Sierra Leone's economic development has always been hampered by an overdependence on mineral exploitation. Successive governments and the population as a whole have always believed that "diamonds and gold" are sufficient generators of foreign currency earnings and lure for investment.
As a result, large scale agriculture of commodity products, industrial development and sustainable investments have been neglected by governments. The economy could thus be described as one which is "exploitative" - a rentier state - and based upon the extraction of unsustainable resources or non-reusable assets.
Two-thirds of the population of Sierra Leone are directly involved in subsistence agriculture.[22] Agriculture accounted for 58 percent national GDP in 2007.[23]
Economic history
This is a chart of trend of gross domestic product of Sierra Leone at market prices estimated by the International Monetary Fund and EconStats[24] with figures in millions of Sierra Leones.
Year
Gross Domestic Product
1965
246
1970
355
1975
572
1980
1,155
1985
4,365
1990
98,386
1995
657,604
2000
1,330,429
Current GDP per capita of Sierra Leone grew 32% in the 1960s, reaching a peak growth of 107% in the 1970s. But this proved unsustainable and it consequently shrank by 52% in the 1980s and a further 10% in the 1990s.
Agriculture is the largest employer with 80 percent of the population working in the sector.[25]Rice is the most important staple crop in Sierra Leone with 85 percent of farmers cultivating rice during the rainy season[26] and an annual consumption of 76 kg per person.[27]
As of 2016, about 12% of the population of Sierra Leone had access to electricity. Of that 12%, 10% was in the capital Freetown, and the remaining 90% of the country used 2% of the nation's electricity.[28] The majority of the population relies on biomass fuels for their daily survival, with firewood and coal used most prevalently.[29] The burning of these sources has been reported to have adverse health effects on women and children.[29] A 2012 study was done on the correlation between Acute Respiratory Infection (ARI), and burning biomass fuels in the home. The results were that 64% of children were diagnosed with ARI where firewood stoves were used, and 44% where charcoal stoves were used.[29] The use of coal and firewood has also posed environmental concerns as they are both in conflict with the push for more sustainable sources of energy.[30] As a result, the commercialisation of firewood and coal has been a point of contention with aid donors and government agencies such as the Ministry of Energy and Water Resources and the Forestry Division.[30] There have been strong pushes for both solar and hydropower to become the dominant sources of energy in Sierra Leone because of the UN's Sustainable Development Goals, particularly goal number seven (affordable and clean energy). Sierra Leone's tropical climate, heavy annual rainfall, and abundance of rivers give it the potential to realistically pursue more solar and hydropower alternatives.[31]
In conjunction with the UK's Department for International Development (DFID), Sierra Leone has set the goal to provide solar power to all of its citizens by 2025.[32] This overarching goal has been broken down into smaller goals as well. The first of these goals is to provide solar power to at least 50,000 homes in 2016, the second is 250,000 homes by 2017, and finally to provide power to 1,000,000 people by 2020.[32] This initiative falls under the Energy Africa access campaign which seeks to provide electricity to 14 different African countries by 2030.[28] Previous to this compact agreement, Sierra Leone's private sector for solar energy was weak, as it provided energy to less than 5% of the target population.[28] Part of the reason for this was due to the import duties and taxes and the lack of quality control.[28] To ensure that the Energy Africa goal is met, Sierra Leone has agreed to remove its import duties and Value Added Tax (VAT) on certified solar products.[32] This change will attempt to encourage foreign investment while providing affordable, quality solar products to its citizens. It is estimated that there will be a 30% to 40% cost reduction on solar products with the lack of duties and taxes.[28]
As of 2012, Sierra Leone has 3 main hydroelectric plants. The first is the Guma plant which was decommissioned in 1982, the second is the Dodo Plant which is located in the Eastern Province, and finally the Bumbuna plant.[31] There is also potential for several new hydroelectric plants to be opened on the Sewa River, Pampana River, Seli River, Moa River, and Little Scarcies.[31] Amongst all these projects, both finished and potential, the Bumbuna dam still remains the largest of the hydroelectric projects in Sierra Leone.[31] It is located near the Seli River and Freetown and was estimated to produce about 50 megawatts of electricity.[33] There were plans to increase its capacity 400 megawatts by 2017 which would cost around $750 million.[34] It has been projected that the Bumbuna dam could potentially reduce the amount of spending on foreign fuel and save the country at least $2 million a month.[35] In the past this project received its funding of over $200 million from a combination of the World Bank, the African Development Bank, and the Italian company Salini Impregilo.[33]
Rich in minerals, Sierra Leone has relied on the mining sector in general, and diamonds in particular, for its economic base. In the 1970s and early 1980s, economic growth rate slowed because of a decline in the mining sector. Financially disadvantageous exchange rates and government budget deficits led to sizable balance-of-payments deficits and inflation.
Certain policy responses to external factors as well as implementations of aid projects and maintenance have led to a general decline in economic activity and a serious degradation of economic infrastructures. Sierra Leone's short-term prospects depend upon continued adherence to International Monetary Fund programs and continued external assistance.
Radio is the most-popular and most-trusted media source in Sierra Leone, with 72% of people in the country listening to the radio daily. Sierra Leone is home to one government-owned national radio station and roughly two dozen private radio stations, as well as one government-owned and one private TV station.
According to the International Labour Organization, approximately 8,000 Sierra Leoneans are employed in the tourism industry, with a growing number of jobs expected to be created in the future. The main entrance point is Freetown International Airport, where transport to and from has been problematic. The main attractions for tourist in Sierra Leone are the beaches, nature reserves and mountains.[36]
Because of widespread poverty, high petroleum prices and a large portion of the population residing in small communities, walking is often the preferred method of transportation in Sierra Leone. There are 11,700 kilometres (7,270 mi) of highway in Sierra Leone, of which 936 km (582 mi) are paved.
There are 800 km (497 mi) of waterways in Sierra Leone, of which 600 km (373 mi) are navigable year-round. Major ports of Sierra Leone include: Bonthe, Freetown and Pepel. Queen Elizabeth II Quay in Freetown represents the country's only deep water port facility capable of berthing large-hulled cargo or military vessels.
There are ten airports in Sierra Leone, of which one - Lungi International Airport in Freetown - has a paved runway in excess of 3000m in length. Of the remaining airports, all of which have unpaved runways, seven have runways of lengths between 914 and 1,523 m (2,999 and 4,997 ft); the remaining two having runways of shorter length. There are two heliports in the country.[where?]
Trade and investment
Sierra Leonean exports in 2006.A proportional representation of Sierra Leone's exports.
Mineral exports remain Sierra Leone's principal foreign exchange earner. Sierra Leone is a major producer of gem-quality diamonds. Though rich in this resource, the country has historically struggled to manage its exploitation and export. Annual production estimates range between $70–$250 million; however, only a fraction of that passes through formal export channels (1999: $1.2 million; 2000: $16 million; 2001: projections $25 million). The balance is smuggled out and has been used to finance rebel activities in the region, money laundering, arms purchases, and financing of other illicit activities, leading some to characterize Sierra Leone's diamonds as a "conflict resource."
Recent efforts on the part of the country to improve the management of the export trade have met with some success. In October 2000, a new UN-approved export certification system for exporting diamonds from Sierra Leone was put into place that led to a dramatic increase in legal exports. In 2001, the Government of Sierra Leone created a mining community development fund, which returns a portion of diamond export taxes to diamond mining communities. The fund was created to raise local communities' stake in the legal diamond trade.
Sierra Leone has one of the world's largest deposits of rutile, a titanium ore used as paint pigment and welding rod coatings. Sierra Rutile Limited, fully owned by Nord Resources of the United States, began commercial mining operations near Bonthe in early 1979. Sierra Rutile was then the largest non-petroleum U.S. investment in West Africa. The export of 88,000 tons realized $75 million for the country in 1990.
The company and the Government of Sierra Leone concluded a new agreement on the terms of the company's concession in Sierra Leone in 1990. Rutile and bauxite mining operations were suspended when rebels invaded the mining sites in 1995. Negotiations for reactivation of rutile and bauxite mining are in progress. The U.S. interest in the company has been reduced to 25%.
Since independence, the Government of Sierra Leone has encouraged foreign investment, although the business climate suffers from uncertainty and a shortage of foreign exchange because of civil conflicts. Investors are protected by an agreement that allows for arbitration under the 1965 World Bank Convention. Legislation provides for transfer of interest, dividends, and capital.
The currency is the leone. The central bank of the country is the Bank of Sierra Leone which is in the capital, Freetown. The country operates a floating exchange rate system, and foreign currencies can be exchanged at any of the commercial banks, recognized foreign exchange bureaux and most hotels. Credit card use is limited in Sierra Leone, though they may be used at some hotels and restaurants. There are a few internationally linked automated teller machines that accept Visa cards in Freetown operated by ProCredit Bank.
The MRU has so far been inactive because of domestic problems and internal and cross-border conflicts in all three countries. The future of the MRU depends on the ability of its members to deal with the fallout from these internal and regional problems.
^ abMunro, Paul; van der Horst, Greg; Healy, Stephen (June 2017). "Energy justice for all? Rethinking Sustainable Development Goal 7 through struggles over traditional energy practices in Sierra Leone". Energy Policy. 105: 635–641. doi:10.1016/j.enpol.2017.01.038. ISSN0301-4215.
$1.704 billion (153rd) (2018 est.)[10]
34.6% of GDP (2012)[18]
