Sierra Leone

EITI Status Yet to be assessed against the 2016 Standard
EITI Member Since 2008
Latest Data From 2013

Overview

Political stability has led to a revival of economic activity, including in the natural resource sector. The rise of mineral prices until 2011 resulted in a surge of new mining licenses and exploration. However, in recent years, falling commodity prices and low currency combined with the 2014 Ebola outbreak has had a considerable negative impact on mining operations and economic growth.  Many of the mining companies have now ceased operations and left the country. Notwithstanding, the extractive sector remains the key driver of growth in these challenging times.

Prudent management of natural resources is a pillar of the national Agenda for Prosperity and there is strong commitment to align the EITI with these reforms. In 2012, Sierra Leone also launched an advanced online repository, making revenues generated from mining companies accessible to its citizens.

Extractive industries contribution to the economy

  • 90 %
    to exports
  • 20 %
    to GDP
  • 20 %
    to government revenue
  • 1.5 %
    to employment

Beneficial ownership disclosure

Objectives of beneficial ownership transparency in Sierra Leone

  • Due diligence in licensing and preventing conflict of interest
  • Preventing transfer mispricing
  • Transparency in ownership of extractive assets and rights help by PEPs
  • Prevent corruption and illicit financial flows to help maximise revenues from extractives

Progress on implementing beneficial ownership disclosure 

Sierra Leone is collecting beneficial ownership information from the 20 largest extractive taxpayers. In addition, steps are being taken to support and improving the due diligence procedures employed by the National Minerals Agency and the Petroleum Directorate in order to make these government agencies better informed in their dealings with prospective commercial partners, and better equipped to lead to the systematic collection and recording of beneficial ownership data.

Sierra Leone EITI plans to organize a series of technical workshops to review current legal and institutional framework for beneficial ownership and build the capacity of relevant stakeholders for the implementation of beneficial ownership. Read Sierra Leone's beneficial ownership roadmap below for more information.

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 this [SLEITI] 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

Production

Iron-ore production remains the key contributor to Sierra Leone‘s GDP growth with over 17 bn MT in 2014 (USD 742m in export value). Despite the increase in production volume in recent years, export values have not increased correspondingly as result of the fall in commodity prices and the decline in the currency. Gold is mostly mined artisanally and presently production comes from alluvial deposits. Diamond is also been mined mainly from alluvial deposits at the Bo, the Kenema, and the Kono districts. Growth in diamond production was driven by improved world market prices of diamonds.

Mining leases have recently being granted to two large-scale gold producers and one iron-ore producer. Current exploration activity also indicates the potential for commercially viable and large-scale exploitation of natural rutile.

Several offshore oil discoveries have also been announced since 2009. Development of these reserves, which could be significant, is, however, years away.

In any of these [contract] negotiations, there is such an asymmetry in terms of capacity of negotiation … the EITI is an important step and should be recognised.
Jeremy Allouche, Institute of Development Studies

Revenue collection

The latest EITI disclosures (2014 Report) show that Sierra Leone received USD 58 million in revenue from its extractive industry operations. 85% of these revenues came from the mining sector, with the rest mainly stemming from exploration activities in the petroleum sector. Revenues were mainly collected through mineral royalties (57%), mining licences (9%)  and signature bonuses from the award of oil blocks (7%).

Initializing chart.

Revenue allocation

The National Revenue Authority (NRA) is mandated to collection all taxes on mining. In addition, other payments from the mining sector are made to local councils and Chiefdoms, where mining companies are based, to the Ministry of Mines and Mineral Development. In the case of petroleum revenues, payments are made to the Petroleum Directorate (PD).

Funds paid to the NRA and the PD are subsequently transferred to the Consolidated Fund/Treasury, and thereby lose their identity in the National Budget. Moreover, the budget does not show expenditure by geographical locations but rather by line ministry, which means it is difficult to track where money is actually spent on host mining communities. However, specific contributions, such as surface rent by mining companies, are allocated to certain district councils and chiefdoms for social development.

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

  • Through its Online Repository Sierra Leone has made revenues generated from mining companies accessible to its citizens. It contains all mining licenses and payments, published directly from the mining licensing system at the National Minerals Agency. This portal also includes data on  licenses issued by the Forestry Department. It was launched in January 2012 and adopted by SLEITI in early 2014.

  • The Minerals Cadastre Administration System (MCAS) hosts fiscal information for all the large-scale mining companies. All fiscal terms in MCAS are copied directly from the companies’ Mining Lease Agreements. Information on companies’ shareholding structures is also available in MCAS.

  • The 2011 report includes the license register number of each company, information about the commodity explored/produced and details on equity ownership. Some companies have also reported on production.

  • The communications team at SLEITI worked with a group of blind people to produce the ‘SLEITI Song’.

Implementation

The most recent EITI Report (covering 2014) was published in December 2016. On 15 September 2014, the EITI Board granted Sierra Leone an open-ended extension to the deadline for preparing the 2012 and 2013 EITI reports due to the Ebola outbreak.

Sierra Leone achieved EITI Compliance under the old EITI Rules in 2014. The MSG has recently been focused on making a greater contribution to informed debate about resource governance. An assessment of the activities to make the best use of the EITI Standard and an initial assessment on Beneficial Ownership have been conducted. Through its Online Repository, hosted by the Revenue Development Foundation, Sierra Leone has made revenues generated from mining companies accessible to its citizens.

Learn more at https://eiti.org/blog/setting-records-straight

Governance

In 2011, an MOU was signed between the Government of Sierra Leone, civil society, and the extractive industries to implement the EITI. http://www.sleiti.gov.sl/admin/images/news/SLEITI%20MOU0001.pdf

An SLEITI Bill has been drafted but is yet to be passed.

Part XVIII (§159 and 160) of the Mines and Mineral Act of 2009 gives Minister of Mines and Minerals the responsibility of reporting, disclosing and request for information. §160 stipulates duty to report according to established deadline.

Section 105 under Part XII- FINANCIAL PROVISIONS of the Petroleum (Exploration & Production Act) 2011 states that "Payments made to the State under this Act shall be disclosed according to the terms and procedures of the Sierra Leone Extractive Industries Transparency Initiative."

Timeline

Validation

Sierra Leone's  Validation against the Standard will commence on 1 July 2018. The country is compiliant under the 2011 Rules.