Sierra Leone has been hit hard by the spread of the Ebola virus. The country is now trying to recover from a crisis which has claimed thousands of lives and devastated economies.
With support from IDA, the World Bank’s fund for the poorest countries, Sierra Leone is now hoping to reignite its economy, working toward a more resilient future.
Prior to the Ebola outbreak in 2014, the authorities in Sierra Leone had made considerable progress since the end of a crippling civil conflict in 2002, which resulted in tens of thousands of deaths and the displacement of more than two million people (about one third of the population).
Since 2002 Sierra Leone had implemented two medium term development strategies that invested in state building, mainly through improving infrastructure and strengthening macroeconomic foundations while still qualifying for significant levels of debt relief. The country exprienced robust economic growth rates prior to the Ebola crisis, ranging from 6% to 15% annually, driven by the key driver of the extractives industry.
Strengths of the Sierra Leone market
* As well as diamonds and iron ore, one of the world’s largest producers of titanium and bauxite, a major producer of gold, and one of the world's largest deposits of rutile.
* New infrastructure under development across the country
* Growing agriculture and the health care sectors
* Electricity is now constant in the city and main towns.
* Democracy and the rule of law flourishing
Challenges of the Sierra Leone market
Sierra Leone remains extremely poor and nearly half of the working-age population engages in subsistence agriculture. In recent years, economic growth has been driven by mining - particularly iron ore – but the economy remains vulnerable to fluctuations in international prices. Iron ore production has now dropped, due to low global prices and high costs, driven by the epidemic.
The rapid spread of Ebola virus has caused a contraction of economic activity in other ket areas areas, including transportation, health, and industrial production.
And because if the above, the outlook for the economy in the medium term remains uncertain. According to the African Development Bank, economic growth slowed down to 6.0% in 2014 compared to the original projection of 11.3%. GDP growth was projected to go as low as -2.5% in 2015, but the economy is projected to recover slightly in 2016, reaching 2.8%. Inflation, meanwhile, is projected at 8.3% for 2016.
And despite the improvements of the last decade, infrastructure deficiencies remain and could pose a threat to private sector development but progress had been made in improving the business environment prior to the outbreak of Ebola.
Until 2014, the government had relied on external assistance to support its budget, but it was gradually becoming more independent.
The Ebola epidemic has disrupted economic activity and forced the government to increase expenditures on health care, straining the budget and restricting other public investment projects. A rise in international donor support will partially offset these fiscal constraints but considerable effort now needs to be exerted by government and development partners in implementing its post-Ebola recovery plan.