The World Bank in Sierra Leone

Macroeconomic Context

Sierra Leone’s sustained economic growth has been constrained by (i) exposure to multi-dimensional exogenous shocks (economic, epidemic, climatic); (ii) fragile institutions; and (iii) limited fiscal space. Agriculture and mining account for two-thirds of all economic output. Since the 2010s, the economy has been affected by back-to-back crises, interspersed with periods of short-lived recovery: the Ebola epidemic (2014-16), the collapse in global commodity prices (2015-16), the mudslide in Freetown (2017), the COVID-19 pandemic (2020), and the implications of the war in Ukraine (March 2022 onwards).

Recent Developments: During 2021, the economy grew by 4.1%, supported by a recovery in agriculture, mining and private consumption demand. During 2022, headline inflation accelerated to a decade-high of 30% (year-on-year) by July, compared to an average of 12% during 2021. High food and fuel inflation has had significant social impacts. According to the World Food Programme (2022), about 73% of Sierra Leoneans are food-insecure. Using the 2017 PPPs (at $2.15/day), the poverty rate is estimated to have increased during the pandemic in early 2020. Fiscal pressures have intensified. In response to COVID-19, the deficit rose from 3.1% of GDP in 2019 to average 6.2% of GDP during 2020-21. During 2022, inflationary pressures have prompted authorities to increase energy subsidies and cash transfers to vulnerable households, slowing the planned fiscal consolidation.

Outlook: A nascent economic recovery was disrupted in 2022 by a net negative terms-of-trade shock with the onset of the war in Ukraine and the rise in global food and fuel prices (only partially mitigated by higher prices for key exports). The increase in fuel prices also resulted in pervasive power outages. GDP growth is now projected at 3.6% during 2022, down from 5% projected at the end of 2021. It will be supported by: (i) resumption of iron-ore mining at Marampa and Tonkolili, for the first time since Ebola; and (ii) a gradual recovery in consumption demand. However, supply chain disruptions and inflationary pressures caused by the war in Ukraine will dampen investments and slow the recovery in private consumption, prolonging the overall economic recovery. Over the medium-term, GDP growth is expected to average 4%, but remain below the long-term average of 4.3%, reflecting economic scarring from repeated shocks.

Risks and Challenges: Accelerating inflation and intensifying fiscal pressures pose significant risks to the medium-term economic outlook. Risks of social instability have also risen as witnessed during the violent riots in August 2022, which left 27 people dead (including security personnel). Besides the continued global spillovers from the war in Ukraine, the main risks to the outlook stem from rising public discontent and uncertainties associated with the upcoming general elections. Any aggravation of the negative terms-of-trade shock could destabilize inflation and cause further public expenditure overruns. Higher food inflation would hurt the poor disproportionately since they tend to spend a higher share of their budget on food. Rising inflation can further spur public discontent and rioting, which could hamper the authorities’ appetite for reforms ahead of the general elections in mid-2023, resulting in populist policies.

Political Context

Sierra Leone holds Presidential, Parliamentary, and Local Council elections on June 24, 2023. The Electoral Commission announced that the upcoming elections will be conducted under the District Block Proportional Representation (PR) System as opposed to the Constituency-based First-Past-the-Post System used since 2007. The main opposition, All People’s Congress (APC), has challenged the legality of the PR System in the Court, and the laying of the Constitutional Instruments on November 23 resulted to a violent confrontation between the opposition and ruling party members in Parliament. Meanwhile, the ruling Sierra Leone People’s Party (SLPP) has endorsed the current President Julius Maada Bio as the party’s presidential candidate for 2023. The main opposition APC and other registered political parties are yet to decide on their flag bearers.

Development Challenges

Until the outbreak of Ebola in 2014, Sierra Leone was seeking to attain middle-income status by 2035, but the country still carries its post-conflict attributes of high youth unemployment, corruption, and weak governance. The country continues to face the daunting challenge of enhancing transparency in managing its natural resources and creating fiscal space for development. Problems of weak infrastructure and widespread rural and urban impoverishment persist despite remarkable strides and reforms.

Last Updated: Oct 20, 2022

The Country Partnership Framework (CPF FY21-FY26), approved in May 2020, is strongly aligned with the government’s National Development Plan, which emphasizes human capital development and economic diversification. It has three focus areas: (i) sustainable growth and accountable governance; (ii) human capital acceleration for inclusive growth; and (iii) economic diversification and competitiveness with resilience, and 3 crosscutting themes: governance, gender, and technology.

The World Bank portfolio stands at $1.021.99 billion, covering 21 national projects with an amount of $842.42 million; 4 regional projects with $179.57 million; and Trust Funds worth $50.79 million. The Energy Sector constitutes the largest share of the portfolio (16%) followed by Health (12.7%), Urban, Resilient and Land (8.9%), and Social Protection and Jobs (8.5%).

International Finance Corporation (IFC)

IFC’s Sierra Leone Country Strategy FY20-FY24 outlines three critical focus areas to support Sierra Leone’s key sectors. These focus areas are 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: Oct 20, 2022

COVID-19 Response ($39.65 million): support has been streamlined through the COVID-19 Emergency Preparedness and Response Project ($34.1 million). COVID-19 vaccination started on March 15, 2021. To date, the Government has administered 4,956,371 doses with an absorption rate of 68% of the currently available vaccines, which has translated in 37.4% of the population being fully vaccinated.

Health Systems Development and Systems Support (HSDSS) Project ($15.50 million): HSDSSP was approved in June 2016 immediately after the 2014-2016 Ebola outbreak and expected to close in December 2022. The project significantly improved access to quality essential health services and enhanced the national emergency response capacity. 79% of pregnant women were attended to four or more times by health personnel during their antenatal care visits, and skilled personnel attended to 87% of births. The percentage of children (0-23 months) fully immunized increased to 75%, exceeding the 60% project-end target, and the average quality-of-care score was 36.50. The project also supported the training of 156 midwives through a graduate program and the construction of a modernized Comprehensive Emergency Obstetric and Newborn care facility in Jojoima, Kailahun district, to provide services for populations in remote communities. This facility will be an anchor (hub) under the new health project, Quality Essential Health Services and Systems Support (QEHSSSP).

Free Education Project ($50 million): The project aims to improve the management of the education system, teaching practices, and learning conditions in primary and secondary education. The project 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 project is supporting a series of important education sector programs and strengthening the institutional capacity in the country. Key support areas include, education sector planning and budgeting, school quality assurance, school catchment area planning, education data and management, annual school census, institutional reform, curriculum reform, national assessments, girls’ education, inclusive education, teacher professional development, and teacher management. The project also provides performance-based financing and school renovation grants to schools. To improve the teaching and learning environment, the project will build an additional 500 furnished classrooms by the end of the project. 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.

The Global Partnership for Education (GPE)-funded additional financing for COVID-19 Response ($6.85M) was added to the Free Education Project to support the government’s education emergency response and reduce learning losses. The main approach is to keep students safe and minimize learning losses. The project also supports communication and sensitization campaigns to prevent the spread of COVID-19, keep girls engaged in learning and out of pregnancy, and get children back to school. The project helped the government launch a National Policy on Radical Inclusion for all children in Sierra Leone.

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 planning decision-making 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 Program ($47 million): The World Bank is supporting the Government’s flagship Social Safety Net Program (SSNP) with $47 million. The program has benefited 109,000 extremely poor households, reaching an estimated 654,000 individuals with cash transfers, including beneficiaries covered under the Ebola period. 74% of the beneficiaries are women. Taking advantage of the systems built through the SSNP, the government was able to swiftly respond to the COVID-19 crisis by: (i) providing one-time Emergency Cash Transfers (ECT) to 65,000 vulnerable urban households; and (ii) expanding the SSNP cash transfers to 65,000 extremely poor households in CY 2021.

Productive Social Safety Net and Youth Employment (PSSNYE) Project ($40 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 will further scale up the SSN cash transfers to the extremely poor while providing a package of services to help them establish a foundation for income generation. For the youth, the project will support sustainable and green labor-intensive public works programs, support for youth-led entrepreneurship, and an information platform for youth employment.

Energy Sector ($207.65m): 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 $207.65 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 has facilitated the increase in marketed volumes by producer organizations to agribusinesses with the targets being surpassed (157% for rice, 123% for cocoa, 108% for maize, 113% for birds, and 128% for eggs), except for palm oil, which is at 93% of the target. The number of out-growers linked to project-supported agribusinesses has increased from 3,663 in 2017 to 59,424 by end of October 2022, and the volume of crops sold to agribusinesses by out-growers has exceeded 98,000 metric tonnes. So far, the project has supported the rehabilitation and maintenance of 271 kilometers of feeder roads and the construction of 192 culverts and 6 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 125,681, of which 54,392 (43.3%) are women. The project is supporting the Government’s food security intervention through the activation of the Contingency Emergency Response Component and its on-going activities. The project development objective is to promote smallholder commercialization by fostering business linkages between smallholder farmers and selected agribusiness firms and other commodity off-takers in Sierra Leone.

Last Updated: Oct 20, 2022

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: Oct 20, 2022