World Bank: Sierra Leone’s Economy Stabilizing, Private Sector Key to Future Growth

The report emphasizes that private sector revitalization is essential for driving sustainable growth and reducing poverty.

Sierra Leone’s economy is showing encouraging signs of stability and recovery, according to the latest World Bank Sierra Leone Economic Update (SLEU) launched in Freetown. The report, titled “Enabling the Private Sector for Growth and Job Creation,” projects the country’s GDP growth to reach 4.3% in 2025 and further expand to 4.6% by 2027, underpinned by improvements in agricultural productivity, mining expansion, and steady growth in services.

Despite facing a turbulent global economic environment—marked by high commodity prices, tightening global financial conditions, and climate-related shocks—Sierra Leone’s medium-term outlook is cautiously optimistic. The World Bank report attributes this resilience to ongoing reforms that aim to stabilize macroeconomic fundamentals, strengthen public financial management, and promote private sector development.

“Unlocking the potential of the private sector remains critical to diversifying Sierra Leone’s economy and creating more meaningful jobs,” said Abdu Muwonge, World Bank Group Country Manager for Sierra Leone. “Sustaining the current reform trajectory to restore macroeconomic stability, improving the investment climate, and strengthening social spending will foster inclusive growth and development.”

---

Economic Outlook: Growth Amid Global Uncertainty

According to the SLEU, Sierra Leone’s growth trajectory is stabilizing after several years of economic strain caused by the COVID-19 pandemic, the global energy crisis, and domestic fiscal imbalances. Agriculture—employing over 60% of the population—is expected to continue driving growth, supported by better input distribution and diversification beyond subsistence farming.

The mining sector, a key export earner, is projected to expand through increased investment in iron ore, rutile, and gold, while the services sector continues to benefit from digitalization, telecommunications growth, and improved trade logistics. However, the report also warns that persistent inflation, high debt servicing costs, and infrastructure gaps could undermine progress if not addressed through sound fiscal and structural reforms.

---

Private Sector Development: The Engine of Job Creation

The report emphasizes that private sector revitalization is essential for driving sustainable growth and reducing poverty. With an expanding labor force, Sierra Leone must create at least 75,000 new jobs annually just to maintain its current employment-to-population ratio. Yet, private sector activity remains constrained by:

• Limited access to finance

• High energy and transportation costs

• Inadequate infrastructure

• Weak land governance

• Skills mismatches in the labor market

“Revitalizing Sierra Leone’s private sector is essential for unlocking the country’s growth potential and creating more jobs,” said Subika Farazi, World Bank Senior Economist and co-author of the report. “By improving the regulatory environment and service delivery, the country can foster a more dynamic, resilient, and competitive business climate that empowers entrepreneurs and attracts investment.”

The SLEU highlights findings from the World Bank’s global B-READY 2024 report, which identifies regulatory inefficiencies as a major barrier to entrepreneurship and investment. Simplifying business registration, improving contract enforcement, and strengthening competition are cited as key to enabling Sierra Leone’s small and medium-sized enterprises (SMEs) to thrive.

---

Key Policy Recommendations

The World Bank outlines a comprehensive reform package to support Sierra Leone’s economic transformation, focusing on fiscal discipline, governance, and private sector competitiveness. Among the key recommendations are:

1. Strengthen Fiscal Management

• Enhance domestic revenue mobilization through tax reforms and improved administration.

• Implement better expenditure controls and reduce reliance on high-cost domestic borrowing.

• Restore fiscal credibility to attract concessional financing and donor confidence.

2. Improve Business Competitiveness

• Simplify business entry and exit procedures and reduce trade barriers.

• Strengthen competition policy and promote fair market practices to boost productivity.

3. Expand Access to Finance

• Improve credit information systems and collateral registration to help SMEs access loans.

• Encourage innovation in digital financial services to promote inclusion.

4. Invest in Infrastructure

• Prioritize investments in reliable energy, transportation networks, and digital connectivity to reduce business costs and attract investors.

5. Reform Investment Regulations

• Streamline foreign direct investment (FDI) frameworks.

• Reform sectoral restrictions in key industries to attract private capital and improve investor confidence.

---

Challenges Ahead: Balancing Reform and Inclusion

While Sierra Leone’s growth prospects are improving, the report cautions that social inequalities and fiscal vulnerabilities remain major risks. High living costs, limited formal employment, and climate shocks continue to strain households. The World Bank stresses that inclusive growth strategies, including targeted social protection and education investment, must complement macroeconomic reforms to ensure that growth translates into real improvements in living standards.

“Sierra Leone’s prospects for growth and poverty reduction depend on strengthening fiscal discipline, improving the business environment, and fostering private sector-led job creation,” said Michael Saffa, World Bank Senior Country Economist and lead author of the report. “Without decisive reforms, the country risks falling short of its development objectives.”

---

A Call for Stronger Partnerships

The report urges continued collaboration between the government, private sector, and development partners to drive reforms. The World Bank reaffirmed its commitment to supporting Sierra Leone’s macroeconomic stability, human capital development, and private sector competitiveness through financial and technical assistance.

With concerted effort and sustained policy action, Sierra Leone can turn its current economic stability into broad-based, inclusive growth, creating jobs, reducing poverty, and strengthening resilience against global shocks.