Sierra Leone


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Sierra Leone's mining sector has made a significant recovery since the 11-year civil war ended in 2002. The country produced more than 400,000 carats of diamonds in 2010, making it the world's 10th-largest producer and accounting for nearly half of the nation's total exports. Offshore oil reserves were discovered in 2009, but production has yet to begin, and Sierra Leone's economy is likely to remain highly dependent on diamond revenues.


Sierra Leone's Performance on the Resource Governance Index

Sierra Leone received a "weak" score of 46, ranking 35th out of 58 countries. Its performance on the Enabling Environment component was particularly poor.

Rank
(out of 58)
Score
(out of 100)
35 Composite Score 46
43 Institutional & Legal Setting 52
Freedom of information law 33
Comprehensive sector legislation 100
EITI participation 67
Independent licensing process 83
Environmental and social impact assessments required 50
Clarity in revenue collection 33
Comprehensive public sector balance 0
SOC financial reports required N/A
Fund rules defined in law N/A
Subnational transfer rules defined in law N/A
28 Reporting Practices 47
Licensing process 83
Contracts 0
Environmental and social impact assessments 17
Exploration data 17
Production volumes 50
Production value 67
Primary sources of revenue 56
Secondary sources of revenue 83
Subsidies 33
Operating company names 67
Comprehensive SOC reports N/A
SOC production data N/A
SOC revenue data N/A
SOC quasi fiscal activities N/A
SOC board of directors N/A
Fund rules N/A
Comprehensive fund reports N/A
Subnational transfer rules 100
Comprehensive subnational transfer reports 33
Subnational reporting of transfers 0
25 Safeguards & Quality Controls 59
Checks on licensing process 56
Checks on budgetary process 67
Quality of government reports 67
Government disclosure of conflicts of interest 100
Quality of SOC reports N/A
SOC reports audited N/A
SOC use of international accounting standards N/A
SOC disclosure of conflicts of interest N/A
Quality of fund reports N/A
Fund reports audited N/A
Government follows fund rules N/A
Checks on fund spending N/A
Fund disclosure of conflicts of interest N/A
Quality of subnational transfer reports 0
Government follows subnational transfer rules 67
41 Enabling Environment 24
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 26
Open Budget (IBP Index) N/A
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 40
Government effectiveness (WGI) 11
Rule of law (WGI) 18
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 43rd/58, Score: 52/100) learn more

While Sierra Leone publishes detailed mining legislation, its revenue collection mechanisms are convoluted, leading to a "partial" score of 52.

The Mines and Mineral Resources Ministry issues licenses, signs contracts, and regulates the mining industry, while the newly established Petroleum Directorate oversees the oil sector. The process for granting mining licenses is unclear; open bidding requirements included in mining legislation do not apply to all areas, and the ministry engages in direct negotiations with companies.

The National Revenue Authority collects taxes on mining activities and the Mines and Mineral Resources Ministry collects other payments, but a lack of public information makes it difficult to assess revenue flows to the treasury. Diamond exports, for instance, are believed to be at least double the volume declared.

National law requires some disclosure by extractive companies and the government, but there is no comprehensive freedom of information act. Social and environmental impact assessments are required but are not made public. Sierra Leone was suspended from the Extractive Industries Transparency Initiative in February 2013.

Reporting Practices (Rank: 28th/58, Score: 47/100) learn more

Sierra Leone does not publish contracts with extractive companies and releases only partial data on most aspects of the mining industry, resulting in a "weak" score of 47.

Information on the licensing process and fiscal arrangements is available from government websites, and a Mining Cadastre allows authorized users to access information on the status, location, and ownership of mining licenses, as well as some data on company payments.

The National Revenue Authority provides very little information on mining receipts, and the Mines and Mineral Resources Ministry appears to offer information only on diamond-related revenues. Only the Finance Ministry and the Bank of Sierra Leone regularly disclose information about the mining sector's operations and revenues, including data on reserves, production volumes, prices, the value of resource exports, the names of companies operating in Sierra Leone, royalties, and license fees.

Safeguards & Quality Controls (Rank: 25th/58, Score: 59/100) learn more

Sierra Leone received a "partial" score of 59, reflecting incomplete government oversight.

The minister of mines appears to have wide discretion in granting licenses. The Mines and Minerals Act includes procedures for appealing licensing decisions, but the process remains untested. The legislature is occasionally asked to ratify agreements, but does not provide consistent monitoring.

The national Audit Service examines state accounts and publishes annual reports, but there is no specific review of mineral revenues. Government officials involved in the mineral sector must disclose potential conflicts of interest. The 2012 Anti-Money Laundering Act is another positive step toward transparency.

Enabling Environment (Rank: 41st/58, Score: 24/100) learn more

Sierra Leone's "failing" score of 24 is due in part to low global rankings on government effectiveness and the rule of law.


Subnational Transfers (Rank: 23rd/30, Score: 40/100) learn more

In 2001 Sierra Leone established the Diamond Area Community Development Fund to transfer a small portion of the central government's revenues from registered artisanal mining licensees to mining communities. It receives 0.75 percent of the revenues raised by the nation's 3 percent diamond export tax. The Mines and Mineral Resources Ministry's management of the fund is opaque; financial reports are neither audited nor published.

The Community Development Fund was created in 2009 and requires large-scale licensees and selected small-scale operators to reach agreements with affected communities prior to mine development. Mineral rights holders must also allocate at least 0.1 percent of their annual gross revenue to community initiatives. Very little information is available on the fund's management.

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