Promoting growth sectors and entrepreneurship in Sierra Leone

Interview with Lorisa Canillas and Archibald Shodeke, Investment Managers in Sierra Leone  


Investing for impact in West Africa. Part 3

27 January, 2022

Two of CIM’s Investment Managers based in Freetown, Lorisa Canillas and Archibald Shodeke, talk about the investment landscape in Sierra Leone, and the difficulties and opportunities of investing in MFIs and SMEs in the region.

What is it like to invest in Sierra Leone?

Lorisa: Sierra Leone is like an island, surrounded by problems. Therefore, the investment landscape is challenging and demands patience and persistence from the investor. Sierra Leone lacks an enabling environment for the private sector to succeed largely due to years of social unrest leading to a devastating civil war that lasted for over a decade. The country is among 50 countries classified as fragile states. Inefficient governance, laws, and regulations, inadequate education and health services, lack of human capital are some of the underlying causes of Sierra Leone’s fragility.

Investments in the country are largely considered risky. Corruption and lack of skilled human capital are the two things foreign companies entering the market in Sierra Leone struggle with the most. Numerous expatriates are invited to work here because finding highly skilled workers is an issue – the level of education is not able to keep up with the needs of the market. Besides, Sierra Leone has a high cost of operations because it is import-dependent and lacks connectedness to global supply chains, thus making shipping and transportation very expensive. 

Inadequate infrastructure further inhibits the development of sustainable enterprises. Many parts of the country have no electricity access or proper water system. One of our investees, Capitol Foods, a beverage manufacturing company, sometimes will temporarily shut down because of the interrupted water supply.

Archibald: On the other hand, we see that the political climate is not as troublesome, as in many countries in the region. Since the end of the eleven-year-long Sierra Leone Civil War in 2002, there have already been tranquil transitions of power. Horrors of the civil war restrain opposing constituencies. They do their best to talk and cooperate. The division between two major parties is quite regional. Such a dual system has issues – parties have a winner-takes-it-all mentality and if in power, marginalize the other group. But overall the political climate is relatively peaceful and stable.

Institutions and supporting structures for entrepreneurship are slowly emerging. The government has committed to the development of agriculture and tourism. They have also adopted strategies to promote the growth of small and medium-sized enterprises. The implementation of those strategies is another issue of course. However, the mere fact that the direct strategy of the government is to facilitate entrepreneurship is a big step forward.

How would you describe the role of Cordaid Investment Management’s investments in the country?

Lorisa: We are one of the few investors remaining in Sierra Leone. A couple of other impact funds had to put their operations on hold after the COVID-19 pandemic heightened the scale of macroeconomic problems in the country. International investors expecting high returns for the high risks they are taking, see very limited opportunities in Sierra Leone. Only truly impact-driven investors can stay and succeed here.

Archibald: At the beginning of my career, I worked for development institutions where I noticed, in the end, the mismatch between what they set out to do and actual results attained. Only when I joined the microfinance sector, I noticed that my work truly impacts communities. I witnessed the change financial inclusion makes on people's lives: small-scale entrepreneurs who could not put the food on the table in a couple of years would get back on their feet and grow their businesses. But investing only in MFIs does not suffice, impact investors have to do better. Investing in social businesses and growth sectors that provide services to deprived communities, that create jobs in households at bottom of the wealth pyramid, that sustain the environment, that’s what brings catalytic change. That is the kind of impact we are looking for.

What does the sector strategy in Sierra Leone look like? 

Lorisa: West Africa Bright Future Fund is going to concentrate on agriculture, clean energy, and waste management. Boasting the richness of the soil and favourable climate, Sierra Leone has great potential in agriculture. Before the civil war, it was considered a breadbasket for rice in the region, but right now the production of all crops is low. Sierra Leone grows cocoa, coffee, rice, palm oil but the production is far from reaching scale and cannot compete with the rest of the world yet.

Our role is to identify resilient players in those sectors and facilitate their growth. Companies expand and create jobs. We prioritize the ones that create employment opportunities for women and youth. At the same time, we don't want to limit ourselves down to specific value chains. We need to keep our eyes open for promising players – a narrow focus on particular agribusiness subsectors will limit our capacity to identify sustainable enterprises that lack "the missing middle" growth capital.

Clean energy is another key impact sector. As electrification rates are low, we have an opportunity to skip the fossil fuel generators and go straight to renewables which are cheaper and better for the climate.

Copyright WARC
Copyright WARC

How is Cordaid Investment Management going to measure impact in Sierra Leone?

Lorisa: Being based in Sierra Leone and knowing the local context, gives us a better understanding of what metrics we can realistically collect. Given the challenging environment our investees operate in, we need to simplify and prioritize. Our investees will and should be focused on strengthening their business. We do not want to unnecessarily burden them and add new day-to-day challenges, such as tracking all sorts of data they cannot use at the end of the day. One cannot just enforce a basket of impact metrics that high-income countries are using and expect it to work. They need to be customized. 

Another challenge we are facing is that some of these metrics are hard to implement across all types of investees and beneficiaries. They are not homogeneous, so we are very careful about which metrics and surveys to use. We want to get quality information to see the improvements our investments make and encourage investees to use those metrics to learn, improve, and expand their operations.

Investing in social businesses and growth sectors that provide services to deprived communities, that create jobs in households at bottom of the wealth pyramid, that sustain the environment, that’s what brings catalytic change

What impact have we already made in Sierra Leone? 

Lorisa: CIM’s activities in West Africa began with a couple of investments in Sierra Leone's microfinance sector. We have witnessed to what extent financial inclusion helps the development of micro-entrepreneurship. The majority of MFI clients we work with are involved in the informal trading sector, and most of them are women. 

Investments in MFIs are not without risk, but they are still safer than financing SMEs. In this way, we are especially proud of our contribution to the growth of enterprises in Sierra Leone. For example, the catalytic role that we played for Easy Solar, the largest solar home systems distributor in the country. Our investment came during the early months of Easy Solar’s commercial operations 5 years ago. We were the first international lender and our early-stage financing helped Easy Solar demonstrate that their business model works. That gave confidence to other impact investors to join in. Another example of significant social impact was funding to Mountain Lion Agriculture, engaged in rice milling and the development of out-grower schemes with smallholder farmers. Our investment sustained 53 direct jobs and supported nearly 7500 rice farmers. 

Archibald: Amidst the COVID-19 pandemic we offered timely support to a producer of fruit-based beverages Capitol Foods. CIM's loan created an immediate relief to both the company’s input supply chain and thousands of farmers, whose access to the market was limited due to movement restrictions. The impact created inspired CIM's confidence and search for new ways to facilitate the growth of SMEs. For instance, CIM recently has fostered collaboration between Easy Solar and CIM's partner MFIs. This has set the stage for further critical partnership between financial service providers and Easy Solar to enhance the provision of affordable solar home systems to customers.


Cordaid Investment Management’s (CIM) has been investing in small and medium-sized businesses (SMEs) in West Africa since 2016. Our first investments in Sierra Leone demonstrated the great potential of SMEs in the region and the transformative role that entrepreneurship has for the local economy and lives of individuals. In the past year, despite the challenges of a global pandemic, CIM’s portfolio in West Africa has shown significant growth. We now have 20 SMEs in Sierra Leone and 9 SMEs in Mali with a total portfolio size of €12.5 million.

Knowing there are sustainable businesses lacking finance to expand and flourish, CIM is launching a new West Africa Bright Future Fund (WABFF), contributing to economic development and building sustainable livelihoods in Mali, Sierra Leone, Burkina Faso, and Guinea. The Fund aims to fill the SME financing gap in West Africa, offering the “missing middle” loans from €250,000 to €3 million. The fund focuses on three sectors – agriculture, clean energy, and waste management – which have proven to be transformational for the region.

CIM aspires to contribute to job creation for women and youth in West Africa, combining loans with technical assistance and environmental, social and governance (ESG) development. To develop an investment strategy that will maximize social impact, CIM engaged an independent research team to assess the performance of the West African portfolio and the outcomes of our investments to date. Sponsored by Dutch Postcode Lottery, this project allowed CIM to gain valuable insights on how to maximize social impact in a fragile context.

More info about WABFF

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