A UK-funded feasibility study has found that Sierra Leone’s diaspora remittance flows, worth approximately US$321 million in 2024, could potentially be coordinated with foreign currency needs of offshore investors to create more cost-effective foreign exchange (FX) hedges and help unlock local currency investment in the country.
The idea starts with a simple mismatch in currency flows. When Sierra Leoneans living overseas send money home, foreign currency is converted into leones. Investors providing foreign currency capital to projects in Sierra Leone need to make the opposite exchange at project maturity, converting leones back into foreign currency.
The proposed structure explores whether these two existing flows can be coordinated through the existing financial system, creating a source of more cost-effective FX protection for offshore investors without changing the amount ultimately received by remittance recipients.
Sustainabar FX Lab, a financial innovation platform developing new ways to unlock investment in emerging markets and developing economies, is exploring whether banks and other actors in the ecosystem could coordinate these flows. The proposed approach could create cost-effective FX hedges for investors to protect themselves against changes in the exchange rate and allow projects to have certainty about the amount due at maturity – all without reducing the amount received by families, adding to government debt or requiring new sources of money.
This protection matters because many investors provide funding in foreign currency to businesses and projects that generate revenues in leones. Movements in the exchange rate can affect the value of investor returns when converted back to foreign currency, but protection against these losses is often expensive or difficult to obtain in Sierra Leone. This need, together with the country’s significant diaspora remittance flows and growing number of potential investment opportunities, made Sierra Leone a strong location for the first pilot.
The feasibility assessment was funded through Invest Salone, a UK-funded private sector development programme. It examined whether the idea could work in Sierra Leone and found no significant barriers to piloting the process. An implementation consortium of ten organisations – consisting of banks, investors, lawyers and development partners – is now working together to move towards implementation.
The team is currently finalising the legal and financial design and securing the support needed to execute the first pilot transaction. Lessons from the pilot will be shared through an open-source framework so that other countries facing similar investment challenges can learn from Sierra Leone’s experience.
“Our findings give us the confidence to take the next step. Sierra Leone is a trailblazer in this work, and we are very excited to be working with our partners to take this from feasibility to the first trade globally. If successful, it could demonstrate how existing financial flows can be used in new ways to enable us to create a fairer financing system that works for all,” said Roopal Kanabar, founder of Sustainabar FX Lab.
Pooja Melwani, an Invest Salone consultant, said: “Sierra Leoneans living overseas send hundreds of millions of dollars home to help their families every year. This initiative explores whether those existing flows can also help overcome one of the biggest barriers to investment, without reducing the money families receive. The findings are encouraging, and the pilot will show whether the idea can work in practice and attract more investment to Sierra Leone.”
Sustainabar FX Lab will now work with Ecobank Sierra Leone, Invest Salone and other partners to complete the design. The aim is to carry out the first pilot transaction before the end of 2026.
