Economy of Sierra Leone

Economy of Sierra Leone

A diamond Mine in Kono District.
Currency Sierra Leonean leone
Calendar Year
Trade organisations
 AU, African Development Bank, ECOWAS, Mano River Union, World Bank, IMF, WTO, Group of 77
Statistics
GDP Increase $8.412 billion (PPP) (2012 est.)
Rank: 155 (2012 est.)[1]
GDP growth
 Increase 19.8% (2012 est.)[2]
GDP per capita
 $1,400 (PPP) (2012 est.)
Rank: 205 (2012 est.)[3]
GDP by sector
 agriculture (51.5%)
industry (14.9%)
services (33.6%) (2012 est.)
Increase 12.9% (2012 est.) [4]
Population below poverty line
 70.2% (2004 est.)[5]
62.9 (4th) (1989 est.)[6]
Labour force
 2.207 million (2007 est.)
Unemployment N/A
Main industries
 diamonds mining, small-scale manufacturing (cigarettes, beverages, textiles, footwear), petroleum refining, commercial ship repair
External
Exports Increase $1.104 billion (153rd) (2012 est.)[7]
Export goods
 diamonds, rutile, cocoa, coffee, fish[8]
Main export partners
  China 50.5%
 Belgium 18.0%
 Japan 7.6%
 Turkey 4.8% (2012 est.)[9]
Imports Increase $1.509 billion (172nd) (2012 est.)[10]
Import goods
 machinery, fuel, lubricants, chemicals, food[11]
Main import partners
  China 16.3%
 India 10.1%
 South Africa 7.1%
 United States 6.6%
 United Kingdom 6.6%
 Côte d'Ivoire 4.6%
 Belgium 4.5% (2012 est.)[12]
FDI stock
 Increase $1.644 billion (94th) (31 December 2012 est.)[13]
Increase $1.125 billion (158th) (31 December 2012 est.)[14]
Public finances
Decrease 34.6% of GDP (2012)[15]
Revenues $510.2 million (2012 est.)[16]
Expenses $728.5 million (2012 est.)[16]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Sierra Leone is that of a least developed country[17] with a GDP of approximately 1.9 billion USD in 2009.[18] Since the end of the civil war in 2002 the economy is gradually recovering with a GDP growth rate between 4 and 7%.[18] In 2008 its GDP in PPP ranked between 147th (World Bank) and 153rd (CIA) largest in the world.[19]

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 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.[20] Agriculture accounted for 58 percent national Gross Domestic Product (GDP) in 2007.[21]

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[22] 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.

The mean wage was US$0.32 per hour in 2009.

Economic sectors

Percentage of GDP by sector (2007)[21]
Rank Sector Percentage of GDP
1 Agriculture 58.5
2 Other Services 10.4
3 Trade and tourism 9.5
4 Wholesale and retail trade 9.0
5 Mining and quarying 4.5
6 Government Services 4.0
7 Manufacturing and handicrafts 2.0
8 Construction 1.7
9 Electricity and water 0.4

Agriculture

Further information: Agriculture in Sierra Leone
A farmer with his rice harvest in Sierra Leone.

Two-thirds of the population of Sierra Leone are directly involved in subsistence agriculture.[20] Agriculture accounted for 58 percent national Gross Domestic Product (GDP) in 2007.[21]

Agriculture is the largest employer with 80 percent of the population working in the sector.[23] Rice is the most important staple crop in Sierra Leone with 85 percent of farmers cultivating rice during the rainy season[24] and an annual consumption of 76 kg per person.[25]

Mining

Further information: Mining in Sierra Leone

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.

Telecommunications

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.

Telephone and telegraph services are marginal, but improving. Internet usage is low, reaching just 1.3% of the population in 2012, but improving with growth in 3G mobile cellular data services and the mid-2011 arrival of the ACE international fiber-optic cable system in Freetown.

Tourism

Further information: Tourism in Sierra Leone

According to the International Labour Organisation, 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.[26]

Transport

Further information: Transport in Sierra Leone

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 has paved runways (the length of which exceeds 3,047 m or 9,997 ft). Of the remaining airports, all of which having 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.

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.

Currency and central bank

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.

Membership of international economic bodies

Sierra Leone is a member of the Economic Community of West African States (ECOWAS). With Liberia and Guinea, it formed the Mano River Union (MRU) customs union, primarily designed to implement development projects and promote regional economic integration.

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.

Sierra Leone is a member of the WTO.

See also

References

  1. ↑ "GDP (PPO) of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  2. ↑ "GDP growth rate of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  3. ↑ "GDP per capite of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  4. ↑ "Inflation rate of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  5. ↑ "Population below poverty line". CIA World Factbook. 2004 est. Retrieved 2013-07-27. Check date values in: |date= (help)
  6. ↑ "GINI Index". CIA World Factbook. 1989. Retrieved 2013-07-27.
  7. ↑ "2012 Exports figures of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  8. ↑ "Exports Products of Sierra Leone". CIA World Factbook. Retrieved 2013-07-27.
  9. ↑ "Exports Partners of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  10. ↑ "2012 Imports figures of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  11. ↑ "Imports Products of Sierra Leone". CIA World Factbook. Retrieved 2013-07-27.
  12. ↑ "Imports Partners of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  13. ↑ "Foreign Direct Investment in Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  14. ↑ "2012 External Debt of Sierra Leone". CIA World Factbook. 2012 est. Retrieved 2013-07-27. Check date values in: |date= (help)
  15. ↑ "Public Debt of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27.
  16. ↑ 16.0 16.1 https://www.cia.gov/library/publications/the-world-factbook/fields/2056.html#sl
  17. ↑ United Nations OHRLLS. Least Developed Countries: Country profiles Retrieved 2010-03-24.
  18. ↑ 18.0 18.1 (German) German Foreign Office. Country Information Sierra Leone - Economy Partly citing the Economist Intelligence Unit. Retrieved 2010-03-24.
  19. ↑ List of countries by GDP (PPP)
  20. ↑ 20.0 20.1 "Settling for a future in Sierra Leone". New Agriculture. November 2007. Retrieved 20 February 2011.
  21. ↑ 21.0 21.1 21.2 African Development Bank, OECD - Organisation for Economic Co-operation and Development (2009). African Economic Outlook 2009: Country Notes: Volumes 1 and 2. OECD Publishing. pp. 561–562. ISBN 978-92-64-07618-1.
  22. ↑ http://www.econstats.com/IMF/IFS_Sie1_99B__.htm#Year
  23. ↑ König, Dirk (2008). Linking Agriculture to Tourism in Sierra Leone - a Preliminary Research. GRIN Verlag. p. 67. ISBN 978-3-638-94680-3.
  24. ↑ Catling, David (1992). Rice in deep water. Int. Rice Res. Inst. p. 372. ISBN 978-971-22-0005-2.
  25. ↑ Rice today, Volume 3:Rice facts. International Rice Research. 2004. p. 48.
  26. ↑ Europa Publications Limited (31 December 2002). Africa South of the Sahara 2003. Psychology Press. p. 934. ISBN 978-1-85743-131-5. Retrieved 22 March 2011.

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