Real Gross Domestic Product (GDP) growth increased to 15.2% in 2012 after expanding by 6% in 2011, due to the commencement of iron ore production, non-iron ore GDP growth was 5.3%. The latter was led by an expansion in agricultural production, services and construction, as spending, particularly on roads and the two large iron ore projects, continued at increased levels. The overall result in 2012 was significantly lower than expected mainly due to operational problems at the large Tonkolili iron ore mine. The International Monetary Fund (IMF) reports that Sierra Leone fell two percentage points from the 15% economic growth achieved in 2012 to 13% in 2013 -14. Real GDP growth for 2014 is forecast at 14%. The current account deficit of the balance of payments is projected to narrow to 10.5% of non-iron ore GDP (19.1% in 2013), while reserve coverage would improve to 3.4 months of imports.
Inflationary pressures declined in 2012 and prospects for 2013 are encouraging: Inflation eased steadily throughout the first half of 2012 reaching 12.5 per cent in June 2012. Factors that contributed to the decline included a tightening of government expenditure in the first half of 2012, moderation in the growth of the money supply particularly credit to the private sector which decelerated significantly, a stable exchange rate and removal of customs duties on petroleum products and resultant stability in retail fuel prices. Inflation moderated slightly over the second half of 2012 to 11.4 per cent (December 2012 on December 2011). The declining trend in inflation has continued in 2013 as the authorities are restraining fiscal policy, and monetary policy conditions have remained tight. The inflation rate (year-on-year) stood at 9.5% in July, which augurs well for the end-year target.
The 2012 fiscal position was worse than anticipated. The domestic primary deficit reached 3.8% of non-iron ore GDP, compared with 1.8% budgeted, because of expenditure overruns. While revenue collection was slightly higher than expected, expenditure was well above appropriation levels, mostly on account of spending related to the November elections, and the authorities’ continued efforts to scale-up infrastructure investment. The higher-than-budgeted deficit was partially financed with over-borrowing from the government securities market and an accumulation of unpaid bills at the end of the year.
The external position improved in 2012 and is expected to strengthen further in 2013. The current account deficit dropped from 45% of non-iron ore GDP in 2011 to 39.4% in 2012. The improvement reflects the sharp decline in investment-led imports related to iron ore projects, the commencement of iron ore export, and favorable terms of trade. Although the latter are expected to deteriorate in 2013, the current account deficit would narrow further on account of the expected strong export performance. Sierra Leone’s reserve coverage rose from 2.8 months of imports (excluding iron ore-related imports) in 2011 to 3.1 months in 2012. It is expected to stabilize around this level in 2013.
Monetary and banking sector developments were broadly satisfactory in 2012, as risks to financial sector stability appeared contained. Broad money (M2) grew by 23.1%, slightly faster than nominal non-iron ore GDP; and credit to the private sector expanded by 6.3%, down from 21.8% in 2011, partly reflecting the impact of enhanced banking supervision, and some crowding out from a sharp rise in government borrowing from the securities market in 2012. Financial soundness indicators show that banks are generally well capitalized, profitable, and in compliance with prudential regulations. They also point to an increase in nonperforming loans, partly due to the high level of government unpaid bills to the private sector at the end of 2012.
Furthermore, strong reforms aimed at reducing corruption, providing free health care and improving the decrepit transport, power and public health infrastructures top the list of the government’s priorities. As a result, the country is ranked as one of the world’s top reformers by the 2012 World Bank’s Doing Business index.
Youth unemployment is a challenging social problem in Sierra Leone. The country’s youth unemployment rate of 60% is amongst the highest in the West African sub-region. In the context of the second Poverty Reduction Strategy Paper (PRSP II) or Agenda for Change for 2008-2012, the government has implemented new legislation for youth-friendly initiatives that aim to provide an environment conducive to youth development, employment and empowerment. Youth employment remains a top priority in the third Poverty Reduction Strategy Paper (PRSP III) or Agenda for Prosperity.
Sierra Leone gained independence from Britain in 1961, under the premiership of Sir Milton Margai of the Sierra Leone People’s Party (SLPP). Sir Milton ruled the country until his death in 1964 and was succeeded by his younger brother, Sir Albert Margai.
Following multi-party elections in 1967, the SLPP narrowly lost power to the All Peoples Congress (APC) led by Siaka Stevens, but was prevented from becoming Prime Minister by a coup, on the day he was to be inaugurated. In 1978 a group of non-commissioned officers, staged a counter coup and invited Stevens to form a new government.
In 1971, the country became a republic with Siaka Stevens as president, and a year later popularly elected local councils were abolished. Steven’s APC regime introduced one-party rule in 1978, and he ruled the country until 1985 when he retired.
Siaka Stevens was succeeded by Joseph Momoh in 1985, and remained President until 1992, when he was overthrown one year into the country’s civil conflict. The National Provisional Ruling Council which had overthrown Momoh handed over power to Ahmed Tejan Kabbah in 1996, after multi-party elections. At the end of the war in 2002, Kabbah won a second and final five-year term. In 2004, popularly elected local councils were reinstated after an interregnum of 32 years.
On September 17, 2007, Ernest Bai Koroma of the APC was sworn in as President of Sierra Leone. The second set of local council elections took place in July 2008. The 2012 presidential and parliamentary elections were fiercely contested. The SLPP’s candidate retired Brigadier Julius Maada Bio, who as the incumbent’s main challenger pulled 37.4% of the votes. Koroma won 58.7% of the votes in the first ballot, thus preventing a run-off.
In the 50 years since Sierra Leone’s independence, the SLPP has ruled for a total of 16 years, from 1961 to 1967 and again from 1996 to 2007; while the APC has ruled for 31 years, from 1967 to 1992 and again from 2007 to 2013. Although various military regimes and interregnums ruled Sierra Leone for a total of five years, civilian rule, under either the APC or SLPP, accounts for about 90% of the country’s post-independence time span as of 2010.
Sierra Leone was one of the world’s poorest countries when the civil war began in 1991. In spite of its remarkable strides and reforms since the war ended in 2002, problems of poor infrastructure -- including roads and energy -- low capacity, youth unemployment, high maternal and infant mortality, widespread rural impoverishment, impact of the global economic downturns, and lapses in public financial management and governance still persist. There is also the daunting challenge of enhancing transparency in managing the country’s vast natural resources.
Through its Country Partnership Strategy (CPS), the Bank in Sierra Leone supported the country’s Agenda for Change which has phased into the Agenda for Prosperity. The current Agenda for Prosperity prioritizes economic diversification, managing natural resources , accelerating human development and other growth drivers; international competitiveness, labor and employment, social protection, governance and public sector reform and gender and women’s empowerment. The Bank supports policy reforms and macroeconomic management through budget support (provided in harmonization with other budget support donors), and in the areas of human development, infrastructure & productive sectors, and governance. The Bank is also focused on strengthening country systems, including support to decentralized services and public finance management and helping to build the demand for good governance.
Country Performance and Institutional Assessment rating has been 3.3 for the past three years, compared to 3.2 in 2009
Transparency International ranking, which measures perceived levels of public sector corruption, ranked Sierra Leone 134 out of 183 countries and territories in 2011, and 123 out of 178 in 2012. In 2013, Sierra Leone had the highest number of respondents admitting to having paid a bribe at 84%.
Doing Business data provides objective measures of business regulations and their enforcement. In 2013, Sierra Leone ranks 137 out of 183 countries on the "ease of doing business," up from 148 in 2012. The 2014 ranking is 142.
The United Nations' Human Development Index, which focuses on the challenge of sustainable and equitable progress, ranked Sierra Leone 180 out of 187 countries and territories based on 2011 data. In 2012, Sierra Leone moved up to 177 out 187 countries.
Health and nutrition outcomes were among the worst in the world: infant mortality rates were recorded at 160 per 1,000 live births in 2006, maternal mortality was at 1,077 per 100,000 live births in 2005, and the mortality rate for children under five was 271 per 1,000 in 2005. The incidence of tuberculosis is high, with about 628 cases per 100,000 people versus 495 cases for the region.
The reported incidence of malaria is high but declining, from a morbidity rate of 37.5 (2003) to 35.2 (2005). Sierra Leone has made rapid progress in measles immunization, with better than average results relative to the rest of Sub-Saharan Africa.
The HIV/AIDS prevalence continues to be low at 4.9% (2009) nationally. Ninety-one percent of children born to HIV-positive mothers are now negative (2009). The reported incidence of malaria is high but declining, from a morbidity rate of 37.5 in 2003 and 2004, to 35.2 in 2005, 35.0 in 2006, 35.1 in 2007, and 35.0 2008 and 2009.
Poverty is heavily concentrated in the rural and other urban areas outside Freetown. Revised estimates suggest that 66% of the population lived below the poverty line in 2004. But between 2011 and 2013, poverty decreased to 52.9%. The proportion below the poverty line in Freetown in 2003 and 2004 was estimated at 22%, compared to about 79% in the rural areas. In 2011, while rural poverty decreased to 66.1%, it increased to 28% in the Western Area
Underemployment still continues to be a problem. In 2006, three of every 10 men aged 20 to 24, were neither formally employed nor in school. The problem is especially acute in urban areas.
The distribution of public power in 2007 was limited mainly to Freetown in the Western Area, Bo in the South and Kenema in the East, with approximately 20 megawatts of actual output in the three cities. This translates into 30 kilohertz per capita versus a regional average of 541 kilohertz per capita. With the commissioning of the first phase of Bumbuna Hydroelectric Project in December 2009, power distribution in Freetown has improved and coverage has been extended to Makeni in the North. Nevertheless, the current power generation capacity remains highly inadequate to accommodate the country’s overall power demand. State-owned installed capacity totals 90MW approximately, of which 85% serve the Freetown Capital Western area, including the 50MW Bumbuna hydro plant.
The use of the electricity distribution network in Freetown area is severely constrained by insufficient transport capacity and frequent outages. Partial power supply remains available only in 4 District Headquarter towns out of 12 District Headquarter towns in total. In rural areas, where the bulk of the population resides, electricity access is practically non-existent. The mining sector primarily relies on captive generation to meet its large power needs. Non-mining customers are forced to resort to private diesel generators.
Also, paved, all-weather roads have improved slightly to 9.8% of the total in 2009.
Last Updated: Nov 01, 2013