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- GDP (PPP):
- $12.6 billion
- 6.0% growth
- 10.5% 5-year compound annual growth
- $2,027 per capita
- Inflation (CPI):
- FDI Inflow:
Sierra Leone’s economic and political institutions remain fragile and provide little support for long-term economic development. Recent reforms have been targeted at openness to international trade and stronger enforcement of contracts. The country continues to face the daunting challenge of enhancing integrity in the management of its natural resources.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 52.3 (up 0.6 point)
- Economic Freedom Status: Mostly Unfree
- Global Ranking: 142nd
- Regional Ranking: 33rd in Sub-Saharan Africa
- Notable Successes: Trade Freedom
- Concerns: Rule of Law, Regulatory Efficiency, and Management of Public Finance
- Overall Score Change Since 2012: +3.2
Mismanagement of public spending remains a serious problem and ultimately hurts implementation of needed structural and institutional reforms. Protection of property rights is weak, and the judicial system lacks both independence and transparency. Legal proceedings are vulnerable to political interference and commonly subject to pervasive corruption.
Opposition candidate Ernest Bai Koroma, elected president in 2007 in Sierra Leone’s first peaceful transition of power since independence from Britain in 1961, was reelected in 2012. Despite some institutional progress since the end of the country’s decade-long civil war in 2002, living standards remain very low. Sierra Leone ranks 183rd out of 187 countries on the U.N.’s 2014 Human Development Index, and basic infrastructure is lacking throughout the country. Mining is the primary industry, and mineral exports generate most foreign exchange. Gem-quality diamonds account for nearly half of exports and for high rates of economic growth. In 2014, West Africa’s Ebola epidemic spread to Sierra Leone, killing nearly 4,000 people as of September 2015 and badly damaging the economy.
Corruption remains pervasive, and steps taken in 2015 by President Koroma to consolidate his power are not likely to improve the rule of law. The government’s anti-corruption commission has been criticized repeatedly for its poor prosecutorial record, especially in trials involving the president’s friends, family, and political allies. There is no land titling system, and judicial corruption is significant. Traditional tribal justice prevails in rural areas.
The top individual income and corporate tax rates are 30 percent. Other taxes include a goods and services tax and an interest tax. The overall tax burden equals 8.8 percent of total domestic income. Government spending amounts to 15.7 percent of GDP, and the budget balance continues to be negative. Public debt equals about 40 percent of annual domestic output.
Launching a company takes less than 30 days, but completing licensing requirements is time-consuming. An increase in the minimum wage has exceeded labor productivity growth in the formal sector. The IMF has urged the government to take advantage of lower oil prices and cut subsidies, particularly since so many public funds had to be redirected to respond to the Ebola outbreak.
Sierra Leone’s average tariff rate is 10.3 percent. Foreign investors may not own land, but government policies otherwise do not generally discriminate against foreign investment. The government does not screen foreign investment, but long-term investment remains discouraged by the inadequate rule of law. The state controls the majority of bank assets, and much of the population operates outside of the formal banking sector.