In Sierra Leone, Focus on Corporate Governance Helps Rebuild Economy

At the height of the Ebola crisis in Sierra Leone, business activity simply shut down. The virus that took thousands of lives also crippled an economy just beginning to rebound from a 2002 civil war. Combined, the three nations that were ground zero for the 2015 outbreak—Sierra Leone, Liberia and Guinea—lost a staggering $2.2 billion in economic growth that year, according to World Bank estimates.

In the wake of this crisis, Sierra Leone’s list of development priorities is long. “The problems facing Sierra Leone, like other fragile countries in Africa, are complex, deep-reaching, and wide in scope,” notes Roman Zyla, IFC’s Africa Corporate Governance Lead. Chief among these problems is jump-starting a destroyed economy.  And this means stabilizing markets, rebuilding businesses and attracting new investment, he says.

Boosting investor confidence in a fragile country

But from an investment perspective, going into in a fragile and conflict-affected country like Sierra Leone can be risky. “Investors worry about uncertainty,” Zyla says.  They want assurances about market stability and adherence to a culture of good corporate governance.

This is why IFC is working with authorities in Sierra Leone to promote the adoption of corporate governance best practices and standards with a corporate governance code.

According to Chinyere Almona, Regional Program Manager for IFC’s Africa Corporate Governance Program, increasing investor confidence in the Sierra Leone business market is one of the key reasons behind establishing the code. “Commitment to improving the corporate governance climate in Sierra Leone through voluntary compliance with the code will help do this,” she says.

Sierra Leone’s Corporate Affairs Commission  took the lead on drafting the code—a collaborative, two-year effort involving key market players, regulators, and business leaders.  At each stage of the process, these stakeholders  provided thoughtful  input, including practical recommendations on implementation and monitoring. The degree of  participation was a strong indicator of the  enthusiasm and appetite for corporate governance, which all understood would serve  as an important tool to enhance economic growth  in Sierra Leone. IFC’s corporate governance experts provided guidance and support throughout the process.

Enhanced regulatory control and uniform compliance

While initially focused on the private sector, the effort has now broadened to address corporate governance of state-owned enterprises and non-profits.   “Our work with IFC to develop a National Corporate Governance Code will help our businesses and public entities adopt global best practices and attract a diverse pool of investors,”  notes  Michala Mackay, the CAC’s chief executive officer. She  says that the code will enable increased regulatory control and enhance uniform compliance, which also will contribute to market stability, reducing risk and heightening investor interest.

Launch planning underway

With the drafting process complete, Sierra Leone’s cabinet—the nation’s chief executive body—is reviewing the proposed code in preparation for formal adoption. Plans for a mid-2018 roll out and implementation  are underway. Meanwhile, several  professional bodies have indicated their strong support for the code,  including the Institute of Chartered Accountants of Sierra Leone, which  intends to use it as the basis for a revised code of ethics and standards.

IFC’s advisory work on Sierra Leone’s corporate governance code is part of a broader initiative to expand markets, attract and retain additional investment, and improve firm-level performance for increased economic growth in West Africa, with a specific focus on the nations hardest hit by Ebola.

Related Links:

Topic page: Corporate Governance in Fragile and Conflict-Affected Situations

Fact sheet: Corporate Governance in FCS, November 2017

Video: Strengthening Corporate Governance in FCS

Article: Strengthening Governance During Crisis, Winter 2018

Feature Story: Supporting Corporate Governance in Iraq, August 2017

December 2017