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Washington, DC: e-mail: pubrights@worldbank.org 3 About DE4A Rapid digital transformation is reshaping our global economy, permeating virtually every sector and aspect of daily life, changing the way we learn, work, trade, social- ize, and access public and private services and information. In 2016, the global digital economy was worth about US$11.5 trillion, equivalent to 15.5 percent of the world’s overall gross domestic product (GDP). It is expected to reach 25 percent in less than a decade, quickly outpacing the growth of the overall economy. However, countries like Sierra Leone are currently capturing only a fraction of this growth potential and need to strategically invest in the foundational elements of their digital economy to keep pace. The Digital Economy for Africa (DE4A) Initiative forms part of the World Bank Group’s support for the African Union’s Digital Moonshot for Africa, which aspires to see every African individual, business, and government digitally enabled by 2030. The DE4A Initiative is underpinned by five foundational and synergistic elements: Digital Infrastructure provides the way for people, businesses, and governments to get online and link with local and global digital services, thus connecting them to the global digital economy. Broadly, digital infrastructure consists of high-quality and affordable connectivity, internet of things, and data repositories. With a growing digital economy, the role and importance of data privacy and cybersecurity also in- crease, adding security functions to protect critical infrastructure. Digital Platforms underpin digital transactions and connections. These systems, appli- cations, and services have the potential to transform the way people, governments, busi- nesses, and civil society interact with each other in all aspects of life. Digital platforms can help create economies of scale and network effects, whereby additional users can create an exponential increase in value from other users, including the data they generate. Digital Financial Services provide individuals and households with convenient and affordable channels by which to pay, as well as to save and borrow. Firms can lever- age digital financial services (DFS) to more easily transact with their customers and suppliers, as well as to build digital credit histories and seek financing. Governments can use DFS to increase efficiency and accountability in various payment streams, including for the disbursement of social transfers and receipt of tax payments. Digi- tal payments are often the entry point for DFS and provide the ‘rails’ through which additional products and use cases can be developed. Digital Entrepreneurship and innovation create an ecosystem to bring the digital economy to life—with new, young ventures and transformation of existing business- 4 es—contributing to net employment growth and helping to enhance competitiveness and productivity of an economy. Digital entrepreneurship offers new products and ser- vices, leverages new technologies and business models, and opens new markets. Digital Skills equip a digitally savvy workforce to build robust digital economies and competitive markets. Digital skills are technology skills, together with business skills for building or running a start-up or enterprise. Greater digital literacy enhances the adoption and use of digital products and services among the larger population. Foundations of digital economy involve several cross-cutting areas, including agile regulation, competition policy, gender, cybersecurity, consumer protection and data privacy: the foundational elements of digital economy have some common themes. All areas of digital economy require effective competition. Firms operating within the digital economy—whether to offer digital connectivity, payment solutions, or digital platforms—require a good level playing field. Free market forces can help drive down prices and ramp up usage. All aspects of digital economy need to be inclusive, giving equal opportunity to men and women and to the disadvantaged. With the growing use of digital information, protecting critical information and infrastructure, whether it is for digital platforms, financial services, transport, or energy, is paramount. The privacy of people’s information across sectors similarly requires robust safeguards. Additional areas, including taxation, trade, and intellectual property rights, are important for a digital economy and depend on the development maturity and needs of the country. The DE4A Initiative is fully embedded in the World Bank Group’s IDA19 commit- ments to improve public service delivery particularly in fragile and conflict areas, create markets and remove constraints to more and better jobs, and improve wom- en’s ownership and control over assets. Key commitments include support to en- sure (a) 50 percent of IDA FCS countries use field-appropriate digital tools to improve project implementation and coordination; (b) digital infrastructure gap is closed by reaching 30 percent broadband penetration in at least 20 IDA countries by 2023; (c) at least 60 percent of IDA19 financing operations for digital skills development will support women’s access to online work, and 50 percent of entrepreneurship projects will incorporate DFS and/or digital entrepreneurship elements; and (d) all IDA19 fi- nancing operations for Digital Development will support women’s increased access to information and communication technology (ICT) services and take steps to increase women’s usage of services. 5 As part of the DE4A Moonshot Initiative, ambitious, high-level targets have been established for all five foundational pillars of the digital economy, articulated under the DE4A framework, as a way to define and measure success against the goal of en- suring that every individual, business, and government is digitally enabled by 2030. Figure 0.1 Key Component of the Digital Economy Ecosystem Macroeconomic Applications likely to develop once the Enabling Environment foundation elements are in place: Macro-economic Stability E-commerce Usage Open Bankinng - Non-banks offer tailored service Financial Sector Stability and Interity Enabiling Tax Policy Digital Enterpreneurship Enabling Trade Policy DIGITAL SKILLS DIGITAL AND LITERACY PLATFORMS Cross Cutting Areas Digital Financial Services Data Privacy & Cybersecurity $ Competion Gender Digital Infrastructure Foundational Elements Figure 0.2 Digital Moonshot Targets across Pillars Note: GNI = Gross national income. DFS = Digital Financial Services. GDP = Gross Domestic Product. 6 Acknowledgements This report was researched and prepared by a cross-sectoral task team led by Kaoru Kimura (Senior Digital Development Specialist) and comprised experts from across the World Bank Group. Core team members included Mavis A Ampah (Digital De- velopment Consultant), Constantin Rusu (Senior Public Sector Specialist), Nicholas Timothy Smith (Financial Sector Specialist), Nana Yaa Boakye Adjei (Financial Sector Consultant), Cristian Quijada Torres (Senior Private Sector Development Specialist), Alari Hasanatu Ijileyoh Mahdi (Private Sector Specialist), Himdat Iqbal Bayusuf (Ed- ucation Specialist), Mari Shojo (Senior Education Specialist), and Mohamed Adama Jalloh (Education Consultant). The team benefited from the insights of Sierra Leone’s country office staff and from the support provided by Sheikh Alhaji Yayah Sesay, Allan Dunstant Odulami Cole, Mariatu Margaret Sankoh, and Warrah Mansaray. Overall guidance was provided by Gayle Martin, Country Manager for Sierra Leone, and Pierre Laporte, Country Direc- tor for AWCW1 (Ghana, Liberia, and Sierra Leone). Additional guidance and contributions were provided by Michel Rogy, Practice Man- ager (Digital Development), and Tim Kelly (Lead Digital Development Specialist). Moreover, the team is grateful to the peer reviewers of this report – Caroline Chepkorir Koech (Digital Development Specialist), Leonard Mutuku Matheka (Senior FM Special- ist), Holti Banka (Financial Sector Specialist), Eva Clemente (Private Sector Specialist), and Yevgeniya Savchenko (Senior Economist)– for their valuable comments. The team is grateful for the valuable contributions by Lucine Munkyung Park (Digital Development ET Consultant), Claudio Mendonca (Graphic Designer). The team would also like to thank the Ministry of Information and Communications (MIC), the Directorate of Science, Technology, and Innovation (DSTI) in the State House, National Civil Registration Authority (NCRA), National Public Procurement Authority, Statistics Sierra Leone (Stats SL), Right to Access Information Commission (RAIC), the Bank of Sierra Leone, The Ministry of Trade and Industry, the Ministry of Basic Se- nior Secondary Education (MBSSE), the Ministry of Technical and Higher Education (MTHE), the University of Sierra Leone, Njala University, private sector representatives, and all the other stakeholders, which helped make this diagnostic possible. 7 8 Diagnostic Methodology Data Collection An in-country kickoff mission was undertaken in October 2019 for this diagnostic. Most of the work was conducted by desk research as well as interviews with key stake- holders. Given the emerging COVID-19 pandemic, a joint team visit to Sierra Leone to hold a stakeholder workshop in Freetown did not take place. Virtual client review and feedback meetings were organized in June 2020 as part of this country assessment. The valuable comments received from the clients were incorporated in the final re- port. The list of stakeholders involved in this diagnostic is the following:  Public sector: Ministry of Information and Communications (MIC), Directorate of Science, Technology, and Innovation (DSTI), National Civil Registration Authority (NCRA), National Public Procurement Authority, Statistics Sierra Leone (Stats SL), Right to Access Information Commission (RAIC), Bank of Sierra Leone (BSL), Ministry of Trade and Industry, Ministry of Technical and Higher Education (MTHE), Ministry of Basic and Senior Secondary Education (MBSSE),  Private sector: Niche Technology  Incubators and accelerators: Innovation Axis, Sensi Tech Hub  Telecommunications sector: National Telecommunications Commission (NATCOM), Universal Access Development Fund (UADF), Sierra Leone Cable Limited (SALCAB), Africom, Orange, Sierratel, Qcell,  Financial sector: Sierra Leone Fintech Association, Orange Money, AfriMoney, Ecobank  Education sector: Public and private universities and colleges (University of Sierra Leone – Fourah-Bay College and IPAM, Njala University, IAMTECH, MMCET, and Limkokwing University)  Donor agencies: U.K. Department for International Development (DFID), European Commission  Civil society organizations: Investment Salone, Cordaid International Analysis presented also draws on regional and global benchmarking, based on standardized indicators that form part of the Digital Economy for Africa (DE4A) di- agnostic methodology. The analysis also draws on government statistics and data shared by the private sector. 9 10 Contents Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Diagnostic Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Country at a Glance: Sierra Leone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Sierra Leone and the Digital Economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Rationale for Digital Economy Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Diagnostic Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Digital Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Importance of Digital Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Diagnostic Findings: Current State of High-speed Internet Development . . . . . . . . 41 Digital Infrastructure Recommendations and Next Steps . . . . . . . . . . . . . . . . . . . . . 54 Digital Platforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Importance of Digital Platforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Diagnostic Findings: Current State of Digital Platforms . . . . . . . . . . . . . . . . . . . . . . 59 Digital Platforms Recommendations and Next Steps . . . . . . . . . . . . . . . . . . . . . . . . 76 Digital Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Importance of Digital Financial Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Diagnostic Findings: Current State of DFS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Opportunities: Leveraging Recurrent Payments to Increase Usage of DFS . . . . . . 101 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 DFS Recommendations and Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Digital Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Importance of Digital Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Diagnostic Findings: Current State of Digital Entrepreneurship . . . . . . . . . . . . . . 117 Digital Entrepreneurship Recommendations and Next Steps . . . . . . . . . . . . . . . . . 138 Digital Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Importance of Digital Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Diagnostic findings: Current State of Digital Skills . . . . . . . . . . . . . . . . . . . . . . . . . 148 Digital Skills Recommendations and Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Conclusion: The Way Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 Annex 1: List of Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 11 List of Figures Figure 0.1 Key Component of the Digital Economy Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 0.2 Digital Moonshot Targets across Pillars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 1.1 Population Pyramid by Age, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 1.2 GDP per Capita, Time Series, (Constant 2010 US$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 1.3 Digital Economy Can Bring Shared Prosperity and Reduced Poverty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 1.4 Key Components of the Digital Economy Ecosystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Figure 1.5 Digital Moonshot Targets across Pillars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Figure 2.1 Internet’s Effect on Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Figure 2.2 Mobile Market Share in Sierra Leone, Q4 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 2.3 Network Coverage by Population, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 2.4 Cost of Broadband Internet (% GNI per capita), 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Figure 2.5 Average Download and Upload Internet Speed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Figure 2.6 ITU Regulatory Tracker for Sierra Leone, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Figure 2.7 Africa Regulatory Watch Index, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Figure 2.8 The ACE submarine cable system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Figure 2.9 Used International Bandwidth per Population (kbps), 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Figure 2.10 Steps for Regulatory Support for Market Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Figure 3.1 Digital Public Platforms: Benefits and Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Figure 3.2 United Nation’s e-Government Development Index Scores, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Figure 4.1 Financial Institution or Mobile Money Account (% adults) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Figure 4.2 Geospatial Mapping of Financial Service Access Points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Figure 4.3 Financial Institution vs. Mobile Money Account Ownership (% adults). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Figure 4.4 Made or Received Digital Payments in the Past Year (% age 15+). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Figure 5.1 GEI Score (percentage). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Figure 5.2 GEI 2018: Sierra Leone Country Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Figure 5.3 Global Competition Ranking and Scores (0–100). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Figure 5.4 Sierra Leone Doing Business Performance in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Figure 5.5 Investment Climate Constraints in Sierra Leone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Figure 5.6 Venture Capital Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Figure 5.7 Start-up Skills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Figure 5.8 Reliability of Supply and Transparency of tariff index, (0–8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Figure 5.9 Sector Choice of Respondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Figure 5.10 Indicators of Entrepreneurship Culture (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Figure 6.1 Competency Domain of ICT Professionals in Government Institutions and Parastatals. . . . . . . . . . . . . . . 144 Figure 6.2 Area of Interest/Focus of ICT Professionals in Government Institutions and Parastatals . . . . . . . . . . . . . 145 Figure 6.3 Structure and Levels of Sierra Leone Education and Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Figure 6.4 Children Using Tablets during the Rollout of the 60 Million Girls MLL Program in November 2016 . . . . 150 Figure 6.5 Structure and Levels of Sierra Leone Education and Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Figure 6.6 Children Using Tablets during the Rollout of the 60 Million Girls MLL Program in November 2016. . . . 163 12 List of Tables Table 1.1 Sierra Leone at a Glance: Key Top-level Figures and Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Table 1.2 Poverty Headcount Ratio, 2011 PPP, % of Population, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Table 2.1 Key ICT Indicators in West Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Table 4.1 Breakdown of Financial Service Access Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Table 5.1 Status of the Legal Framework for Digital Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 Table 5.2 Categories of Entrepreneurship Support Institutions Operating in Sierra Leone . . . . . . . . . . . . . . . . . . . . . . . .128 Table 5.3 Average Tariff (US$/kWh) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129 Table 6.1 Number of Students by Level of Education, Field, and Sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 Table 6.2 Number of Graduates by the Level of Education, Field, and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157 Table 6.3 Projects for Technical Skills Enhancement and Employment Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161 13 Acronyms 4IR Fourth Industrial Revolution EFT Electronic Fund Transfer A4AI Alliance for Affordable Internet EGRA Early Grade Reading Assessment ACE Africa Coast to Europe EPI E-Participation Index (part of EDGI) ACH Automated Clearing House FREE Focusing Resources on Education AFROSAI African Organisation of English- FSA Financial Services Association speaking Supreme Audit Institutions G2B Government-to-Business AI Artificial Intelligence G2C Government-to-Citizen AML/CFT Anti-Money Laundering and Combating G2G Government-to-Government the Financing of Terrorism GB Gigabyte API Application Programming Interface GCCN Government’s Common Core Network ARWI Africa Regulatory Watch Index GDC Government Data Centre ASSL Audit Service Sierra Leone GDP Gross Domestic Product ASYCUDA Automated System for Customs Data GDPR General Data Protection Regulations ATM Automated Teller Machine (European Union) AU African Union GEA Government Enterprise Architecture AUC African Union Commission GEI Global Entrepreneurship Index B2B Business to Business GNI Gross National Income B2P Business to Person GoSL Government of Sierra Leone BDS Business Development Service HCI Human Capital Index BECE Basic Education Certificate Examination ICR Implementation Completion and BSL Bank of Sierra Leone Results Report CEC Community Education Center ICT Information and Communication CERT Computer Emergency Response Team Technology CICO Cash-In/Cash-Out ID Identification CMP Common Market Protocol ID4D Identification for Development COTS Commercial Off-the-Shelf IDB Islamic Development Bank CPMI Committee on Payment and Market IFC International Finance Corporation Infrastructures IFMIS Integrated Financial Management DE4A Digital Economy for Africa Information System DFID U.K. Department for International INCRS Integrated National Civil Registration Development System DFS Digital Financial Services IoT Internet of Things DLT Distributed Ledger Technology IP Intellectual Property DRMS Debt Recording and Management System IPR Intellectual Property Right DSTI Directorate of Science, Technology, and IRCBP Institutional Reform and Capacity Innovation Building Project e-CF European e-Competency Framework ISP Internet Service Provider ECOWAN ECOWAS Wide Area Infrastructure IT Information Technology ECOWAS Economic Community of West African States ITAS Integrated Tax Administration System EDGI E-Government Development Index ITU International Telecommunication Union (United Nations) JSS Junior Secondary School 14 JSS2 Junior Secondary Grade 2 Students PoP Point of Presence KYC Know Your Customer POS Point of Sale M&E Monitoring and Evaluation PPP Public-Private Partnership MB Megabyte PSP Payment System Providers MBSSE Ministry of Basic and Senior Secondary PSRU Public Sector Reform Unit Education QR Quick Response MDAs Ministries, Departments, or Agencies RAIC Right to Access Information Commission MFI Microfinance Institutions ROA Return on Assets MIC Ministry of Information and ROE Return on Equity Communications RTGS Real-time Gross Settlement ML Machine Learning SALCAB Sierra Leone Cable Limited MLL Mobile Learning Lab SLIX Sierra Leone Internet Exchange Point MNO Mobile Network Operator SMEs Small and Medium Enterprises MoF Ministry of Finance SPU Strategy and Policy Unit MoPED Ministry of Planning and Economic SS Senior Secondary Development SSS2 Senior Secondary Grade 2 Students MTHE Ministry of Technical and Higher Education STEM Science, Technology, Engineering, and MTI Ministry of Trade and Industry Mathematics NaCSA National Commission for Social Action TVET Technical and Vocational Education and NASSIT National Social Security and Insurance Trust Training NATCOM National Telecommunications Commission UADF Universal Access Development Fund NCRA National Civil Registration Authority UIS UNESCO Institute of Statistics NDIS National Digital Innovation Strategy UN United Nations NDP National Development Plan UNCDF United Nations Capital Development Fund NDTR National Digital Transformation Roadmap UNDP United Nations Development Programme NIDS National Innovation and Digital Strategy UNESCO United Nations Educational, Scientific, NPC National Payment Council and Cultural Organization NPL Nonperforming Loan UNICEF United Nations Children’s Fund NPPA National Public Procurement Authority USSD Unstructured Supplementary Service Data NPSA National Payment Systems Act VCPE Venture Capital and Private Equity NRA National Revenue Authority WACREN West Africa Regional Education Network NRA National Risk Assessment WAPP West Africa Power Pool NRI Networked Readiness Index WARCIP West Africa Regional Communication NSFI National Strategy for Financial Inclusion Infrastructure Project OARG Office of the Administrator and WASSCE West Africa Senior Secondary Certificate Registrar General Examination OCDS Open Contracting Data Standard WBG World Bank Group ODRA Open Data Readiness Assessment WDR World Development Report OTC Over the Counter WEF World Economic Forum PAYE Pay As You Earn WoG Whole of Government PIN Personal Identification Number WTO World Trade Organization PKI Public Key Infrastructure 15 16 Executive Summary T he rapid evolution of digital technologies and digital transformation is re- shaping the dynamics of the global economy and supply chain. The digital economy creates new opportunities for innovation, access to information and services, social networking, job creation, and economic growth. The value of the global digital economy was estimated around US$11.5 trillion, approxi- mately 15.5 percent of global gross domestic product (GDP) in 2016. It is expected to reach 25 percent in less than a decade. The digital economy potentially offers opportunities for development in Sierra Leone, and there are associated risks of being further left behind if a comprehen- sive strategy is not put in place. Without a reliable digital infrastructure, affordable connectivity, digital literacy, and digital skills, it is difficult to achieve growth that includes shared government platforms, coverage of digital identification, access to digital financial services (DFS), new digital businesses, and new job opportunities. The Government of Sierra Leone (GoSL) recognizes digital technologies as a key enabler for transforming the country in general, and its economy in particular. Sierra Leone ex- perienced first-hand the importance of digital technologies during the Ebola crisis when mobile phones were instrumental in tracking, monitoring and managing outbreaks. The COVID-19 pandemic has further demonstrated the critical need for more robust digi- tal infrastructure to provide essential services as well as trace, monitor and manage the spread of the disease. The crisis, with its social distancing requirements, offers unprece- dented demand for digital technologies, as well new opportunities for the global digital economy as a whole. At the same time, Sierra Leone with all its concomitant develop- ment challenges (poverty, a growing youth population and high youth unemployment, weak institutions, a North-South ethno-regional divide, and susceptibility to multidimen- sional shocks—epidemic, economic, and climatic), and still ranking near the bottom of most development indexes, risks being left out of emerging digital opportunities. The critical use of digital technologies is inevitable for a government to build a strong foundation of efficient and effective governance that includes public service delivery, economic diversification, and economic growth. Strategic investment in the fundamental elements of the digital economy needs to be carefully selected and implemented in a fast, agile manner. Also, timely prepared actions for minimizing emerging risks, such as cybersecurity data governance, are needed. A country diagnostic of Sierra Leone’s was launched as part of the World Bank Group’s Digital Economy for Africa (DE4A) Initiative to examine the current state of digital econ- omy across Africa by applying standardized DE4A methodology. This report provides a comprehensive assessment of Sierra Leone in the five key pillars: Digital Infrastructure, Digital Platforms, Digital Financial Service, Digital Entrepreneurship, and Digital Skills. 17 Pillar Overall Performance DIGITAL INFRASTRUCTURE Indicator Source and date Sierra Leone SSA average “Unique” mobile-broadband subscriptions per 100 inhabitants GSMA Intelligence 2019 26.6 28.2 % of population covered by 3G mobile network (%) GSMA Intelligence 2019 62.6% 77.9% Average Mobile Broadband download speed (Mbit/s) Cable.co.uk 1.2 Mbps (ranked#189 out of 207 countries) 2.66Mbps Cost of broadband internet (500MB, as % of GNI) A4AI 4.9% 9.95% Pillar Overall Performance DIGITAL PLATFORMS Indicator Source and date Sierra Leone SSA average Digital Adoption Index - government cluster World Bank 2016 0.42 0.41 Open Data Inventory Score Open Data Watch 2019 Score 44/100 (ranked #86 of 178 countries) n.a. Online Service Index UN 2018 0.33 0.36 % ID coverage for adults FINDEX 2017 n.a. 69% Pillar Overall Performance DIGITAL FINANCIAL SERVICES Indicator Source and date Sierra Leone SSA average Mobile money access rate (% of adults) Findex 2017 11% 20.9% (excluding high income) Made or received digital payments in the last year (% of adults) Findex 2017 15.6% 34.4% Used a mobile phone or the internet to access a financial institution Findex 2.8% 7.8% account in the past year (% of adults) Pillar Overall Performance DIGITAL ENTREPRENEURSHIP Indicator Source and date Sierra Leone SSA average Global Entrepreneurship Index GEI 2018 Ranked #132 out of 137 countries n.a. Firm-level technology absorption, WEF Global Competitiveness Report 3.5 (Ranked #126 out of 137 countries) n.a. 1 = not at all and 7 = to a great extent 2017-2018 Pillar Overall Performance DIGITAL SKILLS Indicator Source and date Sierra Leone SSA average Proportion of youth and adults with advanced digital skills ITU n.a. 2% Internet access in Schools WEF Global Competitiveness Report 2.6 (Ranked #131 out of 137 countries) n/a 2017-2018 * https://www.cable.co.uk/broadband/speed/worldwide-speed-league/#regions 18 The country diagnostic confirmed Sierra Leone’s potential, as well as its commitment and efforts to leverage digital technologies for transformational growth. However, the di- agnostic findings highlighted the enormous challenges that Sierra Leone faces compared to regional peers. The country has made significant efforts including liberalization of the telecommunications market to allow competition in the provision of telecommunications infrastructure and extensive public investments in the national backbone network; devel- opment of a shared government digital platform and rollout of key applications such as the Integrated Financial Management Information System (IFMIS) and public financial management (PFM) to improve the government’s capacity to manage public resources; improved environment for the National Payment Systems which are the core infrastruc- ture supporting digital payments (beyond mobile money); launch of some incubation and acceleration programs and increase in early-stage financing; and substantial progress in increasing access to education following the civil war, especially among girls. The table below summarizes a qualitative assessment of the key strengths, weak- nesses and opportunities within each of the five pillars of the digital economy. Key Strengths Key Weaknesses and Roadblocks Opportunities High-level government vision: Mobile First About 20% of population living in areas Effective operation and management of without access to any mobile phone signal the UADF provision will go a long way in Existence of fiber-optic cable network improving access connecting key cities Inefficient use and management of Universal Digital infrastructure Access Development Fund (UADF) Effective revision of licensing regime to Existing submarine cable landing station enable technology neutrality Low mobile broadband internet access Steady growth of mobile market and availability limited to urban areas Further liberalization of International Gateway Delay of liberalization of international gateway Outdated or absence of streamlined legal and regulatory application decrees in new digital areas (data policy, cybersecurity) Key Strengths Key Weaknesses and Roadblocks Opportunities High-level government understanding and Lack of coordination among ministries, Better institutional and donor coordination support for a WoG approach toward digital departments, and agencies (MDAs) on for digital transformation platforms digital provision Design and implement a WoG information Ongoing implementation of key Insufficient interoperability between and communication technology (ICT) Digital Platforms applications (PFM/IFMIS, e-Procurement, existing initiatives and databases enterprise architecture to provide the Integrated Tax Administration System foundation for digital transformation Government middle-management’s poor (ITAS), and civil registration/digital ID digital capabilities: skills and infrastructure Establish and apply a shared platforms/ initiatives (National Civil Registration services for government approach Authority [NCRA]) Need to update the digital strategy Expedite the implementation of a national Weak cybersecurity practice data center as a base for establishment of a hybrid government cloud to create a common virtual infrastructure for the public sector 19 Key Strengths Key Weaknesses and Roadblocks Opportunities Digital Financial Service National Strategy for Financial Inclusion Sierra Leone lags in access to and usage of DFS Bolster national payment systems to promote (NSFI) 2017–2020 developed digital payments and financial inclusion High level of cash payment in the economy Financial inclusion rate has increased, in Increase efficiency and effectiveness Inadequate legal and regulatory framework part, from mobile money of government payments through their Lack of digital payment system digitization infrastructure and credit infrastructure Improve user experience and protection thereof Key Strengths Key Weaknesses and Roadblocks Opportunities Ongoing effort to improve business Lack of policy and legal environment to Improve the policy and regulatory environment support digital entrepreneurship (for environment for digital enterprises by example, intellectual property right, tax closing gaps in the existing legislative Digital Entrepreneurship Favorable context given increasing use incentive) framework to support the expansion of of technologies and a nascent innovation digital goods and services ecosystem Limited access to finance Support access to early-stage finance for Transformational entrepreneurship Access to infrastructure (electricity and entrepreneurs culture among youth internet) is still insufficient to support development of digital space Nurture digital entrepreneur ecosystem (including supply of quality business Limited e-business skills development providers and technical skills in the labor market) Key Strengths Key Weaknesses and Roadblocks Opportunities Substantial progress in increasing access Lack of data is a key challenge to access the Support internet access from schools, to education since the end of the civil war current levels of digital skills in Sierra Leone especially secondary schools, technical in 2004, especially among girls and vocational education and training Lack of devices, access to internet from (TVET) institutions, and universities for Digital skills Government of Sierra Leone (GoSL) set schools, digital contents better digital job opportunities as well as ambitious target for skill development Limited capacity of the Ministries of research collaborations in science, technology, engineering, and Education, Skills Development, and Higher mathematics (STEM) courses Integrate the use of digital technologies in Education to lead digital skills agenda the delivery of education across all sectors and design and implement digital-related and implement existing policies to include a policy and regulatory framework computer skills program in the curriculum 20 SUMMARY OF HIGH-PRIORITY RECOMMENDATIONS This DE4A Country Diagnostic led to the formulation of 54 recommendations from the five key pillars1, with different time horizons (short, medium and long term) and different priority levels (high, medium and low). Also, the following cross-cutting issues were observed throughout the assessment Cross-cutting Issues observed in the DE4A SL Country Diagnostic  Ensuring that the digital economy is more inclusive  Supporting more agile and enabling regulation and policy  Streamlining institutional framework and coordination for the GoSL’s digital transformation agenda  Creating a trust environment  Increasing competition  Enhancing human capital  Strengthening collaboration among the key stakeholders (GoSL, private sector, academia, civil society, and development partners) The table below summarizes only the high-priority recommendations. (see Annex 1 for the full list). 21 Pillar Objectives Horizon Topic: Ensuring that the digital economy is more inclusive Infrastructure Improvement in the management of the UADF Medium | Long Platforms Initiate a comprehensive plan to modernize government services to citizens and businesses. Medium Financial Services Implement national retail payment switch Short Digitize cash transfer programs with the aim of digitizing all government payments Medium Entrepreneurship Prioritize investment readiness for entrepreneurs to lower transaction cost for investors and establish a viable pipeline Short- Medium Promote uptake of digital goods and services Short- Medium Skills Enhance connectivity for education institutions, prioritizing secondary schools, TVET institutions, and universities Medium Topic: Supporting more agile and enabling regulation and policy Infrastructure Revision of the licensing regime Short Streamlining of the cybersecurity environment and development of dedicated law or legislative framework on Medium | Long cybersecurity/cybercrime Financial Services Adopt the amended National Payment Systems Act Short Amend guidelines on agents Short Amend the legal and regulatory framework to facilitate the digital termination of remittances Short Entrepreneurship Close gap in the existing legislative framework to support the expansion of digital goods and services and manage Short | Medium emerging risk of expansion to consumers and entrepreneurs Topic: Streamlining institutional framework and coordination for the GoSL’s digital transformation agenda Infrastructure Further strengthening of the regulatory institution (NATCOM) to foster market competition Medium | Long Liberalization of the international gateway Short Platforms Strengthen leadership and promote institutional and donor’s coordination for digital transformation Short | Medium Design and implement a WoG ICT enterprise architecture to provide the foundation for digital transformation Short | Medium Establish and apply a shared platforms/services for government approach Short Expedite the implementation of a national data center as a base for establishment of a hybrid government cloud to create Short a common virtual infrastructure for the public sector Implement the interoperability framework (technological and regulatory) Short Develop new or modernize existing core systems (back-office) in line with WoG ICT architecture and international good practices Medium Financial Services Establish and operationalize national retail payment switch implementation committee Short Establish connection between MoF IFMIS and BSL EFT Medium Entrepreneurship Close gap in the existing legislative framework to support the expansion of digital goods and services and manage Short | Medium emerging risk of expansion to consumers and entrepreneurs Skills Integrate the use of digital technologies in the delivery of education across all sectors and implement existing policies to Short | Medium include the computer skills program in the curriculum Topic: Creating a trust environment Platforms Create a trust environment for digital government Long Financial Services Conduct an in-depth diagnostic on cybersecurity needs related to DFS Short Increasing competition Infrastructure Coordination of Policy and Strategy Documents for development of Digital Economy Short | Medium Topic: Enhancing human capital Financial Services Bolster BSL licensing capacity on DFS and with respect to DFS-related legal, regulatory, and oversight framework Short | Medium responsibilities Skills Ensure the curricula, teaching methods, and assessment are linked to digital skills Medium Provide capacity building for Ministries of Education, Skills Development, and Higher Education Medium | Long Topic: Strengthening collaboration among the key stakeholders (GoSL, private sector, academia, civil society, and development partners) Platforms Strengthen donor’s coordination for digital transformation Short | Medium 22 Much more will need to be done if Sierra Leone expects to leapfrog in its economic growth and ensure that digital dividends accrue to all citizens. First, the country needs to develop more specific and in-depth implementation plans for policies, legal, regulatory frameworks that have been developed. Next, the government needs to be more proactive with institutional reforms and development of strong institutional/ organizational structures that manage the digital agenda. Last but not the least, the government needs to prioritize the development of specific projects and programs which promote digital technology adoption across government, businesses, and peo- ple in Sierra Leone. The report specifically highlights the need to address remaining gaps in digital infrastructure, develop a Whole of Government (WOG) approach to digital platforms, improve the enabling environment for private sector leadership in provision of entrepreneurship and financial services programs, and develop the requisite skills for a new economy. 23 24 1 Introduction COUNTRY AT A GLANCE Sierra Leone The boundaries and names shown and the designations Mamou used on this map do not imply official endorsement or er acceptance by the United Nations. Nig Kol en t G U I N E A L ol a e SIERRA Kindia LEONEFaranah Médina Dula Falaba Tabili ba Dubréka Ka go s cie Musaia Gberia on M car Coyah Bafodia Fotombu at S G re Kabala Banian Konta Fandié Kamakwie Koinadugu Bendugu Forécariah Kamalu li Kukuna Fadugu Se B ag be Madina Bambaya er Jct. N O R T H E R N Nig es c ar ci Kurubonla eS Karina Mateboi Alikalia tl Lit Kambia Pendembu Bumbuna Yombiro Batkanu Bendugu Ma b Rokupr Gbinti Binkolo ol e Mange Kayima M el i Kortimaw Is. Mambolo Makeni Bendou Bodou Port Loko Magburaka Tefeya Yomadu Lunsar Masingbi Koidu-Sefadu li Koundou Lungi Pepel Se Matotoka Yengema a R okel or an Int'l Airport Freetown Ferry mp Masiaka Njaiama Mile 91 Njaiama- Pa Wellington Yele Sewafe Tongo Gandorhun oa Hastings Yonibana Tungie Koindu M WESTERN Songo Bradford E A S T E R N AREA York Waterloo Mongeri Falla Kailahun Buedu Rotifunk Taiama Panguma Bomi Manowa Giehun T ai a Moyamba Bauya Dambara Boajibu Pendembu Yawri Njala Banana Is. Bendu Bay Mano Lago Segbwema Shenge Sembehun S O U T H E R N Bo Gerihun Daru Plantain Is. Sieromco Mokanje Kenema Bumpe a Tikonko Gbangbatok Blama Tokpombu Se w o She Kpetewoma Koribundu or r b ro Nitti M Riv e r i oa Turtle Is. Sumbuya M ho Sherbro I. Matru je Ma Bonthé Potoru Waan Gorahun Ma no A T L A N T IC O C E A N ait LIBERIA S tr ro Pujehun Sherb Zimmi Kongo no Lake Ma SIERRA LEONE Mabesi Bendaja Lake Mape fa Lo Bopolu National capital Provincial capital l City, town Sulima au tP Bomi-Hills S ai n Major airport International boundary Bong Lake Robertsport Piso Kle Provincial boundary Main road Secondary road 0 20 40 60 80 km Railroad 0 10 20 30 40 50 mi Map No. 3902 Rev. 6 UNITED NATIONS Department for Field Support September 2014 Cartographic Section 25 S ierra Leone is a small country in Figure 1.1 West Africa with a total popula- Population Pyramid by Age, 2019 tion of 7.6 million. The country Male Female 100+ 0.00% 0.00% is located by the North Atlantic 95-99 0.00% 0.00% Ocean on the west coast of Africa and is bor- 90-94 0.00% 0.00% 85-89 0.00% 0.01% dered by Guinea and Liberia. It is surround- 80-84 0.1% 0.1% 75-79 0.2% 0.3% ed by rich mineral, agricultural, and blue re- 70-74 0.4% 0.5% 65-69 0.5% 0.7% sources. Approximately 60 percent of GDP is 60-64 0.8% 0.9% from agriculture, forestry, and fishery. Min- 55-59 1.1% 1.2% 50-54 1.4% 1.5% erals, such as diamonds, titanium, bauxite, 45-49 1.9% 1.9% 45-49 and gold, are leading the country’s exports. 2.3% 2.3% 35-39 2.9% 2.8% The country suffered a decade of the Civil 30-34 3.5% 3.4% 25-29 4.1% 4.0% War (1991–2002) and a horrific Ebola epi- 20-24 4.7% 4.7% demic (2014-2015) which infected over 13,000 15-19 5.5% 5.4% 10-14 6.2% 6.2% Sierra Leoneans and claimed the lives of at 5-9 6.8% 6.8% 0-4 7.4% 7.3% least 4,000. Sierra Leone has had an uninter- 10% 8% 6% 4% 2% 0% 2% 4% 6% 8% 10% rupted democratic government since 1998, Sierra Leone - 2019 Population:7,813,207 and free of the Ebola disease since 2015. Source: Population Pyramid.net Sierra Leone is ranked nearly at the bot- tom of most development metrics. About Figure 1.2 40 percent of the total population lives un- GDP per Capita, Time Series, (Constant 2010 US$) der the poverty line (US$1.9 per day). Life expectancy at birth is 54 years, and per cap- 600 ita GDP remains almost the same level as 500 400 it was after independence from the United 300 Kingdom in 1961. The country faces a lot of 200 development challenges—poverty, growing 100 youth populations and high youth unem- 0 1964 1973 1982 1991 2000 2009 2018 ployment, weak institutions, a North-South ethno-regional divide, and susceptibility to Source: World Bank, World Development Indicators. multidimensional shocks (epidemic, eco- nomic, and climatic). The recent outbreak Table 1.1 of COVID-19 pandemic which has already Poverty Headcount Ratio, 2011 PPP, infected over 1,000 and claimed the lives of % of Population, 2018 at least 50 people, threatens to reverse the Poverty headcount ratio at $1.90 a day 40.1 modest improvements made in the coun- Poverty headcount ratio at $3.20 a day 74.4 try’s physical and social infrastructure fol- Poverty headcount ratio at $5.50 a day 92.1 lowing the Ebola crisis. Source: World Bank, World Development Indicators. 26 Table 1.2 Sierra Leone at a Glance: Key Top-level Figures and Map Key Indicator 2010 2015 2018 Population, total (million) 6.4 7.1 7.6 Population growth (annual %) 2.25 2.18 2.14 Population density (people per km2 of land area) 88.9 99.4 106.0 Poverty headcount ratio at US$1.90 a day (2011 PPP) (% of population) — — 40.1 GNI per capita, Atlas method (current US$) 420 550 490 Life expectancy at birth, total (years) 49.4 52.9 54.3 Fertility rate, total (births per woman) 5.2 4.6 4.3 Primary completion rate, total (% of relevant age group) — 60 82 GDP growth (annual %) 5.35 −20.60 3.45 Agriculture, forestry, and fishing, value added (% of GDP) 52.94 58.65 58.93 Industry (including construction), value added (% of GDP) 7.78 4.56 5.27 Exports of goods and services (% of GDP) 16.79 19.36 17.47 Imports of goods and services (% of GDP) 34.48 47.44 39.23 Time required to start a business (days) 12 10 8 Foreign direct investment, net inflows (BoP, current US$, millions) 238 252 217 Net official development assistance and official aid received (current US$, millions) 458 946 505 Source: World Bank. World Development Indicators. Note: BoP = Balance of payment; GDP = Gross domestic product; GNI = Gross national income; PPP = Purchasing power parity. In terms of digital development, the first full internet connection in Sierra Leone was launched in 1996 by Sierratel with support from Global One of the United States. How- ever, the quality of service was not good due to the broken infrastructure and poor management. Fixed-line telecom infrastructure was damaged during the civil war (1991–2002). Mobile communications is the main service for both voice and data com- munications in the country. Mobile phone usage has expanded with effective competi- tion among operators. At the same time, the operating environment in Sierra Leone is very expensive for the operators, due to broken or lacking infrastructure (power supply, backbone infrastructure etc), high fuel costs for diesel generators, and high tax rate set by the government. The cost of a personal computer and broadband internet subscrip- tion at home is beyond the budget of a majority of the people in Sierra Leone. Most of the people access the internet at work or at public access points. The majority of people who have access to the internet are in Freetown and in some other major cities. 27 Sierra Leone and the Digital Economy Vision and Strategy for the Digital Economy Despite the challenges, there is a bright horizon toward the digital economy. The current government sees the possibility of the fourth industrial revolution (4IR) led by digital technologies, as a key enabler for economic transformation and socioeco- nomic growth of the country and has reflected this in its national vision for digital de- velopment. In 2018, the Government of Sierra Leone (GoSL) launched a medium-term National Development Plan (NDP) 2019–2023) which outlines the GoSL’s vision to transform the country from a fragile state into a stable, democratic nation. The core of the NDP is human capital development, and the role of digital technologies to improve Sierra Leone’s competitiveness and inclusive growth is highlighted. Within the context of the NDP, the GoSL is envisioning to become a digitally inclusive society empowered by the digital economy with digital technologies by 2029. In November 2018, the Government confirmed its commitment to its tech-en- abled development agenda with the establishment of the Directorate of Science, Technology, and Innovation (DSTI) in the State House to focus on elevating and mainstreaming digital technologies in the NDP to develop every citizen’s poten- tial. The vision around the establishment of the DSTI was to use science, technol- ogy, and innovation to help the government deliver on its national development plan and to establish Sierra Leone as an innovation nation. In November 2019, the DSTI launched the National Innovation and Digital Strategy (NIDS) (2019–2029) which is a high-level aspirational strategy toward a digital economy, with one phi- losophy–‘Digitization for All: Identity, Economy, and Governance’; and three prin- ciples–‘mobile first’, ‘country as artificial intelligence (AI) lab’, and ‘applied data science for governance’. 2 The NIDS was developed following the President’s visit to Estonia and has been approved by the Cabinet. The NIDS is complemented by a National Digital Transformation Roadmap (NDTR) which has been drafted by the Ministry of Information and Communications (MIC) and is in the final stage of re- view and submission for the Cabinet approval. The NDTR is a comprehensive doc- ument which serves as an implementation document for the 2019 National Digital Policy and highlights key high-level priorities along six pillars: (a) leadership, gov- ernance, and partnership; (b) digital infrastructure and access; (c) human capital, 28 digital skills, and knowledge; (d) digital entrepreneurship, innovation, and emerg- ing technologies; (e) e-government and improved public service delivery; and (f) cybersecurity. Both the NIDS and the NDTR chart a more aggressive approach to an inclusive digital economy strategy through the NDP, and are fully aligned with the Africa Union Commission’s (AUC) Digital Transformation Strategy for Africa and the Economic Community of West African States (ECOWAS) Digital Economy Strate- gy. They are also in line with the ‘Leave No One Behind’ vision of the United Nations (UN) and the 2063 vision of the ‘Africa We Want’ principle of the African Union (AU). Progress to Date and Cross-cutting Challenges The GoSL is making notable efforts to translate the high-level goals of digital trans- formation articulated in the NDP by proposing a new set of development mas- ter plans and strategies. The NDTR from the MIC and the NIDS from the DSTI are well-written, high-level, and ambitious strategies highlighting the country’s need for comprehensive digital transformation and setting out high-level aspirational philoso- phy and principles. But more specific and in-depth implementation plans are needed to outline key changes for policy, legal, regulatory frameworks; institutional reforms; and organizational structures. More specific projects and programs also need to be designed and rolled out to leverage the benefits of digital technology adoption across the government, businesses, and people in Sierra Leone. Important cross-cutting ar- eas, such as cybersecurity, data protection, and digital identification, which under- pin a more sustainable digital economy development agenda also require stronger coordination and collaboration. Increasingly, the DSTI has taken the role of imple- menting key innovation and digital platforms for schools, public expenditure track- ing, etc. Furthermore, the government’s internal coordination capacity to pursue a whole-of-government (WoG) would need to be further strengthened through a better alignment the roles of the MIC, DSTI, and other relevant government ministries and agencies. This could be done with support from development partners and lessons learned from peers and other advanced countries. 29 Rationale for Digital Economy Development Digital economy is defined as the part of economic output derived from digital tech- nologies with a business model based on digital goods or services. The digital economy is made up of various elements and dimensions including cloud computing, digital platforms, digital identity, data analytics, machine learning, AI, 3-D printing, internet of things (IoT), e-commerce, digital financial services (DFS), fintech, and so on. Digital economy creates and offers new opportunities; however, without digital in- frastructure or digital literacy and skills, it is not possible to achieve the transfor- mational impact on socioeconomic opportunities and inclusive growth. Also, asso- ciated policy and regulatory frameworks (including data policy, data protection, and cybersecurity) and access to basic infrastructure (electricity, road, and transporta- tion) and services are important to set a foundation for digital transformation and improve national and international competitiveness in the digital economy. Providing a solid framework for the digital economy development is critical, as the growth path cannot be linear or a panacea. Setting up a WoG approach with priority and sequencing is critical to develop effective digital government platforms and associated pol- icy and enabling environment/ecosystem work. Key investments and reforms may need to be prioritized as part of an overall development strategy and implementation plan. Shifting cash into digital accounts for government payments, remittances, small and medium enterprise (SME) payments, and agricultural value-chain payments can enable broad-based participation in digital economy. DFS can be more accessi- ble for lower-income segments of population and for women and agricultural house- holds—population segments often underserved by traditional financial services. 30 Figure 1.3 Digital Economy Can Bring Shared Prosperity and Reduced Poverty YR EDUCTION JOB ERT S P OV EF TH ation Smar t FI OW Educ E ne CI GR it a l rgy EN Dig C E Sm IV Y t or ar US p t ns CL IN Ag a Tr ric al al Citizen Digit ul git tu Di re alth Dig eCom ital Government Digital He ital Digital m er c e Private Sec Economy Dig tor Digit 4.0 ry a l Cu ust Di ce ltu In d git an eur Digi Digital Platforms r al Fin e Sk pren tal I al ill git s ntre nfra Di tal E s tr u ctur Digi e A digital economy has potential to enhance productivity gains in multiple ways. A digital economy can change the way economies of scale are achieved, particularly with online service delivery, as the incremental cost of offering an additional product or service may become negligible. The digital economy may provide better matching of buyers and sellers in a competitive marketplace. It may address certain concerns with asymmetric information, solving some principal-agent problems where buyers and sellers are separated by intermediaries or even multiple levels of intermediaries. It may strengthen people’s trust in firms or governments by enabling some decentral- ized forms of trust (such as with blockchain) where centralized authorities are not trusted. It may allow products and services to be customized and targeted—enabling better inclusion as well as easier ways to exclude some. 31 Diagnostic Methodology Figure 1.4 Key Components of the Digital Economy Ecosystem Macroeconomic Applications likely to develop once the Enabling Environment foundation elements are in place: Macro-economic Stability E-commerce Usage Open Bankinng - Non-banks offer tailored service Financial Sector Stability and Interity Enabiling Tax Policy Digital Enterpreneurship Enabling Trade Policy DIGITAL SKILLS DIGITAL AND LITERACY PLATFORMS Cross Cutting Areas Digital Financial Services Data Privacy & Cybersecurity $ Competion Gender Digital Infrastructure Foundational Elements The Digital Economy for Africa (DE4A) Country Diagnostic was formed as part of the World Bank Group’s support for the Digital Economy Moonshot for Africa Ini- tiative of the African Union (AU). This has set the target of making every African individual, business, and government digitally enabled by 2030. The DE4A Moonshot Initiative is underpinned by five principles:  Comprehensive: Taking an ecosystem approach that looks at supply and demand and defies a narrow silo approach in defining the digital economy elements and foundations  Transformative: Aiming at a different scale of ambition beyond incremental ‘islands’ of success  Inclusive: Digital economy for ‘everyone, in every place, and at all times’ creating equal access to opportunities and dealing with risks of exclusions  Homegrown: Based on Africa’s realities and unleashing the African spirit of enterprise to have more homegrown digital content and solutions  Collaborative: Dealing with the digital economy requires a different flexible ‘mind- set’, collaborating among countries, sectors, and public and private players. 32 For a successful and inclusive digital economy, African countries would require building key foundational elements of a digital economy (Figure 14). These founda- tions, which are synergistic and require the use of public and private sector solutions, are the following:  Digital Infrastructure: Digital infrastructure provides the way for people, businesses, and governments to get online and link with local and global digital services, thus connecting them to the global digital economy. For digital economy, good and affordable internet connectivity is a critical foundation.  Digital Platforms: Digital platforms offer products and services, accessible through digital channels, such as mobile devices, computers, and internet, for all aspects of life. Digital platforms enable producers and users to create value by interacting with each other. Governments operate digital platforms to offer citizen-facing government services and share information. Commercial firms also operate digital platforms to offer a growing array of products and services.  Digital Financial Services: Digital financial services enable individuals and businesses to conduct transactions electronically or online and open a pathway to a range of DFS in addition to digital payments, including credit, savings, and insurance. Access to affordable and appropriate DFS is critical for the participation of individuals and businesses in the digital economy.  Digital Entrepreneurship: Digital entrepreneurship and innovation create an ecosystem to bring the digital economy to life, with new, growth-oriented ventures, and transformation of existing businesses, contributing to net employment growth and helping enhance competitiveness and productivity of an economy.  Digital Skills: Economies require a digitally savvy workforce to build robust digital economies and competitive markets. Digital skills consist of technology skills, together with business skills for building or running a start-up or enterprise. Greater digital literacy further enhances adoption and use of digital products and services among the larger population. Corresponding Moonshot targets have been established for all five foundations of the digital economy articulated under the DE4A framework (Figure 1.5). 33 Figure 1.5 Digital Moonshot Targets across Pillars Note: GNI = Gross national income. DFS = Digital Financial Services. GDP = Gross Domestic Product. The following chapters present key findings on the current state of the five core pillars of the digital economy, defined in the DE4A diagnostic framework. Chapter 2 discusses the current access, quality, and usage of digital infrastructure, as well as the availability and affordability of digital connectivity. Chapter 3 examines the current status and vision to expand the use of digital platforms in the public sector and relat- ed policies and strategies. Chapter 4 analyzes the state of update of DFS among the public sector, businesses, and individuals. Chapter 5 examines the state of the digital entrepreneurship ecosystem and digital innovation for future job creations. Chapter 6 analyzes the current state of digital skills realization and coverage in education sys- tem, as well as basic digital skills for employability and digital job opportunities. The report concludes with a summary of key issues and next steps. 34 35 36 2 Digital Infrastructure Importance of Digital Infrastructure Socioeconomic Rationale for Digital Infrastructure Development T he potential dividends from a strong digital infrastructure foundation are immense. In broad terms, digital infrastructure consists of connectivity (such as with high-speed internet and internet exchange points);3 IoT (such as with mobile devices, computers, sensors, voice-activated devices, geo- spatial instruments, machine-to-machine communications, and vehicle-to-vehicle communications), and data repositories (such as with data centers and clouds).4 It also includes all the active and passive infrastructure necessary to develop the digital economy downstream (for example, sites, masts, towers, and spectrum). The links between connectivity, in particular broadband infrastructure, and long-run rates of economic growth are well documented. The internet backbone is foundational in this process, as it promotes inclusion, efficiency, and innovation by lowering the cost of transactions, expanding markets and services to excluded communities, and making supply chains more efficient. Figure 2-1 shows how the internet affects development. Figure 2.1 Internet’s Effect on Development Access to Services by the Poor Finding Customers Sending Remittances Pre-internet Internet INCLUSION EFFICIENCY INNOVATION Source: World Bank, World Development Report 2016. 37 Boosting broadband adoption, quality, and speed has the potential to accelerate socioeconomic development in Sierra Leone. According to the Statistics Sierra Le- one’s data, ICT sector contribution to GDP was about 1.8 percent in 2017.5 An exten- sive body of research confirms the impact of increased investment in broadband on economic growth. McKinsey estimates that increased access to the internet could contribute about US$300 billion to Africa’s GDP by 2025, with the largest impact being on six key sectors of the economy: education, health, agriculture, financial services, retail, and government. At the firm level, there is also indication that firms that invest more in ICT have higher levels of productivity and are more profitable (Qiang, Clarke, Halewood 2006). Broadband provides a platform for growth and in- novation across all sectors. It enables entrepreneurs and businesses to develop and use new applications and services in areas such as e-commerce and financial ser- vices. The World Development Report (2016), for example, confirms that Vietnam- ese firms using the internet for e-commerce added an additional 3.6 percent to their rate of productivity growth. Broadband enables digital service delivery in sectors critical to inclusive growth in Sierra Leone, such as agriculture, education, trade, and job creation. It also allows the public sector to deliver services to citizens and businesses more effectively and more inclusively. Sierra Leone has continued its efforts to improve the resilience, reach, and quality of its connectivity infrastructure following a decade of civil war. Sierra Leone was one of the first countries in West Africa to commit to improving the geographical reach of high-speed connectivity to its citizens through an undersea internet cable, Africa Coast to Europe (ACE), which benefitted from World Bank Group financing. Additional commitments to robust national backbone and access networks to ensure a ubiquitous and affordable connectivity to all citizens included investments in a 660 38 km terrestrial fiber-optic backbone link from Freetown to the Liberia and Guinean borders, with fiber points of presence (PoPs) in some 28 cities across the country. Key reforms which were expected to come with these commitments included the liberal- ization of the international telecommunications gateway and the opening up of the market to competition. The Telecommunications Amendment Act of 2006, with its various amendments, provided a regulatory framework for open access to both na- tional and international infrastructure and to sector liberalization. By most accounts, improved connectivity in Sierra Leone has had a tremendous impact on the socioeconomic development of the country. World Bank estimates indicate that improved international connectivity through the ACE cable contributed some US$1 billion annually to the country’s GDP between 2011 and 2016.6 Whole- sale prices for fixed broadband E1 capacity dropped by 97 percent from US$8,000 to US$174 per Mbit/s per month, resulting in a drop in fixed broadband retail prices from US$1500 to US$180 per Mbit/s per month during the same period. Improved connectivity proved particularly essential for Sierra Leone during the Ebola crisis when anonymized data from mobile phone records became instrumental for track- ing, treating, and managing the Ebola Virus. More recently, improved internet access is helping nurture a tech ecosystem and provide digital job opportunities for Sier- ra Leone’s burgeoning youth. Innovation Axis and Sensi Tech Hub are among the promising, albeit small, tech hubs that are taking advantage of the relatively robust infrastructure in Freetown to provide incubation, co-working, and other services to start-ups in the country. A study of 12 African countries with a combined population of roughly 500 million shows that the employment rate in connected areas relative to unconnected areas increased by 4.2–10 percent when fast internet became available (Hjort and Poulsen 2017). 39 Alignment with Country Development Strategy and Goals The current President, Rtd. Brigadier. Julius Maada Bio, who came to power in May 2018, recognizes the potential of digital technologies for major economic and social transformation and is keen to leverage these technologies to leapfrog the econom- ic and social development of Sierra Leone. The establishment of the DSTI in 2018, within the Office of the President, to advise and advocate for the use of science, tech- nology, and innovation for national development signals the government’s renewed commitment to underpin its development with digital technologies. The DSTI has led the development of a National Innovation and Digital Strategy which will serve as a high-level guiding principle for Sierra Leone’s development in the next 10 years. The strategy, which was approved by the Cabinet and launched in November 2019, em- phasizes ‘Digitization for All’, with emphasis on three principles (mobile first, coun- try as AI lab, and hybrid technology systems) and short-term strategic activities in six areas (e-ID, applied AI for governance, digital infrastructure, cybersecurity, digi- tal entrepreneurship, and organizational framework). The DSTI has implemented a number of innovation projects to improve government service delivery in strategic areas such as in response to COVID 19 and to improve educational performance been approved by the Cabinet. The government is in parallel developing a National Digital Transformation Roadmap (NDTR), which is being led by the MIC in line with the AU’s Digital Transformation for Africa Initiative and highlights similar priorities along six pillars: (a) leadership, governance, and partnership; (b) digital infrastructure and ac- cess; (c) human capital, digital skills, and knowledge; (d) digital entrepreneurship, innovation, and emerging technologies; (e) e-government and improved public ser- vice delivery; and (f) cybersecurity. The two documents articulate the government’s digital transformation agenda highlighted under its National Development Plan. Despite these commitments and notable developments, most citizens are yet to reap the full benefits of digital infrastructure in Sierra Leone. On most metrics for ICT performance, Sierra Leone lags behind peers in the region. Issues ranging from weak regulatory capacity and noncompetitive international connectivity to inadequate confidence in cybersecurity and data protection are contributing to relatively high prices and concentration of internet services in the capital city, Freetown. 40 DIAGNOSTIC FINDINGS Current State of High-speed Internet Development This section provides diagnostic findings on the state of infrastructure development in Sierra Leone. First, the scale of service availability in the country is evaluated in terms of access, coverage, affordability, and quality of service; next the market struc- tures and competition are assessed; subsequently, all segments of the value chain in- cluding the first mile (international internet access), middle mile (national backbone and internet exchange point), and last mile (local access networks reaching the end user) with respect to the internet and mobile telephony markets are examined. The analysis is complemented by an examination of the enabling regulatory environment or invisible mile (the intangible parts of the network also referred to as the ‘soft’ infra- structure such as spectrum, licensing, taxation, and cybersecurity). Scale of Service Availability Access Overall telecom/ICT sector performance in Sierra Leone lags behind other African countries due to the country’s economic and social challenges. Sierra Leone was ranked 153 out of a total of 207 economies for mobile penetration7 in 2018 and 197 out of a total of 208 economies for internet usage in 2017.8 41 Broadband penetration, however, is par- Table 2.1 Key ICT Indicators in West Africa ticularly low at about 4 percent. Due to the prolonged civil war, the country’s fixed line infrastructure was poorly managed and much of it/or destroyed. Limited availabili- ty of the electricity grid outside of Freetown and a few main cities and high fuel prices9 Market penetration; unique mobile internet subscribers (%) further compound the challenges. Market penetration; unique mobile subscribers (%) That said, the mobile market has experi- enced steady growth driven by strong com- 3G network coverage, by population (%) 4G network coverage, by population (%) petition. As of 2019, there were four mobile Smartphone connections (%) operators (Africell, Orange, Sierratel [in- Total population (million) cumbent], and Qcell). Africell has been the market leader since 2009 with over 60 percent of market share. Orange increased its market share to 33 percent in 2019. Si-   erratel’s share has declined to less than 3 Sierra Leone 48.3 26.6 62.5 66.5 47.4 7.9 percent. The new market entrant, Gambian Western Africa 49.0 28.6 78.6 46.8 45.0 396.7 owned Qcell, launched its mobile services in January 2019. All four mobile operators Benin 47.7 26.1 68.6 45.0 40.0 12.0 offer 3G services. In January 2018, Sierratel Burkina Faso 45.8 23.6 65.0 8.6 44.4 20.6 and Africell launched 4G/LTE networks in Côte d’Ivoire 51.3 28.0 91.6 55.3 45.4 26.0 Freetown and other major locations. Or- Gambia, The 51.7 20.1 58.3 31.0 46.4 2.4 ange launched 4G services in April 2019. Ghana 55.0 35.7 85.0 76.8 39.1 30.7 Coverage and issue of universal access. It Guinea 48.0 19.9 67.3 34.4 39.0 13.0 is estimated that approximately 80 percent of the total population is covered by mobile Guinea-Bissau 42.6 15.4 69.0 34.0 37.3 1.9 signals. But this leaves more than one mil- Liberia 46.3 13.1 48.9 48.9 38.4 5.0 lion people completely unserved. in areas Mali 49.5 25.7 71.0 41.0 35.3 20.0 without access to any mobile phone signal. Mauritania 53.9 30.7 42.1 7.2 48.4 4.6 To reach universal access (that is, every Af- rican individual, business, and government Niger 33.6 12.6 67.9 51.0 37.3 23.8 is digitally enabled) by 2030, this segment Nigeria 49.7 31.8 82.2 85.0 47.8 203.6 of the population, which amounts to over Senegal 51.9 31.0 95.2 73.1 53.2 16.5 1.5 million people, should be a primary tar- Togo 47.4 21.5 66.4 12.4 44.4 8.2 get. That said, the mobile operators do not see these uncovered areas as commercial- Source: GSMA Intelligence. 42 Figure 2.2 ly viable with compounded challenges (no Mobile Market Share in Sierra Leone, Q4 2019 power supply, no main access roads, and 59% 33% 5% so on). The Universal Access Development 3% Fund (UADF) is operational but has very Sierratel limited financial and human resources and Africell Orange QCell unlikely to be able to close the access gap Source: TeleGeography. without some external technical and finan- cial assistance (see details of the UADF in the Last Mile section). Affordability According to the 2019 Affordability Index developed by the Alliance for Affordable Internet (A4AI), Sierra Leone was ranked Figure 2.3 Network Coverage by Population, 2019 57 out of a total of 61 countries.10 Affordability of broadband internet is of- 3G 4G 0 25% 50% 75% 100% ten measured and compared by broad- Sierra Leone band service price as a percentage of GNI Western Africa per capita. Two types of prices were com- Benin pared: handset device-based usage (500MB) as well as computer-based 1GB plan. Burkina Faso Cabo Verde The vertical axis shows the price as a Cote d’Ivoire percentage of the GNI per capita. The Gambia prices for a handset-based 500MB pack- Ghana age is compared with a computer-based 1GB package. Current prices do not meet Guinea the A4AI’s ‘1 for 2’ (1GB for no more than Guinea-Bissau 2 percent of monthly average income) af- Liberia fordability threshold11. Mali Out of the 94 countries surveyed by the Mauritania A4AI, the broadband price in Sierra Le- Niger one was in the lowest 20th percentile in Nigeria the ranking. Sierra Leone ranked 77 (with a Senegal score of 4.9 percent) for the handset-based Togo package and 83 (with a score of 9.9 percent) for the computer-based package. Source: GSMA Intelligence. 43 Figure 2.4 Cost of Broadband Internet One of the major obstacles/barriers for afford- (% GNI per capita), 2019 able broadband internet in Sierra Leone is the de 500MB 1GB 0 15% 30% facto monopoly and inefficient operation of the international gateway by the state-owned Sierra Egypt Leone Cable Limited (SALCAB).. In 2013, Sierra Mauritius Sudan Leone made the first fiber-optic cable connection Gabon to a submarine cable system. The landing of the Tunisia ACE submarine cable was initially expected to South Africa Botswana create a momentum for the growth of the broad- Ghana band internet market in Sierra Leone. However, Libya Nigeria the opportunity was disrupted by the delayed lib- Cabo Verde eralization of the international gateway and poor Kenya operation of the assets by SALCAB (see details in Namibia Algeria the First Mile section) Morocco Angola Cameroon Quality of Experience Cote d’Ivoire The quality of experience of the broadband Tanzania Senegal is normally measured in terms of the average Zambia download and upload speed that the consumer Congo Brazzaville experiences. According to the speed test global Rwanda Uganda index for May 2020, Sierra Leone was ranked 151 Mozambique out of 173 economies, with 9.59 Mbps download Guinea speed at fixed broadband compared to the global Lesotho Burkina Faso average of 76.94 Mbps download speed.12 Ethiopia Sierea Leone Mali Gambia Comoros Benin Togo Zimbabwe Liberia Figure 2.5 Burundi Average Download and Upload Internet Speed Madagascar Niger Malawi Guinea-Bissau 9.59 5.67 43 Central Africa Rep. Download Upload Latency Chad Mbps Mbps ms D. R. Congo Source: A4AI. Source: SpeedNet. 44 Market Structure and Competition Mobile phone penetration is growing in Sierra Leone with 88.47 percent of people having a mobile phone subscription in 2018.13 Unlike other African markets where smart phone penetration is beginning to take off, 2G feature phones continue to be the predominant type of phone in the Sierra Leonean market. Although the ITU’s figures would suggest high pen- etration in total, unique mobile subscribers were estimated at only 48.3 percent in Sierra Leone.14 It highlights the fact that a significant proportion of adults and/or households have very limited access to phones. One of the mobile network operators (MNOs) has begun to sell low-cost feature phones in major markets to support the uptake of its sim cards. Africell’s acquisition of Tigo has enhanced its market leadership, with approxi- mately 60 percent of the market. Orange’s acquisition of Airtel has also increased its market share to about 33 percent. State-owned company Sierratel is barely visible with less than 3 percent market share while the latest entrant QCell has launched its services only in 2019. Competition has also pushed operators to invest in network upgrades and expansions to improve market share. This has been buoyed by the re- cent award of 4G licenses to all four operators. It has also pushed down prices of both mobile and internet prices. Africell’s persistent dominance of the market however requires strengthened competition laws and frameworks to further improve competi- tion and address issues of significant market power. There are already ongoing allega- tions of collusion with the regulator, the National Telecommunications Commission (NATCOM). Sierra Leone does not currently have any competition law in place, The ICT market in Sierra Leone is governed by the Telecommunication Act 2006. The independent regulator, NATCOM, was established by this act and, following amendments in August 200915 and March 2015,16 is in charge of telecom regulation and responsible for overseeing licensing, spectrum, and supervision of all the oper- ators, including the state-owned incumbent operator, Sierra Leone Telecommunica- tions Company (Sierratel). The MIC is in charge of policy and overall coordination of ICT investment and planning in the government. Despite the notable market progress and NATCOM’s role in managing sector develop- ments, the country’s regulatory environment is scored still low by global and regional benchmarking. A recent audit by the members of AFROSAI17 has accused NATCOM of promoting unfair competition between 2015 and 2018, costing the country some US$68 million, and charging regulatory fees without any statutory instrument and implicated Af- ricell and QCell of being complicit in promoting unfair regulatory practices. According to the Regulatory Tracker index18 from the ITU, Sierra Leone’s regulatory environment scores relatively high on independence and mandate but very low on its competition framework. 45 Figure 2.6 ITU Regulatory Tracker for Sierra Leone, 2018 Regulatory Authority 2007 2018 30 Max Category Score 20 10 Competition Regulatory Framework Mandate Regulatory Regime Source: ITU Regulatory Tracker 2018 (https://www.itu.int/net4/itu-d/irt/#/country-card/SLE). Figure 2.7 Africa Regulatory Watch Index, 2019 License regime OTTs International gateways 01 6 11 16 21 26 31 Nigeria 28 Benin 25 Ghana 23 Côte d´Ivoire 23 Cape Verde 23 Senegal 23 Mali 21 Burkina Faso 20 Togo 20 Guinea 19 Liberia 16 Niger 14 Gambia 11 Guinea-Bissau 11 Sierra Leone 9 Source, World Bank 2019a. 46 The Africa Regulatory Watch Index (ARWI) (World Bank 2019a) also ranks Sierra Le- one as the lowest of the 15 ECOWAS countries. The major factors contributing to this low score are: outdated licensing regime, noncompliance with regional framework (license requirement for extensive design of telecom operator activity), and absence of transparency. The report points out that the low broadband penetration in Sierra Leone is largely due to a restrictive license regime, which imposes lengthy processes on new market entrants. FIRST MILE International Connectivity International connectivity infrastructure in Sierra Leone continues to be managed under monopoly conditions by the wholly state-owned company, SALCAB. The ACE submarine cable is currently the only source of international connectivity/bandwidth (other than highly expensive and slow satellite service, used mainly for back-up) for Sierra Leone. The ACE submarine cable system serves 24 countries on the west coast of Africa and Europe, including Sierra Leone, as shown in Figure 2-9 and is managed by a consortium of 19 members. Overall bandwidth capacity before the launch of ACE was about 155 Mbps. This increased to about 2.170 Gbps following the launch in 2011. The ACE consortium consists of telecommunications operators and member countries that have invested in the US$700 million project, with the financial support of the World Bank. The impact of the ACE cable has been quite significant for Sierra Leone, with average monthly wholesale broadband prices decreasing by about 97 percent from US$8,000 to US$174 per 2Mbps, resulting in a drop in fixed broadband retail prices from US$1,500 to US$180 per Mbit/s per month between 2011 and 2017. But this price is still high for the average Sierra Leonian. Although it reduced significantly from 25.9 percent to 9.9 percent of monthly national income, it is five times the UN’s ‘1 for 2’ (1GB for no more than 2 percent of monthly average income) affordability threshold. The high hopes that competitive access to international connectivity would stim- ulate growth of the broadband internet market and lead to more affordable and stable broadband connectivity in the country were quickly dashed following delays and policy reversals by the government on the liberalization of international gate- way and the entrenched monopoly of SALCAB. The ACE landing station (as well as the existing backbone) is controlled by SALCAB. The government approved the Telecommunications Amendment Act of 2015 which sought to liberalize the international gateway through a repeal and replacement of Section (33) of the 2006 Telecommunications Act to curtail the monopoly of incumbent Sierratel over 47 Figure 2.8 The ACE submarine cable system Spain the international gateway. A series of policy and regulatory reversals and disagreements Portugal on shareholding structure resulted in with- drawal of private sector and the transfer of Canary Islands the government’s assets in both national and international connectivity infrastructure to Mauritania Senegal SALCAB. SALCAB was incorporated as a lim- Gambia Guinea ited liability company in 2012 and was fully Sierra Leone Libéria owned by the GoSL despite original plans for a public-private partnership (PPP). Côte d’Ivoire Ghana Benin SALCAB’s monopoly and inefficient oper- Nigeria ations are a major bottleneck for the re- Cameroon Angola liable and affordable broadband internet Equatorial Guinea Gabon Namibia access in Sierra Leone. In November 2018, Democratic Republic of Congo Sao Tome e Principe SALCAB announced a 48 percent wholesale bandwidth cost reduction for IP transit and South Africa Source: ACE lease circuits. This was expected to improve demand for international bandwidth. How- Figure 2.9 Used International Bandwidth per Population (kbps), 2019 ever, current utilization of the existing ca- pacity allocated to SALCAB continues to 0 10 20 be low as operators do not appear to trust Benin the transparency and efficiency of SAL- Burkina Faso CAB’s operations. A recent Audit Service Cabo Verde Sierra Leone (ASSL) report, for example, Cote d’Ivoire revealed that two companies were provided Gambia with international bandwidth by SALCAB Ghana without formal registration as operators Guinea by NATCOM. NATCOM is reviewing their Guinea-Bissau operational status. Operators continue to Liberia prefer to use microwave and satellite for Mali backhaul. According to TeleGeography da- Mauritania tabase, the total used international internet Niger bandwidth for Sierra Leone was 53 Gbps in Nigeria 2019, against 1,810 Gbps Lit Capacity of the Senegal ACE submarine cable19. The used interna- Sierra Leone Togo tional bandwidth per population for Sierra Leone was only 6.71 kbps. This is very low Source: TeleGeography. compared to other ECOWAS countries. 48 International connectivity in Sierra Leone is further challenged given the lack of redundancy in submarine cable routing. This is a major risk in the event of a cut on the local ACE branch (about 420 km). It may take 30 days for the minimum repair and would cause an internet shutdown for the whole country. Some level of redundancy could be achieved through utilizing excess fiber capacity along the West Africa Power Pool (WAPP) transmission line, expected to be completed in 2020, but a second sub- marine cable is also an option. MIDDLE MILE The National Backbone Infrastructure The GoSL has made significant efforts to develop the terrestrial backbone networks that connect the ACE submarine cable to its citizens and neighboring countries. The government made two relatively large investments to develop its national back- bone network. First is the construction of a 660 km terrestrial fiber-optic backbone link from Freetown to Zimmi at the Liberia border and onwards to Gbalamuya at the border with Guinea connecting some 28 cities along the routes. The US$28 million network was largely funded with a loan from the Islamic Development Bank (IDB). The government has complemented this backbone with the development of an addi- tional 690 km of fiber funded through the Eximbank of China. In total, 1,010 km20 of in-country core fiber backbone network connects most major cities and towns. About 50 percent of the country is covered for potential broadband and other electronic services for the end users; however, no last-mile solutions (services) are provided. The ownership and operation of both networks have been transferred to SALCAB. Sierra Leone is also part of the WAPP which intends to leverage the fiber in the power transmission lines to further strengthen regional communications in West Africa. The WAPP is expected to be structured on a PPP basis and could potential provide redundancy for Sierra Leone as well as strengthen competition in the country. There are some restrictions to private sector investment in the development of back- bone infrastructure in Sierra Leone. Mobile operators can deploy their backbone ex- clusively on microwave links (inferior performance and throughput compared to the fiber) for the transport layer of their networks. They are also allowed to build limited fiber backbone especially along routes falling outside the national fiber backbone. There is no infrastructure-sharing framework in place for the private sector to share each other’s network or that of SALCAB. Infrastructure sharing can expedite network coverage expansion by significantly lowering costs and speeding up time to market. The cost of civil works represents about 70 percent of the total cost of deploying fi- ber.21 The rapid growth of independent tower companies and the search for new mar- 49 kets in Africa provide additional opportunity for mobile operators in Sierra Leone to further reduce the cost of fiber deployment through infrastructure sharing. The launch of the Sierra Leone Internet Exchange Point (SLIX)22 will also improve latency and reduce cost of internet by allowing internet users in Sierra Leone to in- terconnect with each other and ensure that local traffic/content is exchanged locally. Box 2.1. Internet Exchange Point (IXP) in Sierra Leone In Sierra Leone, an internet exchange point (IXP), called the Sierra Leone Internet Exchange (SLIX) was launched in Freetown in 2010. Sierra Leone was the 19th African country to establish an IXP . An IXP makes internet traffic flows more efficient by exchanging local data traffic directly in the country rather than linking through other countries. It contributes to reduce international bandwidth costs and improve local internet performance. In 2013, the first fiber optic connection to the Africa Coast to Europe (ACE) submarine cable, which has substantially increased internet bandwidth capacity. A better operation and management of an IXP could significantly contribute to more reliable and affordable broadband services in Sierra Leone. That said, internet services are not yet reliable and affordable in Sierra Leone. No detail information of current operational and maintenance information of SLIX was available at the time of DE4A Country Diagnostic. According to the draft National Digital Transformation Roadmap (NDTR), the Government of Sierra Leone is anticipated to establish another IXP by 2021. LAST MILE Internet Services The last mile in Sierra Leone principally consists of a combination of technologies put in place by the different operators. The mobile operators have established radio access last miles on the 2G, 3G, and 4G frequency bands to provide their basic voice and data services. Internet service providers (ISPs) are using a combination of fiber, VSAT, and nomadic WiMAX technologies to reach out to their subscribers. Both NATCOM and mobile operators confirmed that approximately 80 percent of the country is currently covered by mobile network. To reach universal access (that is, every African individual, business, and government is digitally enabled) by 2030, this segment of the population, which amounts to over 1.5 million people, should be a primary target. According to the mobile operators, these areas cannot be served on purely commercial terms. 50 The Universal Access Development Fund (UADF) is operational but has been mis- managed and currently has limited financial and human resources. The recent ASSL report (April 2019) highlighted concerns over the use of UADF funds. The Telecom- munications Act outlined that the UADF should comprise funds from all telecom operators; however, only mobile operators had been subject to paying US$150,000 annually to the fund (ie., not revenue-based). The UADF was estimated to be SSL 7 billion in December 2018 (about US$800,000). However, a study by AFROSAI23 accused NATCOM of mismanagement of the UADF between January 2015 and July 2018 to the tune of about US$800,000 to finance NATCOM’s administrative costs (staff sal- ary, allowances, and office expenses) rather than for infrastructure improvements. The new director general for the UADF who came on board early 2019 committed to improve fund management and to close the access gap, but given the weak capacity and resource constraints, it is very challenging to pursue the mission without some technical and financial assistance. INVISIBLE MILE Legal, Policy, and Regulatory Environment The invisible mile consists of the hidden elements that are vital to ensuring the integrity of the value chain, including cybersecurity and data policies/laws, spec- trum allocation and management, taxation etc. Sierra Leone’s Telecommunications Act (2006) with its subsequent amendments has provided a good foundation for es- tablishing an Independent Regulator and for liberalizing the sector. However, more needs to be done beyond the traditional agenda of regulating telecom operators and opening up monopolistic markets. Sierra Leone needs a more forward-looking legis- lation for the next phase of digital infrastructure development (or digital transforma- tion)–increasingly referred to as ‘5th Generation Regulation’ which recognizes a new ICT landscape that is fundamental for developing every sector of the economy and addresses critical issues such as data protection and privacy, digital identity, block- chain, AI etc. A more proactive law and regulations including for re-farming and repurposing of spectrum to accommodate new technologies could help address the access gap in rural and underserved communities. The spectrum allocation process in Sierra Leone lacks transparency. The Government of Sierra Leone recognizes the need and sense of urgency to strengthen its national cybersecurity. Improved internet access has unfortunate- ly brought with it various forms of cybercrime including telecom related fraud, in particular SIM boxing24, computer-related fraud, such as phishing, spam, as well as crimes involving messaging applications, and gender-based violence. There is in- 51 creasing evidence of cyber-attacks in Sierra Leone. In January 2020, the Commercial Bank of Sierra Leone reported that its official website had been hacked. Various gov- ernment websites have been attacked in the past. .An assessment of the Cybersecu- rity environment in Sierra Leone posits that the legal and regulatory framework is dispersed, ad-hoc and rudimentary, with no dedicated law or legislative framework on cybersecurity or cybercrime. Sierra Leone is a signatory to the Africa Union’s Con- vention on Cyber Security and Personal Data Protection but is one of a handful of countries who have not adopted the ECOWAS Supplementary Acts on Personal Data and Protection and Cybercrime. The MIC has set up a National Cybersecurity Co- ordination Unit to work with other stakeholders to develop a national framework through which all stakeholders, from both the public and private sectors, can collab- orate in the development and refinement of policy and strategies to protect critical information infrastructures in the country. The unit is expected to develop a close, mutually beneficial relationship with the National Computer Emergency Response team (CERT) and national infrastructure companies to develop sectoral CERTs. This will promote CERT situational awareness across industry, academia, and the pub- lic sector and provide the single point of contact for coordination and collaboration between national and sectoral CERTs as well as international cooperation. A draft National Cyber Security and Data Protection Strategy (2017-2022) has been finalized and yet to be approved by Government. As part of this Strategy, a CERT-SL has been created but there is no indication of its impact in addressing cyber security or cyber- crime issues. Data Policy (data protection, data privacy, data ownership) is recognized as a key area that requires immediate attention. Article 22 of the Constitution grants indi- viduals a right of privacy, including with respect to a person’s ‘electronic communi- cations. But there are no regulations for implementation. Also, there is no cohesive approach towards data policy and no coordination among MDAs. Secure exchange of data for example requires a robust public key infrastructure (PKI), or equivalent us- ing blockchain, that allows online transactions to be conducted in a secure manner. Sierra Leone currently has no PKI in place. GOSL has expressed interest for immedi- ate assistance to promote internet safety and trust in online transactions. One of the key challenges to stimulating demand for internet is the relatively high taxes on mobile phone services. The combined impact of increasing high surtax on incoming international traffic, import duties on network equipment and phone devices increase cost of service to customers and decrease investments in underserved areas. 52 Box 2.2. Issues of taxation in digital sector In order to accelerate digital connectivity and adoption in a country, the governments play a key role to ensure a sound enabling environment, such as policies and regulations, to attract private sector investment in digital infrastructure development. Telecommunications sector is a large revenue generating industry in a country. Setting appropriate amount of taxes and contributions/fees from operators is not easy, especially in telecommunication and digital services. Taxation along with the degree of market competition would directly impact on the affordability to the end users. A higher taxation and stale market could end up with the higher prices for the end users and the lower returns on the private sector investments, which would create a vicious cycle of digital infrastructure deployment and quality of services. According to the GSM Association25, 63 percent of Sub-Saharan African countries imposed sector-specific taxes in the telecommunication services in 2017. In addition to that, some additional taxes (such as specific excise taxes or VAT/sales tax) were imposed on usage, voice, SMS and/or data packages. International incoming calls are typically subject to an additional tax in many countries in Africa. Some countries impose additional taxes on digital service providers or over-the-top services. Furthermore, handsets/devices/ telecommunications equipment are usually heavily on import duties. Beyond the basic telecommunications serves, taxation on add-value digital services (such as mobile payments, online services) launched in some countries. Middle East & North Africa Sub-Saharan Africa Latin America Asia Pacific Europe Percentage of countries with sector-specific tax (2017) 63% 56% 33% 57% 17% Number of sector-specific increases or introductions (2011-2017) 41 24 24 15 15 1 GB of data as a % of income, all earners (2017) 37% 5% 6% 5% 1% Taxes as % of income, 20% lowest earners (2017) 27% 3% 3% 4% 0.70% Source: GSMA 2019. Rethinking mobile taxation to improve connectivity The GSM Association completed a few studies related to taxation issues in Sub-Saha- ran Africa26 and ECOWAS states27. The key findings are summarized as below: (a) mobile and network operators (MNOs) are often the largest tax contributors. (b) mobile services are often subject to sector-specific taxes and fees (above general taxation), and the amount of sector-specific taxes has been increased over time. (c) high taxes and fees/contributions as well as high import duties on smartphones, devices, and equipment reduce affordability. (d) mobile tax reductions would contribute to digital connectivity expansion and fiscal sustainability in the medium term. 53 DIGITAL INFRASTRUCTURE Recommendations and Next Steps The GoSL has made notable progress in developing policies, creating an indepen- dent regulator, and strengthening competition in the mobile segment of the market, but more needs to be done to improve Sierra Leone’s competitiveness in the region. R1. Coordination of policy and strategy documents for development of digital econo- my. In line with its objective of leveraging digital technologies to transform the country’s economy to benefit all its citizens, the government has approved one strategy document (NIDS) and is in the process of finalizing a second one (NDTR). Both highlight similar areas of focus and are expected to provide a road map and drive the development of the digital economy. These documents and respective implementing institutions how- ever need to be better coordinated to align with the government’s technology-enabled growth strategies articulated in its National Development Plan. The government also needs to prioritize the development of a national broadband strategy that sets the tar- gets and plans for providing affordable broadband to all citizens of Sierra Leone. R2. Further strengthening of the regulatory institution NATCOM to foster market competition. The consistent low ranking of NATCOM due to its weak competitive framework and promotion of unfair market competition requires immediate attention to improve trust and accountability and create a level playing field for all operators. Pol- icy makers and regulators play a critical role in promoting healthy market competition and affordable and reliable broadband internet access in the country. The policy envi- ronment will have significant influence on the telecom sector market conditions and broadband development. The government needs to empower the regulator to enforce fair market rules, evidence-based interventions, and dynamic competition policies. R3. Revision of the licensing regime. Sierra Leone needs support to overhaul the current licensing regime to enable technology neutrality. The current licensing regime is con- sidered restrictive and not conducive to deployment of broadband services. Technology neutral licenses could be particularly useful for expanding services to underserved com- munities as operators will be flexible to use any appropriate technology at the last mile. 54 R4. Liberalization of the international gateway. The government needs to prioritize more efficient and diversified access to international connectivity if it is to improve access and reduce cost of broadband. SALCAB’s exclusive control of the international gateway, despite recent efforts to lower wholesale prices, R5. Improving National Bac kbone Infrastructure through Infrastructure sharing: Government should remove restrictions on commercial fiber deployment; allow all operators and ISPs to deploy their own infrastructure; and provide appropriate in- centives for infrastructure sharing to lower the cost of connectivity. R6. Improvement in the management of the UADF. The UADF has been poorly man- aged, and funds are used to finance NATCOM’s administrative expenses instead of services to poor and underserved communities. The government needs to develop detailed guidelines regarding the manner in which levies are calculated and collected and what the funds can be used for. A formal public reporting process would need to be put in place to reassure contributors of fund management and use. Given the enormity of the rural access gap, the government would need to identify additional sources of funding to complement contributions from operators. R6. Streamlining of the cybersecurity environment and development of dedicated law or legislative framework on cybersecurity or cybercrime. The current legal and regula- tory framework is dispersed, ad hoc, and rudimentary, with no dedicated law. This would need to be addressed to promote trust in the use of digital technologies. The draft Nation- al Cyber Security and Data Protection Strategy needs to be approved by the Government. Figure 2.10 Steps for Regulatory Support for Market Competition STEP 1 STEP 2 STEP 3 FAIR MARKET RULES EVIDENCE-BASED POLICIES DYNAMIC COMPETITION POLICY Policymakers should set fair rules Policymakers and regulators should Policymakers and regulators should for entry into the market, with clear base their decisions on publicly- apply dynamic pressures to markets licensing requirements for traditional available evidence and consult all as they change to support positive abd providers and community networks. stakeholders through inclusive sustainable market competition. Effective operating rules are also processes, including businesses and necessary for service providers to plan civil society groups. long-term network investments. Source: Affordability Report 2019. Affordable Internet for All (www.A4ai.org). 55 56 3 Digital Platforms Importance of Digital Platforms Socioeconomic Rationale for Digital Platform Development D igital platforms28 are at the core of the digital economy. By underpinning digital transactions and connections, these systems, applications, and services have the potential to transform the way people, governments, businesses, and civil society interact with each other in all aspects of life. Digital platforms can help create economies of scale and network effects, whereby additional users can create an exponential increase in value from other users, includ- ing the data they generate. When public digital platforms are designed following a ‘WoG’ and ‘user-centric’ ap- proach to digital transformation, they can significantly improve operational and economic efficiency. They can also boost service quality and accountability, includ- ing through providing new channels for public engagement and feedback and reduc- ing opportunities for corruption. The development of public digital platforms under- pins the expansion of e-government services and core operations. Figure 3.1 Digital Public Platforms: Benefits and Requirements BENEFITS Users  Increase people’s to rights and services and improve their end-to-end experiences with services Use Cases  Improve core government functions and programs adminstration  Increase public engagement, accountability, and responsiveness  Facilitate trade and economic integration Core Components  Support private sector development Applications for Core Government Systems and Interfaces Functions, Services & Civic Tech REQUIREMENTS  Design that is outcome-nad context-based, user-centric, Digital ID & Trust Services Secure Digital Transactions and uses open principles  Strong legal, regulatory, and operational frameworks Interoperability & Shared Services Data exchange across common resources  Whole-of-government approach  Investment in digital skills and literacy 57 Alignment with Country Development Strategy and Goals Historically, the government digitization process and use of ICT were not well coor- dinated. As a result of the silo approach, the existing IT systems in government were fragmented and poorly maintained. The GoSL recognizes digital technologies as a key engine for the fourth industrial revolution (4IR) and realizes the issues and needs for improvement of strategic and operational digital platforms. A WoG approach has been highlighted and emphasized in the GoSL’s recent high-level aspirational documents: the National Digital Innovation Strategy (NDIS) led by the DSTI and the NDTR led by the MIC. Along with a WoG approach, a shared government digital platform, a new reg- ulatory and legislative framework to ensure safe and reliable digital transactions and data governance (including interoperability and data standard, cybersecurity policy and strategy, and data protection), and a better institutional coordination/governance system are identified as critical factors for digital transformation in Sierra Leone. Figure 3.2. United Nation’s e-Government Development Index Scores, 2018 70 60 50 40 30 20 10 0 Sierra Leone AFR Average LDC Average Low Income Average World Average Source: United Nations 2018. 58 DIAGNOSTIC FINDINGS Current State of Digital Platforms Government Capacity to Offer Digital Government Services Institutions The ICT/telecom sector in Sierra Leone has multiple players with different roles and leadership responsibilities. Prominent among them are policy formulation, setting standards and regulations, implementation of development strategies, collaboration and coalition building, monitoring and oversight, and resource mobilization. The visionary leadership with the broad oversight of the digital transformation agenda is expected to be done by a National Digital Transformation Advisory Coun- cil (NDTAC) which is likely to be a reconstitution of the existing council for the National ICT policy. The NDTAC shall provide policy and strategic direction on the digital transformation roadmap. The NDTAC will take ownership at the highest level to ensure that the digitalization process receives sufficient support from all the stake- holders, which is necessary to ensure the coordinated implementation and success of the digital transformation roadmap. The Council will be led by the President and includes representatives of the presidency, key ministers, service providers, key part- ners and the consumer representation. The MIC and DSTI also play a lead role in policy formulation in the area of public sector digital transformation. The MIC has been constrained in the past to effectively carry out its mandate as MDAs work in silos without the consultation and participation of the MIC. For example, it was reported that the DSTI, SALCAB, NATCOM, and the Ministry of Finance (MoF) all are undertaking programs and projects relating to ICT/ telecom with little or no recourse to the MIC. There is therefore a compelling need for synergy and collaboration among the various players in the sector. According to the draft NDTR, the MIC is expected to provide the necessary leadership and coordination for all efforts by all ICT/telecom sector stakeholders. Thus, it is essential that the minis- try’s structure is reviewed at all levels to reflect this enhanced role, especially the criti- cal ongoing transformation in the ICT sector. The mandate of the DSTI regarding digital platforms is not clearly defined and therefore creates duplication of efforts in the area of the government’s digital transformation. The DSTI has also implemented a number 59 of innovation projects to improve government service delivery in strategic areas such as in response to COVID 19 and to improve educational performance. There are some other critical players for the Sierra Leone digital ecosystem such as SALCAB, NATCOM, the National Civil Registration Authority (NCRA), the National Reserve Authority (NRA), the National Social Security and Insurance Trust (NAS- SIT), immigration departments, and the Sierra Leone Road Safety Authority (SLR- SA). Multiple MDAs are involved in the implementation of policies and standards rel- evant to digital technologies, such as those referring to cybersecurity, data protection, the transferability of data, and interoperability standards. Overall, there is no strong link between MDAs’ IT activities and WoG priorities. In terms of implementation of IT services, MDAs are working in silos without the consultation and participation of the MIC. MDAs are referencing to their mandate which gives them the authority to take responsibility for their decisions due to which they do not feel compelled to consult the MIC when taking decisions related to IT. Furthermore, the current IT governance arrangements allow MDAs to opt into the WoG IT initiatives on a self-approved basis as though they were independent enti- ties. Interagency coordination that is necessary to ensure that policies and strategies relating to digitalization are implemented with a WoG approach is weak and leading to ad hoc, reactive, and siloed design and implementation of digital services. The draft NDTR envisages some interventions to support institutional reforms with a WoG mechanism to promote digital uptake, open innovation, ICT-based entrepreneurship, electronic services, electronic commerce, and mobile application development. As proposed by the NDTR, the Sierra Leone ICT government institutional structure will consist of the following components:  The National Digital Transformation Advisory Council  Ministry responsible for ICT/telecom  ICT/telecom sector regulators (National Communications Authority and Independent Media Commission)  The proposed ICT Development Implementation Body (National Digital Transformation Agency)  SALCAB  MDAs and local councils  DSTI. However, an organization that would play a key role in leading and coordinating the implementation of digital transformation is missing. 60 Policies and Legislations Policies Currently, there are various uncoordinated policies and strategies guiding different facets of the ICT sector, just as there are several laws relating to different aspects of the sector. Apart from the fact that these strategies are uncoordinated, there are gaps and a lack of cohesion, which make them ineffective to support the digital trans- formation agenda of the government, especially in the context of the fast-evolving developments in the digital world. One important document in the context of digital transformation is the medi- um-term National Development Plan (NDP) for 2019–2023 launched by the GoSL. The NDP’s main theme is ‘Education for Development’ anchoring on the ‘New Direc- tion for Improving People’s Lives through Education, Inclusive Growth, and Build- ing a Resilient Economy’. The NDP outlines the vision of the GoSL to transform the country from a fragile state into a stable and prosperous democracy. At the center of the NDP is human capital development as a fundamental pathway to achieving the middle-income status by 2039 and sustainable development through inclusive growth that is sustainable. Goal 4 of the NDP addresses a competitive economy with a well-de- veloped infrastructure with cluster 3.5, specifically, to improve information and com- munication technologies (digital technologies) to improve Sierra Leone’s national and international competitiveness. Another important policy document supporting digital transformation is the 2019 National Digital Transformation Policy (NDTP). The NDTP is government’s policy in line with the country’s Medium-Term National Devel- opment Plan to guide digital transformation, ICT accessibility, and its utilization on a national scale to meet the opportunities and challenges of a digital economy. It aims at creating a framework that addresses the need for the consolidation of digital tech- nology development activities under a National Digital Development Agency (SLDTA) to ensure a proactive and holistic national development planning in collaboration with the private sector. It has 18 policy thematic areas ranging from infrastructure and access, digital education and skills development, digital resources (Spectrum) gender mainstreaming of ICT etc. Legislations The National Civil Registration Act (2016) outlines the establishment of the NCRA responsible for the registration of births, adoptions, deaths, marriages, and divorc- es throughout Sierra Leone. The Right to Access Information Act (2013) outlines the right to access public information and the formation of the Right to Access Informa- 61 tion Commission (RAIC).29 Legislations to regulate electronic transactions and per- sonal data protection have not yet been enacted in Sierra Leone. This has resulted in low confidence in the use of ICT to enable electronic services. Interoperability Layers and Shared Services There is no government-wide established ICT architecture, integration, and stan- dardization in Sierra Leone. Past efforts to digitalize government services have mir- rored the vertical silos of the government organization and concentrated mainly in digitalizing core government back-office processes to address challenges relative to specific government functions without following a WoG approach. This silo approach has resulted in systems that have their own structures, and which do not communi- cate with each other, resulting in reduced efficiency potential. This leaves citizens and businesses to deal with multiple government entities with their own separate processes and systems and reduces the quality of the user experience of citizens. This has led to low consistency of IT applications and escalating support and maintenance costs. In addition, while the majority of MDAs have government email domains to facilitate government-wide electronic communication, they are not widely used. Data Infrastructure Management Shared data center. MDAs are planning and developing their IT infrastructure and systems by themselves with limited, if any, support from the central government. In the absence of a central government data center, public sector registries and in- formation systems are hosted in sectoral or regional data centers and have different levels of sophistication. In many cases, MDAs host their own servers in inadequate conditions. Some of those conditions would just barely meet the minimum require- ments of a modern data center. There are many interoperability issues among the infrastructure serving different MDAs. Authorities are reluctant to share the infor- mation and the exchange of data is mainly done on paper using bilateral relations. The absence of a shared government data center is leading to a duplication of invest- ments, inefficiency, and security concerns. Also, there are likely to be high operation and maintenance costs to pay the infrastructure used by various MDAs. There are many concerns within the government over cybersecurity and interoperability. A shared vi- sion for centralized public sector IT infrastructure and development of a consolidated model that ensures required standards of safety, redundancy, and business continuity would be more cost-effective than the current fragmented arrangements. 62 According to the draft NDTR, the GoSL intends to build a national data center, which is a step in the right direction. The draft envisages the establishment of a national data center and private cloud infrastructure. This shared IT infrastructure is sup- posed to provide the entire government the much-needed ICT-enabled environment for the uptake of electronic governance systems. It is expected that from the data cen- ter, the various MDAs will be provided with several shared services such as emailing, antivirus management services, document management systems, and other services. This will ensure a structured and simplified workflow between the MDAs. The new cloud infrastructure is supposed to be expanded and shared across government for a secured storage of all critical information and data of the government for MDAs to have enhanced security and control over government data and information. Addi- tionally, the government is planning to establish shared backup, disaster recovery, and business continuity sites. According to the draft NDTR, the national data center should be designed to host the government’s mission-critical systems and applications to support the develop- ment of a WoG digital ecosystem. The national data center should provide a common platform for public and private sectors for the development and implementation of the citizen-centric e-government applications to improve communication between the government and citizens. The government’s cloud infrastructure should provide associated delivery models such as infrastructure as a service, platform as a service, and software as a service (IaaS, PaaS, and SaaS. As planned, implementation of cloud solutions is expected to help achieve synergies and economies of scale in both the public and private sectors. Interoperability. A common shared platform for data exchange incorporating in- teroperability tools does not exist yet in Sierra Leone. Institutional arrangements for managing the governance of shared data for compliance with standards have not been made yet. However, the GoSL is planning to implement interoperability solu- tions as part of its digital strategy to promote the exchange of data among ministries for better decision support and analytics systems. According to the draft NDTR, the government intends to establish a common standardized government IT architecture and framework and to develop and implement common core data sharing standards. In the absence of the government’s shared interoperability platform, some bilateral interoperability arrangements have been developed with the World Bank’s support, such as development of a system interface between the Debt Recording and Man- agement System (DRMS) and IFMIS. This was done to improve the reconciliation between the debt management and the public accounts. 63 Existing Digital Systems and Platforms in Sierra Leone Only some MDAs in Sierra Leone have basic systems, which usually are stand-alone, decentralized, and disconnected and involve many manual steps for downloading and consolidating information, largely through spreadsheets. The GoSL’s initial priority was to implement basic functional process systems for public administrations, with priorities for key sector ministries, such as the MoF, before implementing more advanced tools. Core systems of the government would benefit from digitalization as they lack in- ternal integration, critical functionalities, and key controls. They are architected as stand-alone systems that are not interconnected and do not interoperate at the central and regional levels. Most of the systems are lacking end-to-end functionalities and only partially cover front- and back-office processes. Owing to these challenges, staff usually require several manual steps and spreadsheets to ensure controls and compile reports. The design and architecture of the most systems also lack citizens-centric, service de- livery focus. Besides, these systems are hosted on sector-specific server rooms at the center and the regions. These data server rooms lack full security and technical staff- ing. The inefficiencies and control weaknesses could be improved through the modern- ization of these systems in line with international good practices. Core Government Back Office Systems (G2G30) Public Financial Management System (central level) In 2003, the GoSL initiated an IFMIS to improve the government’s capacity to ef- fectively manage public resources through improved budget preparation, budget execution, cash management, and financial reporting. An IFMIS started to be de- veloped under the Institutional Reform and Capacity Building Project (IRCBP) in the Accountant General’s Department in 2005. The IFMIS runs on the FreeBalance platform and covers the following modules:31 Financial Accountability (including General Ledger, Appropriation, Purchase, Rev- enue, Expenditure, Bank Reconciliation, and Control); Human Capital Accountabil- ity; Civil Service Management; Performance Budgeting; and Asset Management. The modules were implemented in several MDAs and were working satisfactorily. However only a limited number of MDAs could operate the system online due to connectivity issues. The IFMIS has been rolled out to 30 MDAs.32 Its major use is to control the commitment processes and level of arrears, some of which were accumulated during the war and some more recently as a result of unpaid bills owing to tight fiscal space. The expendi- 64 tures for most of the MDAs are captured in the IFMIS and templates are used to capture the financial transactions of sub-vented agencies and some of the donor-funded proj- ects, thus facilitating the consolidation of central government financial statements. The checks for the relevant payments are also printed from the IFMIS. The Human Capital Accountability (HCA) module was used for the processing of salaries. The GoSL stopped using the HCA in 2013 and switched over to the Civil Service Module (CSM) that has been in operation since then. The three modules comprising the IFMIS application have three separate databases and communicate with each other through additional tools. Starting in 2017, the World Bank supported further development of the IFMIS. Activi- ties included the rollout of the IFMIS to the remaining 43 MDAs; extension of the IFMIS to include on-budget donor-funded projects; provision of a backup power supply (for example, battery banks); establishment of the IFMIS interface with other government systems such as the Bank of Sierra Leone (BSL); the DRMS, customs and tax systems (Automated System for Customs Data [ASYCUDA] and Integrated Tax Administration System [ITAS]); establishment of a data center; establishment of a disaster recovery site. The setting up of the MoF’s Data Center is in an advanced stage with various IT equipment and primary backup power installed and configuration almost complet- ed. The secondary backup power comprising a solar system and two diesel genera- tors are yet to be acquired and installed for the Data Center to acquire a Tier III status with a robust power supply exhibiting full redundancy. Additionally, MoF is currently establishing a Disaster Recovery Site (DRS). A building was identified to house the DRS infrastructure and a request sent to Sierratel for approval for the use of this fa- cility, but no response has been received from SierraTel so far, and subsequent work towards its establishment is still outstanding. Additionally, the World Bank supported the improvement of online accountability and reporting. Activities included implementation of a document management system for financial management; implementation of electronic funds transfer (EFT) system, and so on. The implementation of the EFT system is a joint project being undertaken by two service providers. They have submitted their proposals which have been reviewed and approved. Virtual meetings have been held with them to further clarify technical requirements and the project has kicked off with consultations in progress. The primary objective of the government now is to upgrade the IFMIS to a fully inte- grated web-based application comprising these modules namely the Financial Ac- countability, Performance Budgeting and the Civil Service Payroll Module CSM with added functionality and will also ease deployment at a significantly reduced cost. Latest proposal for the implementation of an integrated web-based solution is being reviewed for finalization of both the technical requirements and the implementation cost. 65 Public Financial Management System (local level) Local Government’s PFM System (PETRA) is supporting recording of budget execu- tion, accounting, and reporting. It operates in all local authorities, although not in real time. The World Bank supported strengthening timely recording and reporting in the local councils through enhancement of the PETRA to perform ‘procure to pay’ functions, including commitment control. As result, separate consolidated financial statement for central government and local councils are submitted to the ASSL on early basis. Additionally, the World Bank supported enhancement of power supply and related issues in local councils to facilitate real-time processing of transactions through the PETRA. Digital Service Delivery (G2C and G2B33).). Since the devolution in 2004 to date, the Public Financial Management Reform Di- vision has made tremendous effort in terms of improving recording and reporting of financial activities of Local Councils (LCs). These efforts range from the use of manual ledger, to excel and finally to an accounting software, which is the PETRA accounting software package. The PETRA was implemented in some LCs in 2009 and gradually rolled out to other LCs. To date, all twenty-two LCs use the PETRA to record and report on their financial transactions. In order to provide for the growing needs of LCs reporting, additional functionalities were added, such as Bank Reconciliation and Fixed Asset Modules. The PETRA accounting system is not a real time processing system, but a recording and reporting system used by LCs to record and reports their day to day transactions. In 2012, the International Public Sector Accounting Standard (IPSAS) Cash an inter- nationally accepted accounting standard for public sector reporting was introduced to LCs in an effort to address inconsistencies in financial statements submitted to the Auditor General. Currently PETRA comprises following modules: The Accounting System Revenue Trial Balance System Admin Reporting Income Statement Budgeting Bank Reconciliation Expenditure /Revenue Listing General Ledger Account Balance Report Balance Sheet Expenditure Payment Analysis Report Tax System As of 2017, the Domestic Tax Information System (DTIS) implemented by the GoSL was a basic system with limited functionality. It did not have an audit module and any connection with other systems. It was recording only income tax transactions. Goods 66 and service tax and corporate tax were recorded in other stand-alone systems. The GoSL had difficulties processing tax returns and amendments, as the National Revenue Authority (NRA) did not have a fully integrated tax assessing and collecting system. As a result, the GoSL decided to implement an ITAS. The introduction of an ITAS was expected to lead to the full establishment of an efficient tax system in Sierra Leone, enabling taxpayers to meet their tax obligations quickly and cost-effectively. The ITAS was envisaged as an enabler for the NRA to operate its processes in a simpler and more transparent fashion and to encourage those in the informal sector to formalize their businesses, bringing economic benefits to the country. It was considered that instead of crafting each new information system locally, the NRA would be able to in- stall a well-integrated, internationally sourced package that seeks to incorporate best practice from information technology systems worldwide. This package would also provide rich choice in features and functions so that the NRA could meet its identi- fied specific needs. Ultimately, it was decided to implement a more robust, off-the- shelf tax administration system that allows for online taxpayer, tax administration, customs services, and revenue reconciliation. The World Bank supported the acquisition of a commercial off-the-shelf (COTS) tax administration system to address the shortcomings of the DTIS which the NRA was using till then. The immediate expected outcome was integrated management of domestic tax revenues, improved trade facilitation, and revenue reconciliation. The ultimate outcome was improved services delivery, taxpayer compliance, and tax administration—taxpayer registration, filing, payment and refunding, dispute resolu- tion management, taxpayer services, enforcement, and risk management—leading to improved resource mobilization. The new ITAS allows for the full incorporation of Income Tax and Goods and Services Tax Assessing Systems, which helps the NRA in achieving a fully integrated assessment and collection system. Additionally, it allows to process tax returns and amendments. It pro- vides access to the online calculation of tax liability facility screens to process tax returns and amendments. It provides an integration possibility with other systems such as IFMIS solution. The expected ultimate impact of the ITAS was in maximizing revenue generation and improving governance. It reduces revenue leakages through the reduction of direct interaction with the taxpayers and help improve tax compliance through increased access to more reliable taxpayer data for auditing and compliance monitoring. It also makes it possible for the taxpayers to file their tax returns online without the need to visit the tax offices. Payment for taxes is possible to be made electronically, thus easing the burden on the taxpayer and increasing the ability to account for and reconcile tax payments. Finally, the ITAS can serve as a platform for improving reporting and reconciliation. 67 However, the NRA has not been able to implement the ITAS to become the main vehicle for processing business taxes, including value added tax, employer pay as you earn (PAYE), and relevant contracts tax. While the ITAS intends to support the processing of tax payments, tax refunds, and certain compliance activities for income tax and corporation tax customers, the ‘assessing system’ which processes the tax re- turn data and computes the tax liability has, until now, remained in an older system. Custom System The initial implementation by the GoSL of the Automated System for Customs Data on ASYCUDA++ platform was not successful. Apart from the shortcomings in func- tionality, it has not been stabilized for efficient and effective use. The GoSL decided to transition from the ASYCUDA++ version to ASYCUDA World, its web-based version, which has improved functionalities with added efficiency advantages. It was expect- ed that ASYCUDA World will consequently encourage greater compliance and stim- ulate new business opportunities not only in Sierra Leone but also in neighboring countries, which will help enhance competition. Single-window systems provided by ASYCUDA World allow for trade facilitation and provide even greater efficiency as they provide an electronic platform for all parties involved in the export and import of goods to submit, receive, and process documents used for trade-related cargo. Effi- cient and quick customs procedures resulting from the implementation of ASYCUDA World were expected to encourage cross-border trading and international trade. The World Bank contributed to the implementation of the transition to ASYCUDA World, helping the country meet its World Trade Organization (WTO) requirements. Implementation of ASYCUDA World is supporting to secure the international trade supply chain in Sierra Leone where most items are imported. Additionally, it helped remove inflexibilities of ASYCUDA++, considering the ever-changing business needs. The implementation of ASYCUDA World made the customs clearance process more customer friendly and quick, leading to larger economic benefits. The implementa- tion of the new system was expected to enhance and increase voluntary compliance with existing customs laws, regulations, and procedures, which have been lacking and leading to less collection of revenues. It is anticipated that the new system will lead to improved transparency, as clients will now view the status of their declara- tions in addition to receiving status notifications issued by the system. There will be quick declaration processing because of the online submission and paperless decla- ration processing, which will result in reduction of average clearance time and re- duce the environmental footprint through reduction of paper usage. 68 e-Procurement System Before the implementation of the e-procurement system, the GoSL was undertaking procurements through a manual tendering process. The manual tender system suf- fered from many deficiencies, some of which have been adequately captured in the annual government audit reports. Issues such as red tape, lack of transparency, and manual movement of files across the administrative hierarchy have resulted in inor- dinate delays in the finalization of tenders: typically, tenders for major projects took 90 to 150 days to process. These delays have contributed to cost and time overruns for projects. Procurement is considered a sensitive function, with all related information tightly controlled and closely guarded by the GoSL, resulting in a severe lack of trans- parency in the entire process. This lack of transparency was leading to misinforma- tion and a lack of trust in the system by the bidders, media, and the citizens. As a result, the GoSL decided to develop an e-procurement system to deal with such weaknesses. The implementation of e-procurement was considered critical because it automates the procurement process, links the process to budgeting systems, brings about higher productivity with reusable tenders and templates, and improves buying methods across government. It was supposed to help standardize the procurement processes, ensure that spending across MDAs is leveraged for better pricing, and es- tablish mechanisms to protect unauthorized spending. The World Bank supported the development and implementation of the Public and Electronic Procurement System (e-Procurement) at the National Public Procure- ment Authority (NPPA), followed by a complete rollout of the system to other MDAs. The system facilitates online tendering by provision of ‘anywhere, anytime’ access to the bidders for participating in tendering. Implementation of e-Procurement elim- inated the non-value-adding activities, such as manual sale of tender documents, manual opening and reading of bids, preparation of comparative statements (as they are automatically available), audit/cross-check of comparative statements, time spent in movement of files from one person to another, and manual creation of purchase order and delivery schedule, among others. The new system brought higher efficien- cy: the cost per transaction was reduced and information and data about procure- ment activity are easier to be kept, analyzed, and used as an audit trail, which has been the reason for audit qualifications in the past. Information about procurement activities across government is used to prove and manage compliance with govern- mental policies and procedures. Negotiation with vendors was automated and opti- mized. The amount of paper created by the procurement process was dramatically reduced, and the procurement cycle time was reduced as well. The major benefit of the e-Procurement implementation is making procurement processes more trans- 69 parent and accessible to the stakeholders, which enabled competition and eventually control of possible corruption. Open contracting principles were embedded in the core structuring of the e-Pro- curement. An open data approach was implemented that envisages publication of procurement data in structured and open formats, according to the Open Contracting Data Standard (OCDS). The OCDS helped improve the quantity, quality, and timeli- ness of the procurement information and data to be published by providing technical specifications on how to publish contracting data in a more accessible, interoperable, and useful manner. The e-Procurement system offers the following services to all MDAs:  Centralized view of all suppliers registered/blacklisted for all classes  Online advertising of bidding opportunities  Online short-listing, comments, and corrections and approvals  Online submission of bids  Online sealing of virtual tender box  Online bid opening, evaluation, and approvals  Issuance of purchase/work orders online  Contract award publications  Data collection and dissemination  Tracking and handling of procurement-related complaints  Measurement of procurement performance  Publication of open procurement/contract data. 70 CivicTech–Citizen Engagement The draft NTDR stipulates that issues around service delivery quality in Sierra Leone are central. The need to develop an effective feedback loop to ensure that frontline min- istries receive the information needed to improve efficiency and effectiveness of their ser- vices is crucial. There are currently no effective mechanisms for determining the quality of service delivery aspects. Through piloting of service delivery quality and anticorrup- tion surveys, followed by institutionalized service delivery feedback loop mechanisms to be financed and established, it is expected that a proper and effective framework for improving such services can be established to the satisfaction of the citizenry. Civil Registration System The GoSL through the National Civil Registration Authority (NCRA) in collaboration with UNDP and other Development Partners has partly developed a National Identi- ty Management System (IDMS) that supports the continuous and permanent regis- tration of citizens and non-citizens resident in Sierra Leone. However, the IDMS Sys- tem is limited to the registration and capturing of biometric and bio- data and does not support the registration of other vitals events such as Births, Deaths, Marriages, Divorces, Nullities, Adoptions, Legitimization, Recognition etc. Official Websites The GoSL has an integrated presence on the web through the GoSL’s official portal (https://psru.gov.sl/gosl-portal), which is also the corporate site of the Public Sector Reform Unit (PSRU) under the Office of the President. The portal contains informa- tion about public servants, branches of the government, various public sector enti- ties such as the State House (Office of the President), Parliament, MDAs, institutions, commissions, units, and so on, and provides access links to their web pages. No in- formation is provided on the portal regarding available public services for citizens and businesses. Transparency Portal Under the auspice of the President, a web portal known as Transparency Sierra Le- one Portal (http://www.transparencysierraleone.gov.sl/) was launched in 2012, aiming at enhancing the transparency and accountability of his government. The portal, es- tablished by the Commonwealth Secretariat for the GoSL, was unveiled in Freetown in January 2012. It aimed to build on the Open Government Initiative in promoting good governance and democracy. The portal was supposed to provide a gateway to information on government development projects and data that will be made public. 71 The portal offered access to three key sites: Government Project Registry for data on poverty reduction projects; Development Partner Registry for information on fund- ing and disbursements for various sectors; and Join the Transformation, which is an interactive platform for debate on the government’s poverty reduction strategy. It was managed by the Strategy and Policy Unit (SPU) in the Office of the President. Howev- er, the portal does not seem to be active now. CivicTech Applications In response to the COVID-19 pandemic, during the three-day lockdown, a team of local computer scientists and data engineers from the public and private sectors collaborated to develop technological solutions to enhance the nation’s COVID-19 preparedness and response efforts. The COVID-19 emergency tech response team made up of experts from the DSTI, United Nations Children’s Fund (UNICEF), Emer- gency Operations Center, MIC, Ministry of Health and Sanitation, other government agencies, and private sector partners developed and incorporated COVID-19 public health information into the GoSL’s *468# (*GOV#) public information system. They expanded the government’s existing *468# (*GOV#) Unstructured Supplementary Ser- vice Data (USSD) platform to allow citizens to conduct a self-check against their symp- toms, learn prevention tips, and get updates on Sierra Leone’s COVID-19 situation, including the number of cases, deaths, and the quarantine status. A complimentary SMS mobile application that offers users the same functionalities was also developed. Open Data The GoSL has embraced the open data agenda and accomplished significant achievements to date. With the World Bank’s support, in late 2015 the GoSL conduct- ed an Open Data Readiness Assessment (ODRA)—the World Bank’s action-oriented assessment of the readiness of the government to evaluate, design, and implement an open data initiative. Based on the ODRA results, the GoSL, with support from the World Bank, launched an open data portal, held an International Open Data Day, and engaged in data lit- eracy trainings. The latter helped boost demand for and capacity to use data and leverage IT for improved development results. The Gosl Opendata hub is completed with data from the selected pilot MDAs (https://opendatasl.gov.sl/). 72 However, data and IT demand and usage remain low, limiting the development impact of such measures. Notwithstanding, the MoF formally requested additional support from the World Bank around open data and big data. By infusing open and big data concepts into the public sector, MDAs are expected to benefit from greater transparency and participation, increased citizen engagement, enhanced service de- livery, lower costs, reduced waste and corruption, improved compliance, and more efficient policies. As the government seeks to improve outcomes for citizens against a backdrop of cost pressure, big data enables them to do more with less. Also, it was decided that information systems set up through the IFMIS will be a backbone to enhance increased need for data that the citizens will need for moni- toring service delivery in various sectors of the economy. The IFMIS was expected to become a center to provide data for a transformational change in sectors. Integration of open data, big data, and beneficiary feedback into service delivery operations, was agreed as one of next digital transformation steps. World Bank activities fostering open and big data envisage designing, piloting, and scaling up a combination of exploratory uses of big data for enhanced service deliv- ery, service delivery surveys, quality feedback mechanisms, and enhanced grievance redress mechanisms in service delivery operations of key sectors. These selected sec- tors include education, health, land, and water. Additionally, the GoSL with the World Bank’s support will focus on activities around improving the open data enabling envi- ronment include implementation of ODRA recommendations, including piloting the use of big data applications for enhanced service delivery, relaunching and revamping the government’s open data portal, developing sectoral data dashboards, incentivizing the public disclosure of existing government data sets, conducting sensitization cam- paigns around open data, and introducing a provision for open data by default. Digital ID and Trust Services In Sierra Leone, several functional identity systems are currently operating, such as for passports, national identity card, voter’s identity, driving license, and social se- curity. Some systems are based on IT solutions, for example, those that are perform- ing biometric capture such as passport, and some are manual. All systems requiring biometric registration of people conduct their own biometric capturing, thereby du- plicating efforts and resources. 73 Without a unique national identity number, some systems, such as voter’s identity, need to be routinely updated for each election cycle, further duplicating efforts and resources. The different functional identities currently are not interlinked and do not provide the government with a unified profile of an individual. All systems follow different standards without any interoperability. The details captured by one govern- ment department may not be in sync with data kept by other departments. Therefore, the data captured by identity programs may not be accurate, especially in cases of manually run programs. There is the probability of ghost and duplicate identities in functional identity systems due to the absence of a biometric-based de-duplication system and unique identity numbers. Moreover, even with so many identity systems in place, most of the population in Sierra Leone (as of 2017–updates needed) does not have an identity document or a proof-of-address document and thus has difficulty in availing government services. The GoSL has developed a national policy on civil registration and the legislation framework, namely, National Civil Registration Act (2016). However, there is no law related to personal data protection yet. The proposed reforms are expected to make it mandatory for citizens to register key civil events, including birth, death, marriage, adoption, divorce, and so on, and issue an identity credential to people. The National Civil Registration Act is mainly focused on the civil registration pro- gram and may require further focus on national identity system as part of the same act or a supplementary act. Through the civil registration program, the GoSL plans to consolidate the resident data in an integrated civil registration repository. This repository shall then be a source for providing various services to people, including passport, marriage certif- icate, voter’s card, and so on. To create this repository, the GoSL plans to collect and validate personal information of all residents and subsequently issue an identity card to each resident. The NCRA that oversees civil status registration has only about 100 employees (up- dates needed). The entire process of birth and death registration in Sierra Leone is manual. Registrations are performed at around 1,350 health facilities and offices across the country by health workers as service providers and NCRA staff trained and deployed at designated local registration centers across the country. Many of the registration centers are located in health care facilities where current birth and 74 death registration and certification are processed within 90 days by the in-charges.. Between 2015–16, approximately 255,000 paper-based birth certificates were issued. In 2019, the NCRA recorded 284,056 birth and 13,883 deaths respectively. The Eu- ropean Union (EU) has been providing three-year technical assistance to the NCRA to maintain and implement an Integrated National Civil Registration and ID Man- agement System in line with international standards. The EU support si intended to cover legal reviews, CRVS & ID Management Regulations and Procedures, upgrade of ICT infrastructure to make it interoperable, establishment of decentralised CRVS & ID Management System in communities. However, the EU support is not sufficent to make the desired systems functional to support good governance, interoperability and service delivery. UNDP provided support to the government and hired techni- cal experts to develop an INCRS. The INCRS was only partially developed and some important functionalities are missing. It is expected that GoSL and its Development Partners will mobilise resources needed to implement the UN guided costed five years National Civil Registration, Vital Statistics and Identity Management Strategic Plan 2019 – 2024 whose development was informed by a Comprehensive Country As- sessment (CCA) on the CRVS & ID Management landscape in Sierra Leone guided by the United Nations Economic Commission for Africa (UNECA). A unified digital ID system and infrastructure is missing in Sierra Leone. The draft NDTR 2021–2029, recently developed by the GoSL, set up establishment of the nation- al digital ID system (e-ID) as one of the priorities of the government. The e-ID is envis- aged as a supporter to mitigate a low level of trust in digital economy. A high level of trust in the e-ID issuing authority, system design, and technology used are mentioned as prerequisites for a successful functioning of the e-ID system. According to the draft NDTR, the NCRA and other stakeholders in charge of civil registration should be involved in the development of the standards, including on authentication protocols, minimum data fields, deduplication protocols, biometric and other formats, model regulations, and other standards. Additionally, it defines that e-ID should be designed and implemented using open standards and incorporate strong security mechanisms. Also, according to the NDTR, to promote trust in online transactions, the govern- ment is planning to establish nationwide trust service through implementation of a public key infrastructure (PKI) and certificate authority. 75 DIGITAL PLATFORMS Recommendations and Next Steps Building Support for Digital Platforms R1. (precondition/highest priority/most urgent): Strengthen leadership and pro- mote institutional and donor’s coordination for digital transformation. Strong po- litical will and leadership are needed at the highest level of government to ensure effective institutional coordination and promote the necessary legal and regulatory changes. High-level leadership can promote a WoG transformation approach and overcome political opposition at the ministerial level. A diagnostic to review the cur- rent institutional digital government architecture and the effectiveness of the central unit, coordination mechanisms across the government, and partnerships beyond the government needs to be conducted. This diagnostic should include aspects of data governance institutions to examine and monitor standards for data sharing, manage- ment, and protection. The diagnostic should include a functional and organizational review and identify opportunities for institutional strengthening. Standardized oper- ating procedures and various incentives and sanctions should be employed to ensure smooth adoption and uptake of digital platforms. At the implementation level, if the MIC is to continue its role to manage digital transformation, it needs to be equipped with better capacity in terms of staff and resources to effectively manage, monitor, and enforce transformation. The monitoring and increased coordination of donor and multilateral organization activities will also be crucial to avoid waste and project overlaps, as will the establishment of a clear strategy and governance structure to drive and manage external e-government funding and sponsorship. R2 (precondition/highest priority/most urgent): Design and implement a WoG ICT enterprise architecture to provide the foundation for digital transformation. Such a comprehensive instrument for planning, aligning, and implementing all digital ini- tiatives in the government would help define building blocks, interdependencies, de- sign principles, and standards to allow proper interoperability and reusability of ICT 76 solutions avoiding duplications and inefficient investment in ICT. This architecture could be developed as part of a broader government digital transformation strategy or as a stand-alone document. R3 (high priority/urgent): Create a trust environment for digital government. As an initial step, to finalize the implementation of the national unique identification sys- tem based on a unique identification numbers for citizens and businesses. Based on these foundational arrangements, implement a trusted digital ID and digital signa- ture for secure transactions (based on PKI) and enhance a legal and regulatory envi- ronment for cybersecurity, data protection, and privacy. R4 (high priority/urgent): Establish and apply a shared platforms/services for gov- ernment approach. This will reap economies of scale through standardizing and re- using technology capabilities required across the government. Examples of shared government platforms and services to be used by multiple MDAs include a national data center and G-Cloud; disaster recovery and archiving centers; interoperability platform; services portal; data warehouse; and e-ID, e-signature, e-payment, e-noti- fication, and e-logging. The government is encouraged to adopt a ‘build once, reuse always’ approach for all new digital investments. Shared platforms and services con- cept can be part of a broader WoG ICT architecture. R5. (high priority/urgent): Expedite the implementation of a national data center as a base for establishment of a hybrid government cloud to create a common virtual in- frastructure for the public sector. The government’s plan to implement a national data center and private cloud for the government is a step in the right direction. However, the government could also consider using public cloud services (a hybrid cloud model) for nonconfidential or less critical data. This could result in substantial cost savings, allowing agencies to optimize spending and to reinvest in the most critical needs. 77 Improving the Legal, Policy, and Regulatory Environment R6 (high priority/urgent): Implement the interoperability framework (technological and regulatory). Decision support and service delivery systems require data sharing and implementation of analytics tools based on the data layer. Interoperability is the backbone for public services modernization. The government plans to implement in- teroperability solutions as part of its digital strategy to promote the exchange of data among ministries. However, implementation of interoperability framework needs proper planning and strong interagency coordination and institutional arrangements for managing data exchange in compliance with specific standards and protocols. R7 (high priority/less urgent): Develop new or modernize existing core systems (back office) in line with WoG ICT architecture and international good practices. Further developments or procurement of COTS solutions should be compatible with interconnection, interoperability, cloud, and so on requirements. The systems should have a citizen-centric and service delivery focus. R8 (high priority/less urgent): Initiate a comprehensive plan to modernize govern- ment services to citizens and businesses. As an initial step for public services modern- ization, the government should conduct a comprehensive inventory of all administra- tive services followed by a horizontal review of this list to remove duplicate and obsolete services. Once this list is finalized, it will be important to map administrative processes to identify areas for simplification through the reengineering of business processes to achieve efficiency gains. To improve service access, Sierra Leone can implement a sin- gle government portal to be used as one-stop shop for provision of all public e-services like business registration, driver’s license, welfare eligibility benefits, and so on. In ad- dition, this portal could include citizen feedback channels to obtain real-time data on citizen satisfaction on services that will identify service gaps and improve quality. Engaging Key Stakeholders R9 (medium priority/less urgent): Boost the publication of open government data and promote data reuse. This will expand access of data that can support innova- tion and improvement to service delivery. The data sets should be made available in standardized, machine-readable, and easily accessible formats, based on agreed standards to create larger data sets to increase the value and interest in reuse by in- novators and entrepreneurs. More engagement is needed with potential data users in both civil society and in the private sector to promote and facilitate the use of data. The program of engagement could include hackathons and competitions as well as business roundtables and other ways of promoting sustained data reuse. 78 79 80 4 Digital Financial Services Importance of Digital Financial Services The G-20 High-level Principles for Digital Financial Inclusion defines DFS as: “…financial products and services, including payments, transfers, savings, credit, insurance, securities, financial planning and account statements. They are delivered via digital/electronic technology such as e-money (initiated either online or on a mobile phone), payment cards and regular bank accounts.”34 T his diagnostic sets out to explore the state of DFS development and the barriers thereto. The diagnostic explores the general financial sector con- text, followed by the state of DFS in Sierra Leone; the analysis then goes on to outline the policy and regulatory environment. A review of the state of key DFS and credit infrastructure is provided, with a focus on how such infrastruc- ture might support the growth and uptake of DFS within the context of the digital economy. An analysis of recurrent payment streams and how these may be leveraged to support the uptake of digital payments is also undertaken. Recommendations for how best to develop the DFS landscape to support the digital economy environment are outlined by topic, covering policy; legal, regulatory, and oversight; financial infra- structure; credit infrastructure; and recurring payments. Socioeconomic Rationale for DFS Development DFS are a critical pillar of any digital economy, providing consumers with access to financial services in the digital form and other key benefits. Financial services, such as the provision of credit, saving mechanisms, and insurance, are commonly under- stood to play a critical role in economic development. DFS hold enormous opportu- nities for greater access to such services (that is, financial inclusion) by facilitating digital access to, and use of, formal financial services, as consumers require accounts to make and receive digital payments. DFS also stand to play a critical role in helping promote access to financially excluded and underserved segments of the population given their accessibility and costs of access via mobile devices, which much of the world’s poor are increasingly obtaining, among others. Additionally, DFS stand to (a) bolster access to and usage financial services (that is, financial inclusion) as users 81 require accounts to make and receive digital payments which are more easily made/ received, thus increasing usage; (b) reduce costs by removing the need to physically access financial service access points, like distance bank branches, and to physically move cash, particularly to remote regions, to conduct commerce, including finan- cial institutions; (c) increase efficiency in payments by removing manual processes, which are often multilayered in nature and are far from being instant in nature; (d) promote accountability by creating a digital paper trail of transactions; and (e) pro- mote financial sector development more broadly and thus commerce by creating an environment that facilitates innovation and more users (due to greater access), thus increasing the incentive to invest in a larger market. Digital payments have played a critical role in improving financial inclusion levels in a range of countries; key success stories include India and Kenya. The widespread use of feature phones with basic messaging tools such as USSD has been the main conduit by which underserved communities can now access and use transaction accounts (for example, a mobile money account.35 For many of these individuals, usage of financial services has tended to begin and end at the transaction account level, however, with customers rarely utilizing other forms of DFS on a regular basis. In the case of Sierra Leone, usage of digital payments—the usual entry point to DFS—is extremely low, with only 15.6 percent of the population having made such a digital payment within the last year, significantly behind all regional comparators and the regional average. Alignment with Country Development Strategy and Goals Sierra Leone has taken a keen interest in supporting DFS development in recent years. The National Strategy for Financial Inclusion (NSFI) 2017–2020 supported by the United Nations Capital Development Fund (UNCDF) has been the main guiding policy docu- ment. The development and implementation of the NSFI focuses on six strategic areas: (a) responsive policy, regulations, and coordinated action; (b) client-centric products and services; (c) DFS; (d) access to finance for micro, small, and medium enterprise in growth sectors; (d) financial literacy, financial education, and consumer protection; 82 and (f) data and measurement. In the area of DFS, the strategy aims to (a) ensure that BSL and other regulators are responsive to emerging opportunities, notably DFS, and (b) enable financial institutions to leverage technology in the design and delivery of fi- nancial services. As part of the strategy, six key areas necessary for promoting inclusive financial systems were identified. For each individual area, working groups are to be established to mobilize stakeholders, including the DFS working group. In 2017, BSL in partnership with development partners undertook a fintech chal- lenge to provide much needed financial and technical support to the nascent fin- tech sector emerging within the country. The fintech sector comprises a number of companies using or aiming to use open access and/or white-labelled software to de- velop financial products and services that better meet the financial needs of the un- banked population. The challenge focused on supporting innovation in a controlled sandbox environment where potential risks to financial integrity are identified and mitigated. The aim is to make these new solutions market ready. Following a review of business models, four businesses were selected to enter the newly established regulatory sandbox at BSL, to test and evaluate regulatory as- pects of their respective technologies and business models. The challenge focused on supporting financial inclusion through innovation in the fintech space. These businesses were (a) mypay, which offers a third-party processing solution that al- lows for P2P, P2B, B2P, and B2B solutions;36 (b) IDT Labs’ miKashBoks (Icommitt), which helps farmers develop savings plans and save over a period per their produc- tion goals and then purchase inputs; (c) InvestEd, which provides a mobile platform to train entrepreneurs, including financial literacy, who then qualify for credit, and (d) Noory, which is an application programming interface (API) that helps facilitate interoperability.37 It is important to note that without the presence of an interoper- able retail payment switch, institutions like mypay and miKashBoks, among others, cannot commence operations. Other key investments from the region and outside are likely to enter the market upon the establishment of the switch and adoption of the draft electronic payment regulations and draft amendments to the National Payment Systems Act; e.g., remittances that can be digital terminated (deposited directly) into mobile wallets or bank accounts. 83 DIAGNOSTIC FINDINGS Current State of Digital Financial Services Context Overview of the Financial Sector The banking sector is dominated by commercial banks. The banking sector in Sierra Leone includes 14 commercial banks, 17 community banks, 59 financial services as- sociations (FSAs), 18 microfinance institutions (MFIs) (3 deposit taking and 15 credit only), and 2 mobile money operators which offer affordable digital transfer services. The commercial banking sector accounts for 99 percent of all financial sector assets. Foreign banks account for more than 60 percent of the industry’s total assets. The 17 community banks (credit unions), 59 FSAs, and 18 MFIs designed to be com- munity owned38 (3 deposit-taking and 15 credit only MFIs) are the primary branch- based financial service providers in rural areas. These institutions account for about 1 percent of financial sector assets but have a wide geographic reach. These categories of MFIs primarily cater to micro and small enterprises and entrepreneurs. These insti- tutions also have a significant focus on agricultural lending and on rural areas. Women also make up a significant portion of loan recipients—44.05 percent in the case of FSAs. Outside of the two state-owned banks, the banking system is broadly stable. The broader financial sector remains relatively stable as demonstrated by the improve- ment in key financial soundness indicators. Total assets of the banking system in- creased by 15.1 percent to 27.0 percent of GDP in 2018, mainly due to increases in de- posits and shareholders’ funds. Both total deposit and shareholders’ funds increased during 2018 reflecting new products to attract deposits and retained earnings to shore up capital. Demand deposits accounted for the highest percentage of total deposits, followed by savings deposits and time deposits. Although the average capital ade- quacy ratio of the banking industry remains far above the 15 percent minimum at 44.9 percent as of September 2019, it does not adequately capture the risks faced by some banks and the situations vary widely across the industry. Profitability improved as both return on assets (ROA) and return on equity (ROE) increased to 4.8 percent and 19.8 percent in September 2019, down from 6.1 percent and 27.25 percent in De- cember 2018, respectively. The ratio of nonperforming loans (NPLs) declined to 12.7 percent as BSL continued to implement measures to strengthen risk management in 84 banks. The two state-owned banks with approximately 30 percent of assets and 25 percent of credit have recently suffered significant losses primarily due to high levels of NPLs and weak credit decision-making. Both the banks have returned to profit- ability, but this has mostly been driven by utilizing their substantial funding to invest in government Treasury bills (over 50 percent of their assets) that are yielding over 20 percent. A major driver of the poor performance of the two institutions in recent years has been political interference in the operations of the banks. The two large state-owned banks also pose challenges to increasing access to finance, in particular for the enterprise sector. To finance the budget deficit, government bor- rowing from the banking sector has increased in recent years, which has limited the cred- it available to the private sector. Credit to the private sector declined from 7.5 percent of GDP in 2011 to 5.5 percent in 2016 and to 5.6 percent in 2017, while the Sub-Saharan Africa median was 17.2 percent in 2017 (IMF 2018). At the same time, credit to the central government increased from 5.5 percent in 2011 to 16.8 percent in 2016 and 17.6 percent in 2017. The major driver of this decreased lending to the private sector and increased lend- ing to the central government has been the two state-owned banks. In addition, govern- ment securities that are purchased by these two state-owned banks often have terms that are more advantageous than securities sold more broadly to the market. In making the choice to prioritize financing to the government, the government is effectively making a choice that limits access to finance, in particular for the enterprise sector. The outcome of the planned restructuring of these two banks has the potential to greatly increase the funding available to the private sector and could be a major driver of increased access to finance for the enterprise sector. Additionally, lending in the banking sector is largely concentrated on corporate entities and trade as banks are less willing to lend to entre- preneurs and the agricultural sector due to their high perceived risk. In this context, the financial sector in Sierra Leone is among the shallowest in the region and has been de- clining (as measured by private credit/GDP). The 2020 Doing Business report ranks Sierra Leone at 165 out of 190 countries in getting credit.39 Access to financial services also remains low, at less than half the Sub-Saharan Af- rica average.40 According to Financial Inclusion Database (Findex) 2017, only 19.8 percent of the adult population has an account with a formal institution or mobile money provider, compared to 42.6 for the Sub-Saharan Africa average (Figure 4-1). Furthermore, there has been little improvement in the level of financial inclusion since 2011 (15.3 percent), highlighting the need to put in place the requisite financial sector infrastructure, policies, and investments, among others, to help drive access to financial services. Financial inclusion levels are lower for women (15.4 percent), the poorest 40 percent (12.9 percent), and those living in rural areas (14.4 percent). 85 In 2017, there were 1,811 access points (seemingly those active) throughout the country, of which over 75 percent are mobile money agents (BSL 2017). Automated teller machine (ATMs) make up only 2 percent of the access points throughout the country, with traditional commercial bank branches accounting for a mere 6 percent of the total. Given the low absolute number of access points throughout the country, 41.5 percent of chiefdoms in the country do not have any financial services access points, including mobile money agents. According to the geospatial mapping exer- cise, more than half of the chiefdoms in Tonkolili, Falaba, Karene, Kambia, and Port Loko districts do not have access points (Tokolili District has the highest number of chiefdoms without an access point). Figure 4.1 Figure 4.2 Financial Institution or Mobile Money Account (% adults) Geospatial Mapping of Financial Service Access Points 2011 2017 0 25% 50% 75% 100% Sierra Leone Guinea Liberia Nigeria Cote d’Ivoire Senegal SSA Ghana South Africa Kenya Source: Findex, 2017. Note: SSA = Sub-Saharan Africa. Table 4.1 Breakdown of Financial Service Access Points Access Points Number % Mobile money agents 1,356 75 MFIs 125 7 Commercial banks 110 6 Foreign exchange bureaus (FEBs) 103 6 FSAs 57 3 ATMs 43 2 Community banks 17 1 TOTAL 1,811 Source: BSL 2017. Source: BSL 2017. 86 There is a clear urban trend when looking at the distribution of financial access points throughout the country.41 The Western Urban District (the district where the capital city Freetown is located) has 475 access points located within it (26 percent of the total) followed by Bo District, with 276 individual points (15 percent). The pre- dominantly rural districts of Falaba, Karene, Koinadugu, Pujehun, and Kambia ac- count for only 6 percent of the total. A lack of access to financial services throughout the country appears to be a sig- nificant barrier to converting the demand of services into actual usage. Financial inclusion statistics highlights a clear demand for a broad range of financial services, including basic transaction accounts, savings, and credit products; however, this de- mand for services is yet to be converted into actual formal usage. One of the biggest challenges to realizing this potential is the significant limitations customers face when trying to access formal financial services, including DFS. Cash remains the main payment instrument for small-value payments, while checks are predominately used for larger-value transactions and among businesses. Cash is still the preferred method of payment with only 1.5 percent of adults having re- ceived payments from self-employment through a mobile phone, compared to 8.1 percent in Kenya, 5 percent in Ghana, and 1 percent in Liberia.42 Similarly, only 2.1 of adults have received payment for agricultural products by mobile phones, compared to 9.4 percent in Ghana, 12.7 in Kenya, while other peers are equally low. 43 Current State of Digital Financial Services DFS in Sierra Leone are not diversified, with digital payments, especially low cost mobile money, being the main driver of the sector. DFS in Sierra Leone are very much at an early stage or stage 1 of 4 in DFS development using the trajectory of the World Bank’s 2020 DFS report as it is predominantly cash-based (compared to level 4 with widespread adoption like the US, Sweden, and China).44 At present, DFS in Sierra Leone largely refer to mobile money services provided by one of two main providers: Afri-Money and Orange Money. The two providers together have over 5.5 million cus- tomers as of September 2019, of whom 18.1 percent are active users of their services. Given minimal usage of mobile money, this highlights that the gains in financial in- clusion, which are small and driven by mobile money, are even smaller. Outside of mobile money, there are limited examples of DFS; however, banks are beginning to innovate, and there is a growing yet small group of fintech providers and technology solution providers operating within financial services. Despite growing mobile phone penetration, Sierra Leone continues to lag behind its peers within the region in mobile money adoption. The adoption of mobile mon- 87 Figure 4.3 ey in Sierra Leone is much lower than in Financial Institution vs. Mobile Money Account Ownership (% adults) peer countries. At present, only 11 percent of Sierra Leoneans have mobile money ac- Financial Institution account Mobile money account counts, which is below Côte d’Ivoire (34.1), Ghana (38.9), Guinea (13.8), Liberia (20.8), 0 20 40 60 80 and Kenya (72.9).45 Nigeria However, mobile money adoption has Serra Leone Guinea been the main driver of increasing us- South Africa age of formal financial services.46 In fact, Liberia between 2011 and 2017, the percentage of Sub-Saharan Africa adults with accounts at financial institu- Senegal tions decreased from 15.3 percent to 12.4 Cote d´Ivoire percent. In the interim, with the introduc- Ghana tion of mobile and 11 percent of adults Kenya now having such accounts (only 8.7 per- cent for adult women), financial inclusion Source: Findex, 2017. levels (access to financial institution and/ or mobile money account) increased to 19.8 percent. In this context, mobile mon- ey and financial institution account own- Figure 4.4 ership is near on par. In either case, Sierra Made or Received Digital Payments Leone lags behind the Sub-Saharan Africa in the Past Year (% age 15+) average and regional comparators. 0 20 40 60 80 Digital payment usage also remains min- Serra Leone imal, in line with low mobile money ac- Guinea count usage.47 Only 15.6 percent of Sierra Leoneans made a digital payment in the last Liberia year, behind all regional comparators and Nigeria the regional average (Figure 4-4). Improving Sub-Saharan Africa active usage of mobile money accounts has Cote d´Ivoire been the focus of mobile money providers, Senegal and their efforts have yielded some results; Ghana however, there remains a disparity between South Africa the growth in the number of registrations and ongoing usage of these accounts. Kenya The main use cases include cash-in/ cash-out (CICO), airtime top-up, and bill Source: Findex 2017. 88 payment. Mobile money providers note that the main use cases for mobile money include CICO, airtime, and data top-up, as well as bill payment services. The vast majority of transactions continue to be conducted over the counter (OTC) at agent locations. This was described as being far more prevalent than transactions being undertaken directly from an individual’s wallet. Positively, the percentage of OTC transactions was reported to be declining every year. Of all of the use cases, cashing out continues to be the most utilized. For both provid- ers, cash-out services are the most used by customers, followed by airtime and data top-up. A number of other use cases have been developed but are yet to take off. Both digital credit and digital insurance have been introduced to the market, but neither product has done particularly well. The challenges with uptake were in part due to limitations in the providers infrastructure, making the services difficult to use and to access, as well as a lack of supporting infrastructure, particularly as it pertained to digital credit. An inability to assess a customer’s credit history digitally (see the Credit Infrastructure section) combined with very low wallet-based activity made it difficult for providers to assess which customers would be best suited for digital credit, mean- ing the services were underutilized and eventually discontinued. The rise of mobile money has pushed banks to begin to offer online banking solutions for both corporate and individual customers. All of the major banks in Sierra Leone have developed or are developing their online propositions. For individual customers, this has come in the form of mobile banking app solutions, where customers can check their bank balance and initiate transactions (only 2.8 percent of adults have accessed a financial institution account via the internet or a mobile phone compared to 7.8% in SSA), including fund transfer between accounts and bill payments. A number of banks had raised the issue that they were unable to access the USSD messaging tool to support their digital banking solutions. This has now been rectified with NATCOM having liber- alized the USSD market, allowing banks fair access to the communication channel. As mentioned earlier, feature phones continue to be the predominant phone type in Sierra Leone, meaning the ability to access app-based digital banking tools is limited, and thus without USSD, banks could not scale their digital banking solutions. As a result, a number of banks are now planning to make significant strides in this area. There appears to be some innovation within the bill payment use case for both mobile money and online banking solutions. A number of companies have been onboarded by mobile money providers to deliver bill payment solutions to their customers. This includes both public and private sector institutions. Interestingly a number of aggregators appear to be operating in the space, functioning as third-party providers to utility companies, facil- itating the collection of payment from customers for their services. Many of these aggre- 89 gators have integrated with mobile money providers and to a lesser extent banks, to allow customers to pay for electricity and water directly from their digital transaction accounts. Pure payments aggregation appears to be limited, however, with payment service providers having to undertake direct integrations on a unilateral basis, limiting the growth and development of a digital ecosystem. Aggregation services present a significant opportunity in the market. Time-consuming and costly approaches to integration are stifling the growth and development of the digital ecosystem. Out- side of the core payments infrastructure of the country, there are no ‘plug-and-play’ solutions in the market that will allow payment system providers (PSPs) to access all players within the retail payments ecosystem, through one integration. Supporting mobile money merchant acceptance has been highlighted as the next major opportunity by both mobile money providers and banks. A number of pro- viders consulted outlined their plans to improve merchant acceptance throughout Sierra Leone, which highlighting its importance to retaining funds within the digital ecosystem, minimizing the need for cash-out services. A number of solutions are being explored including the introduction of mobile app-based quick response (QR) code systems, POS48-based solutions, and general fund transfer approaches. Enabling Environment for DFS The overall policy and regulatory environment for DFS requires significant bolster- ing, as it is fragmented, outdated, and insufficient in scope and lacks resources to facilitate improvements. About policy, Sierra Leone lacks a comprehensive guiding framework on DFS development, while key policy areas from supporting infrastruc- ture like the national ID and e-signatures, consumer protection, and financial litera- cy, among others are lacking. Additionally, the legal and regulatory space is outdated and fragmented, and payment systems oversight is lacking, with promising improve- ments under way as supported by the World Bank’s Financial Inclusion Project. Policy BSL lacks a comprehensive DFS strategy and effective policy coordination body to guide DFS development. On policy, the latest strategy is the UNCDF-supported NSFI 2017–2020.49 While the DFS working group has proven to be an effective forum, there is no effective operational National Payment Council (NPC) to coordinate high-level policy and decision-making across the government and businesses. An NPC is con- sidered best practice and will be essential to help steer the country to not only bolster DFS development and the broader ecosystem but also a digital economy, as the NPC 90 can help embed DFS across the public and private sectors and help connect the strat- egy with budgets to implement DFS reforms. Consumer Protection According to the Financial Stability Report published by BSL in 2019, Cabinet has approved the competition and consumer protection policies and a bill has been sub- mitted to Parliament. However, consumer protection remains an area for immediate development in Sierra Leone. As it stands there are no clear regulations or guidelines (derived from the recently passed law) on the provision of information pertaining to digital financial products, nor is there a requirement for transparent pricing. Clearly communicated complaints procedures, which are usually essential and mandated for all regulated financial institutions, are outlined at the discretion of the service pro- vider, leading to inconsistencies in the application of the principles. UNCDF recently agreed to work together with BSL on developing the legal and regulatory aspects of consumer protection with a focus on DFS. There is momentum on consumer protection in the areas of DFS. More specifically, the draft e-money issuer and guidelines on agents (discussed in the regulatory sub-section) cover consumer protection. The e-money issuer regulations provide transparency in transactions and information (that is, fees), transaction security (for example, data are encrypted and personal identification numbers [PINs] are used to transact), transaction receipts and confirmation, suspension of e-money accounts and rights thereto, manag- ing of customer complaints, and notification of changes to policies. The guidelines on agents also require agents to clearly display whom they are agents for, customer service contact information of their principal, dispute resolution/redress mechanism, protec- tion of consumer information, and disclosure of information such as pricing, among others. BSL will also require capacity building in consumer protection supervision and enforcement. With no unit dedicated to consumer protection, BSL requires significant capacity building in this space, along with resources to finances a consumer protection unit’s work, including technology to facilitate the management of complaints. AML/CFT Just as with the broader financial sector, meeting anti-money laundering and com- bating the financing of terrorism (AML/CFT) requirements is particularly import- ant for DFS, given that many transactions take place without in-person verification of transactions. AML/CFT is overseen by the Financial Intelligence Unit with the gov- erning body having representation from BSL Governor, the Minister of Finance, the Attorney General, and the Minister responsible for internal affairs, which was estab- 91 lished by the Anti-Money Laundering and Combatting of Financing of Terrorism Act, 2012. Implementation and enforcement of AML/CFT laws (aimed at preventing and detecting ML/TF, as well as supporting financial integrity, and providing correspon- dent banks with some assurance that transactions are subject to appropriate screen- ing) remain very weak. One consequence of the ineffectiveness of these systems are the decline in correspondent banking relations in past few years.  Although Sierra Leone completed a National ML/TF Risk Assessment (NRA) in 2016 toward compli- ance with a critical and foundational international obligation, full compliance has not been achieved due to serious delays in adoption of an NRA report and an NRA action plan. Although they were adopted in mid-2019, implementation has only re- cently commenced. Thus, further efforts on the AML/CFT and NRA agenda are need- ed to help bolster ‘know your customer’ (KYC) identification requirements, which are critical to supporting the uptake of DFS (as consumers’ IDs must be verified for them to transact digitally). In particular, there is a need to support policies on e-KYC (verification of customers’ identities electronically) and e-signature in tandem with rolling out the biometric national ID with linkages to the national payment systems to ensure that such critical instruments can be used to support financial inclusion while also meeting AML/CFT requirements. E-KYC in particular could play a critical role in basic transaction account openings with low transaction limits (deposit taking financial institution or mobile money) to facilitate digital payments, such as cash transfers or subsidies to farmers for fertilizers, in response to COVID-19, in which social distancing is necessary and there is a need to reduce the costs associated with opening an account in person. When the switch is implemented as is envisaged in late 2020, its instant payments capability can help facilitate such payments. Cybersecurity in DFS With the increasing digitalization of financial services, including of consumers’ personal and financial history, ensuring robust cybersecurity is imperative for safe- guarding consumer information, promoting consumers’ confidence in and use of the system, and promoting financial stability and integrity. With financial services increasingly digitalized, consumers’ personal and financial information will also be digitized to facilitate more efficient and seamless front- and back-end services, such as links between one’s ID or e-signature and one’s credit history. Ensuring the safety of such information is also essential to ensure that consumers maintain con- fidence in the system, with which Sierra Leone already struggles due to traditional and non-digitalized financial services, which affects consumers’ use of DFS. Further- more, increased digitalization of the financial system means that the broader sys- tem is susceptible to systemic threats from cybercrime. In this context of new risks 92 brought on by the digitalization of financial services, it is essential that central banks, the government, and the private sector have the array of protections and policies in place to prevent cyber threats and support data protection and privacy. Thus, there is a need to conduct an in-depth diagnostic on cybersecurity needs related to DFS, to help plan for such investments, so that the country’s payment system’s infrastructure meets World Bank, European Central Bank, and CPMI standards.50 Legal, Regulatory, and Oversight The legal, regulatory, supervisory, and oversight environment is critical to cre- ating and enabling an environment that will support the growth of DFS. Through effective legal and regulatory regimes, product development and innovation can happen in a controlled environment. Striking the right balance in regulating DFS means creating a regime that does not stifle innovation and focuses on protecting the broader financial sector from undue risks and shocks through proportionate su- pervision and oversight. BSL, as the regulator of DFS, is integral to ensuring a func- tional, consistent, risk-based, participatory, and transparent regulatory regime, and thus there needs to be the requisite in-house capacity to effectively license and supervise. Lastly, there is a need to ensure the smooth flow of the systems and protect against risks thereto through payment systems’ oversight. A comprehensive review and updating is currently under way of the legal and regulatory environ- ment along with developing regulations for payment systems’ oversight through the World Bank’s Financial Inclusion Project. That said, corresponding capacity, tech- nical and human resources, will need to be built in-house at BSL to help implement the enhanced legal, regulatory, and oversight frameworks. BSL manages the country’s payment systems and regulates and supervises their use by financial institutions as legally mandated. The Bank of Sierra Leone Act (2019) notes that “The Bank shall license, regulate and monitor payment and securities settlement systems and may for these purposes take remedial measures and impose sanctions” and also “…by statutory instrument, make regulations prescribing conditions and re- quirements for – (a) payment and securities settlement systems and the operators of such systems; and (b) the issuance and quality of payment instruments.”51 BSL’s regulation and supervision of payment systems is also covered by the outdat- ed National Payment Systems Act (NPSA) of 2009. The NPSA does not cover the spec- trum of payment systems issues, including recent innovations in the market such as fintech, payment systems oversight, and remittances, among others. After initial at- tempts to update the NPSA were thwarted by Ebola in 2015, BSL’s Financial Inclusion Investment Project Financing with the World Bank is financing the development of 93 the new draft NPSA to cover such issues. The payment system regulatory landscape also comprises regulations and guide- lines. In the Sierra Leonean context, there are currently draft agent and electronic payment regulations.52 As agents serve to provide payment services, ensuring that their regulatory requirements are in line with the broader legal and regulatory en- vironment is critical. With respect to the electronic payment regulations, it is im- portant that they supersede the mobile money regulations, as mobile money are a subcategory of electronic money. Ensuring conformity across the types of payments and providers is critical as providing for different terms for payment providers who provide similar types of payments may serve to promote regulatory arbitrage. Sierra Leone’s long-awaited guidelines on agents (January 2020) provide the oppor- tunity for all licensed institutions under the Banking Act (2019) and Other Finan- cial Services Act (2001) to utilize agents in the provision of their financial services. Agents can be any entrepreneur or business, such as a local shop or gas station, with the exception of entities like schools or political organizations. Permissible activi- ties of bank agents include deposits, withdrawals, funds transfers, account opening, loan servicing, bill payment, and “are permitted to provide encashment point ser- vices for the payment of Leones, underlying an in-bound money transfer transac- tion” meaning the remittance must be paid out in cash; however, providing loans and foreign exchange transactions prohibited. Agents of other deposit-taking institutions may collect and forward KYC information to facilitate account opening (but not to open accounts), facilitate CICO transactions, and receive and forward applications for the principal’s products, among others. Agents of e-money may facilitate CICO transactions, collect KYC information to facilitate account opening for regular ac- counts, transmit applications for financial products to the financial institution, and facilitate opening of low-value accounts, among others. The regulations allow for the establishment of ‘master agents’, also widely known as ‘super agents’, which serve as a principal to agents of their own principal; such super agents play a critical role in helping provide liquidity and other services to agents in rural areas and reduce the cost of the principal to servicing agents more broadly. The regulations also cover the oversight of agents, AML/CFT and KYC requirements, IT requirements, and consum- er protection in which the principal is fully responsible for the activities of agents. Draft amendments from BSL pending from before the guidelines were adopted aim to broaden the scope to all payment services not just e-money, provide, legal clari- ty on liability between various actors involved, who can operate master agents, and permissible activities, among others. Regarding permissible activities, it will also be important to further amend the guidelines to allow for non-bank agents (including 94 mobile money agents, among others) to do remittances. It is important to note that the guidelines on agents forbids agent exclusivity, where- by the principal can require the agent to not serve as an agent for another financial institution. While this provision may make some financial institutions initially hesi- tant to invest in agents (for example, electricity or telecommunications) that other fi- nancial institutions could subsequently benefit from, the prohibition of exclusivity is in line with best practice as it enables (a) competition from the availability of diverse financial services in rural areas, (b) reduces the unit cost of an agent by the sharing of the cost, and (c) ultimately allows for greater volume of transactions by agents and thus broadens the need to use financial services and the agent in the areas through bolstering the environment for the use of such services. Additionally, the ability of non-deposit-taking institutions, which use e-money, to open low KYC accounts is crit- ical to financial inclusion, as the distance to traditional bank or MFI branches and the cost of accessing and utilizing these access points are often a barrier to entry. BSL also has draft e-money issuer guidelines awaiting adoption. Per the guidelines, e-money connotates “an electronically stored monetary value, issued against receipt of funds in local currency and redeemable for cash, that accepted as a means of pay- ment by persons other than the issuer.” This means that for every electronic Sierra Leone Leone (SLL), there is a physical SLL in a trust account. It is important to note that mobile money is indeed a form of e-money, and given that the mobile money guidelines are in effect, the issuance of these regulations and the maintenance of the mobile money regulations could provide for regulatory uncertainty and arbitrage if both were issued and contained different provisions for the same providers or cov- ered effectively similar services but had different requirements for different provider types, respectively. Given that mobile money is a form of e-money, it is recommend- ed that the mobile money regulations be rescinded and replaced by robust e-money issuer guidelines. In line with the agent regulations, the e-money regulations pro- vide for agents. e- Money issuers may provide the following services: CICO, e-mon- ey transfers to other e-money issuers and banks, bill payment, credit products (if licensed as a bank or deposit-taking nonbank). As with agents, consumer protection features prominently in the regulations, for example, providing information on fees to new users or explaining them to illiterate users, to help protect against malprac- tice by e-money issuers. The e-money issuer guidelines provide for the adoption of a tiered e-money account process with differing KYC (including e-KYC) requirements depending on the risk. Tiers 1 to 3 provide for small, intermediate, and large accounts, in addition to merchant (for example, government or business offering products) and ‘Agent’ accounts. These tiers are different from the June 2020 BSL directive on tiered 95 account opening for all regulated financial institutions, which will make leveraging the KYC of e-money accounts to open traditional accounts, and vice versa, complex. The current approach to licensing PSPs in Sierra Leone is inconsistent. Time frames for approvals are not standardized, with some institutions having to wait for more than three years to obtain their final authorization to operate. The draft e-money reg- ulations aim to standardize this timeframe for approval/rejection to 90 days. Capacity within the relevant departments of BSL remains a challenge and this is felt in the market across all oversight and supervision functions. Payment oversight is not legally enshrined in Sierra Leone, but the draft NPSA aims to add this, while separate regulations on oversight are also under development. The Committee on Payment and Market Infrastructures (CPMI) defines oversight as “a central bank function whereby the objectives of safety and efficiency are promoted by monitoring existing and planned systems, assessing them against these objectives and, where necessary, inducing change.”53 The draft NPSA adds provisions for BSL’s oversight powers. The draft National Payment System Oversight Regulation broadly covers licensing, access, interoperability, on-site investigation, and off-site monitor- ing. Additionally, the draft e-money issuer guidelines cover payment systems over- sight. More specifically, they cover returns and examinations and audits by BSL. BSL will require capacity building to implement payment systems oversight. Financial Infrastructure Retail Payment Infrastructure and Interoperability Sierra Leone introduced a real-time gross settlement (RTGS) system in 2013, which currently includes participation by all 14 commercial banks operating in the coun- try, plus Apex Bank. The system is responsible for processing large-value transac- tions of above SLL 50 million or approximately US$6 million. According to payment system statistics published by BSL, 118,247 transactions valued at SLL 59.2 trillion (US$6.1 billion) were processed through the RTGS in 2019. In fact, usage of the RTGS has decreased from 124,788 transactions in 2015 but is up from the 103,712 transac- tions in 2018. The automated clearing house (ACH) also became operational in 2013. The system is an interbank system for retail payments (of less than SLL 50 million). All commer- cial banks in the country participate in the ACH system, as does Apex Bank. To date, however, usage of the system has been very low. There were only 21,972 direct credit transactions worth SLL 100.2 billion (US$10.3 million) compared to 15,317 transac- tions in 2015. Additionally, BSL also processes the electronic image of 17,708 checks through the ACH worth SLL 240.7 billion (US$24.7 million) compared to 20,193 checks 96 in 2015. While the ACH can facilitate direct debit, direct debit payments are yet to go live in Sierra Leone. Activating direct debit payments through the ACH has been de- layed for a number of years, with a continued lack of momentum on defining agree- ments, mandate forms, and other procedural and regulatory factors. Sierra Leone’s ATM and POS infrastructure and usage are also limited. Sierra Leone has a total of 105 ATMs across 8 of its 13 banks, of which 3 banks have 5 or fewer ATMs in total. There were 2.2 million ATM transactions worth SLL 384.9 billion (US$39.5 million) compared to 60,996 transactions in 2015. In part, the number and value of transactions are driven by the limit of SLL 400,000 (approximately US$50) per with- drawal. There were 79,318 ATM cardholders in 2019. There is low usage of POS termi- nals, likely due to lack of restrictions on the value. In 2019, there were only 301 POS terminals, largely at high-end restaurants and hotels, with 40,815 POS transactions valued at SLL 72 billion (US$7.4 million), a significant jump from 130 POS terminals and 11,509 transactions in 2015. Only 1.5 percent of adults had credit cards in 2017, compared 1.7 percent of adults who had debit cards. While Sierra Leone has put in place an RTGS and ACH system, a retail payment switch to facilitate interoperability is a critical and missing element of the payments system. With the exception of a few banks, which are connected to each other through bilateral agreements and the various institutions connected by the ACH, financial service pro- viders, including banks, MFIs, and MNOs, are not connected to each other. Concretely this means most consumers cannot transfer money between a bank account and their mobile wallet or send money from an MFI savings account to a family member whose only form of financial access is a mobile phone. For example, market vendors who would like to transfer funds from their mobile money account to their bank account can only do so if the two institutions have integrated with each other to facilitate such a transaction. This is especially important in areas that are not serviced by banks.54 Em- ployees in rural areas who have electronic deposits into accounts would benefit from interoperability between these accounts and mobile money, to facilitate transfers to the latter and thus avoid walking long distances or paying for transport to collect their salaries. BSL sees the switch as a solution to this problem by creating a common plat- form through which all service providers can have access to the payments system. This would allow for interoperability and ultimately contribute to financial inclusion and deepening, as individuals will need an account to make or receive digital payments. The Request for Bids (RFB) for the national switch closed in April 2020 with hopes that it can be procured and live before 2021 depending on how the outbreak of COVID-19 affects this procurement and implementation process/timeline.55 A key aspect of the switch’s operationalization is its management. National switches 97 can be run by central banks, the private sector, or a PPP. Sierra Leone has chosen the central bank-driven approach with the plan to develop a switch implementation committee with participation by financial institutions, including mobile money oper- ators, so that the company functions with inputs from the public and private sectors. Additionally, this approach will help facilitate the dilution of BSL’s ownership shares of the switch over time to financial institutions. Supporting investments in telecommunications connectivity, IT for financial institu- tions, and retail payment devices are necessary to ensure that the switch is fully func- tional and does more than processing instant payments via the switch between banks in Freetown. Ensuring that banks in Freetown are connected to the switch is critical to ensuring a critical mass of users in the capital can benefit from the switch investment. Additionally, BSL and financial institutions, particularly in Freetown, will need to ex- plore upgrading to fiber optic from the current radio signal that they use to connect each other, so that switch and other payment systems payments are not interrupted; the radio signal can serve as the backup. A key aspect of the Financial Inclusion Project is to ensure rural financial institutions, whether they are MFIs, bank branches, or mo- bile money agents, have the requisite banking and IT systems to connect to the national switch and other payment systems. To help determine how to support rural connec- tivity to the switch, BSL is currently advertising for a firm to undertake an assessment with solutions thereto on rural connectivity. Additionally, it will be important to help roll out key infrastructure like POS terminals and QR code scanners, among others, spread out across vendors to help not only obtain volume on the switch to ensure its financial viability but also incentivize the use of DFS by providing such infrastructure to facilitate digital payments. Additionally, integrating payment systems in the West Africa Monetary Zone has been a discussion for some time, but has not yet bore fruit. Credit Infrastructure Credit Registry Sierra Leone lacks a modern credit registry, which is critical to ensuring that fi- nancial institutions can obtain consumers’ digital credit history to assess their risk profile to support credit underwriting. Credit registries serve a critical function of capturing consumers’ credit histories to inform credit risk profile development to inform loan underwriting. As the current Excel-based credit registry is manual, it is susceptible to human error and fraud as well as time-intensive. The current system was established in 2011 as a unit within BSL. BSL gathers and maintains the Excel da- tabase for the formation of credit histories, covering publicly available information, using this as the basis to generate credit reports on individuals. Since its inception 98 the registry has provided over 40,000 credit reports, receiving an average of 100 re- quests from financial institutions every day. According to Doing Business 2020, the credit registry currently covers only 2.1 percent of the population.56 All banks provide information for the credit registry, but MFIs, including community banks and FSAs, and mobile money companies from their digital credit loans, do not. In partnership with KIVA and UNCDF, Sierra Leone is implementing a private cred- it bureau using distributed ledger technology (DLT) with public benefits. Moreover, when borrowers take a loan or make a repayment, this transaction is posted to their ‘wallet’ or private ledger subject to their approval and they can then provide this infor- mation to a lender when they want a loan in the future. In this model, consumers con- trol their private information, which is housed in the larger ledger, and lenders and the government can only access this info with the approval of the individuals. Additionally, informal credit and repayments thereto can be housed on this ledger, and all informa- tion is accessible by mobile phone, or with an agent, including one without network. Given the Excel-based credit registry and KIVA-owned credit bureau, there may still be a need for a modern credit registry. Given the inefficiencies of the Excel-based credit registry and that the KIVA credit bureau will not be available for supervisory purposes nor cover all transactions (given consumers can choose to add transactions to it), there is a need for a modern digital public credit registry, which contains all formal financial sector transactions, including mobile money purchases, and oth- ers related to credit history, such as bill payments, which can be leveraged by BSL to assist in its supervision of the financial sector and by financial institutions. The establishment of a digital credit registry will also help with the digitization of the credit underwriting process by digitally analyzing consumers’ credit histories and seamlessly offering digital loans based on digitalized credit information leveraged in algorithms to assess credit worthiness. Collateral Registry Sierra Leone launched a modern digital collateral registry in 2016 to facilitate the usage of movable assets to securitize loans, but it has its limitations, and the col- lateral registry’s use remains limited. As of November 2018, it had only 133 security interests registered worth SLL 399.7 billion and 141 search requests. The development of a digital collateral registry stands to allow consumers and businesses to leverage movable collateral, such as cars or equipment in lieu of fixed assets like land, for which many lack a title deed. A collateral registry’s digital nature allows for the digi- tization of the credit underwriting process, whereby a financial institution can check online whether the asset has been used to securitize another loan. This verification 99 can also theoretically be integrated into digital loan making decisions with little to no manual verification needed. Yet, the recently acquired collateral registry has some weaknesses. Moreover, the collateral registry does not cover all types of security in- terests in movable assets, including functional equivalents, and lacks an electronic database (which is accessible online 24/7) indexed by the debtor’s identifier, which would be available for both incorporated and non-incorporated entities that wish to register their security interest to make it enforceable against third parties pursuant to the priority of registration. Additionally, registrations, amendments, cancellations, and searches cannot be performed online by interested third parties. The Borrowers and Lenders (Collateral Registry) Regulations of 2016 already cov- er the fiduciary transfer of title and its registration is required in the Sierra Leone Registry by BSL. However, the other functional equivalents do not exist yet. Even if there is a similar medium—known as ‘’Debt Buy-Back’—this does not correspond to the broad tool of assignment of receivables available to creditors and borrowers in countries which follow best global practices. It is thus recommended to ensure that the proposed secured transactions law introduces an integrated or unified legal framework for secured transactions that extends to the creation, publicity, and en- forcement of security interests in movable functional equivalents to security inter- ests in movable assets that exist in the economy. The proposed secured transactions law should provide the same rules for all kinds of entities, incorporated and non-in- corporated, and govern all types of non-possessory security interests in movable as- sets, including the functional equivalents, which would be required to be registered in a central collateral registry for the whole territory of Sierra Leone. A thorough revision of the draft ‘Borrowers and Lenders Act’ of 2018 should also be carried out to ensure that it follows best global practices and includes the tools de- scribed earlier. In this regard, it will be necessary to make sure that security interests can be established on future and after-acquired assets and automatically extend to products, proceeds, and replacements and that a general description of assets provid- ed as collateral is allowed. Finally, the new law should allow for all types of debts and obligation to be secured by movable collateral, including future, nonmonetary, and conditional obligations. The latter features already exist in the current legislation, but since the new draft will repeal the existing law, it is critical to ensure that those concepts remain in the new bill. In addition, the rights of secured creditors during reorganization and insolvency are less protected compared to other economies which makes both recovering assets and resolving insolvency much harder. Since Sierra Leone is adopting a new secured transactions framework, there is an opportunity to modernize its regulations and align them with international best practices. 100 OPPORTUNITIES Leveraging Recurrent Payments to Increase Usage of DFS A key opportunity to support the expansion of access to financial services and facil- itate volume on the country’s national payment systems, while also enhancing the impact of government initiatives, is through large-volume and reoccurring transac- tions like digitizing government payments and inbound international remittance termination. This approach facilitates financial inclusion by obliging beneficiaries to have accounts, while also making the investments in financial infrastructure more viable through increased transactions. More broadly, there is a need to understand how to harmonize and streamline the digitization of government payments. At present, government payments are made in cash and by check, ACH and RTGS, and mobile money. In effect, the government has service contracts for various payments, whereby it writes a check to a bank or mobile money operator and shares the list of beneficiaries to be paid out, instead of initiating payments electronically, which seamlessly reach the intended beneficiaries without any manual processes. A key challenge is that there is no connection be- tween the IFMIS at the Ministry of Finance (MoF) and BSL’s EFT system, meaning that the government must write a check to BSL and provide the list of beneficiaries and these payments are then manually processed using the country’s payment systems like the ACH or RTGS. Additionally, the ACH debit is not active to process automatic debits from individuals and firms to pay government, such as for utilities. Further- more, mobile money operators are not integrated into the ACH system as sub-partici- pants, and thus the ACH cannot be used to reach beneficiaries who only have mobile money accounts. There is also no online payments portal, a potential key enabler of DFS, that allows users to make payments to government for taxes for example (or for e-commerce), further diminishing the incentive to make digital payments. To better understand the various government payment streams and the opportunities to digi- tize them, there is a need to undertake a mapping of government payments. 101 Cash Transfer Programs One key opportunity to leverage large-volume and reoccurring payments is with so- cial payments for the extreme poor and vulnerable. At present, the World Bank is sup- porting a program, ‘Ep Fet Po’, with the National Commission for Social Action (NaC- SA), which helps facilitate the quarterly payment of SLL 250,000 (approximately US$25) to 27,553 vulnerable households, located primarily in rural areas, in nine districts. At present, the program delivers cash to collection points, which are no more than 4 km from the households, and any designated family member can collect the cash. As the contract for the service provider, Splash, had expired and the payments were being de- livered and paid out in cash, the NaCSA has contracted Rokel Community Bank to im- plement this program, although its digital capacity is limited and thus so are the near- term prospects of digitizing these payments. Ep Fet Po stands to benefit from enhanced delivery mechanisms via digital channels, which facilitate scaling up this critical effort, while also promoting these households’ connection to the formal financial sector. Digitizing payments will allow beneficiaries to receive their payments without trav- eling 4 km or longer. Such deliveries can be made to mobile wallets (or to an existing bank account, community bank, or deposit-taking MFI account if they have one), which can be cashed out at a mobile agent of one’s choosing (facilitated with the in- troduction of the national switch); financial institutions with the requisite financial infrastructure; and banking agents (with introduction of the regulations under devel- opment). With such advancements, Ep Fet Po will help beneficiaries get their foot in the door of financial institutions, which will help them slowly build the credit scores (from social transfers and mobile money purchases) and capacity to utilize formal financial services. This will incentivize institutions to increasingly develop products and services that cater to more impoverished segments of society. Digitizing payments will also help reduce risks from corruption by increasing the ac- curacy of beneficiary identification and from theft from the movement of cash on be- half of the beneficiary and the service provider. As multiple beneficiaries per house- hold can collect the payment, the alternative collector could also obtain digital account access, further helping increase access to financial services. Digitizing social protection programs can be an effective tool to include women in the formal financial sector. Giv- en that women make up 95 percent of Ep Fet Po, digitizing payments and linking ben- eficiaries to formal financial products, for example, mobile money payments, could be an effective way to facilitate women’s access to the formal financial sector. Digitizing cash transfer programs, including instant payments via the switch, will be critical to any COVID-19 payment response. If the government aims to scale up 102 its cash transfer program in response to COVID-19 by increasing the value of dis- bursement or the number and types of beneficiaries, digitizing the cash transfer will be even more important to ensure government and development partner resources reach the intended target and in a more efficient manner than cash. Teachers and Other Government Employees Approximately 8,900 teachers are paid via Apex Bank through community banks and FSAs. While these financial institutions have a significant presence in rural areas with almost 80 community banks and FSAs combined, many teachers must still travel a signif- icant distance to access their salaries at these locations. Consequently, teachers may go to collect their salary during the week, which affects the quality of children’s education and presents a security risk as they need to travel to and from the institution with their sal- ary in cash. With the implementation of a national switch relative to its interoperability functionality, teachers will have the ability to access their salaries deposited in commu- nity banks’ accounts via mobile wallets, which will reduce absenteeism. Other teachers receive their salary in cash at FSAs, yet these institutions are not allowed to take deposits. International Remittances Formal remittances to Sierra Leone reached US$49 million in 2017; it is believed that a significant proportion moves through informal channels according to the World Bank bilateral matrix on international remittances flows. Consultation with the Other Financial Institutions Department at BSL raised the issue of a large infor- mal market for inbound remittances. This was also reported in the 2012 World Bank CPMI Assessment of the Sierra Leonean remittances market against the general prin- ciples. According to the report, the informal market was deemed to account for the equivalent of 30 percent of the total flow (US$15 million). The main remittance markets are Guinea, the United States, and the United King- dom, all of which host the largest proportion of Sierra Leoneans residing overseas. According to the World Bank migration and remittances data, the total inflow of re- mittances to Sierra Leone are sent from one of nine countries.57 It is estimated that over 50 percent of the inflow of remittances to Sierra Leone originate from another African country, 42 percent of which comes directly from neighboring Guinea. The United States and the United Kingdom are estimated to account for 27 percent and 10 percent, respectively. According to remittance prices worldwide, as of Q2 2018, 12 services were surveyed for the United Kingdom-Sierra Leone corridor, representing 103 at least 80 percent of the market share for this corridor. All these 12 services surveyed offered cash payout options only, with no electronic termination option available. There is a lack of legal clarity on the digital termination of remittances and a lim- ited category of agents can process remittances. Based on a review of the legal and regulatory environment, there does not appear to be any prohibition against the dig- ital termination of remittances (i.e., the electronic deposit into mobile wallets or fi- nancial institution accounts as opposed to paying out in cash) with the exception for the new guidelines on agents which state that agents (and sub-agents) of banks “…are permitted to provide encashment point services for the payment of Leones, underlying an in-bound money transfer transaction”. In these guidelines, only agents and sub-agents of banks can facilitate remittances, while all other categories of non- banks cannot, precluding additional access points for retrieving remittances via non- bank agents (including mobile money agents). Other pending amendments to the guidelines on agents are also needed to include all payment services (not just e-mon- ey), among others. The lack of digital termination also diminishes the opportunity to promote financial inclusion by necessitating remittance recipients have accounts (whereas cash payout does not necessitate this). Amendments to the legal and regu- latory framework will likely be necessary to facilitate digital termination, including adoption of the draft NPSA. An assessment of the requisite revisions to the legal and regulatory framework, and the revisions themselves, to allow for digital termina- tion will be undertaken by BSL under the Financial Inclusion project with the World Bank. For countries such as Kenya and Ghana, where the termination of internation- al remittances transactions onto a mobile wallet is permitted, growth in this use case has been significant. 104 Conclusion Sierra Leone lags behind regional comparators and the regional average in access to and usage of DFS. To date, DFS in Sierra Leone are largely for mobile money with limited usage and use cases (primarily CICO). Sierra Leone has made critical invest- ments in the ACH and RTGS, but they remain underutilized. Other key services like remittances and government payments remain cash and check and cash based, re- spectively, thus supporting the dominance of cash. In this context, access to and us- age of digital payments are low, with less than 16 percent of adults having made a digital payment in the last year. The challenges to DFS development are clear and surmountable. The underdevel- oped nature of DFS is due to an array of challenges related to (a) policy; (b) legal, reg- ulatory, and oversight; (c) payment system infrastructure; (d) credit infrastructure; and (e) leveraging recurrent payments to increase usage of DFS. In policy, there is a particular need to have an overarching DFS strategy and NPC to guide its implemen- tation and uptake in other areas of government and business, along with bolstering efforts in consumer protection, AML/CFT, and cybersecurity. Regarding, legal, reg- ulatory, and oversight, there is a need to harmonize the legal framework through adopting amendments to the NPSA while adopting agent and e-money issuer guide- lines, rescinding the mobile money regulations, and adopting the oversight regula- tions. In parallel, it will be important to bolster BSL licensing capacity on DFS and with respect to DFS-related legal, regulatory, oversight framework responsibilities. On payment system infrastructure, it is essential to implement the switch along with an implementation committee to guide its development and to undertake the rural connectivity assessment to ensure rural institutions benefit from the switch. There is also a need to implement a digital credit infrastructure to help digitize the credit underwriting process, while updating the collateral registry and draft Borrowers and Lenders Act and developing the secured transactions law to help digitize the securi- tization of movable collateral. To help leverage recurrent payments to increase usage 105 of DFS, there is a need to connect MoF’s IFMIS and BSL’s EFT, digitize cash transfer program with the aim of digitizing all government payments, and amend the regula- tory environment to facilitate digital termination of remittances. Looking forward, the time is ripe for DFS development in Sierra Leone. The under- developed state of DFS and the implications for financial exclusion necessitate action given their benefits to economic development and improved government services like cash transfers. With the country on the brink of a critical investment in the na- tional retail payment switch to help facilitate the interoperability of digital payments, instant payments, and establish an online payments portal, it is important to use this momentum to truly drive DFS development. While the World Bank project will provide the resources for the switch; updating the legal, regulatory, and oversight framework; cybersecurity; and usage of DFS, more resources and policy efforts will be needed to support the digitalization of DFS. 106 DIGITAL FINANCIAL SERVICES Recommendations and Next Steps Policy R1. Develop DFS strategy, which includes national retail payments, to drive DFS de- velopment. BSL lacks a comprehensive DFS strategy to guide DFS development with the latest strategy being the UNCDF-supported NSFI 2017–2020. R2. Operationalize an NPC. BSL lacks an effective policy coordination body to guide DFS development. While the DFS working group has proven to be an effective fo- rum, there is no effective operational National Payment Council (NPC) to coordinate high-level policy and decision-making across the government and businesses. An NPC is considered best practice and will be essential to help steer the country to not only bolster DFS development and the broader ecosystem but also a digital economy, as the NPC can help embed DFS across the public and private sectors and help con- nect the strategy with budgets to implement DFS reforms. R3. Adopt consumer protection regulations with specifications on DFS. According to the Financial Stability Report published by BSL in 2019, Cabinet has approved the competition and consumer protection policies and a bill has been submitted to Par- liament. However, consumer protection remains an area for immediate development in Sierra Leone. As it stands there are no clear regulations or guidelines (derived from the recently passed law) on the provision of information pertaining to digital financial products, nor is there a requirement for transparent pricing. Clearly com- municated complaints procedures, which are usually essential and mandated for all regulated financial institutions, are outlined at the discretion of the service provider, leading to inconsistencies in the application of the principles. R4. Establish a consumer protection unit and build in-house capacity to promote consumer protection for all financial services, including DFS. BSL will also require capacity building in consumer protection supervision and enforcement. With no unit dedicated to consumer protection, BSL requires significant capacity building in this space, along with resources to finances a consumer protection unit’s work, including technology to facilitate the management of complaints. R5. Implement NRA reforms related to KYC requirements and DFS. Just as with the broader financial sector, meeting anti-money laundering and combating the financ- ing of terrorism (AML/CFT) requirements is particularly important for DFS, given that many transactions take place without in-person verification of transactions. Al- 107 though Sierra Leone completed a National ML/TF Risk Assessment (NRA) in 2016 to- ward compliance with a critical and foundational international obligation, full com- pliance has not been achieved due to serious delays in adoption of an NRA report and an NRA action plan. Although they were adopted in mid-2019, implementation has only recently commenced. Thus, further efforts on the AML/CFT and NRA agenda are needed to help bolster ‘know your customer’ (KYC) identification requirements, which are critical to supporting the uptake of DFS (as consumers’ IDs must be verified for them to transact digitally). R6. Conduct an in-depth diagnostic on cybersecurity needs related to DFS. With financial services increasingly digitalized, consumers’ personal and financial infor- mation will also be digitized to facilitate more efficient and seamless front- and back- end services, such as links between one’s ID or e-signature and one’s credit history. Ensuring the safety of such information is also essential to ensure that consumers maintain confidence in the system, with which Sierra Leone already struggles due to traditional and non-digitalized financial services, which affects consumers’ use of DFS. Furthermore, increased digitalization of the financial system means that the broader system is susceptible to systemic threats from cybercrime. In this context of new risks brought on by the digitalization of financial services, it is essential that cen- tral banks, the government, and the private sector have the array of protections and policies in place to prevent cyber threats and support data protection and privacy. Legal, Regulatory, and Oversight R7. Adopt the amended NPSA. The NPSA does not cover the spectrum of payment systems issues, including recent innovations in the market such as fintech, payment systems oversight, and remittances, among others. After initial attempts to update the NPSA were thwarted by Ebola in 2015, BSL’s Financial Inclusion Investment Proj- ect Financing with the World Bank is financing the development of the new draft NPSA to cover such issues. R8. Amend guidelines on agents. Sierra Leone’s long-awaited guidelines on agents (January 2020) provide the opportunity for licensed institutions under the Banking Act (2019) and Other Financial Services Act (2001) to utilize agents in the provision of their financial services. Draft amendments from BSL pending from before the guide- lines were adopted, aim to broaden the scope to all payment services not just e-mon- ey, provide, legal clarity on liability between various actors involved, who can operate master agents, and permissible activities, among others. Regarding permissible activ- ities, it will also be important to further amend the guidelines to allow for non-bank agents (including mobile money agents, among others) to do remittances. 108 R9. Adopt e-money issuer guidelines and rescind mobile money regulations in par- allel. Per the draft guidelines, e-money connotates “an electronically stored monetary value, issued against receipt of funds in local currency and redeemable for cash, that accepted as a means of payment by persons other than the issuer.” This means that for every electronic Leone, there is a physical Leone in a trust account. It is important to note that mobile money is indeed a form of e-money, and given that the mobile money guidelines are in effect, the issuance of these regulations and the mainte- nance of the mobile money regulations would provide for regulatory uncertainty and arbitrage. Given that mobile money is a form of e-money, it is recommended that the mobile money regulations be rescinded and replaced by robust e-money. R10. Adopt payment oversight regulations. Payment oversight is not legally enshrined in Sierra Leone, but the draft NPSA aims to add this, while separate regulations on oversight are also under development. The draft NPSA adds provisions for BSL’s over- sight powers. The draft National Payment System Oversight Regulation broadly covers licensing, access, interoperability, on-site investigation, and off-site monitoring. R11. Bolster BSL licensing capacity on DFS and capacity on DFS-related legal, reg- ulatory, and oversight framework responsibilities. Time frames for approvals are not standardized, with some institutions having to wait for more than three years to obtain their final authorization to operate. Capacity within the relevant departments of BSL remains a challenge and this is felt in the market across all oversight and su- pervision functions. BSL will need capacity building with their new responsibilities under other pending draft amendments or regulations to the larger payment systems legal and regulatory framework. Payment System Infrastructure R12. Implement national retail payment switch. A retail payment switch to facilitate interoperability of digital payments is a critical and missing element of the payments system. BSL is currently procuring the national switch. R13. Establish and operationalize a national retail payment switch implementation committee. A key aspect of the switch’s operationalization is its management. Nation- al switches can be run by central banks, the private sector, or a PPP. Sierra Leone has chosen the central bank-driven approach with the plan to develop a switch imple- mentation committee with participation by financial institutions, including mobile money operators, so that the company functions with inputs from the public and private sectors. Additionally, this approach will help facilitate the dilution of BSL’s ownership shares of the switch over time to financial institutions. 109 R14. Undertake rural payment systems connectivity assessment. A key aspect of the Financial Inclusion Project is to ensure rural financial institutions, whether they are MFIs, bank branches, or mobile money agents, have the requisite banking and IT sys- tems to connect to the national switch and other payment systems. To help determine how to support rural connectivity to the switch, BSL is currently advertising for a firm to undertake an assessment with solutions thereto on rural connectivity. Credit Infrastructure R15. Establish modern credit registry. Sierra Leone lacks a modern credit registry, which is critical to ensuring that financial institutions can obtain consumers’ digital credit his- tory to assess their risk profile to support credit underwriting. Credit registries serve a critical function of capturing consumers’ credit histories to inform credit risk profile development to inform loan underwriting. As the current Excel-based credit registry is manual, it is susceptible to human error and fraud as well as time-intensive. Given the inefficiencies of the Excel-based credit registry and that the KIVA credit bureau will not be available for supervisory purposes nor cover all transactions (given consumers can choose to add transactions to it), there is a need for a modern digital public credit regis- try, which contains all formal financial sector transactions, including mobile money pur- chases, and others related to credit history, such as bill payments, which can be leveraged by BSL to assist in its supervision of the financial sector and by financial institutions. R16. Update the collateral registry. The collateral registry does not cover all types of security interests in movable assets, including functional equivalents, and lacks an electronic database (which is accessible online 24/7) indexed by the debtor’s identi- fier, which would be available for both incorporated and non-incorporated entities that wish to register their security interest to make it enforceable against third par- ties pursuant to the priority of registration. Additionally, registrations, amendments, cancellations, and searches cannot be performed online by interested third parties. R17. Develop a secured transactions law. The Borrowers and Lenders (Collateral Reg- istry) Regulations of 2016 already cover the fiduciary transfer of title and its registra- tion is required in the Sierra Leone Registry by BSL. However, the other functional equivalents do not exist yet. Even if there is a similar medium—known as ‘’Debt Buy- Back’—this does not correspond to the broad tool of assignment of receivables avail- able to creditors and borrowers in countries which follow best global practices. It is thus recommended to ensure that the proposed secured transactions law introduc- es an integrated or unified legal framework for secured transactions that extends to the creation, publicity, and enforcement of security interests in movable functional equivalents to security interests in movable assets that exist in the economy. 110 R18. Revise the draft Borrowers and Lenders Act. A thorough revision of the draft ‘Borrowers and Lenders Act’ of 2018 should also be carried out to ensure that it fol- lows best global practices and includes the tools described earlier. In this regard, it will be necessary to make sure that security interests can be established on future and after-acquired assets and automatically extend to products, proceeds, and re- placements and that a general description of assets provided as collateral is allowed. Finally, the new law should allow for all types of debts and obligation to be secured by movable collateral, including future, nonmonetary, and conditional obligations. Leveraging Recurrent Payments to Increase Usage of DFS R19. Undertake a mapping of government payments. There is a need to understand how to harmonize and streamline the digitization of government payments. At pres- ent, government payments are made in cash and by check, ACH and RTGS, and mo- bile money. In effect, the government has service contracts for various payments, whereby it writes a check to a bank or mobile money operator and shares the list of beneficiaries to be paid out, instead of initiating payments electronically, which seamlessly reach the intended beneficiaries without any manual processes. To better understand the various government payment streams and the opportunities to digi- tize them, there is a need to undertake a mapping of government payments. R20. Establish connection between the MoF IFMIS and BSL EFT. There is no con- nection between the IFMIS at the Ministry of Finance (MoF) and BSL’s EFT system, meaning that the government must write a check to BSL and provide the list of ben- eficiaries and these payments are then manually processed using the country’s pay- ment systems like the ACH or RTGS. R21. Activate the ACH debit system. While the ACH can facilitate direct debit, direct debit payments are yet to go live in Sierra Leone. Activating direct debit payments through the ACH has been delayed for a number of years, with a continued lack of momentum on defining agreements, mandate forms, and other procedural and regu- latory factors. Thus, there is no system to facilitate automatic debits from individuals and firms to pay government, such as for utilities. R22. Digitize cash transfer programs with the aim of digitizing all government pay- ments. Digitizing cash transfer programs will be critical to any COVID-19 payment response. If the government aims to scale up its cash transfer program in response to COVID-19 by increasing the value of disbursement or the number and types of beneficiaries, digitizing the cash transfer will be even more important to ensure gov- ernment and development partner resources reach the intended target and in a more efficient manner than cash. 111 R23. Amend the legal and regulatory framework to facilitate the digital termination of remittances. There is a lack of legal clarity on the digital termination of remittanc- es and a limited category of agents can process remittances. Based on a review of the legal and regulatory environment, there does not appear to be any prohibition against the digital termination of remittances (i.e., the electronic deposit into mobile wallets or financial institution accounts as opposed to paying out in cash) with the exception for the new guidelines on agents which state that agents (and sub-agents) of banks “…are permitted to provide encashment point services for the payment of Leones, underlying an in-bound money transfer transaction”. In these guidelines, only agents and sub-agents of banks can facilitate remittances, while all other categories of non- banks cannot, precluding additional access points for retrieving remittances via non- bank agents (including mobile money agents). Other pending amendments to the guidelines on agents are also needed to include all payment services (not just e-mon- ey), among others. The lack of digital termination also diminishes the opportunity to promote financial inclusion by necessitating remittance recipients have accounts (whereas cash payout does not necessitate this). Amendments to the legal and regu- latory framework will likely be necessary to facilitate digital termination, including adoption of the draft NPSA. An assessment of the requisite revisions to the legal and regulatory framework, and the revisions themselves, to allow for digital termination will be undertaken by BSL under the Financial Inclusion project with the World Bank. 112 113 114 5 Digital Entrepreneurship Importance of Digital Entrepreneurship Socioeconomic Rationale for Building the Digital Entrepreneurship Ecosystem D igital entrepreneurship can support economic diversification and the emergence of a more knowledge-based economy. Digital entrepreneur- ship is a key pillar of the digital economy and is linked to continued eco- nomic growth, wealth creation, and higher standards of living. Digital ventures can contribute to new categories of jobs and help enhance competitiveness and productivity of the broader economy through the supply of novel digital solutions to companies and government alike. For Sierra Leone, the digital economy represents an opportunity to diversify away from its dependency on low-value-added (extractive and agricultural) commodity exports. Digital entrepreneurship has the potential to address important socioeconomic challenges. Africa has offered several examples of entrepreneurs harnessing digital technology to address critical development challenges. Digital technology has been used to improve financial inclusion through the creation of mobile money platforms (mPesa in Kenya being a pioneer), while long-standing challenges such as access to markets and information have been tackled by e-commerce solutions such as Jumia58 and agri-tech solutions that use data analytics to provide tailored market information to smallholder farmers, improving productivity in the sector. Likewise, entrepreneur- ship offers a pathway for women’s economic empowerment that has proven linkages to increased incomes for women, their families as well as positive spillover effects in the economy and society. Digital technology has transformed how businesses are started and operated. In some cases (e-Commerce for example) significantly reducing entry barriers by eliminating need for expensive brick and mortar shops. This opens 115 opportunity for women that may have mobility, finance and time constraints. There- fore, as gender equality and women’s economic empowerment remain key features of the government development strategy, advancing the digital economy in a way that is inclusive of women, will be key in achieving the country’s development objectives. Digital entrepreneurship can help grow a cohort of growth-oriented opportunity entrepreneurs necessary for fueling growth and jobs. Entry requirements for the sector tend to weave out necessity entrepreneurs that, while important, contribute little to growth and jobs. Digital entrepreneurs are largely opportunity seeking and offer innovative products and services in the market. These entrepreneurs envision scalable, high-growth businesses. A prioritization of this sector will contribute to de- veloping a cohort of growth-oriented entrepreneurs to fuel Sierra Leone’s growth. Alignment with Country Development Strategy and Goals The GoSL has demonstrated a clear commitment to advancing Sierra Leone’s digital economy to support the country’s drive toward economic growth and diversifica- tion. The establishment of the DSTI under the Office of the President in 2018 has sent a clear message of the government’s intention “to use science, technology and innovation to support the Government of Sierra Leone to deliver on its national de- velopment plan effectively and efficiently; and to help transform Sierra Leone into an innovation and entrepreneurship hub.”59 Since its establishment, it has undertaken several important projects and initiatives, raising the profile of the technology and innovation agenda in the country, most importantly launching the NIDS (2019–2029). The strategy prioritizes key areas to strengthen the enabling environment for digi- tal entrepreneurs including consumer protection and cybersecurity; digital identi- fication; and support for digital entrepreneurship through incubation, acceleration, business plan competition and pitch events. At the ministry level, the government has also introduced a cadre of ICT professionals into the civil service under the MIC to provide leadership in coordinating the use of ICT in government MDAs. Similarly, the MIC is developing an NDTR prioritizing digital entrepreneurship and in- novation as part of four foundational pillars. The road map sets forth key objectives and makes recommendations to achieve these objectives, which include developing an en- abling ecosystem that addresses all interrelated barriers and needs to stimulate digital entrepreneurship. Combined, both the NIDS and the draft NDTR offer a blueprint to an improved regulatory reform for the sector and demonstrate a recognition of the impor- tance of digital entrepreneurship in the digital economy and in the economy at large. 116 DIAGNOSTIC FINDINGS Current State of Digital Entrepreneurship State of the Digital Entrepreneurship and Innovation Ecosystem Digital economy is nascent in Sierra Leone but offers several opportunities for entre- preneurs. Although significant steps have been made to advance the supply of digital infrastructure with the landing of the ACE submarine cable and the deployment of the terrestrial backbone, Sierra Leone’s digital economy remains nascent with limited adoption of digital technologies by citizens, the government, and companies, and few digital enterprises that are successful at scaling up their businesses. However recent initiatives have begun to provide a new impetus and dynamism to the sector, includ- ing the launching of incubation and acceleration programs, an increase in early-stage financing, as well as the increased prioritization and importance given to the sector by the government as demonstrated by the creation of the DSTI and the launching of the NIDS, among others. A few digital enterprises have emerged from incubation programs and with the support of angel investors.60 Several other factors also present opportuni- ties for the growth of digital entrepreneurship in Sierra Leone, including an expanding infrastructure, increased mobile phone usage, a focus on promoting digitization of gov- ernment services and information, and a growing middle class.61 COVID-19’s impact and opportunities. The ongoing COVID-19 pandemic, while dras- tically affecting the health of many citizens and the economic situation of the coun- try, including funding available for start-ups, will also present new opportunities for digital entrepreneurs to provide essential technologies to address urgent needs (in areas such as logistics, online sales, education, and health, among others) as well as providing a new incentive and urgency to the digitalization of services, including G2B, B2B, G2G, and G2C. Making use of these opportunities on a larger scale will require both public and private sector efforts to improve the overall entrepreneurship support and regu- latory ecosystem. Sierra Leone’s entrepreneurship ecosystem lags behind Sub-Sa- haran Africa comparators. The Global Entrepreneurship Index (GEI) is a composite indicator of the health of the entrepreneurship ecosystem in a given country and 117 Figure 5.1 GEI Score (percentage) measures both the quality of entrepre- neurship and the extent and depth of the Ghana 21% supporting entrepreneurial ecosystem. Nigeria 20% In the 2018 report, Sierra Leone is ranked SSA Average 18% 134 out of 137 economies with a GEI score Liberia 16% of 12 percent, making it one of Sub-Saha- Sierra Leone 12% ran Africa’s lowest-performing entrepre- neurship ecosystems. Sierra Leone un- derperforms all key regional comparators Source: GEI 2018. including Liberia (16 percent), Nigeria (20 percent), and Ghana (21 percent). Start- up skills, risk acceptance, and risk capital are among the lowest scoring indicators for Sierra Leone. Entrepreneurial quali- ties of individuals in the ecosystem out- perform the overall quality of supporting institutions, pointing to a potential good pool of individual talent while highlight- ing the need for significant improvement in supporting institutions. Figure 5.2 GEI 2018: Sierra Leone Country Profile Source: GEI 2018. 118 Constraints and Opportunities for Digital Entrepreneurship and Innovation An ecosystem assessment offers a useful framework in understanding the constraints and opportunities for digital entrepreneurship. This section offers an assessment of the ecosystem for digital entrepreneurs in Sierra Leone focusing on key foundational ele- ments for a dynamic ecosystem for digital entrepreneurship: policy and regulatory envi- ronment, financial capital, support institutions, human capital and culture, and markets. Assessing and measuring the quality of the digital entrepreneurship ecosystem in Sierra Leone is challenging due in part to a lack of data on key indicators. The findings of this report are a result of interviews with various public and private sector stakeholders and a review of existing laws and policies and relevant public data and reports. Policy and Regulatory Environment Entrepreneurs and firms operate in a business environment that is largely shaped by government policies and regulations. A conducive policy and regulatory environ- ment is therefore essential so that companies can enter, operate in, and exit markets. Government has a key role to play, not only in creating and enforcing the rules and regulations that shape firm behavior but also in ensuring effective intergovernmental coordination to maximize use of public resources, in promoting data collection and M&E mechanisms, and in promoting a strong engagement with the private sector so that formulation of policies and regulations can be informed by data and feedback from the businesses themselves. The findings in this section focus on both econo- my-wide business environment and sector-specific polices and regulation primarily targeted at the ICT sector. Entrepreneurs in any sector in Sierra Leone are faced with a challenging business environment. Sierra Leone’s performance in key Global Indexes points to an uncom- petitive and challenging business environment. Sierra Leone ranks 134 out of 140 countries in the World Economic Forum (WEF) Global Competitiveness rankings of 2018 including in ICT adoption and Innovation capacity. The country is underper- forming the Sub-Saharan Africa average on every component of the index. In terms of ease of doing business, Sierra Leone has been ranked 163 out of 190 economies in the 2019 and 2020 Doing Business report, which is a decline from the previous performance in 2018 (ranked 148). Sierra Leone’s underperformance is particularly noticeable in areas such as ‘dealing with construction permits’, ‘registering property’, ‘getting credit’, and ‘trading across borders’. Doing business for female entrepreneurs is particularly challenging. Women entre- 119 Figure 5.3 Global Competition Ranking and Scores (0–100) Institutions 106/140 Innovation Capacity 124/140 Infrastructure 133/140 100 Business Dynamism 124/140 80 ICT Adoption 130/140 60 40 20 Market Size 134/140 Macroeconomic Environment 134/140 Financial Systems 136/140 Health 137/140 Labor Market 132/140 Skills 128/140 Product Market 132/140 SUB-SAHARAN AFRICA SIERRA LEONE GLOBAL Source: WEF. Figure 5.4 Sierra Leone Doing Business Performance in 2020 (Ranking out of 190 economies) Design whith Constructor Permit. 181 Getting electricity 165 Registering Property 169 Trading Across Borders 165 Ease of doing business global 163 Getting Credit 165 Resolving Insolvency 162 Enforcing Contract 108 Paying Taxes 93 Starting a bussiness 58 Source: World Bank Group. 120 preneurs have various social and economic factors that inhibit their growth in a way that is different to male-led businesses. These range from social norms that restrict their access to key assets such as land that restricts their mobility and career choices to economic and legal factors that limit women’s access to finance, skills, and infor- mation. About 73 percent of women-owned firms see access to finance as the most serious obstacle they face versus 52 percent for men-owned led firms (World Bank 2019c). Women-owned firms face greater difficulty with regard to the cost of finance and informal competition and are more likely to be victims of crime, theft, disorder, and corruption than male-owned firms. Sierra Leone’s investment climate is characterized by uncertainty, cumbersome pro- cesses, and a lack of an effective dialogue mechanism with the private sector. The recent change in government has ushered in a new policy direction. This, in the short term, has been accompanied by uncertainty for investors as a new wave of government policies have been adopted. Uncertainty around the institutional arrangements for in- vestment promotion and facilitation has grown, as the government seeks to establish a new National Investment Board with structures, functions, and mandates remaining unclear for investors. Additionally, recent suspension of contracts of mining operators has the potential of having negative spillover effects in other sectors, affecting inves- tors’ confidence in the government to uphold contracts. Amid changes and uncertainty, the government is yet to put in place an effective and sustained mechanism to dialogue with the private sector. While the government often convenes and participates in work- shops to discuss issues affecting the private sector, there is no reliable mechanism to ensure that agreed action points are implemented and accounted for. The Sierra Le- one Business Forum, which played this function after being established in 2007 by the GoSL, has become dormant in recent years. The private sector has addressed policy challenges through industry associations. Digital entrepreneurs are currently not or- ganized in any formal industry association and therefore lack a formal channel to ag- gregate concerns, build consensus, and advocate for policy issues affecting the sector. Weak institutions and poor coordination are drivers of the weak policy environ- ment. The lack of coordination and consistent application of policies, rather than a lack of policies themselves, hinders private sector development. Weak coordination, information challenges, and policy inconsistencies have resulted in negative investor perceptions of the impact of government policies and duplication of efforts which is costly in terms of time and money. Addressing challenges in the business environ- ment cuts across the mandates of several MDAs and therefore requires strong in- ter-MDA coordination to address critical gaps. As the institutional arrangement in the digital economy continues to evolve and take shape, there is a need to develop clear 121 Figure 5.5 coordination mechanism between key ministries and Investment Climate Constraints agencies to avoid duplication, particularly the MIC in Sierra Leone and the DSTI. SL W-MSMES (%) SL M-MSMES (%) Policy environment for digital entrepreneurs is at the Firms identifying as major or very severe (%) embryonic stage. The government has set forth its ob- 72.9 jective for the sector through the NIDS developed by Access to finance 52.2 65.1 the DSTI. The MIC is also developing an NDTR. Both 30.2 36.9 documents will serve as the blueprint for the growth Cost of finance and development of the sector. However, many as- 27.9 Access to land 30.2 59.1 pects of the legal and regulatory framework needed for digital entrepreneurship to thrive are currently not 22.9 Transportation 30.8 in place. This legal framework incudes e-transaction 22.1 laws, consumer protection, data protection/privacy, Practice of competitors / Informality 12.6 42.4 and cybercrime laws. The framework gives legal rec- 20.5 ognition and equivalence between paper-based trans- Crime, theft, disorder 15.5 20.6 actions and electronic forms of exchange and serves 19.7 Electricity 18.7 as prerequisite for conducting commercial transac- 32.6 15.6 tions electronically. There is currently a lack of leg- 21.4 Corruption 45.5 islation on e-commerce, data protection and privacy, 14.8 and tax incentives for businesses in the sector. This Macroeconomic environment 23.6 significantly raises the risk of digital entrepreneurs, 13.9 11.5 particularly e-commerce ventures, and reduces the Customs and tax regulations 27.6 trust of consumers in digital goods and services. As 13.1 Tax rates 13.7 a result, e-commerce ventures make up a fraction of 37.8 digital entrepreneurs operating in Sierra Leone. 5.7 Tax administration 2.7 26.4 The recent passing of the e-transaction law is a sig- 4.9 Political environment/instability 9.3 nificant milestone for the country and for digital 11.9 entrepreneurs and consumers. e-Commerce is dis- 4.1 Inadequately educated/skilled workforce 6.6 tinctively different from traditional face-to-face com- 14.1 2.5 mercial transactions where goods and documentation Labor regulatons 7.1 28.5 are exchanged physically. As the digital infrastructure 2.5 continues to expand in Sierra Leone and especially Telecomunications 7.7 9.7 in the aftermath of the current COVID-19 pandemic, Courts 25.4 e-commerce ventures are expected to grow given al- ready increased demands for electronic B2B and B2C Business Lic & permits 20.4 transactions. The Sierra Leone e-transaction legislation now gives legal recognition to electronic documenta- Source: WEF Competitiveness Index. WeFi Tourism Enterprise Survey (2019) 122 Table 5.1 tions transactions in the same way as paper-based Status of the Legal Framework documentations as a result of a transaction. The for Digital Entrepreneurship legislation also now legally recognizes electronic signatures to be permissible in court. This legisla- e-Commerce Law: No Data Protection and Privacy: No tion and its operationalization will be a critical step Consumer Protection: Draft toward promoting a predictable legal environment  The draft Consumer Protection Bill awaiting to be for consumers to transact in the digital economy. tabled to Parliament  Competition and Consumer Protection Policy There is a pipeline of draft legislations that, if (2012) -Approved by Cabinet passed by Parliament, has the potential to sig- Cybercrime Protection: Draft nificantly strengthen the legal framework. The e-Transactions and e-Signature: Yes–2020 GoSL has prepared two draft bills that are cur- IPRs: Yes  Patent and Industrial Design Act (2012) rently awaiting adoption by Parliament: a com-  No regulations and dedicated agency petition and consumer protection policy (2012)  Trademarks Act and a draft consumer protection bill. The process  Copyright Act can be registered at OARG is championed by the Ministry of Trade and In- Tax Incentives: No dustry (MTI). Additionally, the MIC has prepared Source: Authors. a draft cybercrime bill also awaiting parliamen- tary approval. The expedition of these new legis- lations will significantly bolster the legal frame- work for digital entrepreneurs. Legislation and processes to secure intellectu- al property rights (IPRs) are unclear. For digital entrepreneurs dealing mainly with intangibles, intellectual property becomes their most valuable Figure 5.6 Venture Capital Availability assets. The value of digital firms is often linked to 2015-2016 its intellectual property. Therefore, safeguarding 2016-2017 2017-2018 this asset and securing IPRs become critical for the success of digital entrepreneurs. Additional- 81 Ghana 105 ly, IPR can be used by entrepreneurs to leverage 91 45 investment from financiers. In 2012, the GoSL Liberia 45 85 introduced the Patent and Industrial Design Act. Nigeria 128 130 However, while the legislation is in place, the pro- 131 cess of registering IP is unclear. Trademarks and 50 Senegal 83 94 copyrights can be registered at the Office of the 129 Administrator and Registrar General (OARG). The Sierra Leone 127 111 MTI has the legal mandate to register patents, but it currently does not have the capacity to do so. Source: World Bank 2017a. 123 Finance62 Access to finance is not affordable to SMEs. According to the Enterprise Survey (2017),63 65.1 percent of firms in Sierra Leone cited access to finance as the foremost binding constraint to competitiveness, compared to 38.3 percent in Sub-Saharan Africa. With commercial banks loans attracting an interest rate of 18–24 percent per year, accessing affordable finance is a major impediment to the growth of com- panies. Only 1.3 percent of respondents of the Enterprise Survey recorded that their investments are financed by banks in Sierra Leone. This is largely due to systemic challenges of the financial sector. Out of the 13 banks, 7 have NPLs above 10 percent with excessive exposure to a few large borrowers.64 Private sector credit as a share of GDP is only 5.3 percent (2018), has declined by 31 percent since 2010 and is one of the lowest among all low-income Sub-Saharan Africa countries (World Bank 2019b). The majority of investments by enterprises are made utilizing their own funds and financed internally, which leads to suboptimal investment levels that do not allow for more significant firm growth. For growth-oriented digital entrepreneurs, early-stage or risk financing should be an important source of capital for expansion. Early-stage finance refers to a wide range of instruments including venture capital finance (equity and debt), crowdfund- ing, angel investment, grants, capital from friends and family, and bootstrapping (personal savings). While recent years have seen improvements in the availability of this type of capital, more can be done to attract more investors and to better connect entrepreneurs with sources of financing. Supply-side Constraints The supply of early-stage financing for start-ups is particularly scarce, stifling in- novation. In general, funding requirements in the early stages of development of business ideas into digital enterprises are lower when compared to other sectors. At these early stages of ideation and prototyping, grants (generally coming from the public sector) can be an important instrument to support the growth of the pipeline of digital business ideas. However, in Sierra Leone, government-supported grants predominantly target sectors not related to ICT nor encourage digitization of existing firms. This market need—of small investments of US$10,000 to US$25,000 for ambi- tious and innovative entrepreneurs—remains largely unmet. Existing grant programs are administered by a few incubator programs at the present time. This serves as a disincentive for digital entrepreneurs to test ideas and models with the hopes of de- veloping services and products that can then enter markets. Moving up the financing ladder, the supply of venture capital and private equity 124 (VCPE) has been increasing in recent years, but the share captured by digital entre- preneurs remains small. Over the past decade, five VCPE funds65 have established ongoing operations in Sierra Leone. Taken together, they have invested over US$50 million in at least 50 companies. This capital has been entirely directed toward SMEs, with most firms investing an average of US$400,000 to US$500,000 per transaction. Digital entrepreneurs in their early stages, with limited track records, tend to repre- sent higher risks and as such have not gained as much traction as firms in traditional growth sectors such as manufacturing, agriculture, construction, and tourism. There are some options available for SME growth financing. Digital SMEs ready for growth will require patient capital that offers terms that are far more flexible than those offered by the banking sector. While the supply of such capital is limit- ed, several capital providers do meet this need at different levels of demand. First, Cordaid provides patient and relatively flexible financing for companies that require US$250,000 or more of capital and have been operation for several years. Second, specialized lending programs, such as the Regrow program at Ecobank, also provide more attractive terms than traditional lenders. They also invest as little as US$5,000 to US$50,000 per company. However, digital entrepreneurs make up a marginal share of the portfolio of both Cordaid and the Regrow Program. At present, there are no formal angel investors networks creating a gap in the supply of early-stage financing in Sierra Leone. Angel finance is generally understood as the prac- tice of high-net-worth individuals investing their own time and money in new businesses with the goal of profiting from their long-term growth (World Bank 2014). Distinct from venture capital financing in the typical size of investment and in that angel investors invest their own money and time and are typically motivated beyond profit generation and have patience to wait for returns on investments. In entrepreneurial ecosystems, angel investors fill an important gap between personal savings or capital from friends and families and venture capital or commercial bank financing. While some digital en- trepreneurs interviewed have been able to raise capital from angel investors, there are no formalized angel networks and limited platforms that allow entrepreneurs and angel investors to meet. Access to such investments largely relies on individual entrepreneurs’ ability to navigate this informal network. In addition to helping connect entrepreneurs to capital, formal angel networks allow individual investors to pull resources, share risk, and leverage additional expertise to help guide investments. Regional formal angel inves- tor networks for digital entrepreneurs exist, but entrepreneurs in Sierra Leone show lim- ited knowledge regarding those opportunities. On the investors side, limited knowledge of financing opportunities and mechanisms also limit the number of individuals who are willing to participate and invest in new ventures. 125 Demand-side Constraints Lack of quality deal flow and limited integration of ecosystem actors. Providers of early-stage finance cite lack of quality deal flow as a major constraint in the supply of finance. Generally, the sophistication of entrepreneurs varies greatly. Sophisticated, serial entrepreneurs are few. As a result, VCPE funds often struggle to find a criti- cal mass of investment-ready businesses to invest in. Incubation and accelerators face similar challenges requiring significant investment up front to support entre- preneurs to equip them with some of the most basic skills and mind-set. Identifying viable digital enterprises to invest in has been particularly challenging as there is a lack of e-business skills by entrepreneurs. And digital skills are still incipient in the country (see Chapter 6. Digital Skills). The FireStarter Grant program administered by Sensi Hub was unable to identify a single investment-ready digital enterprise to in- vest in. Instead, the program ended up helping 25 entrepreneurs in agribusiness and creative industries to leverage digital platforms as sources of sales and marketing. Appetite for equity finance among entrepreneurs remains limited. Knowledge of, and interest in, equity financing remains low among entrepreneurs. This results in narrow- ing the options of financial instruments for entrepreneurs in Sierra Leone. Due to limit- ed uptake, existing venture capitalists have had to adapt their approach to meet market demands, in some cases converting from equity to debt instruments (such as Cordaid). Entrepreneurship Support In the entrepreneurship ecosystem, entrepreneurs drive the system, but they do not do so in isolation. In the context of entrepreneurship ecosystems, infrastructure and supports refer to institutions, groups, and actors that provide support and critical services to entrepreneurs. These range from business development service (BDS) pro- viders, lawyers, accountants, incubation and accelerator programs, entrepreneur- ship networks, and support groups. Latest data from the GEI (2018) score the quality of institutions that support entrepreneurship at 25 percent pointing to a weak group of institutions to support entrepreneurs. However, it is important to note that the latest data reflect 2017 results. There have been notable improvements in the supply of entrepreneurship support in more recent years. Supply of Entrepreneurship Support Programs A large share of entrepreneurship support is provided through government, develop- ment partners, and NGO66-supported initiatives.67 While this fills an important gap in the ecosystem, discussions with digital entrepreneurs revealed that there is a perception that 126 such programs rarely offer content that considers sector specificity for digital entrepre- neurs and do not focus on start-ups skills. Results from the GEI point to significantly poor start-up skills in Sierra Leone. This indicator reflects the perception of the population on their skills to start up a business and of tertiary education. Start-up skills are low in the region, but Sierra Leone scores particularly low in this regard, scoring 1 percent. The supply of private BDS providers is growing, but they lack knowledge and offerings to support digital entrepreneurship. There is a growing number of for-profit BDS pro- viders. However, these providers typically seek out market opportunities within govern- ment and development partner-funded initiatives. Their offerings and content are largely shaped by the objectives of the various programs which tend to prioritize development outcomes. This is because entrepreneurs tend to rely on funded projects to access busi- ness development support. An Enterprise Survey conducted by the SOBA project in 2017 found that 94 percent of entrepreneurs cannot afford to pay for the business support services they need and 51 percent of entrepreneurs sought business advice from family and friends or rely strictly on themselves.68 Donor-funded projects tend to be short term, leaving a gap in access to longer-term business coaching and mentorship to see impact on business outcomes. For digital entrepreneurs, BDS providers themselves have a low rate of technology adoption and usage in business diagnostic and advice, lacking relevant experience in digital marketing and IP management strategies, for example. Consequent- ly, BDS providers are widely perceived to be costly and limited value for money. To better serve the digital market, the skills of BDS providers themselves will need upgrading to develop relevant content and adopt more innovative support approaches. In the past five years, there has been an emergence of incubator programs in the country that prioritizes digital entrepreneurship. The emergence of programs such as Sensi Hub, Innovation SL, and Life by Design has proven to have a catalytic impact in the entrepreneurship ecosystem more widely but specifically for digital entrepre- neurs. Several successful digital enterprises have been born out of these programs, for example, i-DT Labs and Mi Cash Box. These programs are characterized by longer periods of support and higher quality of technical advice provided, including coach- ing and mentoring and provision of small funding. There are specific institutions and networks aimed at supporting female entrepre- neurship, but their capacity and outreach could be strengthened for greater im- pact. Access to networks and technical assistance is critical in supporting female-led businesses. To address this, there are several networks and institutions that exist in Sierra Leone to perform this important function. These include Mean Business, Business and Professional Women SL, and Sierra Leone Business Hub. The work of STEM Women, while not focused on entrepreneurship, is still important—providing 127 information to young women in higher education to stimulate their interest in pur- suing careers in the science, technology, engineering, and mathematics (STEM) field. Initiatives that combine a technology focus and entrepreneurship targeting women exclusively are currently lacking in the country. Box 5.1. Ecosystem Mapping Initiative Launched in Sierra Leone “There is every need to connect our research facilities to academia, link our innovation labs with our inventors, connect our entrepreneurs with startup. All these can be achieved if we truly understand how to connect our activities within the ecosystem and leverage on the potential of using science, technology and innovation as the bedrock for developing a modern economy” (President Bio, May 2018). The DSTI is currently rolling out the digital tech startup/entrepreneurs eco-system mapping exercise. The main objective of this work is to have a better understanding of existing startup/tech ecosystems in Sierra Leone and find out the most needed support to the tech eco system. This assessment exercise focuses on identifying the companies/firms which using tech solutions in various sectors, including, agriculture, finance, medicine, manufacturing, and others. This exercise will produce an interactive ecosystem map which indicates all key stakeholders in the tech-ecosystem and their respective roles. The methodology for dynamic data collection to maintain the map will be developed. Also, this exercise will identify the current constraints related to the legal and institutional frameworks in Science, Technology, and Innovation, and propose the way forwards. Given the COVID-19 pandemic, this benchmarking exercise is currently pending, however, DSTI is anticipated to resume the work once the situation clams down. Source: DSTI. Table 5.2 Categories of Entrepreneurship Support Institutions Operating in Sierra Leone Category Example Intermediaries in Sierra Leone Incubation Sensi Hub, Innovation SL Accelerators SL Agcelerator Co-working space BSI SL Limited, Workflow Innovation Hub BDS SAS Consult, CTI Consulting, Africaribe, PHI Networking assets Breakfast Club Africa, Freetown Pitch Nights Source: Authors. 128 INFRASTRUCTURE Figure 5.7 Start-up Skills Electricity and Internet Access to affordable and reliable supply of internet Seirra Leone 1 and electricity is a key component of competitiveness SSA Average 8 Nigeria 10 of digital firms. It forms a key part of their operating Liberia 12 costs and a key determinant of their market outreach, Ghana 22 and it is an important factor for consumers to access and make use of digital goods and services. Therefore, Source: GEI. governments interested in developing an enabling en- vironment for digitally enabled businesses to emerge and thrive must address critical infrastructure gaps. The extent to which electricity and internet are avail- able at an affordable and consistent quality will serve Figure 5.8 Reliability of Supply and Transparency of tariff index, (0–8) as a key incentive or disincentive for digital enter- prises and their consumers. In Sierra Leone, despite 0 2 4 6 8 advancement in both internet and electricity supply, Cote d´Ivoire key structural gaps still exist making their supply ex- Ghana pensive and at times inconsistent. Detailed analysis of Guinea key infrastructure constraints in Sierra Leone’s digital Liberia Nigeria economy is covered in the Digital Infrastructure pillar. Senegal Sierra Leone Electricity in Sierra Leone remains one of the highest Sub-Saharan Africa in the region. The GoSL has taken some important steps to reform the energy sector in recent years including the Source: World Bank, Doing Business Report, 2020. unbundling of the National Power Authority leading to Note: The values for Guinea, Liberia, Nigeria, and Sierra Leone were zero. the creation of EDSA and EGTC separating generation and distribution functions. This unbundling was aimed at introducing much needed efficiency and reducing losses faced by the sector at both generation and dis- tribution levels. While this process has been regarded by industry specialists as relatively successful, gaps in Table 5.3 Average Tariff (US$/kWh) Sierra Leone’s transmission infrastructure continue to Country Average Tariff impede the sector and result in high cost per unit for Sierra Leone 0.180 electricity (US¢18). For businesses, the challenge is two- Burkina Faso 0.227 fold: (a) the time and cost it takes for a business in new Côte d’Ivoire 0.120 premises to get connected to electricity and (b) consis- Guinea 0.080 Liberia 0.385 tent supply during the dry season. According to the lat- Mali 0.180 est Doing Business report, it takes 82 days, 8 procedures, Source: World Bank. 129 and 5,057.02 (% of income per capita) for a first-time connection for a small warehouse. Like several countries in the region, Sierra Leone scores zero in the sub-indicator ‘reli- ability of supply and transparency of tariff index’. Ghana, Senegal, and Côte d’Ivoire are among the subregion’s top performers in this regard. The ‘getting electricity indicator’ is one of Sierra Leone’s poorest performing indicators, ranked 181. Internet connectivity has been expanding but prices remain high. Internet connec- tivity is a fundamental requirement for not only creating and developing digital goods and services but also driving the consumption by the market. Landing of the ACE cable and the deployment of the fiber-optic backbone in 2015 have been driving in- ternet connectivity. The predominant method of accessing internet is through mobile phones, with wide coverage of 3G across the country. With 6,595,000 wireless sub- scribers and 61,000 (4.7 percent household penetration) total broadband subscrib- ers69 4G mobile network was introduced in January 2018 and is being offered by two of the largest mobile operators in the market. Box 5.2. Drones in Sierra Leone In Sierra Leone, the application of drone technology by entrepreneurs has been novel. However, there are few innovative and successful market leaders in this regard. Track Your Build Group have been leading the way in drone application in Sierra Leone. Managed by two brothers it is a group of four digital enterprises offering a wide range of services using drone technology. Initially set up in 2014 to serve the Sierra Leone diaspora market with real time update on status of construction projects in Sierra Leone. The company since then, have benefitted from regional entrepreneurship support programs, completed a successful Series A round of investment and has evolved into a group of four subsidiary companies. However, despite this initial success, the enabling environment for further innovation in drone application is embryonic making it potentially challenging for others to follow. The supply of skilled drone pilots remains shallow. Provision of insurance products for the sector currently does not exist. Similarly, the policy environment to guide drone registration, licenses of pilots all remain in progress. That said, with support of UNICEF, the GoSL has made some strides to bolster this subsector. This includes the establishment of the Drones Corridor with free access for startups, a proposed Drone Academy and a planned ‘President Drone Challenge’. These investment and initiatives hold potential for Sierra Leone to serve as a hub for drone products and services for neighboring countries sin the Mano River Union. Advancing the sector will require continued momentum to put in place the right policy environment to establish processes and procedures to guide the evolution of the sector not just in Sierra Leone but also ensuring harmonization with neighboring countries. Source: DSTI. 130 Human Capital and Skills for Digital Entrepreneurs Access to relevant skills in the digital economy is critical to the success of digital en- trepreneurs. Digital entrepreneurs need first and foremost e-business skills. This re- fers to ability of entrepreneurs to identify how digital technologies can be harnessed to create new business opportunities. Second, they require access to technical skills to develop and deploy technologies which are a critical part of the product and ser- vices they offer. Lastly, greater digital literacy further enhances adoption and use of digital products and services among the larger population. Therefore, any invest- ments to promote digital entrepreneurship must be intentional about developing rel- evant skills in the digital economy at all three levels. Limited e-business skills are reflected in low levels of digitization. Due to the na- scent stage of the digital economy in Sierra Leone, the concept of harnessing digital technologies to create new business ideas is still novel, with only 7 percent of firms having their own website compared to sub-Saharan Africa average of 29.3 percent and global averages of 44.2 percent.70 BDS providers and other wide-ranging entre- preneurship support programs have not focused on building e-business skills among entrepreneurs. Often, they themselves lack an understanding of digital technologies. Yet, global trends would suggest that firm competitiveness now and, in the future, would largely depend on entrepreneurs’ ability to harness e-business skills. The supply of specialized quality digital skills remains scarce contributing to high operation costs and stifling growth of digital entrepreneurs. In recent years, the es- tablishment of new higher learning institutions such as Limkokwing University and Bluecrest College has significantly boosted the supply of specialized skills combin- ing both theoretical knowledge and practical experience. Selected higher learning institutions have sought out internship placements with the private sector which has proven successful in most cases. Increasingly, ICT firms and other digital entrepre- neurs have been able to source technical skills locally. Despite these improvements, entrepreneurs still struggle to find specialized skills for larger complex projects. Spe- cialized skills are often sourced externally, in India, Bangladesh, and China, at high rates. These contracts also tend to be rigid, with entrepreneurs having to incur extra hourly costs should clients require further modifications. Additionally, private sector has limited input on curriculum development. There are no formal mechanisms for private sector actors to inform curriculum. The result is a mismatch between skills supplied and those demanded by the private sector. 131 There are no formal channels through which “Talent retention has been the biggest the private sector can influence curriculum challenge for us in growing our business. to ensure that the labor supply meets demand Many a times we have had to forego requirements. Within government, there is no larger contract opportunities because we formal channel for institutions such as the MIC know we cannot secure the talent required to support the Ministry of Tertiary and Higher locally. Working with developers abroad education to ensure latest digital knowledge is is costly and a headache. So, we focus on infused in the curriculum. However, the recent small contracts that we know we can use appointment of the Chief Innovation Officer to local talent to fulfill.” also serve as the Minister of Higher Education – A digital entrepreneur running holds some potential for this cross-fertilization a software development enterprise. to happen more seamlessly. A group of self-taught innovative tech special- ists serve as important role models. Despite the limited supply of technical skills available domestically, there is a group of passionate, young self-taught technical specialists who have served as a demonstration effect and provid- ed motivation for youth to learn and monetize digital skills. Some of these self-taught leaders have gone on to build successful companies and attract private investment. Moreover, digital en- trepreneurs interviewed indicate a preference for self-taught specialists—citing their passion, commitment, and drive to produce high-qual- Figure 5.9 ity solutions. Having these role models is crit- Sector Choice of Respondents ical in a context where the top-most desirable Male Female sector for job seekers (recent graduates) is the Public Sector development sector (44 percent) followed by 28 10 employment in public sector (38 percent). Only Private Sector 10 6 3 percent of job seekers surveyed have a desire Developmente 25 19 to go into self-employment and 16 percent ex- Self Employment 3 pressed an interest in working for the private sector (Harris 2018). Source: Harris 2018. 132 Culture Sierra Leone’s entrepreneurship culture has been transforming in recent years. Largely driven by necessity, entrepreneurship abounds in urban and rural Sierra Le- one. However, in the post-war era, there has been a rise in domestic growth-oriented entrepreneurs seeking to grow and scale their businesses as the perception of en- trepreneurship shifts in society. No longer considered for selected ethnic groups or those with little formal education, dynamic and innovative local entrepreneurs are emerging to act as positive role models. This shift, while noteworthy, has not yet entirely reflected in career choices of Sierra Leone’s educated youth. A study (Harris 2018) investigating the role of perception in employment choices among young skilled workers in Sierra Leone found that among recent graduates from Sierra Leone’s most prestigious universities, there was a strong preference to work in the development and public sector. With only 3 percent of respondents showing a preference for self-employment, the results also show that female respondents showed no preference in seeking out self-employment opportu- nities. Reasons for respondent choices were driven by several considerations includ- ing stability, status, salary, contribution to society, training opportunities, and career progression. A career in the development sector and public sector was perceived by respondents to provide the most status while self-employment was perceived to pro- vide the most stability. In assessing Sierra Leone’s entrepreneurship culture, the GEI offers some useful insights. Three indicators assessed in the report are of particular interest in under- standing entrepreneurship culture in Sierra Leone: risk acceptability, cultural sup- port, and opportunity perception. Although the data reflect results of the 2018 report, they do not offer useful insights. Risk acceptability. This indicator assesses willingness of individuals to take the risk of starting a business and assesses the extent to which the investment climate serves to increase or reduce risk for starting a business. Given the current nascent stage of the digital economy, starting a digital enterprise in Sierra Leone requires a high-risk appetite of entrepreneurs. High levels of risk aversion in the population may limit the emergence of new businesses in this sector. Sierra Leone scores particularly low in this indicator (2 percent) and while comparable to Liberia (2 percent), it is behind the Sub-Saharan Africa average (11 percent) and significantly lower than sub regional peers such as Ghana (9 percent) and Nigeria (21 percent). Opportunity perception. This indicator measures the ability of the population to identify opportunities to start a business and assess whether the institutional frame- work makes it possible for people to pursue these opportunities. Increasing digital 133 entrepreneurship through either the creation of new businesses or the transforma- tion of existing businesses will require an ability for entrepreneurs to spot a market opportunity to pursue. Sub-Saharan Africa ranks particularly high in this indicator with regional average of 34 percent. Sierra Leone lags behind this average with a score of 20 percent and trails other regional peers such as Ghana (61 percent), Nigeria (37 percent), and Liberia (28 percent). Lower ability to spot new opportunities affects Sierra Leone’s ability to innovate and compete against regional peers. In the digital economy where technology is fast evolving, entrepreneurs need to spot opportunities and they need to do so quickly to thrive. Cultural support. The extent to which society perceives entrepreneurship as a viable and respectable career choice can have a significant impact on career choices of the brightest and the best and may facilitate or deter pursuing business opportunities or ideas affecting the overall supply of growth-oriented entrepreneurs. This indicator measures both how a country’s inhabitants view entrepreneurs in terms of status and career choice and how the level of corruption in that country affects this view. Sierra Leone has scored 20 percent, slightly above regional Sub-Saharan Africa average (27 percent) and outperforming Liberia (28 percent), Nigeria (19 percent) but significant- ly underperforming Ghana (50 percent). Key ecosystem actors have been working toward fostering a dynamic entrepreneur- ship culture most visible in Freetown and Makeni. Many have contributed to devel- oping a vibrant entrepreneurship culture and facilitating networking among ecosys- tem actors. The work of Sensi Hub, Innovation SL, and University of Makeni as well as several development partner-funded projects have been particularly impactful. Busi- ness Plan Competitions, Pitch Nights, Hackathons, and several ongoing networking events have served to increase the profile of entrepreneurship in Sierra Leone. Figure 5.10 Indicators of Entrepreneurship Culture (%) 70 61 60 50 Opportunity Perception 50 37 40 34 Cultural Support Risk Acceptance 28 28 27 30 21 20 19 20 12 11 9 10 2 2 0 Sierra Leone Liberia SSA Average Nigeria Ghana Source: GEI 2018. 134 Market The existence of a viable market for digital goods and services in Sierra Leone will be a key incentive for the creation and expansion of digitally enabled businesses. The market for digital goods and services is determined by several factors. This sec- tion assesses the various factors affecting market access for digital entrepreneurs. There has been an increase in demand for digital goods and services as Sierra Leone’s digital infrastructure expands. Advancement in digital infrastructure, in- creased awareness of digital applications to address key development challenges, and government digitization have all served to fuel demand for digital goods and services. The market for digital software solutions has been largely driven by donor project demands. Entrepreneurs interviewed for this diagnostic report that their main mar- ket has been due to demands from the development sector, corporate clients, and limited demand from government and consumers. Leveraging digital technology during the Ebola epidemic, elections, and the landslide has created opportunities to showcase domestic talent of digital entrepreneurs. As the government explicitly prioritizes e-governance and plans to digitize key G2B services, it has served as a key market for domestic ICT firms. Similarly, businesses increasingly aware of the poten- tial of digital solutions to improve business performance and introduce transparency and innovation have been sourcing digital solutions ranging from human resource platforms to inventory and stock management solutions. At the same time, as Sierra Leone’s middle-class and expatriate community expands, demand for e-commerce and e-service products such as e-delivery has also been on the rise. The nascent nature of Sierra Leone’s digital economy provides opportunities for digital entrepreneurs to explore. Low levels of digitization and low levels of market concentration provide an opportunity for digital entrepreneurs. Compared to oth- er countries in the region, Nigeria, South Africa, or Nairobi, Sierra Leone’s digital economy is lagging, levels of digitization are low, and the use of digital technology as a business model is still a novel concept. This limited concentration in the market provides higher chances of first-mover advantage. The perception among digital en- trepreneurs is that while the long-term business strategy involves scaling up beyond Sierra Leone, the country offers good ground to pilot and refine products and services before going international. While the demand of digital goods and services has been growing, the success of digital enterprises has been mixed with e-commerce ventures struggling to sustain their operations. The size of the Sierra Leone’s market is small, and with a population of 7.5 million, 56.8 percent poverty rate, and labor force participation at 58.1 percent in 2018, the purchasing power of the average Sierra Leonean is limited. Low levels of 135 digital literacy further constrict the market for B2C e-commerce ventures. Despite the opportunities that e-commerce tends to yield for consumers, greater choice and savings, Sierra Leoneans have not been able to reap these benefits. According to latest Findex data, only 4.1 percent used the internet to pay bills or buy anything (World Bank 2018). The UNCTAD B2C e-commerce index (2019)71 measures economies’ readi- ness to engage in and benefit from e-Commerce. It estimates that 16 percent of Sierra Leone’s internet users shop online which is 1 percent of the total share of population. Sierra Leone is ranked 139 out of 152 economies. Unsurprising, there has been limit- ed success for e-commerce ventures in Sierra Leone. B2C e-commerce ventures tend to suffer when consumer spending slows down and are hard hit during economic shocks such as the Ebola epidemic (2014–2016). However, it remains unclear what impact the COVID-19 outbreak will have on e-commerce. Early signs of disrupted supply chains due to mobility restriction may make it challenging for ventures to fulfill orders even as demand for nonhuman contact transaction rises. Fintechs struggle to scale their market due to lack of regulatory framework. Cur- rently, the regulatory environment is lagging behind innovations in the digital econ- omy. Government officials tend to lack an understanding of digital technologies and are at times skeptical of the pace at which innovations evolve. As such, the govern- ment has been slow in putting in place the needed regulatory reforms. For some sec- tors, this has prevented digital entrepreneurs from taking products into the market. A subsector where this is glaring is the fintech sector. While fintechs have significant potential in supporting the government to achieve both economic and development goals through promoting financial inclusion, BSL does not have the requisite legal 136 and regulatory framework to allow fintechs to operate at their full capacity. Obtaining fintech license from BSL is challenging. Additionally, the current e-money guidelines give MNOs monopoly to issue e-money which stifles fintechs to take digital solutions to market. Initiatives such as the regulatory sandbox holds promise for fintechs. The sandbox brings together fintech entrepreneurs and the regulator to pilot solutions, identify gaps, and jointly work to mitigate risks. Currently there are four fintechs enrolled in the program. Limited legal and policy framework inhibits trust and uptake of digital goods and services. The market for B2C solutions is affected by the limited policy framework to address risks and protect consumers. Limited digital literacy makes trust of digital goods and services low. However, this lack of trust is further exasperated by the fact that there are indeed very limited ways and means to secure consumer protection and privacy and prevent cybercrime. Government initiatives should be mindful of crowding out the private sector. The emergence of the DSTI has brought about significant benefits to the digital economy agenda in Sierra Leone. It has the important mandate of developing digital solutions for various MDAs. Typically, government digitization has served as a key market for digital entrepreneurs. However, adopting a model where government solutions will be developed by the DSTI may crowd out private sector entrepreneurs in the domestic market. In discussion with local private ICT firms, there is a perception that domestic entrepreneurs now have to compete with the DSTI in developing solutions. Ensuring that domestic firms are used wherever feasible in government initiatives will provide market opportunities and further drive the creation of more sustain the market. 137 DIGITAL ENTREPRENEURSHIP Recommendations and Next Steps The DE4A Initiative sets out ambitious objectives to bolster digital entrepreneur- ship in Africa: (a) increase the number of digital solutions firms and (b) increase the number of firms using digital technologies for business purposes. The pathway to these targets is not simple in any context but particularly so for developing and fragile contexts such as Sierra Leone. It will require a deliberate prioritization of the agenda and significant public and private sector investment over a sustained period of time to improve the enabling environment for digital entrepreneurs to operate. These investments may be categorized into short-, medium-, and long-term interven- tions. As such, the following matrix makes policy recommendations to improve the performance and function of each foundation of an ecosystem. Improve the Policy and Regulatory Environment for Digital Enterprises R1. Close the gap in the existing legislative framework to support the expansion of digital goods and services and manage emerging risk of expansion to consumers and entrepreneurs. There are several draft legislations and policies in the pipeline. A focus on delivering these and ensuring that they incorporate best practices will be an important step for protecting the regulatory environment. This includes establishing a drone policy and establishing formal certification for locally trained pilots, develop- ing the e-money law to support fintech, and passing the cybersecurity and consumer protection legislation. At the same time, narrowing the regulatory gap may not re- quire a reinvention of the wheel. Significant work has been ongoing at the regional level. Sierra Leone should, where feasible, seek consistency and leverage regional efforts, for example, ECOWAS IP registration, which will also cover Sierra Leone in- stead of establishing its own national bodies given current fiscal situation. R2. Scale up regulatory sandboxes beyond fintech. Regulatory sandboxes have been used to provide a framework set by the regulators to allow fintech start-ups and in- cumbents to pilot new products under the supervision of the regulator. In 2017, BSL established a regulatory sandbox to promote innovation in DFS. Its first cohort com- prised five participating ventures. There is a potential to build on this momentum and extend the use of the sandbox concept to support nonfinancial tech start-ups to pilot ventures using novel technology for which the legal and policy framework may 138 be weak at this time. The advantages of the sandbox concept are well documented and the GoSL may be able to build on this for wider impact. R3. Continue efforts to improve the business environment and reform incentives for start-ups. Sierra Leone has made recent efforts in reforming some aspects in the business environment; however, the GoSL must continue to provide efficiency and reforms in key G2B services that serve to increase the cost of doing business for en- trepreneurs in Sierra Leone. This also includes reforms aimed at making it easier for women to start and manage businesses as well as ensuring that the provision of Government to Business services are inclusive of the needs of women. In doing so, the government will need to deepen analysis on women entrepreneurs in the digital economy. Currently very little data exist. An intentional effort to gather and track data in this regard would be critical in developing well designed interventions and policies to support women in the digital economy. Increase Access to Early-stage Finance for Entrepreneurs R4. Prioritize investment readiness for entrepreneurs to lower transaction cost for investors and establish a viable pipeline. Stimulating private sector investment in early-stage innovation firms in part requires addressing nonfinancial impediments facing Sierra Leone’s digital entrepreneurs. This includes improving the supply of entrepreneurship support programs to help investment readiness and raise business acumen of entrepreneurs, as well as increasing financial literacy of entrepreneurs and supporting entrepreneurs to build pitching skills and foster better understand- ing of equity financing. R5. Establish Innovation Fund to stimulate early-stage finance to entrepreneurs. Cur- rently there is no fund or program that focuses on supplying pre-seed, seed, or start-up capital. This is a key missing link before firms can graduate to venture capital financ- ing. As such the few venture capitalists in Sierra Leone face challenges in identifying quality pipeline. The GoSL may explore opportunities to develop co-investment funds along with selected angel investors to reduce risk for private sector investment, lever- age the expertise of private sector angle investors in driving investment decision, and increase the supply of finance for entrepreneurs in their early stages of growth. R6. Safeguard assets of digital entrepreneurs. This may be through protecting ‘soft as- sets’ in the form of strengthening IP registration, protection, and transfer and promot- ing IP management knowledge among digital entrepreneurs. It also involves protecting ‘hardware assets’ through developing insurance products for digital entrepreneurs, building on ongoing efforts to provide technical assistance to insurance companies to develop products relevant for the sector to reduce risk and safeguard investments. 139 Promote Entrepreneurship and Strengthen Supply of Support Programs R7. Promote entrepreneurship culture among Sierra Leone’s educated youth. While research shows that educated young Sierra Leoneans demonstrate a strong preference for careers in the development and public sector, there is a need to promote dynamic entrepreneurship culture among young Sierra Leoneans. This requires conducting a critical review of existing curriculum in Sierra Leone’s public universities to enhance business education, injecting innovation through business plan competitions, and facilitating access to well-equipped spaces to allow experimentation with technology. R8. Strengthen supply of quality business development providers with relevant products for digital entrepreneurs. Establish ‘training of trainers’ courses for BDS providers to support development of new lines of products relevant to digital enter- prises focusing on e-business skills, digital marketing, and use of digital technologies to improve business outcomes. This may be supported by the Ecosystem Unit at the DSTI and offered on a fee basis for BDS providers. R9. Invest in networking assets and leverage international expertise. Networks and community building assets have been cited to be a critical factor in the success of the world top technology ecosystems (Mulas, Minges, and Applebaum 2015). Host- ing events in partnership with the private sector to facilitate networking among eco- system actors, showcase local talent, and leverage international expertise can be of value. Existing planned initiatives such as the ‘President Drone Challenge’ should be prioritized and scaled up to support other forms of technology application. Private sector initiatives should also be encouraged and supported including hackathons and pitch nights. Government efforts should not stifle innovation from the private sector. R10. Establish physical spaces to support innovation. The use of Innovation Hubs and mLABs has yielded positive results in supporting the expansion of budding and experienced digital entrepreneurs (Mulas, Minges, and Applebaum 2015).72 The mod- el of establishing and operating such infrastructure based on reality on the ground. In the resource-constrained environment such as Sierra Leone, fully private sec- tor-run or PPP models may be most feasible. Large corporate firms in the telecoms sector have provided similar support in other developing countries. The GoSL should advance plans to establishing an innovation hub with one of the leading telecoms operators in Sierra Leone. 140 Reduce Cost of Operation for Digital Enterprises R11. Boost supply of technical skills in the labor market. There is a need to improve the supply of qualified labor in the market as well as position learning institutions to produce graduates for jobs in the future. This requires curriculum review and de- velopment and training of teachers, lecturers, and course instructors, as well as in- vesting in coding programs for youth at various stages. Specifically, the government may leverage the Skills Development Fund (SDF) as part of the World Bank-supported Skills Development Project to finance curriculum upgrade and to prepare a work- force for the future responsive to private sector needs. R12. Promote uptake of digital goods and services. This will require multiple ap- proaches. First, the GoSL may consider piloting a digital inclusion and literacy pro- gram in partnership with private sector or development partners. The program may focus on incorporating digital devices in learning in selected higher learning institu- tions. Second, the GoSL may introduce incentives such as reduced duties on digital devices to reduce cost and promote uptake amongst the public. Third, the GoSL may also establish a digital inclusion and literacy strategy to guide its efforts in this regard and lastly, uptake will be greatly benefited by an expansion of digital infrastructure and reduced rate of internet. R13. Support entrepreneurs with access to information and market intelligence. To an extent, capital and entrepreneurship have never been this accessible as they are today. There is a plethora of resources, entrepreneurship programs, and funding opportunities in the region. Yet, there is a gap in what entrepreneurs know. There is a need to resolve this information asymmetry. Recent investment to strengthen the institutional framework in the digital economy needs to be leveraged to provide sup- port and information to digital entrepreneurs. This role could be played by both the MIC and the Ecosystem Unit located at the DSTI. 141 142 6 Digital Skills Importance of Digital Skills Socioeconomic Rationale for Investing in Digital Skills Development The growth of the digital economy around the world now requires digital skills to live and work. There are many definitions of digital skills and a good one is used in the UNESCO73 Institute of Statistics (UIS) global digital literacy framework, which defines digital literacy (also referred to as digital skills) as “the ability to access, man- age, understand, integrate, communicate, evaluate and create information safely and appropriately through digital technologies for employment, decent jobs and entre- preneurship. It includes competencies that are variously referred to as computer lit- eracy, ICT literacy, information literacy and media literacy.” Digital skills can fall into three broad categories (ITU 2018):  Basic skills (literacy and citizenship) as general skills that are required “broadly for all workers, consumers and citizens in a digital society”  Intermediate skills that build upon basic skills and are “effectively job-ready skills since they encompass those skills needed to perform work-related functions”  Advanced (specialist) skills that “form the basis of specialist ICT occupations and professions” mostly at the post-secondary level and “are crucial to developing innovative ICT products and services.” Digital Skills Frameworks can help to classify digital skills and enable employers, ed- ucation and training providers and individuals to assess the competences and profi- ciency levels that are required for different occupations and functions.74 Most Afri- can countries lack such frameworks. The UNESCO Digital Literacy Global Framework, which is based on the European Union’s DigComp 2.1, provides a robust digital skills framework (see Figure 61 ). Different levels of proficiency in 7 competence areas or domains indicate four broad levels of digital skills that are applicable to many occupations. This DE4A study uses the DigComp 2.1 framework as it is consistent with a more generic skills 143 framework, with three core components comprising cognitive, socio-emotional and technical skills (World Bank, 2018). The digital skills framework cuts across these three skills components. The digital skills framework for this Country Diagnostic Tool will follow the following 4 distinct levels of digital skills adopted in DigComp 2.175:  Foundational: With guidance, deal with simple tasks that involve remembering contents and instructions (75% of youths and adults should have acquired his level by 2030)  Intermediate: Independently deal with well-defined routine and nonroutine problems that involve understanding contents  Advanced: Independently deal with and provide guidance to others on different tasks and problems that involve applying and evaluating content in complex situations (6% of youths and adults should have acquired his level by 2030)  Highly specialized: Independently resolve complex problems with moving pieces, guide others, contribute to professional practices and propose new ideas to the field For ICT professionals and technical workers, who undergird the development and spread of digital technologies, the European Union has developed a more detailed framework, the EU e-Competence framework (see Figure 62). This is envisaged as a tool to articulate the competences required and deployed by ICT professionals (including both practitioners and managers). There are 5 e-Competence areas derived from the ICT Figure 6.1 Digital Skills Framework for all occupations 144 business processes PLAN – BUILD – RUN – ENABLE – MANAGE , and 5 proficiency levels for each e-Competence. The e-Competence levels e1-e5 broadly correspond to the educa- tion levels of upper secondary to postgraduate education in ICT disciplines. Box 6.1 UNICEF “the level of children’s digital skills is connected to a multiplicity of factors.  First, it is influenced more by usage than by access, meaning that having ICT equipment does not guarantee actual use.  Second, what matters is not the amount of time spent on the computer, but the use made of it, both at home and at school: a greater diversity of activities is associated with improved skills.  Third, digital skills are affected by the number of years of computer use by children: the earlier digital skills are acquired, the greater the impact.  Fourth, strengthening students’ written-language skills, such as reading, comprehension and word processing, is necessary to develop their digital skills.  Fifth, the use of ICT by teachers is positively correlated with students’ digital skills levels: if schools wish to best develop their students’ digital skills, they must invest in ICT training for teachers and support the integration of ICT into curricula” Source: Extract from UNICEF Digital Literacy Scoping Paper. Figure 6.2 Digital Skills Framework for ICT professions 145 Alignment with Country Development Strategy and Goals Digital skills are key in helping Sierra Leone participate in the 4IR era. A digitally competent workforce can help strengthen the foundational pillars: the installation of the digital infrastructure that is most relevant for Sierra Leone; the growth of dig- ital entrepreneurship (for example, incubators and e-commerce) that shapes digital industries; and the development and use of digital platforms and financial services (for example, e-signatures and digital payments). Moreover, a digitally competent workforce, comprising a large majority with basic digital skills and a critical mass of skilled personnel and advanced specialists, can help extend the application of digital tools and processes in a wide variety of sectors, such as informal service, agriculture, energy, transportation, health, and education, to name a few (Sajitha and Koji 2019).76 Besides, it has been shown that 65 percent of current elementary school students will work in jobs that do not exist now (WEF 2016). According to the WEF on future of jobs in 2018,77 54 percent of all employees will require significant upskilling by 2022. New jobs will demand a combination of three different kinds of skills: fundamental skills, social skills, and digital skills. Most importantly, a new study published by the International Finance Corporation (IFC) in 201978 has shown that there will be 230 million “digital jobs” in Sub- Saharan Africa by 2030. This will translate to nearly 650 million training opportunities by 2030, including required retraining. The drivers of demand for digital skills vary across sectors and in the formal and informal economy. Digital technology allows farmers to access better information, including from the government, which can improve agricultural productivity that is crucial for Sierra Leone’s growth opportunities. Education is at the heart of the government’s medium-term NDP 2019–2023. In May 2018, the current administration came to power. The new government is guided by 146 five core principles: disciplined leadership, national integration, efficiency, profes- sionalism, and delivery. The NDP outlines eight strategic priorities: (a) education for development, (b) health, (c) water, (d) macroeconomic management, (e) energy, (f) agriculture, (g) tackling corruption, and (h) security. Specifically, the NDP highlights the importance of education in enhancing human capital development and facilitat- ing the transformation of the country. Many measures are being developed and are currently under way to address each of these priority areas. The GoSL has set ambitious targets in the various policy programs to promote gen- eral education skills development and build a digital economy. By 2030, the GoSL aims to ensure that all youth and a substantial proportion of youth, both men and women, achieve literacy and numeracy. For example, the GoSL, through the Min- istry of Basic and Senior Secondary Education (MBSSE) and Ministry of Technical and Higher Education (MTHE), in the current medium-term NDPs aims to increase the literacy rates among those ages 10–35 years from 57.4 percent to 70 percent. The current government has undertaken several initiatives to promote digital skills and bridge the skills gaps (including at various levels, regions, and population segments) and transform the country into a technology and innovation nation. The government has ramped up efforts to boost skills development in STEM courses in educational intuitions and has rolled out scholarship programs in the form of free tuition fees for admission into STEM courses tertiary institutions (GoSL 2019). On the basis of review of the various policy programs and discussions with some of the relevant players, it is apparent that efforts to boost skills development have been fairly limited to mostly infrastructure development such as access to the internet and, to an even more limit- ed extent, the provision of computers. 147 DIAGNOSTIC FINDINGS Current State of Digital Skills Policy, Governance, and Regulatory Context Pillar 3 of the NTDR (human capacity, digital skills, and knowledge) positions ed- ucation as the key to creating sustainable local ICT capacity and expertise. Policy action under this pillar will be directed toward using ICT to facilitate education and learning within the education system and to promote e-learning and e-education and the strengthening of ICT human capacity. Key measures in this pillar include pro- posals to create ICT centers of excellence, incubation hubs, and labs; develop digital skills; develop industry-based curriculum; and modernize ICT training facilities. Sierra Leone’s ICT policy arena is primarily led by the MIC.79 The MIC’s mandate also includes e-governance and policy uptake for a digital economy nationwide. An area that requires strong coordination is the overall policy direction and regulatory environment for digital skill development in Sierra Leone. The DSTI is increasingly implementing key innovation and digital projects to improve public service delivery in Sierra Leone. Situation Analysis of Digital Skills Levels Data are a key challenge when assessing the current levels of digital skills in Sierra Leone. The available data are fragmented across various sectors and sometimes unreli- able. The MIC has recently conducted a rapid diagnostic study to ascertain the number and current levels of digital skills professionals and digital skills jobs.80 The assessment, however, was limited to only government MDAs. There are plans to conduct a national survey that will capture data on the existing digital skills in the country, including in the private sector. The preliminary results and analysis from this rapid diagnostic study are expected to result in a comprehensive gap analysis of the existing skills, demand for digital skills, and the adequacy of supply of digital skills for all sectors of the economy. A digital and entrepreneurship ecosystem mapping and strengthening is ongoing. This mapping is led by the DSTI with a technical working group that includes stakeholders such as UNDP, UNICEF, and some private sector actors such as Innovation Axes and Sen- si Hub. This working group is one of the only institutional processes to engage the private sector in defining the digital skills curriculum in formal educational institutions. 148 The main challenges confronting Sierra Leone’s skills development system include (a) low basic cognitive skills obtained in general education; (b) low access to train- ing programs, particularly for women and rural populations; (c) a supply-driven approach with little or no input from employers’ informing the content of training, curricula, and delivery; (d) inadequate resourcing resulting in poor quality and rel- evance of programs, duplication of courses, outdated curricula and equipment, and inadequate faculty/instructors; (e) a lack of reliable information on the performance of the system (M&E) and poor information regarding labor market outcomes of grad- uates; and (f) a fragmented and complex system for coordination and management of the system. Skills shortages are significant constraints to private sector development in Sierra Leone. The Doing Business report of 2013 cites an inadequately educated workforce among the most problematic factors in Sierra Leone for doing business, after access to financing, weak infrastructure, and corruption (World Bank 2013). Private sector stakeholders have difficulty finding ‘employable’ graduates, and there is an acute shortage of technicians, such as auto repairmen and welders; health professionals, including doctors, nurses, birth attendants, and other health workers; science and mathematics teachers; and those with skills in applied sciences, technology, and en- gineering (World Bank 2017b). A 2013 World Bank report on tertiary education in Si- erra Leone found a severe undersupply of skills in the applied sciences, technology, and engineering fields (World Bank 2013b). The level and type of digital skills in Sierra Leone range across several disciplines. As shown in Figure 6-1, results from the rapid diagnostic study of ICT professional in the public by the MIC show 70 percent of respondents indicated competence in digital infrastructure, with database and data science being the next common compe- tency domains among ICT professionals within the public sector. The study showed that the majority of ICT professionals with competence in networks and systems ad- ministration is unclear, the results in somewhat evenly shared by the area of interests or focus across ICT professionals in the public sector (see Figure 6-1). Skills development in Sierra Leone is largely supply driven with little or no input from employers in the design and delivery of skills development program. There is currently no formal mechanism to assess the demand for skills in key economic sectors. The 2013 World Bank report on tertiary education concluded that the links between higher education institution and employers were weak and often informal. Targets related to the relevance and quality of the training programs have not been formalized and institutions are not rewarded for improving the quality and relevance of their programs. Industry experience is not an important factor in forming the re- 149 Figure 6.3 cruitment of instructors, which is almost Competency Domain of ICT Professionals in entirely based on academic qualifications. Government Institutions and Parastatals 70.9% Demand for Digital Skills and Digital Jobs There are limited data available on the demand for digital skills in Sierra Leone. Some analyses indicate that employment 19.4% in occupations intensive in the use of ICT as the key sector demanding digital skills. Software Development Database and Data Science Additionally, occupations intensive in the Infrastructurre use of ICT will also require higher cogni- (Networkks and Systems Administration) Cyber Security tive and socio-emotional skills. Policy Planning and Research The new industries and services in the dig- Source: Internal survey report of ICT professionals in govern- ital economy will be the emerging sectors ment institutions and parastatals–MIC. for digital skills. The spread of digital tech- nologies in many traditional manufactur- ing and service sectors is likely to stimulate Figure 6.4 demand for digitally intensive occupations. Area of Interest/Focus of ICT Professionals in Government Institutions and Parastatals The ICT sector itself and emerging ICT-in- tensive sectors such as e-commerce, inter- net-enabled offshoring and online work, 35.9% 27.2% bioengineering, and so on will require a workforce with a range of digital compe- tences from intermediate to advanced and highly specialized levels. Moreover, de- 11.7% mand will also emerge from the traditional sectors which are increasingly using digital 19.4% technologies (such as agriculture, construc- Software Development tion, transportation and logistics, manufac- Database and Data Science turing, banking and finance, health, and Infrastructurre (Networkks and Systems Administration) government sectors), in which the different Cyber Security categories of occupations, ranging from Policy Planning and Research scientific to the professional, middle-level, and vocational occupations, will require Source: Internal survey report of ICT professionals in govern- new digital skills. Further, while the ICT/ ment institutions and parastatals–MIC. 150 ICT-intensive sectors are not in themselves labor-intensive, they generate low-skill and medium-skill jobs in services such as retail, food preparation, and cleaning.81 The informal sector has the most constrained demand yet the highest potential for impact. The demand for digital skills from the informal sector, especially agriculture and services, where a high proportion of people in Sierra Leone are employed, is likely to be constrained. This is because of high levels of income volatility, the pre- cariousness of employment, and high opportunity costs that reduce participation in training or skills upgrading. This may constrain the spread of digital technologies in these sectors. Yet, it is precisely in these labor-intensive sectors where relatively simple technologies such as mobile phones can help improve productivity in, for example, agriculture through better information on weather and prices as well as regular technical advice on operations. Small service providers—food sellers, tailors, and so on—can expand markets through the use of social media. The informal manu- facturing sector may also benefit from digital technologies such as 3D printing which allows for small scale and customizable tools. One of the biggest drivers of demand for digital skills in Sierra Leone is the public sec- tor with its ongoing efforts to improve service delivery through digital governance. Some estimates suggest the government might spend US$7 million annually over the next two years to drive its national digitization agenda. The government is currently im- plementing the governance digitization program, and there is a growing demand from many government agencies for domains such as telephone and ICT local services. Sev- eral government initiatives aimed at ensuring the provision of e-government applica- tion and services are key to improving productivity, efficiency, effectiveness, and good governance in all key sectors. The national digitization policy being championed by the MIC promises effective utilization and application of ICTs across multifaceted service delivery platforms and internal government operations to achieve the government’s New Direction policy goals. This includes the rollout of the Digital Government Initia- tive and the National Electronic System and rollout of the broadband connectivity and public information and communication management systems. On a digital economy and government, the plan proposes to improve access to ICTs, develop a critical mass of local ICT skills, and secure all networks and facilities in the country.82 Key government policy plans and initiatives expected to drive the demand for digital skills and jobs in Sierra Leone in the medium to long term include, but are not limited to, the following:  Implement government-wide shared systems and e-services between 2020 and 2026, implement a unified collaboration platform for all ministries and deploy by June 2021, and implement distributed document management by 2023 for MDAs and by extension to local government by 2025. 151  Roll out the IFMIS across all government MDAs and local governments.  Implement a Government Asset Management System by December 2021.  Deploy a government-wide secured email system by June 2021.  Design and deploy an open data portal for accountable governance by 2022.  Ensure all MDAs including local councils have an online presence with relevant information by 2023.  Design and deploy a e-government service Portal by 2024.  Upgrade the Business Registration System by June 2022.  Implement an e-Procurement System implemented by 2021.  Implement a National Civil Registration and Vital Statistics System by December 2025. The private sector in Sierra Leone similarly suffers from low proficiency levels of ICT skills and ICT jobs. Based on stakeholder discussions with private firms within the ICT industry, there seems to be a skills gap among ICT professionals in the coun- try. Such firms resort to recruiting staff with strong ICT skills from India and Kenya resulting in higher costs for these ICT firms as the current level of supply of ICT skills in country is mostly generalist skills. Supply of Digital Skills through Formal and Nonformal Education and Training Sierra Leone has made substantial progress in increasing access to education since the end of the civil war in 2004, especially among girls. The primary school comple- tion rate increased from 55 percent in 2004 to 75.4 percent in 2016 and is above the regional average (69 percent). Secondary school enrollment increases in the post-war period have been especially remarkable (a 50 percent increase in male enrollment and more than a 100 percent increase in female enrollment from 2010 to 2016). Com- pletion rates in junior senior secondary (JSS) and senior secondary (SS) increased from 26 percent and 11 percent in 2004 to 64.5 percent and 27.6 percent in 2016, re- spectively. Access also increased at the tertiary level with the number of students enrolled in public tertiary institutions increasing from 8,913 in 2000 to 31,103 in 2012. Notably, female enrollment increased sharply—the gender gap in enrollment has closed at the primary level and has been reduced substantially at the JSS level though it persists at the SSS and tertiary levels. This, in turn, has resulted in low levels of fe- male participation in the teaching workforce with only 30 percent of primary school, 15 percent of JSS, and 8 percent of SSS teachers being women. Education outcomes are among the lowest in the region. The UN’s Human Capi- tal Index (HCI) research found that a child born in Sierra Leone today can expect to complete 8.9 years of schooling by age 18 (out of a total of 12 years). However, the 152 learning-adjusted years (when the figure is adjusted for the quality of learning) are equivalent to 4.5 years.83 A 2014 Early Grade Reading Assessment (EGRA) found that 87 percent of grade 2 students could not read a single word. Learning outcomes are also low at the JSS and SSS levels. Learning assessments funded by the U.K. Department for International Development (DFID) in 2017 and 2018 show that student learning outcomes are lower than curriculum expectations—60 percent of junior secondary grade 2 students (JSS2) and 40 percent of senior secondary grade 2 students (SSS2) demonstrate English skills no higher than what would be expected at primary grade 6. In mathematics, the gap is even wider, with 70 percent of JSS2 pupils and 50 percent of SSS2 pupils showing skills no higher than what would be expected at primary grade 6. In public examinations, only 50 percent of Basic Education Certificate Examination (BECE)84 candidates received a pass in English or mathematics, while only 3.59 per- cent of West Africa Senior Secondary Certificate Examination (WASSCE) candidates obtained credit in any of the five subjects including English and mathematics (2016). Sierra Leone’s education system consists of a formal sector and a nonformal sector. The structure and levels of Sierra Leone formal education and training are broadly di- vided into basic and secondary education and technical and higher education. The ba- sic and secondary education levels include preprimary education, primary education, and secondary (both JSS and SS) education, while the technical and higher educational levels comprise universities, colleges, and TVET institutions. The formal education sec- tor is relatively small and comprises apprenticeship programs, nonformal educational programs, and nonformal training through Community Education Centers (CECs). Skills development in Sierra Leone is largely supply driven, with little to no input from employers in the design and delivery of skills development programs. There is currently no formal mechanism to assess the demands for skills in key economic sectors. The 2013 World Bank SABER85 Tertiary Education Report concluded that the links between higher education institutions and employers were weak and often in- formal. 86 For the most part, the government and other relevant stakeholders identify critical skills constraints based on ad hoc assessments. Industries and businesses have a limited role in defining strategic workforce development priorities. There are weak links between TVET institutions and businesses. Targets related to the relevance and quality of the training programs have not been formalized and institutions are not rewarded for improving the quality and relevance of their programs. The private sector’s role is limited to providing input regarding the design of the training pro- gram curricula and the upgrading of facilities on an informal basis (through ad hoc links). Industry experience is not an important factor in forming the recruitment of instructors, which is almost entirely premised on academic qualifications. Further, instructors receive little in-service professional development once they are hired. 153 Figure 6.5 Structure and Levels of Sierra Leone Education and Training Fomal Sector Non-fomal Sector National Diploma + Higher National Diploma National Training Certificate Bachelor | Master | PhD Bachelor Tertiary Education (SSS) Technical & Vocational University Polytechnic 4 Years Institute or Colleges WASSCE NVQ - National Vocational Qualification Apprenticeship Secondary Education (SSS) Senior Secondary Schools Technical & Vocational Institute 3 Years BECE Non-formal Education Programmes Middle Education (JSS) Vocational Centers Junior Secondary Schools 3 Years (Trade) VTC NPSE | National Primary School Examination Community Education Centers | CEC-A | CEC-B Primary Education Primary Schools TVET 6 Years General Education Source: Sierra Leone Skills Development Project World Bank 2018, page 10. Note: ND = National Diploma; HND = Higher National Diploma; NTC = National Training Certificate; TVI = Technical and Vocational Institute; NVQ =National Vocational Qualification; NPSE =National Prima- ry School Examination. 154 Digital Skills in the Technical and Higher Education Sector Current levels and quality of supply of digital skills in technical and higher educa- tion institutions remain low. Preliminary results from the 2019 UIS obtained from the MTHE show that the current number of students enrolled in ICT courses and the number of graduates, across all levels, still significantly lower when compared with the number of students in other programs/courses such as arts, business adminis- tration, and education, among others. Table 6.1 shows that only 9,184 students (7.1 percent of the total number of students enrolled) are currently enrolled in ICT cours- es across all levels in technical and higher educational institutions in the country. Of the total of 9,194 students, only 2,701 are female students, which is 2.1 percent of the total number of students currently enrolled in technical and higher education. About 70 percent of the total number of students enrolled in ICT programs are pursuing bachelor’s degrees or equivalent programs that last for at least four years. The small- er number of students in short-term (three years and below) ICT courses presents a critical challenge for the current efforts to train large numbers of graduates with the relevant digital skills to meet the immediate and medium-term demand of the mar- ket. There are, however, some promising signs with the significant spike in first-time entrant numbers for students in short-cycle tertiary for the number of new entrants and first-time new entrants by level of education and gender). The data do not capture new entrants in ICT and other STEM-related courses, and it might be helpful to have a breakdown of these new entrant figures and reasons behind the surge. 155 Table 6.1 Number of Students by Level of Education, Field, and Sex Students (Full- and part-time) Bachelor’s Master’s Doctoral Sex Fields of education Short-cycle tertiary or equivalent or equivalent or equivalent Total tertiary 01 Education 3,287 2,213 19 - 5,519 02 Arts and humanities 2,282 2,430 638 11 5,361 03 Social sciences, journalism and information 347 17,156 135 11 17,649 04 Business, administration and law 4,356 8,471 1,819 8 14,654 05 Natural sciences, mathematics and statistics 8 896 38 - 942 06 Information and communication technologies 1,908 4,575 - - 6,483 Males 07 Engineering, manufacturing and construction 7,265 135 - - 7,400 08 Agriculture, forestry, fisheries and veterinary 2,161 1,376 - - 3,537 09 Health and welfare 935 1,673 11 - 2,619 10 Services 506 135 32 - 673 Not known or unspecified 2,599 126 - - 2,725 Total: All fields of education 25,654 39,186 2,692 30 67,562 01 Education 4,130 1,073 - 4 5,207 02 Arts and humanities 9,823 1,793 338 - 11,954 03 Social sciences, journalism and information 293 15,578 45 - 15,916 04 Business, administration and law 2,895 8,014 1,275 - 12,184 05 Natural sciences, mathematics and statistics 4 251 4 4 263 06 Information and communication technologies 957 1,744 - - 2,701 Females 07 Engineering, manufacturing and construction 1,209 41 - - 1,250 08 Agriculture, forestry, fisheries and veterinary 2,006 836 4 - 2,846 09 Health and welfare 4,533 2,074 19 - 6,626 10 Services 753 221 13 - 987 Not known or unspecified 1,637 62 1 - 1,700 Total: All fields of education 28,240 31,687 1,699 8 61,634 01 Education 7,417 3,286 19 4 10,726 02 Arts and humanities 12,105 4,223 976 11 17,315 03 Social sciences, journalism and information 640 32,734 180 11 33,565 04 Business, administration and law 7,251 16,485 3,094 8 26,838 05 Natural sciences, mathematics and statistics 12 1,147 42 4 1,205 Males and females 06 Information and communication technologies 2,865 6,319 - - 9,184 07 Engineering, manufacturing and construction 8,474 176 - - 8,650 08 Agriculture, forestry, fisheries and veterinary 4,167 2,212 4 - 6,383 09 Health and welfare 5,468 3,747 30 - 9,245 10 Services 1,259 356 45 - 1,660 Not known or unspecified 4,236 188 1 - 4,425 Total: All fields of education 53,894 70,873 4,391 38 129,196 Source: Preliminary internal results from the 2019 UIS by the MTHE. 156 Table 6.2 Number of Graduates by the Level of Education, Field, and Gender Doctoral Graduates Short-cycle tertiary Bachelor’s or equivalent Master’s or equivalent or equivalent Total tertiary Of which: first degree Of which: first degree Sex Fields of education All programmes All programmes programmes All programmes programmes All programmes All programmes 01 Education 1,395 686 686 6 6 - 2,087 02 Arts and humanities 1,700 753 753 210 210 4 2,667 03 Social sciences, journalism and information 340 5,318 5,318 44 44 4 5,706 04 Business, administration and law 1,858 2,626 2,628 599 599 3 5,086 05 Natural sciences, mathematics and statistics 3 278 278 13 13 - 294 06 Information and communication technologies 1,727 1,418 1,418 - - - 3,145 Males 07 Engineering, manufacturing and construction 5,740 41 41 - - - 5,781 08 Agriculture, forestry, fisheries and veterinary 1,392 426 428 - - - 1,818 09 Health and welfare 527 518 518 4 4 - 1,049 10 Services 302 41 41 14 14 - 357 Not known or unspecified 340 8 8 - - - 348 Total: All fields of education 15,324 12,113 12,117 890 890 11 28,338 01 Education 1,561 332 332 - - 1 1,894 02 Arts and humanities 9,288 556 556 111 111 - 9,955 03 Social sciences, journalism and information 287 4,829 4,829 15 15 - 5,131 04 Business, administration and law 1,331 2,484 2,484 420 420 - 4,235 05 Natural sciences, mathematics and statistics 1 78 78 1 1 1 81 06 Information and communication technologies 957 540 540 - - - 1,497 Females 07 Engineering, manufacturing and construction 787 13 13 - - - 800 08 Agriculture, forestry, fisheries and veterinary 1,077 259 259 1 1 - 1,337 09 Health and welfare 1,783 642 642 6 6 - 2,431 10 Services 260 68 68 1 1 - 329 Not known or unspecified 520 4 4 - - - 524 Total: All fields of education 17,852 9,805 9,805 555 555 2 28,214 01 Education 2,956 1,018 1,018 6 6 1 3,981 02 Arts and humanities 10,988 1,309 1,309 321 321 4 12,622 03 Social sciences, journalism and information 627 10,147 10,147 59 59 4 10,837 04 Business, administration and law 3,189 5,110 5,112 1,019 1,019 3 9,321 05 Natural sciences, mathematics and statistics 4 356 356 14 14 1 375 Males and females 06 Information and communication technologies 2,684 1,958 1,958 - - - 4,642 07 Engineering, manufacturing and construction 6,527 54 54 - - - 6,581 08 Agriculture, forestry, fisheries and veterinary 2,469 685 687 1 1 - 3,155 09 Health and welfare 2,310 1,160 1,160 10 10 - 3,480 10 Services 562 109 109 15 15 - 686 Not known or unspecified 860 12 12 - - - 872 Total: All fields of education 33,176 21,918 21,922 1,445 1,445 13 56,552 Source: Preliminary internal results from the 2019 UIS by the MTHE. 157 The proportion of students in digital skills at the tertiary education level is low. Ta- ble 6-2 presents a similar picture of the number of graduates by level of education and gender, with students in ICT programs consisting of only 4,642 (8.2 percent) of the total number of all graduates. Of this total, only 1.497 (2 percent) are female stu- dents across all levels in the technical and higher education sector. The numbers are still low even after adding the number of ICT students to the number of students from other STEM-related courses such as mathematics and engineering and manufactur- ing and construction, currently at 19,039 (14 percent) and 11,598 (20.5 percent) for the number of students enrolled, respectively. The GoSL has set ICT and digital skills targets for technical and higher education as part of its Human Capital Development and Free Quality Education agenda for 2019–2023. The GoSL plans to use ICT through increased equitable access to qual- ity higher education that promotes research, innovation, and entrepreneurship for growth, stability, and national development. A critical component of the govern- ment’s strategy is to increase internet access and provide computers for pedagogi- cal purposes in technical and higher educational institutions (universities, colleges, and TVET institutions). Currently, internet access in tertiary and higher educational intuitions remains poor and unstable. By 2023, the government’s targets are to en- sure all public universities and tertiary institutions have stable internet facilities to boost research and teaching. While efforts to increase internet access by the GoSL is a laudable move, some observers and private sector representatives believe this is only the first step to build a workforce with the relevant skills to meet the demand of the businesses. Serious and concerted efforts from all stakeholders, including the private sector and development partners, are needed to develop digital skills training programs and expand the curriculum of technical and higher education to supply the 158 relevant digital skills (of both teachers and students) to meet current demands and as well future needs. There is no more an appropriate time than today to boost digital skills and ICT development in the formal education sector with the government’s fis- cal commitment to spend at least 20 percent of the state budget on education by 2023. A PPP between the GoSL and private providers is addressing some of the skills gaps. The emergence of some private colleges, TVET institutions, and universities such as Limkokwing University and BlueCrest College have provided a boost to the supply of digital skills, in terms of both the number of graduates and the range of specialized digital skills. Based on stakeholder interviews with employers, graduates from such institutions tend to have stronger digital skills than students from traditional univer- sities and colleges. Development partners are also key partners supporting skills development pro- grams at the technical and higher education levels, although digital skills have not been a priority focus. The main support relating to digital skills has been on infra- structure investments at the universities/TVET institutions. The World Bank is cur- rently supporting the Sierra Leone Skills Development Project87 aimed at supporting the TVET sector. The World Bank’s SDF is the first component of its ‘Skilling Up Sierra Leone’ program provided through the Sierra Leone Ministry of Planning and Econom- ic Development (MoPED). The SDF is currently funding the activities of TVET provid- ers in the formal and nonformal education sectors in Sierra Leone. These activities relate to systems strengthening of the TVET providers so they can provide demand-led skills that are relevant to Sierra Leone’s most attractive sectors. Furthermore, the SDF provides funding for private sector businesses offering apprenticeships, internships, and other means of skills development that lead to a better-qualified workforce. Dig- ital skills are an eligible focus area under the open window proposals. 159 Digital Skills in the Basic and Secondary Education Sector The MBSSE is increasing its efforts to support STEM for girls. The MBSSE’s STEM program supports females and students with disabilities. The objective of this policy program is to ensure equitable growth at the higher education level by providing more incentives for females and students with disabilities to complete secondary school and enroll in tertiary education. This policy was initiated following data from the ministry’s records that suggest that females continue to be severely underrep- resented in certain STEM-related courses at the tertiary level and the disabled are almost nonexistent in the university. The MBSSE is currently implementing this pol- icy through the provision of better-targeted financial support (scholarships/grants/ loans) for females in STEM (MEST 2018). The STEM program received much interests from women and the general public in science and technology. One such group is the STEM Women Sierra Leone initiative that was founded in 2016 (see Box 6-2). Box 6.2 How Female Scientists’ Collective Efforts Are Empowering Girls in Sierra Leone STEM Women Unites Women Scientists In Sierra Leone. STEM Women Sierra Leone was founded in April 2016 by Kumba Liliana Musa, a 27-year-old engineer from Freetown. Inspired by her father’s life-long commitment to women’s rights and frustrated by the lack of women in her field, Musa personally recruited dozens of local doctors, engineers, geologists, and others to help form STEM Women, the first organization of its kind in a country where a quarter of adolescents are out of school, according to UNESCO. In December, she was chosen to receive the Queen’s Young Leadership Award, which she will personally receive from the Queen later this year. As STEM Women continues to grow in Sierra Leone, the program plans to follow each girl through secondary school and on to college, with a university-level mentorship scheme currently in the works. At the heart of the TechWomen program is the aim to empower emerging female leaders who strive to make a difference in their communities. A 2015 fellow of Sierra Leone, Kumba Musa embodies this core objective, and following the 2015 TechWomen program, she founded STEM Women in April 2016. “I decided to establish STEM Women because I want to attract and retain more women in the STEM workforce in order to maximize innovation, creativity and competitiveness in the areas that are responsible for building communities and transforming nations,” said Kumba. Source: TechWomen 2016 (website) Stem Women Unite. 160 Digital Skills in the Nonformal Education Sector The nonformal education sector in Sierra Leone comprises apprenticeships, non- formal education programs, and CECs. Current structures and arrangements remain mostly informal and rely on ad hoc institutional process to develop training program. However, the government, in its current medium-term NDP (2019–2023), plans to set up and operationalize nonformal accelerated learning centers in every district to all out-of-school children over nine years of age in the district. The government has also committed to increase funding for nonformal and adult education and to increase the number of privately owned schools and learning centers, including the number of learning centers managed by churches, mosques, and NGOs in Sierra Le- one (GoSL 2018, 2019). These government initiatives present significant opportunities for development partners, NGOs, and the private sector to promote technical skills development, including digital skills in Sierra Leone. Such efforts will be particularly relevant in the context of the high number of dropouts at the primary and secondary education levels and will contribute toward bridging the regional or urban/rural edu- cational divide and boosting digital skills development across the country. As in the formal education sectors, most of the initiatives supported by organiza- tions and private firms have focused on employment promotion in the most critical sectors. This includes areas such as tailoring and hairdressing, home management and catering, masonry, refrigeration and air conditioning, metal, welding and fabri- cation, plumbing, agriculture, carpentry, and automotive. Table 6-3 presents some of the private sector initiatives to boosts technical skills and employment promotion that have been implemented in different sectors of the economy. There is much to benefit from if similar efforts from the private sector, NGOs and development part- ners are directed toward digital skills development in Sierra Leone. Table 6.3 Projects for Technical Skills Enhancement and Employment Promotion Name of Project Description Sierra Rutile Company LTD Sponsors Jackson and The project was established in 2010 through a joint venture between Sierra Rutile and Africare (an American Devon Anderson Technical Institute (JADA) NGO) to support and promote technical and vocational education in the country and to specifically fill some of the skills gaps in the mining sector. African Minerals Ltd (AML)–Talent Development African Minerals Ltd worked with the Ministry of Education, the Ministry of Mines and Mineral Resources, and the Programme University of Sierra Leone to promote middle- to higher-level technical education through its talent development program. Addax Bioenergy facilitates Farmer Field and Life The project trained 397 (19,000 beneficiaries from 42 villages in Addax operational areas). The training School for Training in Agriculture provided included skills training in agricultural production and farm management through its Farmer Development Program. London Mining and GIZ partner to provide quality London Mining Company (LMC) and GIZ cooperate with each other to improve employability and qualification TVET through the PPP approach. 161 Box 6.3 The 60 Million Girls Foundation After-school Use of Mobile Technologies in Sierra Makes Learning Fun  The 60 Million Girls Foundation completed in 2018 the pilot phase of its Mobile Learning Lab (MLL) pilot program for girls in Koinadugu District, offering primary school pupils of grades 4, 5, and 6, in five different communities, hours of learning per year at an annual operating cost of less than US$0.08 per student hour (including a solar charging system).  The MLL is based on self-directed learning, which personalizes education and mimics the way learning occurs outside of the classroom in the real world and throughout life. The children work at the MLL after school, and at their own pace, by connecting to whatever programs interest them or to subject areas where they need help.  The program’s aims were twofold: to provide quality education to children who otherwise would not be able to pay attention in school because of large class sizes, lagging teacher training, and limited access to traditional educational materials and to facilitate easy access to online learning materials through a simple, inexpensive, easily transportable device that does not require the internet.  The program was evaluated in December 2018 and it was found that grade 4, 5, and 6 students in rural northern Sierra Leone experienced significant increases in math and literacy outcomes compared to control groups following access to the MLL for even as little as two hours per week over 16 weeks.  Beyond the improvement in cognitive skills, there was considerable evidence of an increase in intrinsic motivation and self-confidence of all students, girls, and boys, as noted in high levels of attendance, more engaged learning in the classroom, more enthusiasm and classroom participation by students who had access to the MLL, and strong peer learning while using the MLL that spilt over into community activities. Source: 60 Million Girls Foundation 2018a, 2018b. Potential for scale-up for digital skills through edutainment. Digital Skills Develop- ment by Edutainment (SL) Limited is a small privately owned company using mobile phone technologies to support learning and digital skills development in Sierra Leone. Edutainment is one of several small technology start-ups incubated at one of Sierra Leone’s emerging incubation programs at the Innovation Axis. The start-up registered in 2016 is focused on providing academic and other content on a web portal and mobile app to make resources accessible and learning enjoyable. It does so by creating and aggregating contents on its mobile app to promote easy access to e-books, digitize text- books, audiobooks, and so on. The start-up is currently using preexisting knowledge, but it is working with schools to develop original content aligned with schools in online 162 Libraries. It is registering as an educational institution and is also seeking a partnership with Orange, which is part of the MNO’s flagship Social Venture Programme. The part- nership will allow Edutainment access to Orange’s data centers. Edutainment’s long- term target is SS schools and is currently building MVP and expects to have the Prince of Wales, Grammar School, and Bilingual School in the first cohort. The viability of the start-up’s revenue model and its ability to scale up still need further investigation. Its overreliance on the partnership with Orange, perhaps, could be balanced if it can seek partnerships elsewhere, such as with development institutions, which have been actively engaged in skills development in Sierra Leone. Both the Edutainment Mobile Phone Content Aggregation and the MLL by the Glob- al Partnership are promising great opportunities and learning for future initiatives geared toward integrating mobile technology into formal and nonformal school curricula. They both provide supplementary classroom learning beyond tradition- al classroom learning and promote quality education in the most remote environ- ments where there are shortages of teachers and overcrowded classes. The ongoing COVID-19 crisis presents the most important justification why educational institu- tions and the government should prioritize efforts in bringing education to the door- steps of students. Figure 6.6 Children Using Tablets during the Rollout of the 60 Million Girls MLL Program in November 2016 Source: Global Partnership for Education website. 163 DIGITAL SKILLS Recommendations and Next Steps The COVID-19 pandemic resulted in school closures in the country and the govern- ment initiated several actions including the immediate establishment of the Edu- cation Emergency Task Force (EET). Experience during the Ebola crisis helped the Government take immediate actions beginning with the closure of schools. One good example is an emergency radio education program which the MBSSE and the Teaching Service Commission have embarked on to allow children to continue learn- ing at home. The program provides daily programming based on the primary and sec- ondary school curricula in core academic subjects including mathematics, English, language, life skills, social studies, business management, and integrated science. Lessons are broadcasted five days per week in 30-minute increments and allow lis- teners to call in with questions at the end of each session. This radio program started on April 6, 2020, within one week after the closure of schools. During the Ebola crisis, similar lessons through the radio were provided with support of partners. The Gov- ernment called on the country’s best teachers to develop radio education programs and broadcast lessons in core subjects. The COVID-19 pandemic represents an important challenge and opportunity for digital skills within the education sector to support distance learning. The MBSSE is planning to provide distance learning opportunity through radio and television and digital literacy training and support to teachers. The initiatives undertaken by the GoSL in recent years at all levels of the education system provide opportunities for the development of digital skills. The following recommendations are provided to prepare Sierra Leone’s education system to seize all the opportunities that will be offered by the digital economy. R1. Enhancing connectivity for education institutions and prioritizing secondary schools, TVET institutions, and universities. The biggest constraint for the integra- tion of digital skills in the school and university programs is the lack of devices, con- nectivity to the internet, affordable pricing of services, and digital content. Govern- ment policy can encourage progress in each of these areas through a combination of regulatory reforms and investment programs, in partnership with the private sector. The government can explore options connecting the universities to the West Africa Regional Education Network (WACREN) an international education and research net- work that would allow universities to access online learning platforms, engage in col- laborative research, and use and exchange data and virtual tools. In the meantime, a 164 national education and research network could be established in the long term. This would allow universities to transform their curricula and teaching methods and ex- pand access. At the secondary school level, connectivity to the internet and providing devices and teaching-learning material with adequate support to teachers are critical for ensuring that young secondary school leavers have basic digital skills. Given the cost challenge in Sierra Leone, a financing option involving the use of Universal Ser- vice Funds to enable access to schools and universities should be a priority. R2. Ensuring that the curricula, teaching methods, and assessment are linked to digital skills. Basic education, particularly lower secondary education, curricula must include at least basic digital skills, while upper secondary, TVET, and higher education institutions must aim to teach intermediate digital skills to all students, irrespective of the course that they are enrolled in. Implementation of the curricula in schools and educational institutions requires investing in the training of teachers, equipment at the institution level, and ongoing technical support. In the absence of adequate technical competence in public institutions, PPPs for the delivery of digital skills training can be explored R3. Providing capacity building for the Ministries of Education, Skills Development, and Higher Education. The ministries that must design and implement new policies and regulatory structures often lack basic digital or information literacy skills. A tar- geted capacity-building program is required to enable these ministries and public agencies to carry out their tasks R4. Promoting capacity strengthening through formal and informal learning, ex- changes, study tours, twinning arrangements, and secondments where possible to ensure implementation of digital solutions for the government. This would also support rolling out digital education for the public sector, such as through academia and other public and private stakeholders. It would thus help develop digital skills to support increased technology adoption and innovation in both the public and private sectors, such as digital government and digital business skills, digital user skills, and digital specialist R5. Integrating the use of digital technologies in the delivery of education across all sectors and implementing existing policies to include a computer skills program in the curriculum. For primary schools, teachers and directors should be provided 165 with tablets and computers for teacher in-service training and head of school man- agement training as well as digitization of data collection in each prefecture. The pro- posed World Bank project Focusing Resources on Education (FREE), which is current- ly under preparation, will support teachers with tablets for teaching and monitoring school attendance and learning. Additionally, the annual schools census led by the MBSSE is fully digitized, having successfully delivered two annual censuses, and the government should continue this across all levels of education. In middle and high schools, digital skills in secondary education are currently taught through the computer science subject. However, this class is still theoretical and the MBSSE should explore a mechanism to obtain digital devices to support the teaching of basic digital skills in secondary education. The MBSSE should expand the existing schol- arship program to attract students into STEM courses in formal educational institutions. For the universities and TVET institutes, strengthen access to online resources and activate an online knowledge sharing system through massive open online courses (MOOCs) to meet the demand for lifelong education. Developing a digital competency framework. This would entail close coordination and collaboration with between the Ministry of Communications and Ministry of Ba- sic, Secondary Education and Ministry of Technical Higher Education on adapting a digital competency framework base on the examples of UNESCO/EU DigComp in the context of the national skills qualification framework. An important for establishing such a framework is the ability to against digital skills programs around the world. 166 167 168 CONCLUSION The Way Forward T he digital economy provides an unprecedented opportunity for Sierra Le- one to use digital technologies to transform itself and set a new path to in- clusive economic growth which benefits all its citizens. The government’s commitment and new policies to use science, technology, and innovation to underpin its NDPs and to transform Sierra Leone into an innovation and entrepre- neurship hub signal a new phase of sustainable economic development in line with regional and global trends. The recent launch of the NIDS (2019–2029) in November 2019, which has a philosophy of ‘Digitization for All’, highlights an ambitious gov- ernment strategy for comprehensive digital transformation and provides high-level aspirational philosophies and principles. The diagnostic findings in Sierra Leone confirm the potential as well as the commit- ment and efforts the country is making to leverage digital technologies for trans- formational growth and highlight the enormous challenges that Sierra Leone faces compared to regional peers. Significant efforts include liberalization of the telecom- munications market to allow competition in the provision of telecommunications infrastructure and extensive public investments in the national backbone network; rollout of key applications such as the IFMIS and PFM to improve the government’s capacity to effectively manage public resources; improved environment for mobile money transactions which is pushing banks to offer better online banking solutions to customers; launch of some incubation and acceleration programs, and increase in early-stage financing; and substantial progress in increasing access to education following the civil war, especially among girls. But more needs to be done if the country is going to leapfrog economic growth and ensure digital dividends accrue to all citizens. A more specific and in-depth imple- mentation plan on key changes for policy, legal, regulatory frameworks; institutional reforms; and organizational structures needs to be developed. And specific projects and programs need to be designed and rolled out to leverage the benefits of digital technology adoption across the government, businesses, and people in Sierra Leone. The report specifically highlights the need to address remaining gaps in digital infra- structure, develop a WoG approach to digital platforms, improve the enabling envi- ronment for private sector leadership in provision of entrepreneurship and financial services programs, and develop the requisite skills for a new economy. The DE4A (Sierra Leone) report provides strategic recommendations for each of the five pillars that the government needs to embark on to achieve its new growth objectives. A summary of the recommendations for each pillar is as follows: 169 Digital Infrastructure R1. Coordination of policy and strategy documents for development of digital economy R2. Further strengthening of the regulatory institution (NATCOM) to foster market competition R3. Revision of the licensing regime R4. Liberalization of the International Gateway R5. Improvement in the management of the UADF R6. Streamlining of the cybersecurity environment and development of dedicated law or legislative framework on cybersecurity/cybercrime Digital Platforms Precondition/highest priority/most urgent R1. Strengthen leadership and promote institutional and donor’s coordination for digital transformation R2. Design and implement a WoG ICT enterprise architecture to provide the foun- dation for digital transformation High priority/urgent R3. Create a trust environment for digital government R4. Establish and apply a shared platforms/services for government approach R5. Expedite the implementation of a national data center as a base for establish- ment of a hybrid government cloud to create a common virtual infrastructure for the public sector R6. Implement the interoperability framework (technological and regulatory) High priority/less urgent R7. Develop new or modernize existing core systems (back-office) in line with WoG ICT architecture and international good practices R8. Initiate a comprehensive plan to modernize government services to citizens and businesses R9. Strengthen digital capacity and skills Medium priority/less urgent R10. Boost the publication of open government data and promote data reuse 170 Digital Financial Services R1. Develop a DFS strategy, which includes national retail payments, to drive DFS development R2. Operationalize the NPC R3. Adopt consumer protection regulations with specifications on DFS R4. Establish consumer protection unit and build in-house capacity to promote consumer protection for all financial services, including DFS R5. Implement NRA reforms related to KYC requirements and DFS R6. Conduct an in-depth diagnostic on cybersecurity needs related to DFS R7. Adopt the amended NSA R8. Amend guidelines on agents R9. Adopt e-money issuer guidelines and rescind mobile money regulations in parallel R10. Adopt payment oversight regulations R11. Bolster BSL licensing capacity on DFS and with respect to DFS-related legal, regulatory, and oversight framework responsibilities R12. Implement national retail payment switch R13. Establish and operationalize national retail payment switch implementation committee R14. Undertake rural payment systems connectivity assessment R15. Establish modern credit registry R16. Update the collateral registry R17. Develop a secured transactions law R18. Revise the draft Borrowers and Lenders Act R19. Undertake a mapping of government payments R20. Establish connection between the MoF IFMIS and BSL EFT R21. Activate the ACH debit system R22. Digitize cash transfer programs with the aim of digitizing all government payments R23. Amend the legal and regulatory framework to facilitate the digital termination of remittances 171 Digital Entrepreneurship R1. Close gap in the existing legislative framework to support the expansion of dig- ital goods and services and manage emerging risk of expansion to consumers and entrepreneurs R2. Scale up regulatory sandboxes beyond fintech R3. Continue efforts to improve the business environment and reform incentives for start-ups R4. Prioritize investment readiness for entrepreneurs to lower transaction cost for investors and establish a viable pipeline R5. Establish Innovation Fund to stimulate early-stage finance to entrepreneurs R6. Safeguard assets of digital entrepreneurs R7. Promote entrepreneurship culture among Sierra Leone’s educated youth R8. Strengthen supply of quality business development providers with relevant products for digital entrepreneurs R9. Invest in networking assets and leverage international expertise R10. Establish physical spaces to support innovation R11. Boost supply of technical skills in the labor market R12. Promote uptake of digital goods and services R13. Support entrepreneurs with access to information and market intelligence. 172 Digital Skills R1. Enhance connectivity for education institutions, prioritizing secondary schools, TVET institutions, and universities R2. Ensure the curricula, teaching methods, and assessment are linked to digital skills R3. Provide capacity building for Ministries of Education, Skills Development, and Higher Education R4. Integrate the use of digital technologies in the delivery of education across all sectors and implement existing policies to include a computer skills program in the curriculum. Cross-cutting Issues  Ensuring that the digital economy is more inclusive  Supporting more agile and enabling regulation and policy  Streamlining institutional framework and coordination for the GoSL’s digital transformation agenda  Creating a trust environment  Increasing competition  Enhancing human capita  Strengthening collaboration among the key stakeholders (GoSL, private sector, academia, civil society, and development partners) 173 References 60 Million Girls Foundation. 2018a. Mobile Learning Lab Project – Sierra Leone. https://60mil- lionsdefilles.org/en/mobile-learning-lab-to-sierra-leone/. 60 Million Girls Foundation. 2018b. 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World Development Indicators. http://datatopics.worldbank.org/world-develop- ment-indicators/. World Economic Forum (WEF). Global Competitiveness Index. 175 176 Annex 1: List of Recommendations Action Responsible Agency Time Frame Priority Digital Infrastructure Ensuring that the digital economy is more inclusive. R5. Improvement in the management of the UADF UADF Medium to long High Supporting more agile and enabling regulation and policy R3. Revision of the licensing regime NATCOM Short High R6. Streamlining of the cybersecurity environment and development of dedicated law or legislative framework on cybersecurity/cybercrime MIC Medium to long High Streamlining institutional framework and coordination for the GoSL’s digital transformation agenda R2. Further strengthening of the regulatory institution (NATCOM) to foster market competition NATCOM Medium to long High R4. Liberalization of the international gateway NATCOM Short High Increasing competition R1. Coordination of Policy and Strategy Documents for development of Digital Economy MIC/DSTI Short to medium High Digital Platforms Ensuring that the digital economy is more inclusive R8. Initiate a comprehensive plan to modernize government services to citizens and businesses. MIC Medium High R10. Boost the publication of open government data and promote data reuse DSTI/Statistic SL Medium Medium Streamlining institutional framework and coordination for the GoSL’s digital transformation agenda R1-1. Strengthen leadership and promote institutional and donor’s coordination for digital transformation MIC/DSTI Short to medium High R2. Design and implement a WoG ICT enterprise architecture to provide the foundation for digital transformation MIC/GoSL Short to medium High R4. Establish and apply a shared platforms/services for government approach MIC Short High R5. Expedite the implementation of a national data center as a base for establishment of a hybrid government cloud to create a common virtual MIC Short High infrastructure for the public sector R6. Implement the interoperability framework (technological and regulatory) MIC Short High R7. Develop new or modernize existing core systems (back-office) in line with WoG ICT architecture and international good practices MIC Medium High Creating a trust environment R3. Create a trust environment for digital government MIC Long High Strengthening collaboration among the key stakeholders (GoSL, private sector, academia, civil society, and development partners) R1-2. Strengthen donor’s coordination for digital transformation MIC Short to medium High Action Responsible Agency Time Frame Priority Digital Financial Services Ensuring that the digital economy is more inclusive R12. Implement national retail payment switch BSL Short High R14. Undertake rural payment systems connectivity assessment BSL Short Medium R19. Undertake a mapping of government payments BSL Short High R21. Activate the ACH debit system BSL Short High R22. Digitize cash transfer programs with the aim of digitizing all government payments BSL and NaCSA Medium High Supporting more agile and enabling regulation and policy R1. Develop a DFS strategy, which includes national retail payments, to drive DFS development BSL Medium to long Low R3. Adopt consumer protection regulations with specifications on DFS BSL Medium Medium R5. Implement NRA reforms related to KYC requirements and DFS BSL Medium Medium R7. Adopt the amended National Payment Systems Act BSL Short High R8. Amend guidelines on agents BSL Short Medium R9. Adopt e-money issuer guidelines and rescind mobile money regulations in parallel BSL Short Medium R10. Adopt payment oversight regulations BSL Short Low to medium R17. Develop a secured transactions law BSL Long Low R18. Revise the draft Borrowers and Lenders Act BSL Long Low R21.R23. Amend the legal and regulatory framework to facilitate the digital termination of remittances BSL Short High Streamlining institutional framework and coordination for the GoSL’s digital transformation agenda R2. Operationalize the NPC BSL and MoF Medium Medium R13. Establish and operationalize national retail payment switch implementation committee BSL Short High R20. Establish connection between MoF IFMIS and BSL EFT BSL and MoF Short High Creating a trust environment R4. Establish consumer protection unit and build in-house capacity to promote consumer protection for all financial services, including DFS BSL Medium Medium R6. Conduct an in-depth diagnostic on cybersecurity needs related to DFS BSL Medium High R15. Establish modern credit registry BSL Long Medium R16. Update collateral registry BSL Medium Low Enhancing human capital R11. Bolster BSL licensing capacity on DFS and with respect to DFS-related legal, regulatory, and oversight framework responsibilities BSL Short to medium High 177 178 Action Responsible Agency Time Frame Priority Digital Entrepreneurship Ensuring that the digital economy is more inclusive R4. Prioritize investment readiness for entrepreneurs to lower transaction cost for investors and establish a viable pipeline MTI Short to medium High R12. Promote uptake of digital goods and services GoSL Short to medium High R13. Support entrepreneurs with access to information and market intelligence MTI and DSTI (Ecosystem Unit) Medium Supporting more agile and enabling regulation and policy R1. Close gap in the existing legislative framework to support the expansion of digital goods and services and manage emerging risk of expansion to MIC, MTI Short to medium High consumers and entrepreneurs R2. Scale up regulatory sandboxes beyond fintechs MTI and DSTI (Ecosystem Unit) Medium to long Creating a trust environment R6. Safeguard assets of digital entrepreneurs BSL/GoSL — High R8. Strengthen supply of quality business development providers with relevant products for digital entrepreneurs GoSL/Private Sector — R10. Establish physical spaces to support innovation MTI and DSTI (Ecosystem Unit) — High Increasing competition R3. Continue efforts to improve the business environment and reform incentives for start-ups GoSL Medium R5. Establish Innovation Fund to stimulate early-stage finance to entrepreneurs GoSL Enhancing human capital R7. Promote entrepreneurship culture among Sierra Leone’s educated youth MTHE Long R11. Boost supply of technical skills in the labor market MTHE Long Strengthening collaboration among the key stakeholders (GoSL, private sector, academia, civil society, and development partners) R9. Invest in networking assets and leverage international expertise Long Action Responsible Agency Time Frame Priority Digital Skills Ensuring that the digital economy is more inclusive R1. Enhance connectivity for education institutions, prioritizing secondary schools, TVET institutions, and universities MTHE and MIC Medium High Supporting more agile and enabling regulation and policy R4. Integrate the use of digital technologies in the delivery of education across all sectors and implement existing policies to include the computer skills MBSSE and MTHE Short- Medium High program in the curriculum Enhancing human capital R2. Ensure the curricula, teaching methods, and assessment are linked to digital skills MBSSE and MTHE Medium High R3. Provide capacity building for Ministries of Education, Skills Development, and Higher Education DSTI Medium to long High Copyright © 2020 International Bank for Reconstruction and Development / The World Bank. Some rights reserved. World Bank, 1818 H Street NW, Washington, DC 20433. Telephone: +1 202-473-1000; Internet: www.worldbank.org 179 Endnotes 1 All of the recommendations are found in the Chapter 7. 2 https://www.dsti.gov.sl/ 3 Connectivity includes mobile and fixed access networks, metro and backhaul networks, national backbone networks, and international connections. 4 Service-enabling infrastructure includes private or independent data centers and, increasingly, infra- structure-as-a-service and software-as-a-service cloud platforms. 5 Statistics Sierra Leone. https://www.statistics.sl/images/StatisticsSL/Documents/gdp/2017_gdp_analysis.pdf 6 The Implementation Completion and Results Report (ICR) for the West Africa Regional Communica- tion Infrastructure Project (WARCIP) Sierra Leone. 7 Mobile-cellular telephone subscriptions per 100 inhabitants indicator from the International Tele- communication Union (ITU), 2018 (Sierra Leone’s value was 88.47). 8 Percentage of individuals using the internet by the ITU, 2017 (Sierra Leone’s value was 9.00). 9 The majority of the network operators use fuel generators to support their masts. 10 The A4AI Affordability Index is calculated from Sub-indexes (Communications Infrastructure, and Access). https://a4ai.org/affordability-report/data/?_year=2019&indicator=INDEX. 11 This affordability threshold has been adopted by the UN. 12 https://www.speedtest.net/global-index 13 ITU. 14 GSMA Intelligence. 15 The Telecom Amendment Act in August 2009 bestowed NATCOM with the following additional func- tions: to foster and protect an efficient ICT market, to ensure efficient and fair competition among operators, to deliver mandatory specifications and approve technical equipment used by operators, to establish a suitable system for consumer complaints/feedback, and to promote infrastructure sharing (ducts, masts, and other installations). 16 The Telecom Amendment Act in March 2015 removed the exclusive ownership and operation of inter- nal gateways from Sierratel, liberalizing international services. 17 Includes Auditor Generals from Ghana, Kenya, and Tanzania. 18 https://www.itu.int/net4/itu-d/irt/#/about-tracker 19 TeleGeography. 180 20 Source: NDTR draft paper. 21 Broadband for Africa – Developing Backbone Communication Networks, WB 2010. 22 Launched in July 1, 2010. 23 The African Organization of English-speaking Supreme Audit Institutions (AFROSAI) in South Africa. 24 A sim box is a device used as part of a VoIP gateway installation. Fraudsters can install SIM cards of different mobile operators, allowing it to operate with several GSM gateways located in different countries and terminating international calls through local phone numbers in the respective country to make it appear as if the call is a local call. 25 GSM Association. 2019. Rethinking mobile taxation to improve connectivity. Available at bit.ly/2Ryu4HW 26 GSM Association. 2017. Taxing mobile connectivity in Sub-Saharan Africa: A review of mobile sector taxation and its impact on digital inclusion. Available at bit.ly/3iqgJfM 27 GSM Association. 2019. Digital ECOWAS: Pathways to investment, innovation and inclusion. Available at bit.ly/2TPKht2 28 Private sector platforms have not been much identified in Sierra Leone; however, some elements have been covered under Digital Entrepreneurship pillar (Chapter 5). 29 https://raic.gov.sl/index.php/ar/pages 30 G2G = Government to government. 31 According to the data from 2017. Update may be needed. 32 According to the data from 2017. 33 G2C = Government to citizen; G2B = Government to business. 34 G20, G20 High-level Principles for Digital Financial inclusion, p. 3. https://www.gpfi.org/sites/default/ files/documents/G20%20High%20Level%20Principles%20for%20Digital%20Financial%20Inclusion%20 -%20Full%20version-.pdf 35 For more info on key enablers of DFS development and success stories, please see World Bank, Digital Finan- cial Services, April 2020, http://pubdocs.worldbank.org/en/230281588169110691/Digital-Financial-Services.pdf. 36 P2P = Person to person; P2B = Person to business; B2P = Business to person; and B2B = Business to business. 37 UNCDF. https://www.uncdf.org/article/3635/four-fintechs-approved-to-enter-the-sierra-leone-sandbox-programme. 38 The shares have not been purchased by the community and are held by Apex Bank, which helps provide a vari- ety of services for the FSAs and community banks, including access to the RTGS and ACH payment systems. 181 39 World Bank, Doing Business, 2020. 40 Findex 2017. 41 Findex 2017. 42 Findex, 2017. 43 Ibid. 44 World Bank, Digital Financial Services, April 2020, http://pubdocs.worldbank.org/ en/230281588169110691/Digital-Financial-Services.pdf. 45 Findex 2017. 46 Findex 2017. 47 Findex 2017. 48 POS = Point of sale. 49 BSL, NSFI 2017–2020. http://www.bsl.gov.sl/SL%20FI%20Strategy%202017%20-%202020.pdf 50 See for example: Cyber Resilience for Financial Market Infrastructures, November 2019, http://pub- docs.worldbank.org/en/189821576699037673/FIGI-ECB-OperationalCyber-FinalWeb-12-13.pdf; ECB, Cyber Resilience Oversight Epectations for Financial Market Infrastructures, December 2018, https://www. ecb.europa.eu/paym/pdf/cons/cyberresilience/Cyber_resilience_oversight_expectations_for_financial_mar- ket_infrastructures.pdf; BIS, Guidance on Cyber Resilience for Financial Market infrastructures, June 2016, https://www.bis.org/cpmi/publ/d146.pdf 51 BSL. The Bank of Sierra Leone Act, 2019. http://www.bsl.gov.sl/Bank%20of%20Sierra%20Leone%20As- cent%202019.pdf 52 The draft e-payment regulations cover all e-money issuers engaging in CICO, e-money funds transfers, bulk transfers, bill payments, credit products, transfer between financial institution and mobile wallets, 53 BIS, Committee on Payment and Settlement Systems. Central Bank Oversight of Payment and Settle- ment Systems, May 2005. 54 Yet, financial institutions borrowers need to have transaction accounts to facilitate such interopera- bility, and thus customers of credit-only MFIs, including FSAs, will not be able to have these accounts benefit from interoperability. 55 The switch will be financed by the World Bank Financial Inclusion Project. 56 World Bank, Doing Business, 2020. 57 World Bank, migration and remittances data. 58 Jumia is one of Africa’s leading e-commerce ventures with operations in 13 African countries. Jumia Nigeria alone has over 10,000 SME vendors https://group.jumia.com/. Making history by being the first venture capital-backed investment to be listed on a major stock exchange—New York Stock Exchange (NYSE). Venture capital finance received from Goldman Sachs. While there are industry concerns about the future of the company, Jumia has trailblazed e-commerce in Africa. 59 https://www.dsti.gov.sl/about/ 60 To date both major incubation programs in Sierra Leone (Sensihub and Innovate SL) have directly invested in 8 digital enterprises and provided indirect support in the form of technical assistance to 30 digital enterprises. 61 Internet penetration rate improved from 2 percent of population in 2015 to 5 percent in 2019 (MIC). Falling price for smart phones—average cost of smart phone in Sierra Leone is US$40—is due to expansion of phone companies such as Techno and Itel in the market. 62 The findings in this section incorporate findings from an earlier assessment of the supply of ear- ly-stage finance in Sierra Leone as part of the Sierra Leone Economic Diversification Project. This initial assessment was done by Patrick McGinnis in 2019. 182 63 World Bank 2017a. 64 IMF Country Report 2016. 65 Given that VCPE funds in Sierra Leone often use debt structures rather than equity, the term VCPE as used in this report is inclusive of such strategies (although not of bank lending). 66 NGO = Nongovernmental Organization. 67 This include Sierra Leone Opportunities for Business Action (SOBA), Sierra Leone ‘Agcelerator’, Resil- ience Business Development Support, and Aurora Impact. 68 SOBA (2017), The State of Entrepreneurship. 69 TeleGeorgraphy Global Comms Database, December 2019. 70 Sierra Leone Enterprise Survey; World Bank 2017a. 71 UNCTAD, 2019, B2B e-Commerce Index https://unctad.org/en/PublicationsLibrary/tn_unctad_ict4d14_en.pdf 72 http://www.infodev.org/articles/evolution-mlab-innovating-and-iterating-help-south-african-entrepreneurs 73 United Nations Educational, Scientific, and Cultural Organization. 74 With respect to the digital skills that are required for all occupations (excluding the ICT professions), the diagnostic tool refers to varying digital skill “levels” that correspond to the proficiency levels in the UNESCO/EU framework. Digital skills encompass the 7 competence areas. In the broader liter- ature, sometimes conceptual distinctions are made between skills and competences. For instance, some of the literature characterizes skills as being inherently linked to tasks, while competencies include not only task-specific skills but also knowledge, abilities, attitudes and values. In this note, the terms “skills” and “competences” are used interchangeably. “Digital literacy” refers to the skills/ competences that are required for all citizens and workers, to distinguish them from the competenc- es that are required specifically in the ICT professions. 75 The targets in brackets refer to the those adopted in the Digital Economy for Africa Scorecard. 76 From the ‘Draft Digital Skills: Framework and Programs’. The draft was prepared by Sajitha Bashir with in- puts from Koji Miyamoto and using consultant reports indicated in the references. An earlier draft of this paper was submitted to the AU for its Digital Transformation Strategy for Africa–Annex on Digital Skills. 77 WEF, Accelerating Workforce Reskilling for the Fourth Industrial Revolution. 78 IFC 2019. 79 A digital governance readiness was conducted in 2009. See Open Data Readiness Assessment, Prepared for the GoSL (World Bank Group 2009). https://opendatatoolkit.worldbank.org/docs/odra/odra_sierra_leone.pdf. 80 Unpublished survey report from the MIC. 81 According to the World Bank’s World Development Report 2016, “Kenya’s mobile money service M-Pe- sa uses more than 80,000 agents … Hormuud Telecom—the largest operator in Somalia—employs 5,000 staff but supports 25,000 agents.” 82 According to the NDTR, the new policy will replace the 2009 National ICT Strategy that was developed by the MIC. 83 In the Harmonized Test Scores, Sierra Leone scores 315 on a scale where 625 represents advanced attainment and 300 minimum attainment. 84 Examination taken at the end of junior secondary school. It determines whether a student will be permitted to continue on to SS education. 85 SABER = Systems Approach for Better Education Results. 86 World Bank SABER in tertiary education. 2017. 87 World Bank. 2018. Sierra Leone Skills Development Project. 183 DIGITAL ECONOMY DIAGNOSTICS SIERRA LEONE