How to get started as a lender in Sierra Leone

How do you start lending in a country where most people are still outside the formal financial system? In Sierra Leone, over 70% of the population are financially excluded. 

That means the majority of people don’t have access to bank accounts, loans, or digital payment options. This gap leaves many dependent on cash transactions, which come with risks and limitations.

Financial exclusion isn’t just a rural problem—it’s widespread across cities and villages. Access to financial services like savings, credit, and insurance can help people manage risks and invest in their future, but for many in Sierra Leone, these services remain out of reach.

The good news is that digital solutions, like mobile money, are slowly starting to make a difference, providing more people with basic financial tools.

If you’re looking to start lending in Sierra Leone, understanding this context is key. You’re stepping into an environment where traditional banking still hasn’t reached most people, but there’s a growing interest and demand for financial services.

Start with understanding the market like the back of your palm

The lending market in Sierra Leone is made up of several types of lenders, each serving different needs. You have traditional commercial banks, but they are often inaccessible for most people because of their strict requirements, like needing collateral and high documentation standards.

More accessible options are microfinance institutions (MFIs), which provide small loans to individuals and small businesses. These MFIs are crucial because they don’t require the kind of collateral that banks do and often use group guarantees instead. 

Community banks and financial services associations (FSAs) also play a role, particularly in rural areas, offering small-scale financial services to communities that commercial banks overlook.

Recently, mobile money has been a game-changer in Sierra Leone.

Companies like Orange Money and Africell Money are allowing people to apply for and receive loans directly on their phones. This is especially important in a country where many people are unbanked and live far from any bank branch. 

These mobile money services have made loans quicker and easier to access, particularly for those in rural areas. Digital lenders are also starting to use people’s phone data—like transaction history and mobile usage—to determine if they qualify for loans, which helps include those without formal credit histories.

Interest rates are generally high, reflecting the risks lenders face, especially in the informal sector. Microfinance institutions often charge interest rates between 20% and 35%, making borrowing costly. The high cost of loans is one reason why many people are still reluctant to borrow, despite the growing number of options. 

Collateral remains a challenge too—most traditional lenders need something valuable as security, which many Sierra Leoneans don’t have.

The regulatory landscape is managed mainly by the Bank of Sierra Leone, which oversees the licensing of all lenders to make sure they meet certain standards. For new lenders, getting a license means going through a detailed application process, including proving you have enough capital and that your team is qualified. 

There are also consumer protection regulations in place, requiring lenders to be transparent about rates and terms, but in practice, many borrowers—especially in rural areas—still don’t fully understand what they are signing up for.

A significant recent development is the effort to establish a more effective credit reference bureau. 

The Bank of Sierra Leone (BSL) is leading the initiative to enhance the country’s credit reference system.

In 2011, the BSL established the Credit Reference Bureau to collect and share credit information among financial institutions, aiming to improve the assessment of borrowers’ creditworthiness.

In 2018, Sierra Leone partnered with Kiva, the United Nations Capital Development Fund (UNCDF), and the United Nations Development Programme (UNDP) to modernize its Credit Reference Bureau. This collaboration introduced the Kiva Protocol, a national digital identification system using distributed ledger technology. The system ensures that every citizen has secure ownership of their personal data, with access to financial services.

Plus, in December 2022, the BSL mandated the use of the National Identity Number (NIN) for credit reference requests. This move aims to standardize identity verification across financial institutions, further strengthening the credit reporting framework.

Overall, the lending market in Sierra Leone is evolving, with more digital solutions helping reach those who were previously excluded. For anyone looking to start lending, the opportunity lies in using technology to provide loans efficiently and finding creative ways to manage the risks—especially in an environment where formal credit histories are rare, and financial literacy is low.

You need to know who the key regulators are 

Let’s break down who they are, what they do, and why they matter for anyone looking to start lending.

1. Bank of Sierra Leone (BSL)

The Bank of Sierra Leone is the main authority when it comes to anything financial in the country. They’re the ones who set the rules, make sure banks and lenders are doing things properly, and keep the financial system stable. If you want to lend money, you need to get a license from them.

Here’s what the BSL does:

• Licensing and regulation: They issue licenses to lenders and banks, making sure they meet all the necessary standards.
• Supervision: They keep an eye on financial institutions through regular checks to make sure everyone is following the rules.
• Policy development: They create policies to help expand financial services, like making it easier for people to access mobile banking.

2. National Microfinance Policy Unit

This unit falls under the Ministry of Finance and focuses on microfinance, which is basically small loans to people who don’t have access to traditional banks. They help support and grow microfinance institutions (MFIs) so more people can access credit.

What they do:

• Policy implementation: They come up with policies to make it easier for small lenders to start and grow.
• Capacity building: They provide support and training to microfinance institutions to help them do better.

3. Corporate Affairs Commission (CAC)

The Corporate Affairs Commission is responsible for registering companies, including banks and lenders. They make sure businesses operate legally and follow corporate governance rules.

Their main roles for lenders:

• Registration: Any lender must register with the CAC before starting operations.
• Governance: They ensure lenders keep good records, operate transparently, and follow all corporate laws.

4. Financial Intelligence Unit (FIU)

The Financial Intelligence Unit helps combat financial crimes like money laundering. They work closely with lenders to keep an eye on transactions and make sure everything is above board.

Their role includes:

• Monitoring transactions: They collect data on suspicious transactions and work with lenders to identify potential risks.
• Anti-Money Laundering (AML): They enforce regulations to prevent illegal activities within the financial system.

5. Ministry of Finance

The Ministry of Finance oversees the country’s overall financial policies. They work with the Bank of Sierra Leone and other bodies to make sure the financial sector is stable and growing.

Key responsibilities:

• Policy making: They create strategies that make the lending environment better for everyone.
• Economic oversight: They work on keeping the economy stable, which affects things like interest rates and loan availability.

6. Sierra Leone Association of Microfinance Institutions (SLAMFI)

SLAMFI is a group that represents microfinance providers. They act as a link between lenders and the government, helping to improve the industry.

Their key activities:

• Advocacy: They represent lenders when it comes to discussing policies with the government.
• Training and support: They provide resources and training to help microfinance institutions operate more effectively.

Don’t postpone getting a loan management system

Here is a list of notable companies and their offerings. We can only present them, choosing is up to you.

1. Finastra

Finastra is a global financial software company headquartered in London, UK, serving clients in over 130 countries. They provide a comprehensive suite of financial services solutions, including loan management systems.

Finastra’s Loan IQ is a market-leading corporate lending solution that automates and optimizes the lending process. It supports various loan types, including syndicated, commercial, consumer, and mortgage lending. Key features include workflow optimization, risk management, and seamless integration capabilities.

2. Hyland

Hyland is a US-based company specializing in content services and enterprise information management. They operate globally, providing solutions across various industries, including financial services.

Hyland’s OnBase platform offers loan origination and servicing solutions that streamline document management, automate workflows, and ensure compliance. Features include electronic document capture, process automation, and integration with core banking systems.

3. NEKLO

NEKLO is a US-based software development company with a global presence, offering custom software solutions tailored to clients’ needs.

NEKLO provides custom loan management software designed to handle various loan types, including personal, mortgage, and business loans. Their solutions offer flexibility in loan setup, automated customer communication, secure data storage, and integration with external financial institutions.

4. Lendsqr

Lendsqr is a global loan management software company focused on providing digital lending solutions across Africa. They aim to simplify the lending process and enhance financial inclusion.

Lendsqr offers an end-to-end loan management system that enables lenders to start, launch, and scale their loan businesses efficiently. Features include loan origination, decisioning, approval, disbursement, and collections. The platform supports multiple channels, including web, mobile, and USSD, and provides tools for customer onboarding, loan product management, and real-time automation.

You need money to get started, of course

For commercial banks or non-bank financial institutions (NBFIs) that wish to engage in lending, the capital requirement was significantly increased from SLL 800 million to SLL 15 billion. This higher amount is necessary due to the larger scale of operations, the broader range of services offered, and the need to maintain greater liquidity.

The exact capital requirement can vary depending on the type of lending activities you want to conduct, whether you’re offering personal loans, business loans, or focusing on microfinance. It’s also subject to updates from the Bank of Sierra Leone, which periodically reviews these requirements to align with economic changes.

Choose the right loan channels

Before you choose one loan channel, one important measure to watch is the Non-Performing Loan (NPL) ratio, which shows the percentage of loans that aren’t being paid back as agreed. As at the second quarter of 2024, the NPL ratio was 7.52%, a slight improvement from 8.28% earlier, meaning more borrowers are meeting their repayment obligations.

Mobile money services have become a popular method for providing loans. With a mobile phone penetration rate of 97.7% in 2021, nearly everyone has access to mobile services. Platforms like Orange Money and Africell Money allow people to receive and repay loans directly through their phones, making the process convenient, especially for those in remote areas. 

Web applications are another avenue for loan distribution. However, with internet penetration at 40.41% as of 2024, this channel primarily serves urban populations with reliable internet access. While web apps can streamline the loan application process, their reach is limited compared to mobile platforms.

Traditional bank branches continue to play a role, especially for individuals who prefer face-to-face interactions or lack access to digital platforms. Having physical branches can be resource-intensive but it can be useful for building trust and serving segments of the population less engaged with digital services.

To maintain a low NPL ratio, it’s important to implement robust credit assessment procedures across all channels. Using data analytics, especially in digital channels, can help with creditworthiness evaluations.

Educating borrowers on loan terms and repayment obligations is vital to prevent defaults, particularly when introducing new digital lending platforms.

Something to note: use loan channels that fit your target audience and your loan offers. A mismatch will only hurt business.

Create a marketing strategy

The goal of this marketing strategy is simple: make lending accessible to over 70% of people who currently have no access to financial services.

If you want to make a difference, you’ve got to meet people where they are—simple as that.

1. Meet people where they already are 

Most folks in Sierra Leone aren’t using banks because, frankly, banks are hard to reach. There aren’t enough branches, and too much paperwork keeps them away. But guess what almost everyone does have? A mobile phone—97.7% to be exact. That’s your ticket. Mobile money is how people manage their money—Orange Money and Africell Money are trusted household names.

If you’re looking to lend, make it mobile. Let people apply for, receive, and repay loans right from their phones. It’s about making it easy—no bank trips, no hassle. Hit them up where they’re comfortable—through SMS campaigns or radio ads that explain exactly how they can get a loan, what it’s for, and how it works.

2. Trust and local presence matter 

Not everyone is on the internet—only 40.41% have access. So, if you’re thinking of web-based loans, remember it’s mostly for urban folks. But even beyond the tech, people need trust. Trust comes from seeing real people. That’s why you need agents in the community—people who can answer questions, help with applications, and build relationships. Community events and partnerships with local leaders aren’t just good PR—they’re essential. They make lending tangible. It’s not just a text message or an ad; it’s someone they know saying, “This is real, and it can help you.”

3. Keep it simple—teach along the way 

A lot of people shy away from loans because they don’t get how they work. 

What is  interest? How do repayments actually happen? Your marketing has to teach. Keep it simple—break down the terms in local languages, use visuals if you can. 

Whether it’s a radio jingle, a leaflet, or a quick community session, people need to understand what they’re getting into and how it can help them. Education is an important part of getting people on board.

4. Real stories make real impact

Nobody wants to be the first to try something new—especially when it comes to money. That’s why sharing success stories is so powerful. It’s not just about telling people loans exist; it’s about showing what’s possible. Show how someone in their community used a small loan to expand their business, pay school fees, or manage a tough time. Put these stories on the radio, share them in community meetings, or post them on social media. If they see someone like them winning, they’ll believe they can too.

5. Partner up for reach There are groups already working in these communities—NGOs and development programs. Partner with them. They already have people’s trust and can help bridge the gap between you and those potential borrowers. They can help spread the word, educate, and even guide people through applications.

Get ready to lend in Sierra Leone

Clearly, if you’re serious about lending here, it’s not enough to have the funds. You need to understand the market, navigate the regulations, and pick the right tools to reach people effectively. 

Knowing the key regulators, building a loan management system that fits, and choosing the right loan channels—these aren’t optional steps. They’re essential if you want to thrive.