Small loans for Sierra Leonean market women and farmers
Microcredit in Sierra Leone relies on BRAC Microfinance, other institutions licensed by the Bank of Sierra Leone and a rural network of community banks and Financial Services Associations overseen by the Apex Bank, with group loans aimed mainly at women traders.
BRAC, Sierra Leone's largest microfinance network
Present since 2008, BRAC Microfinance Sierra Leone describes itself as the country's largest institution, with forty-two branches in twelve districts. Ninety-six per cent of its borrowers are women, served through group loans, small enterprise loans and agricultural credit.
Community banks and Financial Services Associations
The rural programme funded by IFAD created or strengthened seventeen community banks and fifty-nine Financial Services Associations. These institutions, owned locally by village shareholders, collect the savings of rural households and lend mainly to small businesses in their area.
The Apex Bank, umbrella of the rural network
Apex Bank Sierra Leone provides supervision, training and liquidity to the community banks and FSAs. It also channels funding from the government and donors, including IFAD, earmarked for rural and agricultural credit across the provinces of the country.
Credit-only and deposit-taking microfinance
The Bank of Sierra Leone distinguishes institutions that collect deposits from those lending only from their own funds or borrowings, which are subject to specific guidelines. Checking a lender's category tells you whether it is allowed to hold your savings.
The group loan as a social guarantee
Borrowers form a group whose members guarantee one another. Weekly meetings are used to repay and to save, and a single member falling behind often blocks a new loan for the whole group until the arrears have been cleared.
Market women in Freetown and Bo
Sellers of smoked fish, rice, palm oil or second-hand clothes make up the typical customer base. The loan pays for stock bought wholesale and is repaid from the week's sales, which explains why instalments fall due so frequently.
Agricultural microcredit in the districts
Some institutions offer loans timed to the harvest calendar for rice, cocoa or lowland vegetables. The farmer loan in Sierra Leone page describes these loans and public programmes such as Feed Salone that support farming households.
From BRAC to the bank: scaling up
After several cycles repaid on time, a Freetown trader can aim for a larger amount. The business loan in Sierra Leone page explains how registering the business and using the collateral registry make this step easier.
The cost of a microloan in leones
Microfinance rates are generally higher than bank rates because loans are small and closely monitored. Membership fees, compulsory blocked savings and credit insurance are often added to the interest, so it makes sense to ask for the total cost.
Microcredit in Nigeria
Nigeria has hundreds of licensed microfinance banks, including LAPO, which is also present in Sierra Leone. The microcredit in Nigeria page lets you compare the depth of that market with the smaller Sierra Leonean network.
Mobile money and remote repayments
In areas with coverage, Orange Money and Afrimoney let borrowers repay without travelling to the branch. This reduces the risks of carrying cash, but each transaction carries a fee that needs to be included in the borrower's budget from the start.
Checking a microlender's licence with the BSL
Before joining, it is wise to check that the institution appears in the Bank of Sierra Leone directory of authorised institutions. A fake microfinance outfit collects membership fees and then closes its offices, leaving members with nothing.
Getting a first microloan in Sierra Leone
- Find a licensed institution near your market or village, such as a BRAC branch or a community bank.
- Form or join a group of traders who know one another and accept a mutual guarantee.
- Attend the information sessions and build up the advance savings required by the institution.
- Present your business to the loan officer, who visits the stall or farm and assesses sales.
- Receive the loan, repay weekly at the meeting or by mobile money, and keep your receipts.
- Apply for a larger second cycle after repaying the first in full and on time.
What a microloan really costs in Sierra Leone
| Element | Observed practice | What makes the amount vary |
|---|---|---|
| Interest | Generally higher than at a bank | Institution, term, repayment frequency |
| Membership and processing fees | Paid in the first cycle | Institution's policy |
| Compulsory savings | Share of the loan blocked during the cycle | Programme rules |
| Credit insurance | Often included | Loan amount |
| Mobile repayment fees | Orange Money or Afrimoney | Operator's tariff |
What Sierra Leonean microlenders ask for
- National ID card with NIN or voter card
- Passport photos
- Proof of business: receipts for goods purchased, market card
- Guarantee commitment from group members
- Letter of recommendation from the neighbourhood or village head
Common missteps in Sierra Leonean microfinance
- Using a loan meant for stock to cover a family expense, then being unable to repay the following week.
- Borrowing from several institutions at once to repay one with another, until the business collapses.
- Joining a group with strangers whose late payments will block the next loans for every member.
- Paying membership fees to a so-called microfinance institution that does not appear in the BSL directory.
Lenders to contact
- Ecobank Sierra Leone: Sierra Leonean subsidiary of the Ecobank group, a commercial bank providing personal banking services and financial support to the private sector.
Questions about microloans in Sierra Leone
Does BRAC lend to men in Sierra Leone?
BRAC's group loan is reserved for women, but its small enterprise loans and agricultural credit can serve other profiles. The exact conditions can be checked at the nearest branch before you decide to apply.
Is a Financial Services Association a bank?
No. An FSA is a community financial institution owned by its members, which collects savings and lends locally. It belongs to the network overseen by the Apex Bank, which is separate from the commercial banks.
Can you get microcredit without a business?
Most institutions require an income-generating activity, however modest. Someone without one often starts by saving in a group or village association before applying for a loan from a licensed lender.
What happens if a group member does not repay?
The other members are generally called on to cover the missed instalment under the mutual guarantee. The group may then exclude the defaulting member, and the institution sometimes delays new loans for everyone.