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Sierra Leone

Overview

The Republic of Sierra Leone has a total population estimated at 7 650 154 in 2020.1 The urban population growth rate is 42.1 percent associated with a population density of 106 inhabitants per km2. 2 The capital city of Freetown has one of the highest population densities in the world with 8 450 people per km2, and a high proportion of informal settlements accounting for 35 percent of the city’s inhabitants. These are major challenges to preventive measures against the spread of COVID-19, as physical distancing and restrained movement may be difficult to practice in informal settlements.3 Migration from rural to urban cities also puts pressure on authorities to address the housing crisis in the country. Freetown needs 280 000 housing units, or 19 000 houses a year by 2028.4

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Sierra Leone has a fragile economy still recovering from a decade of civil war. The macroeconomy is mainly dependent on diamond production and has been unstable over the last few years. Its gross domestic product (GDP) is valued at Le42 993 116.254 (US$4.4 billion) with a GDP per capita estimated at Le5 442 538 (US$557).5 The overall inflation rate was recorded at 15.47 percent in May 2020.6 Government gross debt culminated at 65.4 percent of GDP.7 According to World Bank development indicators, the lending interest rate in Sierra Leone was reported to be 17.92 percent in 2019.8 While the unemployment rate remained at 4.3 percent in 2020, the job market remains fragile.9

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The COVID-19 pandemic has adversely impacted economic activity, with economic growth rate projected to shrink by -3.1 percent in 2020 compared to the pre-COVID-19 projection of 4.1 percent growth.10

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Since the onset of COVID-19, the Federation of the Urban and Rural Poor (FEDURP) and the Centre of Dialogue on Human Settlement and Poverty Alleviation (CODOHSAPA) have taken action to curb its spread.11 However, the slums and informal settlements remain largely ignored by state institutions.12 In April 2020, the federation put together a COVID-19 response plan aligned with the objectives of Sierra Leone Slum Dwellers International (SDI) Alliance for COVID-19.13 This includes monitoring and advocacy activities at settlement and civil society level to minimise threats of eviction and counterproductive closures of essential informal services during

Access to finance

The Madagascar financial and banking sector grew by 4.2 percent in 2019.13 From 2018 to 2019, real estate credit increased by Ar79.7 billion

KEY FIGURES

Main urban centres 

Freetown

Exchange rate (1 July 2020): 1 USD = [a]

9 771.16 SL Leone (SLL) 2 586.28 SL Leone (SLL)

1 PPP$ = [b]

Total population [b] | Urban population [b]

Population growth rate [b] | Urbanisation rate [b]

GDP per capita (Current US$) [b]

Percentage of population below national poverty line [b]

Unemployment rate (% of total labour force, national estimate) (2017) [b]

Proportion of adult population that borrowed formally (2017) [b]

Gini coefficient (2017) [b]

HDI country ranking (2018) [c] | HDI country score (2018) [c]

7 813 215 | 3 319 366

5.51% | 3.12%

US$504

46.7%

4.5%

4.3%

n/a

188 | 0.41

GDP (Current US$)  [b]

Inflation rate (2019) [b]

GDP growth rate [b]Yield on 10-year government bonds

Lending interest rate(2019) [b]

US$3 941 million

5.51%

14.80%

n/a

17.92%

Number of mortgages outstanding (2019)

Value of residential mortgages (Current US$)

Ratio of mortgages to GDP

Typical mortgage rate | Term | Deposit(2019) 

Number of mortgage providers 

Number of microfinance loans outstanding(2014) [g]

Value of microfinance loans in local currency units\(2014) [H]

Number of microfinance providers 

292

US$129.13 million

US$10.2 million

18% | 15 years | 30%

0.26%

261 002

2

3 761

4 942 579 842 SLL

25

Total number of formal residential dwellings in the country

Total number of residential properties with a title deed (2019) [g]

Number of formal housing units built in this year(2019)

Price of the cheapest, newly built house by a formal developer or contractor in an urban area in local currency units (2019)[h]

Size of cheapest, newly built house by a formal developer or contractor in an urban area(2019) [h]

Typical monthly rental for the cheapest, newly built house(2019) [F]

Time to register property [h]
Cost of standard 50kg bag of cement in local currency units (2019)[h]
Type of deeds registry: digital, scanned or paper [h]
World Bank Ease of Doing Business index rank [h]
Number of procedures to register property [h]
Cost to register property as share of property price [h]

World Bank DBI Quality of Land Administration index score (0-30) [h]

n/a

n/a

n/a

167 400 000 SLL

45m2

4 885 581 SLL

63 000 SLL (US$6.45)

Paper

163

7

56 days

10.6%

5.50

Percentage of women who own a house alone: Total |Urban (2016 [k]

Percentage of households with basic sanitation services:

Total |Urban (2016) [m]

Percentage of households with no electricity: Total | Urban Urban (2016) [m]

Percentage of households with 3+ persons per sleeping room:

Total | Urban(2016) [m]

Percentage of urban population living in slums (2018) [m]

n/a | n/a
15.5% | 26.4%

77.1% | 32.7%

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79.7% | 53.1%

36.6% | 45.6%

59.1%

NB: Figures are for 2020 unless stated otherwise.

[a] Xe.com

[b] World Bank World Development Indicators

[c] Human Development Reports, United Nations Development Programme

[d] ] Commerce and Mortgage Bank Sierra Leone

[e]] Access Bank Sierra Leone

[f]First Bank Sierra Leone

[g]Brac International

[h]Central Bank of Sierra Leone

[i]Regimanuel Grey Estate

[j] Ministry of Trade and Industry

[i]Demographic and Health Surveys, USAID

[i]United Nations Human Settlements Programme

(UN-HABITAT)

periods of lockdown.14 The COVID-19 response plan put together by FEDURP and CODOHSARA in collaboration with the Freetown City Council, which aligns with SDI’s objective to fight the pandemic, includes

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Providing community owned and validated settlement profile; and

Monitoring and advocacy of activities to minimise the threat of evictions.15

Access to finance

Despite the government’s commitment to narrow the gap between banks’ credit supply and households’ demand for loans in the housing industry, the financial sector remains difficult to access for Sierra Leoneans. As of 2018, the banking industry and non-banking sector include 14 commercial banks, 17 community banks, 11 insurance companies

68 exchange bureaus, 25 credit only microfinance institutions, 95 financial service associations, and two mobile financial service providers in the country among other financial service providers.16

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The financial sector is dominated by commercial banks with a share of Le8.5 trillion, accounting for 24.4 percent of GDP.17 The microfinance industry expanded in 2018, becoming a major financial service provider of funds for low income earners. This was mainly the result of government efforts to promote financial inclusion as a tool to promote growth and long-term investments to boost the housing development and finance industry.

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Despite a larger geographical presence of microfinance institutions in comparison to commercial banks, use of personal loans to cover housing demand is limited. There are no data on special policy measures by the government to improve housing conditions for the poor during the COVID-19 pandemic. However, the Monetary Policy Committee (MPC) of the Bank of Sierra Leone (BSL) decided to keep the monetary policy rate unchanged at 15 percent in July 2020 because of an increasing outlook of inflation.18 Because of the lockdown imposed by the government, prices for food and other essential commodities have been the sources of inflation pressure in Sierra Leone.19

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The economic downturn resulting from the pandemic continues to constrain credit growth in Sierra Leone and the MPC expects that this credit shortening will be moderated by the BSL Special Credit Facility of Le500 billion to support specific activities such as production and distribution of essential commodities.20 This facility does not mention the housing finance sector. In the meantime, the interest rate remains high, with potential adverse implications for investments.21 The fiscal deficit has worsened because of increased government spending against the pandemic.22

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In summary, the banking sector remains relatively stable according to BSL. This is illustrated by the improvement in all key Financial Soundness Indicators (except the non-performing loan ratio of 12.2 percent, above the required prudential limit of 10 percent).23

Affordability

Acute poverty associated with poor living conditions, overcrowding, and poor public policies in housing finance adversely affect the ability of poor people to earn enough and afford decent housing. The prevailing political and economic uncertainty combined with the pandemic make it difficult for banks to provide funding to low income households to purchase or rent affordable houses. A large majority of Sierra Leoneans therefore cannot afford decent housing

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The high cost of housing limits access to decent housing for low income earners. Experts estimate the cost of building a three-bedroom house at between Le146.6 million (US$15 000) and Le439 740 000 (US$45 000).24 A typical bungalow with five rooms, built on 1.39 town lots in Wellington in Freetown is priced at Le1.5 billion (US$140 000). A four-bedroom bungalow built on two town lots, located off Airport Ferry Road in Freetown is estimated at Le1.8 billion (US$180 000).25. Sierra Leone Property Solutions provided different property prices on its website, with the cheapest price of a two-storey building constructed on 1.1 town lot estimated at Le928 260 465 (US$95 000).

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The major challenge is that construction companies and banks are reluctant to engage low income earners as they prefer to target high earners.26

Housing supply

Sierra Leone faces challenges in providing decent affordable housing for the poor. Although government programmes have opened a Housing Finance Scheme through the HFC Bank, the housing built is high-end and out of the financial reach of many. This scheme is based in part on a “city-competitive” model to make Freetown look like other modern cities.27

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In the absence of long-term public policies, poor people continue to produce poor quality houses nationwide. The 2015 Population and Housing Census analysed housing conditions of the population and revealed that the total stock of houses in the country was 801 417 and that there are 1 265 468 households.28 This indicates a housing gap of 464 051 houses.

The rebels’ invasion in 1999 in Sierra Leone completely decimated approximately 5 932 homes with major destruction in the country. National statistics estimate that almost 300 000 homes were destroyed by 2001.29 As a result, housing supply continues to be a major challenge for the Sierra Leonean government. To meet these challenges, the Deputy Minister for Lands, Housing and the Environment led an investment mission to Zimbabwe in July 2019 to finalise a housing deal with a local developer, Enhanced Mortgaging and Housing Africa (EMHA).30 A Memorandum of Understanding was signed between EMHA and the Sierra Leone Housing Corporation (SALHOC) in February 2020 in Freetown. According to the deal, the two parties will work together under the Housing Development Partnership to construct more than 100 000 social houses in both countries.31 This project is expected to kick off with the initial phase of constructing at least 50 000 accommodations in five years.32 In addition, in August 2019, the Mayor of Freetown announced that Sierra Leone was set to begin the construction of 5 000 housing units in Freetown as part of an affordable housing project to ease the plight of city dwellers in uncongenial habitations and poor housing conditions.33 Despite these efforts, the list of homeseekers continues to grow each year because of the increased costs of purchasing a piece of land.

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​While older two-storey wooden houses have been replaced by structures built using concrete blocks with corrugated iron roofing in Freetown, village houses are traditionally made of sticks with mud walls and thatch or grass roofing.34

COVID-19 response

The COVID-19 pandemic was confirmed to have reached Sierra Leone on 31 May 2020. By the end of April, 124 people had tested positive and seven had died. The government announced a three-day lockdown on 5 April, and subsequently, additional measures were imposed. On 3 May, another lockdown was announced.51

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The BSL did not use an expansionary monetary policy to reduce borrower’s costs during the pandemic, because of fear of inflationary pressure that could further disrupt the economic variables.52 In the absence of public policy towards a moratorium on evictions, FEDURP and Freetown Municipality put together a strategy to prevent and quell the spread of the virus. They engaged in monitoring and advocacy activities at settlement and city levels to minimise threat of evictions and counterproductive closures of essential informal services during the lockdown.53

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Because of the health emergency and planners’ limited understanding of the fluidity of informal settlements, the preventive measures prescribed by the government did not consider the key challenges faced by the residents of these settlements.54 The mayor engaged with informal communities to understand their day-to-day constraints. As a result, the mayor considers informal settlement upgrading and relocation as a potential solution.55

Property markets

Land administration in Sierra Leone is complicated. There are two types of land tenure, colonial land or freehold land, and customary land or leasehold land. Foreigners cannot own land under either of these systems but can lease for up to 99 years. There is no land titling system to validate ownership, so lease rights are hard to secure.35 In the World Bank 2020 Doing Business indicators, Sierra Leone is ranked 163 out of 190 countries. It takes 56 days to register a property while it takes 51.6 days in Sub-Saharan African countries. The cost of registering property is 10.6 percent of the property value in Sierra Leone compared to 7.3 percent in Sub-Saharan African countries.36

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On average, land prices vary in relation to land size and locations. A typical town lot (piece of urban land upon which housing can be built) in Freetown is 3 750 square feet (348 m2). A land size of six town lots is priced at Le107.5 million (US$11 000).37 The least expensive land for sale, located at Juba Hill is priced at Le117.3 million (US$12 000) per town lot.38

SIERRA LEONE

Annual income profile for rural and urban households based on consumption (PPP$), 2019

PPP$40 001 – PPP$10 000 000

Screenshot_50.png

PPP$23 001 – PPP$40 000

PPP$12 001 – PPP$23 000

PPP$8 001 – PPP$12 000

PPP$5 001 – PPP$8 000

PPP$3 601 – PPP$5 000

PPP$2 401 – PPP$3 600

PPP$1 601 – PPP$2 400

PPP$801 – PPP$1 600

<PPP$800

Population:

7 813 215

Urbanisation rate:

3.12%

Cost of cheapest newly built house:

167 400 000 SLL

House price PPP$:

PPP$61 578

No. of households (thousands)

Urban households that could afford this house with finance:

6.11%

1 PPP$:

2 586.28 Sierra Leonean Leone

Policy and legislation

There is no orderly housing finance policy in Sierra Leone. The Sierra Leonean legislation governing housing issues is weak. In Sierra post-conflict, there have not been major reforms in the housing industry and the legislative framework is outdated. However, the fast rate of urban population growth in Sierra Leone is putting pressure on government to undertake housing policy reforms. The 1960 Freetown Improvement Cap 66 was promulgated to control building construction in Freetown. In 1982, the Government of Sierra Leone (GoSL) established SALHOC to promote housing access in the country. It was expected that SALHOC could produce at least 6 500 houses for sale, lease and develop building materials, and establish training centres.39

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Established before the 1990s, Sierra Leone land rights include the Non-Citizens (Registration, Immigration and Expulsion) Act of 1965, the The Protectorate Land Ordinance of 1927, the Imperial Statutes Act, the Town and Country Planning (Amendment) Act No. 3 of 2001 and the Summary Ejectment Act No.6 of 2006.40 Land is classified as state, private or communal. However, most land is governed by customary tenure in a chieftaincy system with chiefs as custodians.41 The Local Government Act No. 1 of 2004 gives local councils the right to acquire and hold land. The 2005 National Land Policy of 2005 promotes equal opportunity to protect property and preserve the existing rights of private ownership.42

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The increase in epidemics combined with rapid urbanisation is set to exert enormous pressure on city authorities to provide more land for housing.43 The Sierra Leone housing finance market is not dynamic.44 As a result of the population density growth, the number of persons per room has increased throughout the country. Successive governments have tried to tackle this. Like Ghana, the GoSL has used retirement funds to invest in housing.45 The National Security and Insurance Trust has also channeled money into home financing and supports the Home Finance Company to provide mortgage funds for poor people.

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Opportunities

Housing Investment offers major investment opportunities that can boost GDP if the GoSL can develop an adequate policy tool to drive foreign and domestic investments in the housing industry in Sierra Leone.

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Despite economic gains in the last decade, Sierra Leone struggles to provide basic needs such as housing. There is a crucial need for investment in housing in the form of upgrading or renovation of existing houses, construction of traditional and low-cost housing, and the building of conventional and luxury houses.46 The GoSL therefore encourages investors to get involved in housing development in the country. The delivery of housing for the vulnerable is under the authority of SALHOC. To tackle the problem and make cities and human settlements inclusive, safe, resilient and sustainable, SALHOC encourages smart spending on low-cost housing.47 The GoSL should create incentives to renovate and construct new houses.48 The GoSL should also use tax credits to encourage a broader range of investors to build houses for sale and private rental at affordable costs.49The cost of land is prohibitive and the GoSL and local councils are trying to remove unnecessary regulations in land acquisition and provide finance for projects.50

Website

Société Générale des Banques www.import-export.societegenerale.fr

ACAPS Sierra Leone www.acaps.org

Trading Economics www.tradingeconomics.com

International Monetary Fund www.imf.org

Sierra Leone Access Bank www.sierraleone.accessbankplc.com

Bank of Sierra Leone www.bsl.gov.sl

Know Your City www.knowyourcity.info

Sierra Leone Urban Research Centre www.slurc.org

Sierra Leone Property Solutions www.sierraleonepropertysolutions.com

Global Property Guide www.globalpropertyguide.com

First Bank Sierra Leone www.fbnbanksierraleone.com

Wyse Real Estate www.wyserealestate.com

VSL Property www.vslproperty.com

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