Economy of Sierra Leone
KEY FACTS 2015
GNI: US$4.0 billion
GNI p.c.: US$620
GDP growth: -20.6% p.a. 2011–15
Inflation: 8.0% p.a. 2011–15
With real GDP falling almost continuously from the 1980s to the start of the 2000s, the economy of Sierra Leone became very
depressed, despite the country’s rich resource base, notably diamonds, rutile (an oxide of titanium), bauxite and gold. Civil war in neighbouring Liberia and its spread within Sierra Leone, particularly from 1995, caused total collapse of the economy. The country was burdened by an economically counter-productive parallel economy, which increased in the lawless conditions of civil war. Around 90 per cent of diamonds produced in Sierra Leone were estimated to have left the country illegally, and cash crops in the fertile south and east were being smuggled out. The cost of maintaining a large army and bringing in foreign troops put a further strain on the economy. There were mass migrations of people seeking to avoid the fighting.
Restoration of democracy in February 1998 and the peace agreement with the Revolutionary United Front of July 1999 opened the way for a very substantial commitment of aid by the international community, led by the UN, International Monetary Fund (IMF) and World Bank, to reintegrate the military into civilian life, restore institutions, rebuild the economy and alleviate poverty.
Delivery of this aid was impeded and delayed by the collapse of the peace agreement in May 2000 and during 2001 by the slow pace of demobilisation of rebel troops and of returning all areas of the country to peace and security. It was during 2001 that the rutile mines were rehabilitated and agricultural production was resumed in large areas of the country. In 2001, too, reserves of offshore oil and gas were discovered and the UN ban on the trade in uncut diamonds started to reduce smuggling.
In December 2006, Sierra Leone qualified for debt relief amounting to US$994 million under the IMF/World Bank Enhanced Heavily Indebted Poor Countries Initiative.
The economy began to expand again in 2000. After a very strong surge of growth in 2001–03, it grew at about six per cent p.a. during the rest of the decade, while unemployment persisted at a high level and inflation rose from practically nil in 2000–02 to generally more than ten per cent p.a. in the second half of the 2000s, continuing into the 2010s. As the world economic downturn of 2008–09 depressed demand for Sierra Leone’s exports, GDP growth moderated to 3.1 per cent in 2009, but recovered quickly in 2010, continuing at more than five per cent p.a. in 2010–15. The outbreak of ebola in late 2013 had a devastating impact on economic activity and caused the collapse of tourism.