Freetown, 10th December 2025– State-owned enterprises (SOEs) in Sierra Leone continue to operate under severe financial strain, with more than 60 percent facing high deficits, low profitability, and tight liquidity that raise insolvency risks, according to the Sierra Leone Governance and Corruption Diagnostic 2025 by the International Monetary Fund (IMF).
A notable example is the Electricity Distribution and Supply Authority (EDSA), which has become heavily dependent on government subsidies due to a mismatch between its buying and selling tariffs and persistent technical and commercial losses. In 2022, EDSA received a subsidy of SLE 729.6 million, followed by an additional SLE 274.6 million in the first half of 2023. Despite this support, the utility still carried US$39 million in arrears as of June 2023.
The IMF report warns that such reliance on budgetary support significantly strains public finances, diverting critical funds away from essential services and infrastructure investments. It also creates opportunities for misuse of funds and corruption vulnerabilities, particularly in the settlement of accumulated arrears.
The Ministry of Finance attributes SOEs’ financial difficulties to several structural weaknesses, including: Quasi-fiscal operations- undertaken without adequate government reimbursement. Weak corporate governance frameworks and a lack of performance monitoring, the absence of effective price adjustment mechanisms, especially in energy SOEs, which fail to reflect current production costs and no clear dividend policy, limiting contributions from profitable SOEs such as state-owned banks.
These inefficiencies perpetuate a cycle of dependency on government bailouts, a situation the IMF describes as unsustainable in the long term.
“The Ministry of Finance estimates that over 60 percent of SOEs suffer from high deficits, low profitability, significant liabilities, tight liquidity, leading to insolvency risks. The root causes of these financial strains include undertaking quasi-fiscal operations without adequate government reimbursement, lack of performance monitoring frameworks and weak corporate governance structures, which further exacerbate inefficiencies.”
The continued reliance of SOEs on government support imposes additional fiscal pressures, undermining Sierra Leone’s ability to allocate resources to priority areas such as healthcare, education, and infrastructure. Without reforms, the IMF cautions, SOEs will remain a drain on public finances rather than contributors to national growth.
Addressing these challenges, the report stresses, is crucial for enhancing the efficiency and sustainability of SOEs. Strengthening governance, introducing cost-reflective pricing in energy, and establishing a dividend policy for profitable enterprises could help shift SOEs from being fiscal liabilities to assets that support Sierra Leone’s broader economic framework.
