Sierra Leone Economic Outlook
- Sierra Leone is currently grappling with the after-effects of the Ebola crisis and the sustained decline in iron ore prices. Accordingly, GDP for 2015 is estimated to have contracted by more than one-fifth.
- Remedial actions and policies are needed to improve the indicators that may have been reversed by the Ebola Virus Disease (EVD) crisis, following positive strides in improved economic and political governance.
- Sierra Leone, with approximately 40% urban population is experiencing its urbanisation without industrialisation (manufacturing), which does not promote appropriate structural linkages and sustained transformation of the economy.
Sierra Leone is on the path to recovery following the effects of an 18-month Ebola outbreak and the sustained decline of iron ore prices. The Ebola outbreak affected the socio-economic livelihoods of the country, disrupting normal health care and education services, agricultural production and trade. The iron ore price decline affected macro-financial stability and reversed the country’s remarkable positive growth trajectory as economic growth declined from a buoyant 20.1% in 2013 to 4.6% in 2014 and thereafter contracted by 21.5% in 2015 according to the latest estimates. GDP in 2016 is expected to remain relatively unchanged and to rise moderately in 2017. Inflation, which was moderate in the first quarter of 2015, is now estimated at 9.9% for 2015 and is expected to hover around 10% in 2016 and 2017. The Bank of Sierra Leone (BSL) needs to be vigilant as regards second-round inflationary pressures resulting from the depreciation of the Leone and the bottoming out of crude oil prices. Fiscal space in Sierra Leone is very limited due to the historically low revenue to GDP ratio and higher government expenditure.
There have been significant gains in the Human Development Index (HDI) from 0.344 in 2005 to 0.413 in 2014 (an improvement of more than 20%), and this will most likely be reversed due to the impact of the EVD on health (i.e. life expectancy at birth), education (years of schooling) and standard of living (gross national income per capita). Having failed to achieve most Millennium Development Goals (MDGs) by 2015, government authorities and development partners on the ground are now aware of the pertinence and inseparability of the 17 Sustainable Development Goals (SDGs) which essentially means that development work should be across all sectors. Government needs to do more on poverty reduction using the new poverty-related data and information which will be generated by the population and housing census conducted in December 2015.
Sierra Leone has a population of about 6.3 million with approximately 39.1% living in urban areas (Freetown, Bo, Kenema, Makeni and other urban areas) in 2015 and the urbanisation rate is projected to reach 43.8% in 2030. Manufacturing is the “missing link” in Sierra Leone’s structural transformation as labour migrates from low productivity agricultural activities in the rural areas directly to low productivity services (informal jobs in the urban areas) without a transformative industrial sector.