Debt in Sierra Leone

Formal private borrowing is available through commercial banks, deposit-taking or credit-only microfinance institutions, community banks, financial service associations, cooperatives, mortgage providers and leasing companies. Informal borrowing commonly involves relatives, friends, neighbours, traders, money lenders, farmers, fishers and communal groups. The latest nationally comparable household-credit data identified in the research dates from the 2018 Sierra Leone Integrated Household Survey: relatives, friends and neighbours accounted for about 54% of reported credit sources, traders 20.71%, money lenders 6.56%, microfinance 5.37%, cooperatives 4.47% and commercial banks 0.5%. These figures are dated and do not provide a current national household-debt measure. The Bank of Sierra Leone expects regulated financial providers to assess repayment history, assets, obligations, business cash flow and over-indebtedness before granting credit. Before signing, the provider should give a Key Facts Statement showing the interest rate, principal, fees, total credit cost in Sierra Leone leones, instalments and repayment schedule. Contract and guarantee terms should be understandable, and each page should be signed or fingerprinted. A guarantor should receive a clear explanation of the liability and an opportunity to obtain independent advice. The financial consumer protection rules provide a five-working-day cooling-off period after the contract for covered credit arrangements. Credit information is governed by the Credit Reference Act 2011 and supervised through the Bank of Sierra Leone's Credit Reference Bureau Unit. Repayment history can affect later access to credit. Publicly reliable current deadlines for obtaining, correcting or challenging a credit-reference record were not established in the available research, so the provider or the Bank of Sierra Leone should be asked for the current procedure. The Sierra Leone Collateral Registry records security interests in movable and immovable assets, including land and buildings, machinery, inventory, crops, livestock, receivables and consumer goods. Registration normally establishes priority, and the public can search registered interests. If the borrower defaults, the contract and law may allow enforcement, including court proceedings. A regulated provider must provide account statements on request without charge, issue receipts without charge and avoid misleading or hidden terms. A written recovery notice must precede collection action: at least five working days for weekly instalments and at least 20 working days for monthly instalments. Collection contact is limited to 7:00 to 20:00, must be documented and cannot involve violence, threats, intimidation, humiliation or contact with third parties other than the customer or guarantor. An agreed restructuring should use a new written contract in an understandable language, with confirmation on each page. For foreign-currency loans offered by participating commercial banks, repayment is made in the currency in which the loan was granted. A complaint normally starts with the financial provider. The provider should send a holding reply within two working days and aim to resolve the complaint within 15 working days; if delayed, it should provide the result within a further 10 working days. After the provider's complaint process, the customer can approach the Bank of Sierra Leone Customer Protection Section, where mediation may be available. The Bank of Sierra Leone can order binding monetary or non-monetary relief. The provider's internal process is generally required first, except where the provider has failed to respond. Public debt is managed by the Ministry of Finance's Public Debt Management Division, which handles debt statistics, debt-sustainability analysis, the Medium-Term Debt Management Strategy, the Annual Borrowing Plan, Treasury auctions and arrears clearance. Public debt at the end of June 2025 included NLe 40.74 billion of external debt and NLe 31.75 billion of domestic debt, equal to 41.33% of GDP and 9.7% more than in June 2024. External debt consisted mainly of multilateral debt, representing 77.8% of the external total; bilateral debt represented 13.4% and commercial debt 8.7%. The World Bank and International Monetary Fund accounted for 25.8% and 24.4% of external debt respectively. Debt service in the first half of 2025 reached NLe 5.41 billion, 55.8% higher than a year earlier, and debt service consumed 59.94% of domestic budget revenue; including one-year Treasury-security redemption, the ratio was 148.30%. The Medium-Term Debt Management Strategy 2025–2029 seeks to reduce the present value of debt to GDP from 44.4% to no more than 35.7%, reduce the foreign-currency debt share from 61% to no more than 51.6%, raise the domestic-debt share from 38.9% to at least 40%, extend overall average time to maturity from 6.4 to at least 9 years and domestic average time to maturity from 0.7 to at least 1.5 years. It also aims to reduce debt maturing within one year from 36.2% of GDP to no more than 21% and Treasury bills from 28.2% to 10%. Short-term domestic debt creates refinancing and rollover risk, while longer-term concessional external borrowing can reduce immediate repayment pressure. Verified domestic suppliers' arrears fell from NLe 2,012.11 million in December 2023 to NLe 1,181.9167 million in June 2025 under the 2023–2028 clearance strategy. The 2026 IMF and World Bank debt-sustainability assessment considered public debt sustainable but identified high overall and external debt-distress risk. Under its baseline, the external-debt-service-to-revenue threshold is breached through 2028 and the present-value public-debt-to-GDP threshold through 2026. The assessment depends on fiscal consolidation, grants and highly concessional external financing. Government borrowing can also affect private credit because banks may hold more government securities, leaving less capacity for private borrowers. If a debt remains unpaid, a contractual claim can lead to a judgment and execution. A secured creditor may have separate rights to realise the collateral. The Bankruptcy Act 2009 allows an individual or firm procedure through a creditor or debtor petition, receiving order, creditor meeting, composition or scheme, adjudication, trustee administration and possible discharge. A debtor's statement of assets, debts and securities is due within seven days after a debtor petition or 14 days after a creditor petition. A receiving order restricts creditor remedies unless the court permits them, while secured realisation remains protected. The Act does not provide a personal-bankruptcy procedure for companies; insolvent companies generally use winding-up under the Companies Act 2009, with secured and unsecured claims ranked under the applicable rules. Current registry fees, court fees, lawyer and trustee costs, enforcement duration and informal-lender interest rates vary. The available official research did not identify a single central government debt-counselling service in Sierra Leone. A borrower should therefore keep the contract, repayment records, notices, receipts and complaint correspondence, and obtain advice from the relevant provider, the Bank of Sierra Leone, a qualified lawyer or another reliable service before signing a guarantee, granting security or agreeing to restructuring.