The World Bank in Sierra Leone

Outlook 

Sierra Leone’s economy contracted by 2% as the COVID-19 pandemic led to slowdown in all  sectors following global supply chain disruptions and lockdown measures. GDP per capita fell by 4% in 2020, reversing some of the recent gains in poverty reduction. Real GDP is expected to rebound by 4.2% in 2021, reflecting the easing of COVID-related restrictions as well as the implementation of the government’s fiscal response to the pandemic. On the demand side, growth will be driven by domestic demand (as external demand remains subdued), with private consumption and investment contributing the most.

Recent Developments 

Headline inflation fell to 8.9% in March 2021, before rising sharply to 10.2% by end June, reflecting an increase in food and fuel prices. Food inflation reached 17.1% in June 2021, well above its pre-COVID-19 level of 9.9%. The current account deficit is expected to improve by 1 percentage point to 16.4% of GDP in 2021, reflecting higher export receipts from the mining sector. In 2021H1, total public expenditure reached 12.3% of GDP while total revenue collection totaled 6.9% of GDP. The overall budget deficit is projected to decline to 3.8% of GDP in 2021. Public debt is estimated to decline to 72.9% of GDP in 2021, although the risk of external and overall debt distress was assessed as high in June 2021.

Risks and Challenges

Sierra Leone’s medium-term outlook is subject to downside risks. COVID-19 risks reflect limited access to vaccines including slow pace of the vaccination program and a resurgence of the pandemic. The main domestic macroeconomic risks are continued high public debt and domestic payment of arrears, slower than expected revenues, and rapid growth in monetary aggregates, including the associated inflationary risks and financial sector weaknesses.

Political Context

Sierra Leone held general elections in 2018, the most closely contested in its political history with the opposition Sierra Leone People’s Party winning by 0.6% after a second vote. The new Government launched the Medium-Term National Development Plan (MTNDP - 2019-2023), which maps out immediate and long-term development goals and commitment to transform from a fragile state into a stable democracy. Tensed political rivalry especially between the ruling Sierra Leone People’s Party and the main opposition All People’s Congress continues to characterize the complex nature of politics and this sometimes results to violent confrontations. The setting up of the Commissions of Inquiry to investigate the governance activities of the past administration, the annulment by the High Court of the election of 10 opposition MPs in 2019, and the trial of some senior opposition members for various offenses, added to the political tension. A Peace and National Cohesion Conference was convened in May 2019 to help foster national unity, and Parliament in December 2020 passed into law the Independent Commission for Peace and National Cohesion. The Government recently repealed the draconian Part 5 of the Public Order Act of 1965 that criminalized libel, while the President has also signed into law the abolition of the death penalty.

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 poor infrastructure and widespread rural and urban impoverishment persist despite remarkable strides and reforms.

Last Updated: Oct 27, 2021

Sierra Leone’s new Country Partnership Framework (CPF) covers the period FY21-FY26. It presents a unique opportunity to support the government’s vision. The structure of the CPF is around three focus areas: (i) Human Capital Acceleration, (ii) Economic Diversification and Competitiveness, and (iii) Governance, Institutions and Resilience. This is consistent with the government’s Medium-Term National Development Plan launched on February 28, 2019. Consultations with various stakeholders including CSOs, private sector, central and local government, Parliament, development partners, and media were undertaken in different parts of the country.

The World Bank portfolio stands at $882.53 million, covering 17 national projects with an amount of $600.23 million; regional with $245.6 million; and Trust Funds worth $36.7 million. The Health, and Energy and Extractives sectors constitute the largest share of the portfolio (27% each); followed by Governance (17%); and Social Protection; Macroeconomics, Trade and Investment; and Agriculture (7% each).

International Finance Corporation (IFC)

IFC’s Country Strategy FY20-FY24 outlines three critical focus areas that will support Sierra Leone escape the fragility trap that has so far prevented the country from achieving its full potential. 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 in particular 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 in these and any other transactions that may come to fruition.

Last Updated: Oct 27, 2021

COVID-19 Response ($20.55 million): The World Bank COVID-19 Emergency Preparedness and Response Project of $7.5 million contributed to containing the outbreak in the country. Among other actions, more than 243,000 COVID-19 testing were performed ; the designated laboratories were increased from two to five, and 12 laboratories activated across the districts. This is complemented by the Regional Disease Surveillance Systems Enhancement (REDISSE) project with $4.55 million to strengthen case management system. In June 2021, $8.5 million was added to scale up vaccination  coverage by 5.6% with the acquisition of 465,000 doses of vaccines through the African Vaccine Acquisition Task Team (AVATT). As of October 5, 2021, more than one million doses of COVID-19 vaccines were received by the country (including 108,000 doses under the World Bank financing), more than 40% of which were administered.

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 $15.97 million grant. It supports a series of important education sector programs and strengthens the institutional capacity. To improve the teaching and learning environment, the project will build 500 additional furnished classrooms. A total of 1.8 million students, 56,000 teachers, and school-management committee members in 7,900 schools in primary and secondary schools have benefitted from it.

The Global Partnership for Education (GPE)-funded additional financing for COVID-19 Response ($6.85 million) has been added to the Free Education Project to support Government’s education emergency response and reduce learning losses through distance learning. 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.

Skills Development Project ($20 million). The project supports increase access to demand-led skills training. The total number of trainees benefiting from demand-led skills training is 12,257 with 1,423 already completing their trainings. In addition, the project is contributing to the development of the first non-formal TVET education policy. Another achievement is the development of nine competency-based education training curricula which have been developed with the input of industry.

Social Safety Net Program ($47 million): The World Bank is supporting the Government’s Social Safety Net Program (SSNP) with $47 million. The program has benefited 68,453 extremely poor households, reaching an estimated 410,718 individuals with cash transfers, including beneficiaries covered under the Ebola period. Taking advantage of the systems built for targeting, enrolling, and providing cash transfers through the SSNP, the government was able to 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 households in CY 2021. 94% of the beneficiaries are women.

Energy Sector ($207.65 million): The Bank is committed to support the Government prepare its least costs National Electrification Strategy (23% actual access rate) by June 2022 to create a strong policy and regulatory framework for a recovery from the COVID-19 crisis and enabling private sector participation in the energy sector. World Bank’s support in the energy sector totals $207.65 million focusing on: (i) regional integration for 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 ($70 million): Under this project, the volume of commodities traded by the smallholders increased by 43%, 70%, 58%, and 72% respectively for rice, cocoa, palm oil and maize (for poultry feed) between 2017 and 2020 agricultural seasons. The number of out-growers linked to project-supported agribusinesses has increased significantly from 3,663 in 2017 to 55,201 by the end of the 2020 cropping season. Also, the project supported the government’s emergency food security intervention by activating the Contingency Emergency Response Component (CERC) in 2020. The total number of direct project beneficiaries is 115,380, of which 49,613 (42%) are women.

Last Updated: Oct 27, 2021

The World Bank continues to engage with its partners in different sectors at both policy level and technical level dialogue with the aim of promoting development in the country. Key areas of engagement 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 27, 2021