Despite having 14 commercial banks, 17 community banks, 50 microfinance institutions (MFIs), five of them deposit-taking, three Mobile Money Operators, and 59 Financial Services Associations (FSA), only 12.4 percent of adults in Sierra Leone have a bank account [1]. Again, the total number of persons with access to formal financial services, including mobile money, is 19.8 percent [2] . Most financial institutions are concentrated in the capital, Freetown, and secondary urban areas like Kenema and Bo, leaving most people in other parts of the country cut off from the financial system. Reasons include the high operating cost for institutions going into the rural and under-served areas of the country.

Over the past four years, the public and the private sector worked together to improve financial inclusion in Sierra Leone. Together with the UNCDF, the World Bank, FSDA, and other development partners, the financial inclusion secretariat of the Bank of Sierra Leone (BSL) reached a number of important objectives. Interventions include the issuance of agency banking guidelines by the Bank of Sierra Leone in January 2020 to enable more banks to extend their services to rural areas of the country. A consumer protection unit of the BSL was set up in 2018 to promote confidence, discipline, and harmony in the banking sector.

The Bank of Sierra Leone also published guidelines on tiered know-your-customer requirements in June 2020, a move that allows for flexible registration requirements, particularly for low-value accounts. The intervention has helped institutions reach out to the unbanked population and people living in rural areas with ID challenges. In fintech and innovation, there were fintech challenges and the establishment of a sandbox programme. Finally, to empower consumers, two national financial literacy campaigns were conducted during the period under review.

The National Strategy for Financial Inclusion (NSFI) 2017-2020 of Sierra Leone officially ended in December 2020. UNCDF in partnership with the Bank of Sierra Leone (BSL) conducted an evaluation of the NSFI to identify the achievements and challenges in the implementation of the strategy and offer recommendations for the design and implementation of a next strategy. The evaluation ended in July 2021, and subsequent to an earlier blog published on 7 July 2021, the findings and recommendations are summarized below.
The evaluation conducted by an independent consulting firm found that the NSFI was relevant to the development context of Sierra Leone. It conformed to other government development policies, including the National Medium Term Development Plan 2019–2023 and the National Agenda for Prosperity 2013 - 2018.

Six recommendations for the next NSFI
Firstly, stakeholders interviewed indicated that the strategy was overambitious and was not aligned with the resources and capacity of the Bank of Sierra Leone (BSL) to achieve it (i.e., limited budget and personnel). It is recommended that the size and capacity of the BSL team be increased to better implement activities in the following strategy (NSFI 2022-2026).

Secondly, the monitoring and evaluation framework of the NSFI was not implemented, as there was no system in place for collecting data. This finding lead to a recommendation about designing and developing monitoring and evaluation framework and a portal for data collection.

The onset of the COVID-19 pandemic in early 2020 also hampered the achievement of some of the outputs of the NSFI. For instance, software vendors could not travel during the pandemic, which slowed down the National Switch implementation. Financial literacy campaigns were also halted, and staff could not travel to communities to carry out trainings due to COVID-19 restriction measures. The evaluation team notes that there was no section in the NSFI that would address risks (such as pandemics) and give mitigation strategies. The recommendation is to add a section to the new NSFI to manage risks (such as pandemics) and provide mitigation strategies.

In key informant interviews, respondents mentioned that the strategy was not sufficiently oriented towards women and youth nor was data collected or disseminated on these aspects of financial inclusion. As a recommendation, gender and youth must be prioritized in the following strategy and the monitoring framework should be improved by disaggregating gender and youth indicators.

Strategically, support for financial sector associations (bankers association, microfinance institution (MFI) associations) was felt to be lacking. As a recommendation, strengthening apex institutions through capacity building must be high on the agenda in the next NSFI. Some stakeholders mentioned that capacity building and institutional strengthening of apex institutions is an important area as these organizations could play a key role in rallying their members around the NSFI initiatives and even act as effective and viable channels for support to various interventions.

Finally, it is recommended that the next strategy becomes a “living document” – updated periodically (every two years is ideal) by a group of stakeholders convened for this purpose (e.g., technical committee on financial inclusion).
The evaluation team noted barriers and constraints in financial inclusion that cannot be overcome only by BSL policies and regulations. It requires cooperation and intentional efforts from the government and other private sector players. Interventions could include digitizing payments for government services, including tax collections, passport requests, vehicle registration and driver’s license, customs duty, land registrations, and business registration. The government can also leverage UNCDF’s inclusive digital economy scorecard (IDES) to measure the inclusiveness of digital development in Sierra Leone. The IDES is a strategic policy tool that governments can use to help set their country’s digital transformation agenda.

1 World Bank 2018 Sierra Leone Financial Inclusion Project Fact Sheet
2 Patricia Laverley, Deputy Minister of Finance-14 Aug 2019