The World Bank in Sierra Leone

Macroeconomic Context

The economy continues to face significant challenges with high inflation, pressures on the currency, high risk of debt distress and inadequate growth to support poverty reduction. Despite some efforts in 2023, further corrective fiscal and monetary measures are urgently needed to address the high inflationary pressures and the worsened food security situation.

Recent Developments: In 2023, economic growth is estimated to have decelerated for the second consecutive year, with an estimated rate of 3.1%. This slowdown was primarily attributed to subdued aggregate demand and socio-political stability concerns. The economy grappled with persistent inflation which diminished households’ purchasing power and restrained both private consumption and investment. Despite these challenges, the mining sector emerged as a bright spot, driven by robust iron ore production and exports, alongside promising agricultural output.

Inflationary pressures remained high throughout the year, albeit showing some tentative signs of easing in the final quarter. Headline inflation averaged 47.6% for the year, making it the second highest in Africa after Sudan. Factors contributing to this included elevated food and fuel inflation, currency depreciation, and ongoing fiscal dominance. More than half the population faced moderate food insecurity, while over 70% of households allocated a substantial portion of their monthly expenditures to food, further straining social and political stability. In response, the Central Bank raised rates by a cumulative 525 basis points, reaching 22.25% by the end of 2023. However, the effectiveness of monetary policy was limited by shallow financial markets and continued fiscal dominance. Inflation began to show signs of moderation, declining from its peak of 54.6% in October to 43% by February 2024.

While the fiscal position saw marginal improvement in 2023, it fell short of annual targets. The fiscal deficit narrowed to nearly 8.4% of GDP, slightly better than 2022 but still higher than the budgeted target. Expenditures decreased compared to 2022, while domestic revenue saw a slight increase. Public debt is estimated to have declined to 87% of GDP from 93% in 2022.

Although there was a slight improvement in trade and current account balances, official reserves decreased to barely three months of import cover due to external debt servicing, currency interventions, and foreign currency payments to diplomatic missions overseas.

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Outlook: Growth is projected to recover slowly to 3.5% in 2024 against a backdrop of high inflation and continued fiscal consolidation, before converging to its long-term average of 4-4.5% in the medium-term. Inflation will be influenced by global commodity prices and monetary tightening and is expected to moderate to 15% by 2026. Upholding fiscal and monetary policy tightening is pivotal for macroeconomic stability.

Risks and Challenges: Sierra Leone’s economic outlook is subjected to several downside risks. Climate vulnerabilities and inflation could increase food insecurity and aggravate social tensions. The risk of political and social instability remains high, following disputed elections and attempted coup.

Political Context

Sierra Leone's recent history has been marred by a devastating civil war that ended in 2002. Despite significant economic growth in the years following, the country still grapples with the lingering impacts of the war, recurrent pandemics, and polarizing politics that hinder its progress. The majority of Sierra Leoneans are engaged in subsistence agriculture, yet the nation boasts abundant natural resources, including iron ore, diamonds, gold, bauxite, and rutile. Post-war governments have faced the formidable challenge of reconstructing the nation's physical and social infrastructure and promoting reconciliation.

On June 24, 2023, Sierra Leone conducted its sixth general election since the end of the civil war. The incumbent, President Julius Maada Bio of the Sierra Leone People’s Party (SLPP), secured re-election with 56% of the vote. The ruling party also gained a majority in Parliament with 81 seats, surpassing the opposition All People’s Congress (APC), which won 54 seats. Post-election tensions between the ruling and opposition parties posed a risk to national stability. However, intervention by regional organizations such as the African Union and ECOWAS, with support from the Commonwealth, led to the signing of the 'Agreement for National Unity' in October 2023. This accord has been pivotal in maintaining peace.

The government has recently unveiled the new Medium-Term National Development Plan (MTNDP) for 2024-2030. This strategic document outlines the administration's short-term and long-term objectives for Sierra Leone's development.

Last Updated: Apr 22, 2024

The Country Partnership Framework (CPF FY21-FY26), approved in May 2020, was strongly aligned with the government’s MTNDP 2019-2023, which emphasized human capital development and economic diversification, and the new MTNDP (2024-2030), which also prioritizes human capital development among its five key pillars, with food security as the main flagship. The CPF has 3 focus areas: (i) sustainable growth and accountable governance; (ii) human capital acceleration for inclusive growth; and (iii) economic diversification and competitiveness with resilience. It has three cross-cutting themes: governance, gender, and technology. The Performance and Learning Review (PLR) is under preparation to be delivered in FY24. The PLR will provide an opportunity to make adjustments to the country program in light of the government priorities, the new MTNDP and the changes to the country context.

The Sierra Leone portfolio comprises 19 projects with a combined total of $1.02 billion (16 national projects with a total of $780 million; and 3 regional projects with a total of $245 million). The portfolio has a focus on human capital, agriculture and agro-processing, energy and transport. Energy commitments stand at 22%, the largest share in the portfolio followed by Agriculture at 20%.

International Finance Corporation (IFC)

IFC’s Sierra Leone Country Strategy FY20-FY24 outlines three critical focus areas to support the country’s key sectors: agribusiness, energy, and mining. Each of these sectors will also benefit from the increased interventions to improve access to finance. The IFC Country Strategy also highlights the increasing role of the digital economy in improving efficiencies and productivity and is fully aligned with the World Bank Country Partnership Framework.

Multilateral Investment Guarantee Agency (MIGA)

MIGA recognizes the heightened perception of political risk and the prevailing fragilities alongside increased interest in foreign investment in the country. MIGA continues to actively explore opportunities to support private investment in Sierra Leone, especially in the power, telecoms, and commercial agriculture sectors, supporting independent power projects and off-grid power solutions. It aims to utilize the IDA Private Sector Window and any other transactions that may come to fruition.

Last Updated: Apr 22, 2024

Quality Essential Health Services and Systems Support Project (QEHSSSP) ($60 million - $40 million IDA and $20 million Global Financing Facility): The project's objective is to increase utilization and improve the quality of reproductive, maternal, newborn, child and adolescent health and nutrition services, especially for the poor and the vulnerable in five districts in Sierra Leone. The project was approved on December 9, 2021, and became effective on March 15, 2022. It is implementing the “Hub-and-Spoke” model in the five districts, with a particular focus on strengthening the service delivery network by integrating primary health care services into a robust referral network to ensure swift referral of patients from lower level of care (spokes) to a higher level of care (hubs). Access to quality essential health services has significantly improved and the national emergency referral system’s capacity has been enhanced across the project districts.

The project has procured and distributed about $3.5 million worth of medical supplies and drugs to selected health facilities in the project districts. In addition, 255 health care providers across the five districts received hands-on training and mentorship on Comprehensive Emergency Obstetric and Newborn Care (CEMONC), and Integrated Management of Neonatal and Childhood Illnesses (IMNCI). The project also focuses on strengthening national-level health systems. In terms of human resources, the project has supported the training of 523 health personnel in Health Management, and Monitoring and Evaluation courses from the University of Washington. A new curriculum in Health Economics has been developed and approved by the University of Sierra Leone to train health economists in Sierra Leone for the first time.

Free Education Project ($50 million) and Additional Financing ($35 million): The project aims to improve the management of the education system, teaching practices, and learning conditions in primary and secondary education. It is co-financed through a grant of $15.97 million equivalent from the European Union (EU); the Foreign, Commonwealth, and Development Office (FCDO) of the UK; and Irish Aid through a World Bank-administered Sierra Leone Education Multi-Donor Trust Fund (MDTF). The Second Additional Financing added $35 million ($20 million IDA grant and $15 million grant from Qatar Education Above All Foundation) for further strengthening the outcome, including the provision of services to out-of-school children and the implementation of the Zero Learning Poverty Plan. The grants will facilitate introduction of country-wide foundational learning program for about 800,000 pupils and facilitate 120,000 out-of-school children enrolments into formal and non-formal learning programs. The project is supporting a series of important education sector programs and strengthening the institutional capacity in the country. The project also provides performance-based financing and renovation grants to schools. To improve the teaching and learning environment, the project will build an additional 500 furnished classrooms by its end date. A total of 1.8 million students, 56,000 teachers, and school-management committee members in 7,900 primary and secondary schools have benefitted from the project.

Skills Development Project ($20 million): The project supports increased access to demand-led skills training and builds the foundations for a demand-led skills development system in Sierra Leone. A total of 18,277 students are benefiting from the training, out of which 7,565 are currently enrolled, and 10,712 have completed training as of August 2022. The project is supporting the government in building a demand-led skills development system through multiple activities. The Technical and Vocational Education and Training Management Information System (TVET MIS) is under development. It will become the main data platform for evidence-based policy and decision-making planning in the TVET sector. The project has further supported the development of the Competency-Based Education and Training (CBET) curriculum in the TVET, with curricula and standards developed for 25 occupations in various sectors, including agriculture, construction, fisheries, mining, and tourism.

Social Safety Net ($47 million): The Social Safety Net Project (SSN) closed in June 2023. The project benefited one million individuals with income support. The project closed satisfactorily, and the quality of the Implementation Completion and Results Report (ICR) was rated high by the World Bank’s Independent Evaluation Group (IEG).

Productive Social Safety Net and Youth Employment (PSSNYE) Project ($42 million): The PSSNYE Project, which became effective in June 2022, aims to improve access to social safety nets and income-generating opportunities for targeted beneficiaries. The project is scaling up the SSN cash transfers to the extremely poor while providing services to help them establish a foundation for income generation. For the youth, the project supports sustainable and green labor-intensive public works programs, support for youth-led entrepreneurship, and an information platform for youth employment. From the commencement of the project, 35,000 households have received income support through mobile money transfer.

Energy Sector ($228m): The World Bank is committed to a long-term engagement and has stepped up its support to energy with an integrated strategy focusing on: (i) ensuring regional energy trade with ECOWAS countries, (ii) ambitious targets for grid and off-grid energy access, (iii) turnaround of energy sector utilities to enable private sector investment in power generation. World Bank support in the energy sector totals $228 million currently, focusing on: (i) regional integration for the security of supply, (ii) financial turnaround and governance reforms in utility (EDSA), and (iii) energy access in rural areas.

Smallholder Commercialization and Agribusiness Development Project (SCADeP) and Additional Financing ($70m): The project development objective is to promote smallholder commercialization by fostering business linkages between smallholder farmers and agribusiness firms and other commodity off-takers in Sierra Leone.

The project has facilitated the increase in marketed volumes by producer organizations to agribusinesses with the targets being surpassed (170% for rice, 113% for maize, 131% for cocoa, 112% for oil palm, 129% for birds and 131% for eggs). So far, the project has supported the rehabilitation and maintenance of 310 kilometers of feeder roads and the construction of 408 culverts and 10 bridges, providing year-round access to farms, markets, schools and health centers for 77 communities in 10 districts. The number of direct project beneficiaries is 128,746 of which 56,290 (47%) are women. This has exceeded the project target of 40%. The project has supported the establishment of a cocoa processing facility, which is the first of its kind in Sierra Leone, with the capacity to process 4,000 metric tons of cocoa mass (liquor) annually. It is also supporting the Government’s food security intervention through the activation of the Contingency Emergency Response Component and its on-going activities.

West Africa Food Systems Resilience Program (FSRP - $135m): The project has so far reached 351,900 beneficiaries, which is 37.3% of the targeted number of overall project beneficiaries. Of the total beneficiaries reached to date, 54.95% are women. In particular, the project has made significant progress with the government’s school feeding programme through which 114,390 children (46.26% of whom are girls) across 584 pre-primary and primary schools have been reached with food and nutrition support. To boost local food production and reduce food insecurity, the project has supported 14,100 households to crop 13,609ha, benefiting about 84,600 people. The project, through the National Commission for Social Action (NaCSA), has reached 72,000 vulnerable food insecure beneficiaries (of which 75% are women) with cash transfers to enable them access food through the market. The project is providing support to the government to implement key production activities in its flagship Feed Salone program under the MTNDP.

Key DPO Achievements: The World Bank's support for structural reforms in Sierra Leone has been channeled through the Development Policy Operation (DPO), facilitating advancements across various sectors. Key landmark legislations enacted under this initiative include: 

• The Sierra Leone Mines and Minerals Act, 2022: This aims to promote transparency, accountability, and good governance in the mining industry.
• The Customary Land Rights Act, 2022: This Act seeks to reform customary land practices and promote equal rights and participation for men and women in land inheritance.
• Gender Equality and Women’s Empowerment Act, 2022: Designed to promote gender equality and empower women, fostering their active participation in socioeconomic development.
• Basic and Senior Secondary Education Act, 2023: Aims to improve access to education, particularly at the foundational and secondary levels, thereby enhancing human capital development and promoting inclusive growth.

These legislations collectively strive to address systemic challenges, promote social justice, and facilitate sustainable development by fostering transparency, inclusivity, and empowerment across various facets of society.

Last Updated: Apr 22, 2024

The World Bank continues to engage with its partners in various sectors at both policy and technical levels dialogue to promote development in the country. Key areas include governance, education, health, agriculture, private sector, energy, and extractives. Under the Multi-Donor Budget Support (MDBS) Framework involving the World Bank and other bilateral partners, coordination among members and with the government has improved over the past few years. The Bank also enjoys close collaboration with United Nations institutions and other development partners.

Last Updated: Apr 22, 2024