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Freetown, Sierra Leone

Sierra Leone

Status
Meaningful progress
Joined
22 February 2008
Latest validation
2019
Latest data from
2016
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Overview and role of the EITI

Sierra Leone has a substantial mining sector, primarily driven by the large-scale production of iron ore, diamonds, rutile and bauxite. It also hosts small-scale and artisanal mining of gold and diamonds. Mining plays an important role in the country’s economy, although the sector has been in decline over the past years. According to EITI reporting, minerals accounted for 67% of total exports in 2019, a decrease from 91% in 2016. Sierra Leone is also conducting exploration activities to develop its petroleum sector. 

Natural resources played a significant role in sustaining conflict during the Sierra Leone Civil War (1991-2002). Subsequently, the transparent management of natural resources became a national priority. In 2018, President Julius Maada Bio made a strong commitment to use the EITI as a tool for reform to improve the country’s investment climate. Sierra Leone’s Medium-Term National Development Plan 2019–2023 includes a target to mainstream transparency and accountability practices into the extractive sector, in accordance with the EITI Standard.

The EITI has played a key role in reforming license allocation management. It continues to serve as a platform for improving disclosure of mining contracts and streamlining revenue payments. Sierra Leone EITI (SLEITI) is currently working to advance beneficial ownership disclosure and strengthen accountability at the subnational level by clarifying payments streams, expected revenue and recipients of subnational revenues.

Economic contribution of the extractive industries

67%
to exports
.6%
to GDP
4.1%
to total government revenues
3%
to employment
  • Step 1
  • Step 2
  • Step 3

Download country data

Download open data on government and company revenues, revenues by revenue stream and indicator, summary data and more.


Innovations and policy reforms

  • Recommendations from Sierra Leone’s EITI reporting and implementation have contributed to establishing a digital mining cadastre. This has resulted in increased government revenue, consistent regulation and timely access to data.
  • The Extractive Industries Revenue Taskforce (EIRT), a platform which was established as a consequence of EITI implementation, has contributed to reducing export duty on gold to levels more comparable to neighbouring countries, thus decreasing smuggling and increasing official gold exports.

Becoming EITI compliant is one of the ways of ensuring greater transparency and improved governance of the sector. We are proud to engage with the EITI process that requires reporting on revenue streams from the extractives sector. The tremendous efforts that have been made by everyone in the production of the EITI Report reflect our shared aspirations for transparency and accountability of the extractives sector, economic growth in Sierra Leone and prosperity for all Sierra Leoneans.

HE Dr Ernest Bai Koroma Former President of Sierra Leone

Extractive sector data

Revenue collection

Level of detail 2

Revenue distribution

2016
Standardised revenue types

Top paying companies

2016

Extractive sector management

Licenses and contracts

The National Minerals Agency (NMA) oversees the allocation of mineral rights. Mineral leases are allocated on a first-come-first-served basis, while petroleum rights are allocated through either direct negotiations or a tendering process.

Sierra Leone has one of the most comprehensive cadastre systems in West Africa. The Mining Cadastre Administration System (MCAS), managed by the NMA, provides information on license holders, coordinates, application dates and duration. This data is publicly accessible through an online repository, which also provides information on license payments made during the year.

While Sierra Leone does not have a contract disclosure policy, both the Extractive Industries Revenue Act and SLEITI bills have provisions to promote contract disclosure. The NMA has published some mining agreements on their website.

Beneficial ownership

Sierra Leone does not have a legal framework mandating the disclosure of beneficial ownership in the extractive sector. An independent review, published in 2017, assessed Sierra Leone’s legal framework to identify gaps for data disclosure and collection, and proposed corresponding reforms. President Julius Maada Bio made a commitment to advance this agenda in 2018. SLEITI’s 2016 EITI Report includes some ownership information for larger companies.

In September 2021, SLEITI produced a scoping study to help streamline various legal provisions and provide a legal basis for collecting and maintaining a central register. A forthcoming amendment to the Mines and Minerals Development Act is expected to include provisions mandating beneficial ownership in the mining sector.

Revenue distribution

The National Revenue Authority (NRA) collects mining payments and the Petroleum Directorate (PD) collects petroleum payments. These revenues are subsequently transferred to the Consolidated Fund of the Treasury. Other payments from the mining sector, such as surface rentals, are made directly by companies to local councils and chiefdoms that host mining activities through the Ministry of Mines and Mineral Development.

Specific contributions, such as the Diamond Area Community Development Fund (DACDF), are distributed from the central government to certain district councils and chiefdoms based on pre-determined formulars for social development.


EITI implementation

Governance

SLEITI is administered by the Sierra Leone Multi-Stakeholder Group (MSG). The MSG is hosted by the Office of the Vice President and chaired by the Minister of State in the Office of the Vice President. It is comprised of representatives from government, industry and civil society. The Vice President of Sierra Leone, Dr. Mohamed Juldeh Jalloh, serves as the EITI Champion.

Timeline

Validation

Sierra Leone was found to have made meaningful progress in implementing the 2016 EITI Standard in June 2019, following its first Validation. The Validation identified 14 corrective actions to be addressed by the country’s next Validation, which commenced in April 2022.

Scorecard

Latest Validation: 15 October 2019
Year

Assessment of EITI requirements

  • Not met
  • Partly met
  • Mostly met
  • Fully met
  • Exceeded
Scorecard by requirement View more Assessment View more

Overall Progress

MSG oversight

1.1Government engagement

Sierra Leone faced several challenges in recent years. In 2014-2018, there was ineffective government engagement. This seems to have been resolved with a renewed leadership of SLEITI. The government has escalated government leadership of EITI to higher levels and enhanced its engagement. The government also funds most of SLEITI implementations.

1.2Industry engagement

The Board considered that company engagement has been meaningful, but expects significant improvements. While there are no barriers, companies are not fully and effectively engaged. There appears to be no forum, either formal or ad hoc, through which industry can coordinate its activities as a constituency.

1.3Civil society engagement

CSOs are able to be fully, actively engaged in the design, implementation and evaluation of the EITI process without coercion. The main barrier for access to the MSG appears to be due to issues of internal coordination, resulting in insufficient consultations, creating a disconnect between the wider constituency’s demands and EITI implementation.

1.4MSG governance

Statutory rules were recently updated, although not followed in practice. Rules for MSG membership are unclear and there are concerns about inadequate representation, particularly for civil society. CSOs have not refreshed their members since MSG formation, in breach of the agreed rules. There is no transparent procedure for appointing members to the MSG.

1.5Work plan

The MSG’s objectives have not changed since 2016. The 2017-2019 workplan was costed and available online, but the MSG have not updated a workplan for 2018 onwards. Still, evidence suggests SLEITI does use workplans and APRs as planning and monitoring tools for EITI implementation.

Licenses and contracts

2.1Legal framework

The 2016 EITI Report describes and references most aspects of the legal framework and fiscal regime governing the mining and petroleum sectors. The does not fully delve into the contents or changes associated with reforms, but any gaps uncovered are minor and not significant for the sector during the period under review.

2.2License allocations

The 2016 EITI Report adequately describes that license allocations are made at the discretion of the Minister of Mines and Mineral Resources, although an assessment is provided by a Minerals Advisory Board. Their assessments of technical and financial criteria are not clear, nor whether there are deviations from license awards procedures.

2.3License register

Mining licenses of all material and non-material companies are accessible through an online repository, although it does not cover artisanal licenses. Based on a sample of entries all required information is described in the registry. A pilot cadastre is available via the Petroleum Directorate’s although it does not yet contain all required information.

2.4Policy on contract disclosure

Despite not having a general government policy on contract disclosure, the interpretation is that they should be transparent due to enabling provisions in sector-specific legislation. In addition, current reforms are underway demanding publication of mining contracts. So far, six agreements are accessible, as are their environmental impact assessments.

2.5Beneficial ownership

Not assessed

Although the Government of Sierra Leone does not yet have a policy in place for beneficial ownership disclosure, the commitments made by the current administration show promise for the future development of policies, laws and amendments related to beneficial ownership disclosure. One company, Koidu Limited, have published its beneficial owners.

2.6State participation

Although state participation is not related to upstream extractive sector activities, the MSG did not discuss definitions or applicability of this requirement. Evidence suggest that Sierra Rutile Limited repaid a significant loan in 2016 which was not covered in the report, constituting a significant gap in coverage of state loans to extractives companies.

Monitoring production

3.1Exploration data

The 2016 EITI Report provides a general overview of the country’s extractive industries, including significant exploration activities.

3.2Production data

Production data for large scale mining is available for 2016. However, production from artisanal and small-scale mining was not available, although official reporting of the Bank of Sierra Leone should include such information, as cited in previous reports. Given this weakness, the overall objective of the requirement has not been met.

3.3Export data

The 2016 EITI Report provides export volumes and values for all mineral commodities exported in 2016, disaggregated by subsector, companies and commodities. It is possible to estimate the location of exports based on data provided.

Revenue collection

4.1Comprehensiveness

The report provides full government disclosure disaggregated by revenue stream in the 2016 EITI Report. The key concern is the exclusion of capital gains taxes from the scope of reconciliations, without justification, although a large CGT payment did take place. Additionally, four companies did not report payments worth 26% of total government revenues from extractives.

4.2In-kind revenues

Not applicable

The 2016 Report confirms that no state-owned enterprise exists through which government receives in-kind revenues, nor does any private company provide revenues in kind.

4.3Barter agreements

There is no evidence to suggest that barter agreements or infrastructure provisions have been discussed. In fact, some stakeholders allude to the existence of such arrangements. In the absence of confirmation from companies and government that there are no such arrangements, information is insufficient to conclude that the requirement is not applicable.

4.4Transportation revenues

Not applicable

The report states that there were no transportation revenues in 2016. Payments uncovered during Validation revealed flat-fee revenues and not tariffs associated with transportation of commodities.

4.5SOE transactions

Not applicable

The report does clarify that there were no state-owned enterprises in the upstream extractive sector giving rise to revenues to the government.

4.6Direct subnational payments

Payments to subnational government entities are widely considered one of the main challenges in Sierra Leone. Evidence is often contradictory regarding oversight of subnational payments, and there are concerns surrounding the lack of public overview of all subnational payments. However, these views have not been well reflected in EITI Reports.

4.7Disaggregation

All reconciled financial data is disaggregated by company, revenue stream and government entity. The report does not provide evidence of project-level reporting, although this is not yet required under the EITI Standard. Still, evidence from third-party sources imply that much revenue information may already be available disaggregated by project.

4.8Data timeliness

Although online publication of the 2016 SLEITI Report was delayed to after the commencement of Validation, stakeholder consultation and other documentation implies that EITI data was available ahead of the two-year deadline.

4.9Data quality

SLEITI used the procedures approved by the EITI Board. The report clarifies the practice of reporting entity audits and which companies failed to adhere to agreed assurances, including the significance of their omissions. It does not assess the comprehensiveness of reconciled financial data and summary data was not completed by the commencement of Validation.

Revenue allocation

5.1Distribution of revenues

The report explains how revenues are recorded in the Consolidated Revenue Fund and thus in the national budget. The report is slightly unclear regarding the inclusion of a specific company’s surface rent payments, although these issues are covered under the assessment of direct subnational payments and subnational transfers (see Reqs 4.6 and 5.2).

5.2Subnational transfers

Koidu Limited’s surface rent payments, and a comparison between notional and actual transfers are available through the report. In addition, the report covers revenues transferred to the Diamond Area Community Development Fund for redistribution, and the statutory revenue-sharing formula. However, the value of executed DACDF transfers is missing.

5.3Revenue management and expenditures

Not assessed

This requirement is not considered for assessing progress towards the EITI Standard. It is nonetheless encouraging that the MSG has made some attempt to including information on the budget-making and auditing processes as well as providing information on the resource dependence of the Sierra Leonean economy.

Socio-economic contribution

6.1Mandatory social expenditures

The report does attempt to disclose mandatory social expenditures under Community Development Agreements. In the end only Sierra Minerals Holding No.1 Limited reported their transactions to a development fund. There is no explanation why the other seven companies did not report, and financial data is not reconciled.

6.2Quasi-fiscal expenditures

Not applicable

The International Secretariat’s initial assessment is that this requirement is not applicable in Sierra Leone in the year under review (2016). The 2016 EITI Report confirms the lack of extractives SOEs in Sierra Leone in 2016.

6.3Economic contribution

The report adequately describes the extractive industries’ contribution, in absolute and relative terms, to gross domestic product, exports, government revenues, employment as well as some information on the location of mining production.

Outcomes and impact

7.1Public debate

The 2015 and 2016 EITI Reports are written in clear English. Prior reports had been actively promoted and disseminated through public meetings, stimulating debate on extractives revenue management. However, there was a significant slowdown in dissemination and outreach; prior evidence of CSOs analysing data from EITI Reports, have slowed in recent years.

7.2Data accessibility

Not assessed

Sierra Leone has made data for EITI Reports up to 2016 available in open formats, using the IMF’s Government Finance Statistics (GFS) classification. The online repository, Minerals Cadastre Administration System, has been strengthened with data from the EITI reports while improving on data accessibility.

7.3Follow up on recommendations

The MSG, through their technical committee, have followed up on recommendations from past EITI Reports. The 2017 annual progress report documents progress on following up on past recommendations, and some reforms could be directly linked to EITI. There is evidence of MSG investigation of discrepancies, but it has reduced in recent years (2014-2016).

7.4Outcomes and impact of implementation

The 2017 annual progress report provides an overview of activities carried out in 2017 and an assessment of progress towards individual EITI Requirements. It documents the MSG’s responses and follow-up. It provides an assessment of progress made against the workplan objectives and the MSG’s assessment of impacts and outcomes of EITI implementation.


Key documents


Contacts