By Mohamed Sahr
Sierra Leone’s economy is projected to rebound strongly, with growth expected to rise to 4.7% in 2024 and 5.2% in 2025, driven by a revitalised mining sector, agricultural recovery, and expansions in manufacturing, construction, and tourism, according to the African Development Bank (AfDB).
Inflation, which surged to 46.6% in 2023, is forecasted to decline to 33.6% in 2024 and further drop to 20.2% in 2025 as external shocks ease. Meanwhile, the fiscal deficit is expected to narrow to 2.8% of GDP in 2024 and 2.4% in 2025, fuelled by increased tax revenue. Similarly, the current account deficit is projected to fall from 6.1% in 2023 to 4.2% in 2024 and 2.1% in 2025, supported by rising official and private grants.
However, the AfDB warns that Sierra Leone’s economic outlook faces downside risks, including a potential global economic slowdown, the prolonged impact of Russia’s invasion of Ukraine, and declining international financial assistance. To mitigate these risks, experts recommend enhancing domestic revenue mobilisation, reprioritising government spending, and accelerating economic diversification efforts to build resilience against future shocks.
Despite projected growth, Sierra Leone has struggled with structural transformation over the past two decades. The agricultural sector’s share of GDP increased from 47% in 2003 to 60% in 2022, yet its employment share declined from 66.5% to 43%. Conversely, the industrial sector’s contribution to GDP dropped from 10% in 2003 to 7% in 2022, while its employment share rose from 6.2% to 12%. The services sector also contracted from 37.6% of GDP in 2003 to 29% in 2022, despite employment increasing from 27% to 45%.
To drive industrialisation and structural transformation, the government has significantly invested in infrastructure, nearly doubling the country’s electricity generation capacity to 253 megawatts over the past five years. Experts suggest that further progress will require improved governance of natural resources, mobilisation of domestic revenue, and leveraging international development assistance.
In response to macroeconomic challenges, Sierra Leone’s fiscal deficit narrowed from 9.6% of GDP in 2022 to 5.8% in 2023, while public debt relative to GDP **declined from 98.8% in 2022 to 90.5% in 2023. The country’s gross foreign reserves stood at $432.9 million (three months of import cover) as of October 2023, reflecting improved foreign exchange management.
The depreciation of the leone moderated from 39.1% in 2022 to 17.2% in 2023, following policy adjustments that lifted administrative restrictions in the foreign exchange market. The banking sector showed signs of improvement, with nonperforming loans falling from 14.8% in 2021 to 11.6% in 2022, though still above the regulatory limit of 10%.
Despite these economic advancements, poverty remains a major challenge. The national poverty headcount stood at 56.8% in 2018, while extreme poverty affected 25% of the population in 2023. Youth unemployment, recorded at 10% in 2022, is also a growing concern, with underemployment rates significantly higher.
Looking ahead, the AfDB emphasises that reforming the global financial system, strengthening trade policies, and deepening regional integration will be critical for Sierra Leone’s long-term economic sustainability. With continued structural reforms and strategic investments, the country could position itself as a resilient and competitive economy in the years to come.