Sierra Leone Trade Policy Review Report, February 2005.
79
SL DTIS, p. 115.
78
51
7.2 Economic Community of West African States (ECOWAS)
144. Sierra Leone, as a founding member of the Economic Community of West African
States (ECOWAS) has embraced regional integration. It was the first member outside of
the West African Economic and Monetary Union (WAEMU) to adopt the Common
External Tariff (CET), which is based on the WAEMU tariff. Sierra Leone is gradually
aligning its tariff lines with those under the CET. Once fully implemented, the average
tariff will fall from 16.9% to 13.3%. With the adoption of five bands of tariff rates (0% to
30%),80 Sierra Leone is achieving an important improvement in the levels and simplicity
of its tariff structure.
145. While member states should implement the CET in full, each country has the
option to identify a few products for which they can change the tariff rate currently
assigned under the CET. Sierra Leone has proposed one change: on the tariff for rice,
wishing to raise it from 15% to 18%. This is an acknowledgement of the sensitivity of rice
as a staple and the implications for increased competition under the EPA.
146. With the CET now taking over the ECOWAS trade liberalisation scheme (ETLS) as
West Africa moves towards a customs union, the aim is to deepen intra-regional trade.
However, the experience on the implementation of the CET among West African
countries is patchy, mainly due to concerns over loss of customs revenue. Thus, trade in
primary products is still not free in the sub-region. Various countries place unofficial
barriers on trade usually for food security reasons. Indeed concern is often expressed in
Sierra Leone over the prevalence of cross-border trade in some food products,
especially rice and palm oil, the export of which has recently been reinstated. Not only is
this inconsistent with intra-regional trade, it is contrary to the expressed aspirations of
government policy to promote private sector development. Cross border trade (to
Guinea or Liberia) usually means better prices for Sierra Leonean farmers and hence
higher incomes. It may also mean greater incentives for them to expand production or
to add value to agricultural products.
7.2.1 ECOWAP
147. ECOWAS Heads of State and Government adopted a new Vision 2020 in June 2007
and instructed the ECOWAS Commission to produce a Community Development
Programme to buttress this vision which is the transition from a Community of ECOWAS
states to ECOWAS people. The ECOWAS Commission has adopted a common regional
80
The initial CET framework had four bands: 0%, 5%, 10% and 20%. The recent change to five bands has
come about through further discussion in ECOWAS on the implications of the EPA and the identification of
sensitive products. Nigeria has successfully negotiated an additional band of 35% to which it applies all
sensitive products.
52
agricultural policy (ECOWAP) with an action plan for implementation.81 The ECOWAP
vision is “a modern and sustainable agriculture based on effective and efficient family
farms and the promotion of agricultural enterprises through the involvement of the
private sector”. The three major themes of the regional agricultural policy are:
 Increasing the productivity and competitiveness of West African
agriculture
 Implementing a trade regime within West Africa
 Adapting the trade regime vis-à-vis countries outside the region
148. The first axis of intervention focuses on improving food security, increasing
producer incomes and recognising their status, and reducing poverty. The second and
third axes aim to facilitate access to regional and international markets to dispose of the
increased volume of produce generated by the modernisation of the region’s
production systems.
149. A first group of eight countries is implementing the regional action plan for the
implementation of ECOWAP. Sierra Leone is not among this group, but together with
the remaining seven countries will start working on national assessments and modelling
investments. In the context of the implementation programme, emergency actions
have been taken to ensure that agricultural issues are taken into account by the CET,
and plans to liberalise trade with the EU within the framework of the Economic
Partnership Agreement (products likely to be excluded from liberalisation). ECOWAP
could provide Sierra Leone with an opportunity for expanded sub-regional trade and
technical assistance for trade facilitation in this regard.
7.3 The Economic Partnership Agreement
150. Under the auspices of ECOWAS, Sierra Leone is negotiating an Economic
Partnership Agreement (EPA) with the European Union (EU). Negotiations cover a broad
range of trade and trade-related policies beyond the mere reduction of tariffs.
Effectively, Sierra Leone and other ECOWAS countries will have to offer duty free access
to most imports from the EU. This will have a significant effect not merely on
government revenue through tariffs, but also have important impacts on domestic
producers including farmers and industries, which over time will have to compete with
increased EU imports. The EPAs are designed to bring the arrangement that the EU has
with about 70 African, Caribbean and Pacific (ACP) countries into conformity with the
WTO.82
81
The objective of ECOWAP is to improve agricultural productivity in order to attain food sufficiency,
standardise agricultural products; improve the dissemination of agricultural information; enhance health,
alleviate poverty and improve the international competitiveness of farmers in the sub-region.
82
The current agreement between the EU and the ACP countries is the Cotonou Agreement.
53
151. Given that Sierra Leone is already a beneficiary of the EBA initiative, which accords
duty and quota free market access, the EPA is only likely to provide the country with
new market access if the EPA is carefully designed. Market access can only be improved
with the relaxing of restrictive rules of origin, the development of supply capacity and
the deepening of regional integration among ECOWAS countries. Sierra Leone has not
been participating effectively in the EPA negotiations, and it needs to give a more
concerted effort to these negotiations which have the potential to have a more
immediate and lasting impact on its economy than even the Doha Round. The irony is
that without specific attention to the regional integration element, the EPA may result
in the ECOWAS countries giving the EU better access to their markets than they provide
for each other. The ECOWAP and the EPA are therefore important components of Sierra
Leone’s plan to develop agriculture further.
152. As a first step in its EPA preparations, Sierra Leone has developed a list of sensitive
products which include rice and palm oil, which may be exempted from liberalisation
schedules under the EPA. However, Sierra Leone needs to examine the opportunities
presented by the EPA for agricultural development and export. In particular, Sierra
Leone should consider which agricultural products could be developed for regional trade
and focus attention on all the aspects of trade facilitation to encourage exports in this
regard.
7.4 Key Issues and Policy Options for Sierra Leone’s Agricultural Trade
Issues: Rules of origin and lack of adequate compliance with SPS measures are
undermining Sierra Leone’s existing market access for its agricultural exports. Weak
infrastructure (laboratories) and institutions (standards bodies) for SPS management
also affects the extent to which Sierra Leone’s agricultural exports can be developed
further. Sierra Leone has not made effective use of the flexibilities in the WTO
Agreement on Agriculture to provide protection for infant agricultural industry.
Policy Recommendations:
 Negotiate more flexible rules of origin under EBA and AGOA and in the future
EPA.
 Make more use of the flexibilities in the Agreement on Agriculture to protect
infant and other vulnerable agricultural industry
 Comply with SPS standards for cocoa, ginger and other important agricultural
commodities
 Develop and enact comprehensive law and regulations on SPS, including systems
and management
54
8 POLICY CONCLUSIONS AND RECOMMENDATIONS
153. A careful mix of policy, smart incentives, institutional support, and technology
applications is necessary in developing the agricultural sector in Sierra Leone, which is
critical in ensuring the growth and prosperity of rural livelihoods and moving farming
communities into the market economy. That said, Sierra Leone’s agricultural sector has
good prospects for commercialisation. The Government of Sierra Leone (GoSL) has
signalled, in important policy statements backed up by fiscal instruments and other
measures that agriculture is now to be the centre piece of Sierra Leone’s growth and
development. The private sector is to play a significant role in this transformation.
154. While progress has been made on the food security front, there is still a significant
agricultural potential that has yet to be tapped by the country. Lessons are therefore
being learnt by the MAFFS and other actors in agriculture from the past policies and
there is a move towards a more coherent approach to policy making and
implementation. The proposed NSADP is a step in this direction.
155. Because many of the measures to addressing commercialisation of agriculture are
not the province of one ministry alone, the agricultural sector should therefore not be
viewed in isolation, but should be seen as a key component of the economy linking
other economic sectors, promoting social cohesion, and charting a sustainable
development paradigm in Sierra Leone. For this reason, it will be important that the
GoSL takes a holistic approach to the development of the agricultural sector.
156. Due to the destruction of most social and economic systems in the country during
the war, Sierra Leone is virtually starting from scratch. This gives the country the
opportunity to chart a different path from the previous economic development model
adopted a few decades ago. It would require a paradigm shift in the approach to
agriculture and its role in economic development.
157. The focus should be on development of productive capacities all along the value
chain of selected products that will enable a stronger role for agriculture in the
country’s development. This can take place through a strengthening of the domestic
knowledge systems; further development and transformation of FBOs and SMEs to
more commercial features; improvement in the scientific and research infrastructure;
development of skills and institutions necessary to ensure inter-sectoral linkages;
institutional collaboration and use of trade policy as a tool for further facilitating
agricultural development.
158. This paper has identified critical gaps in the infrastructure and policy framework
necessary to reform the agricultural system in Sierra Leone towards a more market
oriented path described above. Specific policy recommendations are set out for
55
consideration below, and are listed in the same sequential manner, as outlined in the
foregoing text, for ease of reference and efficient action.
Policy Recommendations for Commercialising Agriculture in Sierra Leone:
[This section revisits the policy recommendations outlined in each section of the paper].
Integrated Agriculture Approach
 Develop productive capacities all along the value chain of promising agricultural
products using a clustering approach (agriculture, agro-industry and agricultural
services)
 Make constant agricultural growth linkages between small and medium scale
farms and local food processing industries for the tourist industry or for export
Agriculture Investment Policy
 Target investment incentives and tax relief at each part of the value chain in
agricultural production, agro-processing and agricultural services.
 Revise the Investment Promotion Act’s package of incentives to reflect the new
agricultural incentives in the 2009 GoSL budget. Disseminate the package as
widely as possible.
 Deepen the reforms in the general business climate to provide a level playing
field, certainty and predictability for domestic and foreign investors.
Agricultural Financing:
 MAFFS (and the MTI) should work with the Bank of Sierra Leone to finalise the
draft Financial Sector Development Plan which envisages increased lending by
the commercial banks to the private sector.
 Establish an efficient (private sector-led) financing vehicle for long term lending
to the agricultural sector, providing subsidised lines of credit for farmers and
smallholders.
 Establish an export credit guarantee scheme in the medium term to provide
support to exporters of traditional and non-traditional export commodities.
 Provide incentives for insurance companies to develop packages of crop
insurance for farmers and SMEs in agricultural production.
 Establish a regulatory framework for credit unions to operate in order to
encourage savings among small farmers.
Institutions
 SLIEPA, MAFFS and MTI should collaborate to produce selected investment and
export development packages to attract domestic and foreign investors to
agriculture.
 Encourage public-private partnerships in agricultural related infrastructure and
research, through the use of fiscal and other instruments.
56


Establish ‘Producer Companies’ through an amendment to the pending
Companies Act.
Review and amend the Cooperative Societies Act 1977.
Agricultural Land
 Establish central G.P.S based mapping of not only the Freetown Peninsula area
but also the Provinces, including Crown land and Government reservations, in
order to determine the status of the available land for cultivation and
development.
 Immediately establish an additional system of property interests in land in Sierra
Leone known as leasehold, and give it legal status through enactment of
legislation.
 Repeal the law prohibiting ownership of land in Sierra Leone by foreigners
subject to a residual oversight by government where large tracts of land are
being bought by non-Sierra Leoneans.
 Establish a system of user rights over state lands. Establish a registration system
for user rights which enables them to be tracked and monitored.
 Establish land regulations with clear rights and responsibilities of communities
and traditional leaders regarding their role in the process or land acquisition,
including zoning, community preservation areas for watersheds, spiritual or
ecologically sensitive areas.
 Immediately implement a system of ‘Title Registration’ based on the GPS
mapping for freehold and leasehold title to property in Sierra Leone.
 Establish a mechanism, such as a Lands Tribunal or Lands Arbitration Board that
will adjudicate initially the claims of competing land ownership and enforce land
agreements/contracts, subject to a right of appeal to the courts.
International and Regional Trade in Agricultural Products and Services
 Negotiate more flexible rules of origin under EBA and AGOA and in the future
EPA.
 Make more use of the flexibilities in the Agreement on Agriculture to protect
infant and other vulnerable agricultural industry
 Comply with SPS standards for cocoa, ginger and other important agricultural
commodities
 Develop and enact comprehensive law and regulations on SPS, including systems
and management
57
Annex 1:
Investment incentives proposed under Investment Promotion Act 2004
Measure/Coverage
Current situation
(Non-Citizen (Trade and
Business)
Act of 1969, and other
Acts)
Indicative list to be
annexed to the
Investment Promotion
Act, 2004
Corporate tax
General rate 35%
Agriculture (tree and food
crops) and forestry
(cultivation)
Agri-processing (60% local
input)
Agri-processing (below
60% input)
Forestry (processing)
Rice: exempt first 10 years
Zone A: 30%; Zone B:
25%a
Exempt first 10 years
35%
Exempt first 10 years
35%
Tourism
Exempt 1 to 5 years
Losses write-off
Allowable, subject to
maximum annual write-off
of 50% of succeeding years
profit
First 10 years: Zone A –
20%; Zone B – 10%
Zone A – 30%; Zone B –
20%
Zone A – 25%; Zone B –
20%
Allowable, subject to
maximum annual write-off
of 50% of succeeding years
profit
Import duty
Raw materials
Plant and machinery
Generator for operations
Tourism
35%
5% (malaria and HIV drugs
exempt)
5%
5%
Duty-free concession for
new construction,
extension or renovation of
an existing one, applicable
to building materials,
machinery or equipment
that is not easily available
in Sierra Leone for the
period of construction or
rehabilitation
58
Duty free
Duty free
Duty free
(i) Duty-free concession for
new approved
construction, verified
extension, restoration of
tourist facilities and
amenities, including
renovation due to force
major, determined by the
Tourist Board. This is
applicable to imported
materials for construction,
Measure/Coverage
Current situation
(Non-Citizen (Trade and
Business)
Act of 1969, and other
Acts)
Indicative list to be
annexed to the
Investment Promotion
Act, 2004
furnishings, and
equipment for first three
years or to date of
completion if less than
three years.
(ii) 50% duty rate reduction
for upgrading during first
12 months of work or to
date of completion if less
than 12 months
20%
Intermediate products
20%
Operational vehicles
5% (between 0 and 4 years)
20% (over 4 and up to 10
years)
30% (above 10 years)
5% (between 0 and 4
years)
20% (over 4 and up to 10
years)
30% (above 10 years)
Plant and machinery
Tax free
Tax free
Other: at entry (advance
tax)
17.5%
10%
at final assessment
17.5% (production over Le
100 million)
17.5% (all production)
vehicles
17.5%
17.5%
General
Non-ECOWAS citizens: Le
1,000,000 (US$370) per
year; and ECOWAS citizens:
Le 100,000 (US$37) per
year
Non-ECOWAS citizens: Le
1,000,000 (US$370) per
year; and ECOWAS
citizens: Le 100,000
(US$37) per year
Exempt if enterprise
exports US$1 million or
more during the year
Tourism
Exempt for non-available
skills for first three years of
employment for up to six
Exempt for non-available
skills for first two years for
up to three personnel
Sales tax
Payroll tax
59
Measure/Coverage
Current situation
(Non-Citizen (Trade and
Business)
Act of 1969, and other
Acts)
Indicative list to be
annexed to the
Investment Promotion
Act, 2004
persons
Investment allowance
5% in first year of new
purchase
7.5% in first year of new
purchase
Export/excise tax
Exempt for 75% exported
output
Exempt for 75% exported
output
Export Processing Zones
n.a.
Special incentives to be
enacted
Duty drawback
Allowed on raw materials
for goods exported
Allowed on raw materials
for goods exported
Research and training
expenses (capital
investment only)
Local employment
allowance (number of
employees)
n.a.
Initial allowance: 40%;
annual: 20%
n.a.
2.5% of business income
exempt from tax (under
51 employees)
5% of business income
exempt from tax (between
51 and 100 employees)
7.5% of business income
exempt from tax (over 100
employees)
Incentives for exports
n.a.
Not applicable
a
Zone A: Western Sierra Leone; and Zone B: all regions in Sierra Leone outside
Zone A.
Source:The Non-Citizen (Trade and Business) Act of 1969; and Law No. 9 the Investment
Promotion Act, 5 August 2004.
60
Annex 2
Some Relevant Provisions to establish Producer Companies under the Sierra Leone
Companies Act
1. Producer would mean any person engaged in any activity connected with or
relatable to any primary produce.83 In this respect, primary produce could be:
 produce of farmers, arising from agriculture (including animal husbandry,
horticulture, floriculture, pisciculture, viticulture, forestry, forest
products, re-vegetation, bee raising and farming plantation products), or
from any other primary activity or service which promotes the interest of
the farmers or consumers; or
 produce of persons engaged in handloom, handicraft and other cottage
industries;
 any product resulting from any of the above activities, including byproducts of such products;
 any product resulting from an ancillary activity that would assist or
promote any of the aforesaid activities or anything ancillary thereto;
 any Activity which is intended to increase the production of anything
referred to the first four sub-clauses or improve the quality thereof;
 "producer" means any person engaged in any activity connected with or
relatable to any primary produce.84
2. Other institutions which do similar activities can also be similarly constituted.85
The objects for which Producer companies are established can be fairly wide.
They can include:
 production, harvesting, procurement, grading, pooling, handling,
marketing, selling, export of primary produce of the Members or import
of goods or services for their benefit :
 Provided that the Producer Company may carry on any of the activities
specified in this clause either by itself or through other institution;
 processing including preserving, drying, distilling, brewing, vinting,
canning and packaging of produce of its Members;
83
Indian Companies Act 1956, as am 2003, s. 581A (v).
Section 581A (l).
85
Section 581A (m): ‘Producer institution’ means “a Producer company or any other institution having
only producer or producers or Producer company or Producer Companies as its members whether
incorporated or not having any of the objects referred to in section 581B and which agrees to make use of
the Producer company or Producer companies as provided in its articles.”
84
61
 manufacture, sale or supply of machinery, equipment or consumables
mainly to its Members;
 providing education on the mutual assistance principles to its Members
and others;
 rendering technical services, consultancy services, training, research and
development and all other activities for the promotion of the interests of
its Members;
 generation, transmission and distribution of power, revitalisation of land
and water resources, their use, conservation and communications
relatable to primary produce;
 insurance of producers or their primary produce;
 promoting techniques of mutuality and mutual assistance;
 welfare measures or facilities for the benefit of Members as may be
decided by the Board;
 any other activity, ancillary or incidental to any of the activities referred
to in the forgoing clauses or other activities which may promote the
principles of mutuality and mutual assistance amongst the Members in
any other manner
 financing of procurement, processing, marketing or other activities
specified in the forgoing clauses which include extending of credit
facilities or any other financial services to its Members.86
3. To take account of the large numbers usually found in the FBOs, any ten or more
individuals, each of them being a producer or any two or more producer
institutions, or a combination of ten or more individuals and producer
institutions, can form an incorporated company as a Producer Company.
Producer companies are incorporated as companies limited by shares. 87 They
are required to be registered in the normal way by the Registrar of companies,88
once the memorandum and articles of association are satisfactorily prepared.
This should normally happen within 30 days and a certificate of incorporation
issued.
86
See Indian Companies Act 1956 as amended 2003, Section 581B.
Section 581C (2), (3).
88
The Office of the Administrator and Registrar-General (OARG).
87
62
4. Producer companies would be permitted to have at least five and not more than
fifteen directors. The Board of Directors would have wide ranging powers in the
operation of the Producer Companies, including the appointment of a Chief
Executive, usually from outside the membership of the Producer Company. The
share capital of a Producer company would consist of equity shares only.89
Shares in the Producer companies are not transferable unless with the
permission of the Board or on the death of a member.
5. Members receive the value of their pooled produce and the excess would be
shared in cash or in kind, or in equity shares, in proportion to the produce
supplied to the Company at the start of the year. Bonus shares or patronage
bonuses would be allotted by the Board based on the contribution of the
members to the company’s operations during the year. At their annual general
meeting, the Members would decide the amounts proposed to be carried to
reserve, the amount to be paid as limited return on share capital, and the
amount proposed to be disbursed as patronage bonus.
6. Cooperatives would also be able to become Producer companies, as in India. In
such case, shareholders in the cooperatives would be deemed to be registered
shareholders in the Producer Company to the extent of their share values. All
properties and assets of the cooperatives would then be vested in the Producer
companies; and their debts and liabilities would be transferred in the same
manner.
7. Special rights90 may be granted to an Active Member through the issue of
appropriate instruments by the Producer Company, which could be transferable
to any other Active Member on approval by the Board.
8. Financial assistance can be provided by the Producer Company to any of its
members on approval by the Board in the form of credit facilities, loans and
advances. Credit would typically be extended for a period of six months or less.
And repayments on loans and advances would not exceed seven years. General
reserves may be invested in order to secure the highest possible return.
9. Not only would Producer companies be able to acquire the shares of another
Producer company, but they would also subscribe to the share capital of or enter
into an agreement either by way of joint venture or formation of a subsidiary,
with any other company (Producer company or otherwise). It would also be able
to buy shares in any other company whether or not it is a Producer company, for
an amount not exceeding thirty per cent of the aggregate of it’s paid up capital
89
Section 581ZB.
"Special right" means any right relating to supply of additional produce by the active Member or any
other right relating to his produce which may be conferred upon him by the Board. Section 581ZC.
90
63
and free reserve. If a Producer company wishes to invest in excess of this, it
would need the permission of the GoSL and a special resolution from its annual
general meeting. Investments may be disposed of by the Board through a
special resolution on approval from the members.
10. Each Producer company would be required to maintain a register containing
particulars of all the investments, showing the names of the companies in which
shares have been acquired, number and value of shares; the date of acquisition;
and the manner and price at which any of the shares have been subsequently
disposed of.
11. There would be substantial penalties in the case of contravention of any
provisions of the Act establishing the Produce companies, including against
directors and officers of the Producer companies, where there has been default
relating to the accounts or failure to call a general meeting. 91 Producer
companies may decide to amalgamate, merge or to split into separate different
companies. Disputes would be settled through conciliation or arbitration, and
provision could either be made for it in the Act which establishes the Producer
companies or it could be dealt with under the new provisions for arbitration in
the draft FSDP.92
12. In recognition that the Producer companies would be within an overall company
legal framework, there would be provision in the Act for all other provisions,
limitations and restrictions applicable to a private company, to apply to a
Producer Company, as if it is a private limited company under the Act insofar as
they are not in conflict with the provisions in the Act on the Producer
companies.93
91
In the case of India, the fine may extend to ten thousand rupees for every day the default or failure
continues. In Sierra Leone, the fine should be suitably large enough to be a deterrent to default.
92
Section 581ZO. In India, this is in accordance with the Act which governs such procedures.
93
In the Indian legislation, this is provided for in section 581ZR.
64
Annex 3: Terms of Reference
MINISTRY OF AGRICULTURE, FORESTRY AND FOOD SECURITY
(MAFFS)/FOOD AND AGRICULTURE ORGANIZATION (FAO)
NATIONAL SUSTAINBLE AGRICULTURAL DEVELOPMENT PLAN (NSADP)
TCP/SIL/3203 (D)
TERMS OF REFERNCE FOR A REVIEW OF THE LEGAL FRAMEWROK FOR THE
COOMMERCIALIZATION OF AGRICULTURE
The Sierra Leone Government through the Ministry of Agriculture, Forestry and Food
Security (MAFFS), with support from the Food and Agriculture Organisation (FAO) of the
United Nations and the Economic Community of West African States (ECOWAS), is in the
process of formulating a National Sustainable Agricultural Development Plan (NSADP)
under the Comprehensive Africa Agriculture Development Programme (CAADP) of the
New Partnership for African Development (NEPAD), based on the Government’s vision
to make agriculture the “engine” for socio-economic growth in Sierra Leone, through
commercialization and producer organization development”.
The Government recognized that various laws and by-laws were enacted in the past that
had influence the current state of investment in the agriculture sector especially by the
private sector. With this new vision of the government for the sector, a short term
consultant is required to, under the overall supervision of the NSADP Coordinator,
undertake the following tasks:
 Review of the current Investment Incentive Regimes in the country, including
taxation as they relate to the Agric. Sector
 Review of the Agric Sector-related laws and their impact on investment in
the sector
 Suggest ways to promote Agricultural Public-Private Partnership (AgPPP)
Schemes in Sierra Leone
 Provide the legal framework for transforming Farmer-Based Organizations
(FBOs) into legal commercial entities or legal faces
 Recommend Legal Options for addressing land tenure issues in Sierra Leone
65

Review the sub- regional, regional and international Trade Agreements and
issues as they relate to Sierra Leone and suggest recommendations that will
lead to “Quick Wins” for the country.
Deliverables:
Taking into consideration the trends in population growth, increasing oil and food prices,
climate change, green house emission and other immediate threat to the development
of the agric. sector and based on his/her review, the consultant is expected to submit a
concise but analytical report (in English) that successfully responds to the TOR with clear
policy recommendations that will contribute to the development of a sustainable
agricultural development plan.
A draft of the report should be submitted six weeks after the signing of the contract,
and then do an hour power point presentation of the key findings to the Agriculture
Advisory Group (AAG). The final report which must take into consideration comments or
observations from MAFFS, FAO-SL, Farmers’ Representatives and the AAG should be
submitted two weeks after.
Consultancy Period: Eight (8) weeks
Qualifications:
 An advanced degree in Trade and Investment Analysis or Trade Law and related
field from a well recognized and reputable university
 Proven track record as evident in assignments and reports
 Fluency in English language is mandatory.
66
Annex 4
Summary of Proposals from Agriculture Finance Technical Committee
Creation and strengthening of public sector/parastatal structures
 Enabling environment: The GoSL should create the enabling environment with
the necessary regulations to safe guard financial institutions against risk
exposure to lending to the agriculture sector. A similar environment should be
created to secure the investments of equity investors.
 Establishment of National Agricultural Fund (NAF) to mobilise resources
internally and externally to ensure rapid response to global food shortages and
higher prices, and mitigation of long term crisis.
 Establishment of Sierra Leone Agricultural Development Bank (SLADB) under a
public/private-sector partnership to finance agricultural ventures directly and
indirectly.
Government Guarantees scheme
 Provision of agricultural loan guarantee scheme by the Government through the
BSL to minimise the high credit risk associated with agricultural finance.
Coordination among private sector/multilateral agencies/ and funds
 Existing commercial banks, community banks and micro-finance institutions to
organise on-lending to agricultural enterprises by accessing funds from NAF,
SLADB, UN agencies and international financial institutions.
 Use leasing companies to provide equipment finance for mechanised farming
 Insurance companies to provide insurance scheme to comprehensively cover all
risks associated with agricultural ventures.
 Create credit unions (which may require amendment to Cooperative Act or other
relevant Acts)
Networking, linkages and collaboration with other entities
 Strategic partnerships with UN agencies (World Bank, International Finance
Corporation, IMF, World Food Programme, Food and Agricultural Organisation,
International Fund for Agricultural Development, and World Trade Organisation).
 Strategic partnerships with other international financial institutions (African
Development
Bank,
Afriexim
Bank,
Kuwait
Fund,
International
Development Bank, Japanese International Corporation Agency (JICA), Chinese
Development Bank, GTZ, BADEA, African Finance Corporation, etc) .
Formation of Technical Standing Committees
 Formation of an independent institutional/technical structure charged with the
responsibility of supervising, regulating and creating bench marks for every other
institution that has the expertise to implement agricultural micro finance.
67

Maintain a broadly represented Ag. Finance Technical sub committee. This entity
can sit within SLIBA.

Establishment of specialised sub committees to be charged with handling
specific issues or sub sectors in agricultural financing.
68