Sierra Leone’s roadmap to economic diversification revealed in a new World Bank report

Sierra Leone Telegraph: 15 January 2020:

A new World Bank report – “Sierra Leone Economic Diversification Study” says that Sierra Leone has abundant natural resources, but as yet not been able to deliver more and better jobs for its fast-growing population.

It says that, for the last decade, the economy has expanded at an average annual rate of five percent, but the distribution of value-added and employment in the economy is heavily skewed to traditional sectors. Sierra Leone needs to stabilize its economy to limit growth volatility and vulnerability to external shocks and provide a better and more predictable environment for economic activities to flourish.

“There has been little structural transformation in Sierra Leone’s economy. Therefore, promoting economic diversification to reallocate resources (capital and labor) from low- to high-productivity sectors can boost growth in GDP per capita and reduce poverty,” said Youssouf Kiendrebeogo, World Bank Senior Economist and one of the authors of the report.

The report describes the structure of the country’s economy and identifies the historical growth by sectors. It also analyses the main constraints to productivity growth in the country – both within and between sectors and proposes pathways to economic diversification.

According to the World Bank, Sierra Leone’s labor productivity in manufacturing tends to be lower than in other African countries. Between 2009 and 2017, labor productivity in the country’s manufacturing sector fell but productivity also varies considerably by firms.

“Raising productivity of private firms especially those in the manufacturing sector is a major path to long-term sustainable growth and poverty reduction, and could bring about a positive turnaround of the economy,” said Gayle Martin, World Bank Country Manager for Sierra Leone. (Photo).

The report suggests that Sierra Leone could harness capabilities in a number of sectors, especially commodity and agro-industries. Given the country’s vast expanses of accessible arable land, abundant rainfall and large resources of fresh water, and with half of the population employed in agriculture, the report emphasizes that expanding agricultural productivity offers a direct path to job creation, sustained inclusive growth, and poverty reduction.

Other sectors where Sierra Leone could build complexity and diversify its economy over the medium-term the reports says, include extractives and processed natural resources, chemicals, plastics and rubber, textiles, wood products, manufacturing, and machinery and transportation equipment.

The report recommends a mix of policy approaches that Sierra Leone could employ to diversify its economy by accelerating productivity-driven growth. This will require, inter alia, expanding agricultural productivity and supporting agribusinesses; value addition to promote manufacturing; investing in physical and human capital through health, education, and social protection measures; improving firm competitiveness and the regulation of business and strengthening governance and institutions to support private sector-led growth.

The report concludes that Sierra Leone needs to stabilize its economy to limit growth volatility and vulnerability to external shocks and also provide a better and more predictable environment for economic activities to flourish, focusing on easier business and property registration, increased access to credit, access to reliable electricity, streamlined tax payment processes, and simplified processes for licenses and permits.

You can read the full report here:

Sierra Leone Economic Diversification Study Report (P162720)-final

4 Comments

  1. Sierra Leoneans who are interested in serious economic analysis on this subject are also encouraged to read the book “Economic Diversification and Growth in Africa: Critical Policy Making Issues”, by Omotunde E. G. Johnson. The book was published in 2016 by Palgrave Macmillan. It can also be found in the libraries of all leading universities in the world as well as the libraries of organizations like the IMF and the World Bank. Of course, the book can also be purchased from leading book sellers, world-wide,via Internet.

  2. All that sounds good and all, but why are we being briefed on the need to have a manufacturing up jump when the country is struggling to keep its lights on for a day? Is there something which pertains to the proliferation of a nation’s manufacturing sector that is yet disclosed, but the people of Sierra Leone should know about? I asked because my understanding is that a sustainable power grid in any nation is the base for it to have a manufacturing sector that is worth mentioning.

  3. Sierra Leone is yet to think about development. Last ministers were unable to do anything but corruption which swept the country to its lowest ebb. Sierra Leone and Sierra Leoneans must mentaly be convinced that there is no other way for development except we find everyone interested and corrupt free. Only then we will be able to see a country ready for development. All Sierra Leoneans know that the country is rich in many things and the gvernment must put or allocate everything to its specific area and followed by investment. I am sure it is now time the politicians work hard for the benefit of the country.

  4. I know IMF and other loaners to our government have been advocating for increase revenue generation; in light of this, with the new regime claiming cash-strap (although their extravagant spending habits and bloated cabinet tells a different story), they have resulted to targeting businesses and other investors—levying higher registration fees and taxes.

    It’s my understanding that businesses are tax well beyond 30% in many instances. Such a tax scheme and approach will surely not attract investors or encourage businesses to prosper. What many in the regime failed to realize is that, we are not the only nation with natural resource in the subregion, so businesses and investors will always choose to go were policies of doing business are attractive.

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