Economy of Sierra Leone

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Economy of Sierra Leone
Leone (Sierra Leone).jpg
Banknotes of Sierra Leone
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.
Diamond Mine in Kono District

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" and based on the extraction of unsustainable resources or non-reusable assets. Sierra Leone is a member of the WTO.

Sectors[edit]

Percentage of GDP by sector (2007)[20]
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[edit]

Although two-thirds of the population engages in subsistence agriculture, and despite the fact that most Sierra Leoneans derive their livelihood from it, agriculture accounts for only 42% of national income. As of 2003, the government was trying to increase food and cash crop production and upgrade small farmer skills. Also, the government works with several foreign donors to operate integrated rural development and agricultural projects.

Mining[edit]

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.

Macro-economic trend[edit]

This is a chart of trend of gross domestic product of Sierra Leone at market prices estimated by the International Monetary Fund and EconStats[21] with figures in millions of Sierra Leone 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.

Trade and investment[edit]

Sierra Leonean exports in 2006
Graphical depiction of Sierra Leone's product exports in 28 color-coded categories.

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.

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. However, 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.

See also[edit]

References[edit]

  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. 
  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. 
  15. ^ "Public Debt of Sierra Leone". CIA World Factbook. 2012. Retrieved 2013-07-27. 
  16. ^ a b 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. ^ a b (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. ^ African Development Bank, OECD - Organisation for Economic Co-operation and Development (2009). African Economic Outlook 2009: Country Notes: Volumes 1 and 2. OECD Publishing. p. 562. ISBN 978-92-64-07618-1. 
  21. ^ http://www.econstats.com/IMF/IFS_Sie1_99B__.htm#Year

External links[edit]