The World Bank Sierra Leone Economic Report published on 10th October 2024, demonstrated that the country’s economic projection has grown by 5.7% in 2023, exceeding expectations driven by strong performance in the mining sector.

However, growth is projected to slow to 4.3% in 2024 due to declining iron ore prices, according to the new World Bank Sierra Leone Economic Update launched today.

The report noted a slightly optimistic medium-term outlook, with growth expected to recover to its long-term average of 4.6%. This is supported by a resurgence in the service sector, improved agricultural productivity, robust mining sector performance, and continued fiscal consolidation efforts to restore macroeconomic stability.

Significantly, it provided a comprehensive analysis of Sierra Leone’s economic performance, key challenges, and opportunities for
sustainable growth. It highlighted the country’s resilience in the face of global headwinds and stressed the need for decisive action to address
critical issues.

Related News

Abdu Muwonge, the World Bank’s Country Manager for Sierra Leone, said the country showed remarkable resilience and potential for recovery despite the development challenges it continues to face.

The findings of this report underscore the critical need for fiscal discipline and strategic investments
and reforms in key sectors like energy, which remain a binding constraint to sustainable development in Sierra Leone.

Muwonge stated that the focus must now be on implementing the recommendations in the Energy Action Plan 2030 and improving the modest progress made on the macro economy to support sustainable growth and development.

Sierra Leone’s public debt-to-GDP decreased from 53% in 2022 to 46.2% in 2023, aided by a stable exchange rate and higher nominal GDP growth. Despite this improvement, the report raises concerns about increasing debt service obligations and the heavy reliance on costly domestic borrowing.

The country remains at high risk of debt distress, with sustainability dependent on strong fiscal adjustments and macroeconomic stability. Rising debt stock and payments have increased liquidity risks as domestic revenue performance remains weak.

Inflationary pressures have eased but remain elevated, even as the Bank of Sierra Leone tightens monetary policy to rein inflation.

The report identifies opportunities for sustained growth in mining,
agriculture, and services. It highlights the importance of bolstering the agricultural sector, improving infrastructure, especially in energy, and focusing on social spending in education and healthcare to support long-term development.

Michael Saffa, World Bank Senio Country Economist and lead author of the report said Sierra Leone’s economic performance in 2023 highlights the progress, opportunities, and challenges ahead.

While the mining sector has been a significant driver of growth, it is crucial to diversify and strengthen other sectors, such as agriculture and services, to ensure long-term stability and resilience.

However, the 2024 Economic Update devotes a special topic on the energy sector – “Unlocking the Potential of the Power Sector in Sierra Leone – Breaking the Crisis Cycle” – examining how limited access to electricity hinders economic development and growth.

The report underscores the significant fiscal risk posed by the energy sector, caused by the high subsidies provided to the sector due to operational inefficiencies and huge arrears owed to independent power producers. It, however, recognizes the government’s efforts through its Action Plan 2030, which aims to achieve financial sustainability and universal access to electricity by 2030.

To help restore macroeconomic stability, the report presents key policy priorities, including the need to remain committed to fiscal consolidation efforts, enhance revenue mobilization, and control expenditures; strengthen the energy sector through reforming the Electricity Distribution and Supply Authority (EDSA) to improve its performance, transitioning to renewable energy sources and attracting private sector investment to ensure a more reliable and
improve debt management.

Furthermore, continued tightening – monetary policy will ease inflationary pressure while promoting financial inclusion, particularly by expanding access to finance for micro, small, and medium enterprises.