25/05/2026
Small Businesses Battle to Survive Economic Hardship
By Sahr Ibrahim Komba
Small and medium-sized enterprises (SMEs), long regarded as the backbone of Sierra Leone’s economy, are facing mounting pressure from high borrowing costs, inflation, increased import expenses and rigid loan repayment structures, forcing many entrepreneurs out of business.
Business owners across various sectors say the current economic climate has made survival increasingly difficult, with many struggling to repay loans, clear imported goods at the ports, or maintain profitable operations amid rising operational costs.
For Madam Mariama, a food importer, access to capital remains essential to sustaining her business. However, she argues that high interest rates imposed on commercial loans have become a burden many traders can no longer bear.
“The increase in loan interest rates is too high and it has affected many businesses. Many of our colleagues have gone out of business because they were unable to fulfill their financial obligations to banks,” she explained.
According to her, import-dependent businesses face additional risks due to shipping delays and rising costs associated with clearing goods at the ports.
“Buying goods from countries like China or Germany requires significant capital. Most times, businesses depend on loans from banks regardless of the interest rates because there are limited alternatives,” she said.
She noted that importers often pay substantial sums in clearing costs, but when delays occur and containers remain uncleared, demurrage charges accumulate rapidly, increasing financial losses.
“Sometimes containers stay for months and businesses cannot clear them on time. Once demurrage charges start, costs rise further and, in some cases, food items spoil before reaching the market,” she stated.
Madam Mariama urged financial institutions to reconsider current lending conditions by reducing interest rates, lowering processing fees and introducing more flexible repayment arrangements for businesses experiencing genuine challenges.
“Banks are part of our business growth. When our businesses grow, banks also benefit. But when businesses collapse, banks lose opportunities too,” she argued.
She further called for repayment structures that reflect the realities facing local entrepreneurs, particularly those dependent on imports and vulnerable to market fluctuations.
Similar concerns were raised by businessman Komba Saffea, who deals in imported second-hand goods.
According to him, commercial activity has slowed significantly compared to previous years, with traders facing unprecedented increases in operational costs.
“Business has slowed down compared to five years ago. The cost of clearing containers has increased drastically and many business owners cannot afford to pay for their goods because prices have doubled or even tripled,” he explained.
He added that rising rental costs for stores in strategic commercial locations, coupled with increased transportation expenses, continue to reduce profit margins.
“Inflation has eaten into local businesses and many people are struggling to sustain operations or repay debts on time,” he said.
Economic pressures, including currency fluctuations and inflation, have significantly reduced purchasing power while increasing the cost of doing business across multiple sectors.
“Sometimes traders can spend days, weeks or even a month without selling a single item,” he added.
During discussions involving customers of a commercial bank, several entrepreneurs shared experiences highlighting the challenges of maintaining business growth despite access to financial support.
One business owner operating a retail enterprise recounted years of struggling with limited capital and slow growth despite being in operation for nearly eight years.
The entrepreneur praised the institution’s customer support services but acknowledged that sustaining expansion remains difficult under current market conditions.
“Business has been slow. Expectations are often high, but when profits do not come quickly, capital becomes affected,” the customer explained.
The entrepreneur also cited difficulties associated with importing goods from overseas markets, particularly from China, where attractive prices are often offset by shipping delays and cash flow challenges.
Madam Mariama reiterated concerns regarding prolonged shipping delays, noting that containers can sometimes remain uncleared for four to five months, worsening financial pressure on importers.
“When containers delay for four or five months, clearing them becomes difficult. We need flexible repayment periods and grace periods,” she appealed.
She encouraged financial institutions to create mechanisms that recognise temporary business setbacks rather than treating delayed repayments solely as loan defaults.
In an interview, Kadiatu Kamara, a vegetable trader who buys produce in the provinces and sells in Freetown, said her business has suffered significant losses due to rising inflation and high interest rates in the country.
She explained that increases in fuel prices have raised operational costs, making it more expensive to transport goods to markets. According to her, delays in accessing vehicles to transport produce have become a major challenge.
“Sometimes, by the time my vegetables reach the market, they have already gone bad,” she said.
Kamara noted that inadequate storage facilities remain another serious problem for vegetable sellers. She said the lack of reliable storage systems, coupled with unstable electricity supply, continues to negatively affect business operations.
She further explained that whenever fuel prices increase, transport operators often raise transportation fares or refuse to carry goods unless higher charges are paid.
“I have not been able to meet my financial obligations to the bank over the past two months,” she said emotionally.
She added that many of her colleagues are struggling with loan repayments, with some reportedly going into hiding due to their inability to fulfill financial obligations to banks, while others have completely shut down their businesses.
“I sometimes appeal to my customers to take my groceries on credit just to avoid losses,” she disclosed.
Kamara called on the government to engage commercial banks to reduce interest rates on loans for struggling small businesses, arguing that lower borrowing costs would help entrepreneurs survive current economic challenges.
Restaurant owner Mr. Caulker emphasized the need for stronger relationships between entrepreneurs and financial institutions, arguing that trust and open communication are essential for business sustainability.
“It’s about commitment and trust. If businesses face challenges, there should be room for discussion and understanding,” he said.
He commended some bank staff for maintaining responsive customer service and providing support to clients navigating difficult economic conditions.
Throughout the discussions, entrepreneurs consistently highlighted the need for stronger networking among local businesses, improved support systems and policies aimed at protecting domestic enterprises from economic shocks.
The experiences shared by business owners reflect broader concerns about Sierra Leone’s business environment, where inflation, expensive credit, rising import costs and rigid financing conditions continue to challenge enterprise growth.
Observers argue that without reforms aimed at reducing borrowing costs, improving access to affordable financing and creating more business-friendly repayment structures, many SMEs may continue to struggle or disappear entirely.
The Government of Sierra Leone has introduced several policies aimed at improving access to finance for small and medium enterprises (SMEs), including reducing the Monetary Policy Rate (MPR) to lower borrowing costs, upgrading the Collateral Registry to enable businesses to use movable assets as loan security, and implementing the National Strategy for Financial Inclusion (2022–2026). A key intervention was the Munafa Fund, launched in 2021, which provides low-interest loans to small businesses, women and youth entrepreneurs. Additional support through the Sierra Leone Economic Diversification Project (SLEDP) offers grants, technical assistance and credit guarantees intended to strengthen SME growth and promote financial inclusion.
However, the reality on the ground appears to tell a different story, as many business owners allege that these policies have yet to translate into meaningful relief for ordinary entrepreneurs. Despite government interventions, traders and small business operators continue to cite high borrowing costs, limited access to affordable financing and difficult business conditions, raising concerns about the effectiveness and reach of these initiatives.
For thousands of entrepreneurs, the issue extends beyond profitability. The survival of small businesses directly affects employment, household incomes and the broader resilience of Sierra Leone’s economy.
As pressure mounts, many business owners are calling for a more collaborative approach between banks, policymakers and entrepreneurs to ensure local enterprises remain viable in an increasingly difficult economic landscape.
