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- GDP (PPP):
- $8.3 billion
- 19.8% growth
- 7.8% 5-year compound annual growth
- $1,344 per capita
- Inflation (CPI):
- FDI Inflow:
Sierra Leone’s economic freedom score is 50.5, making its economy the 148th freest in the 2014 Index. Its score is 2.2 points higher than last year, with substantial increases in half of the 10 economic freedoms including the control of government spending, property rights, business freedom, and labor freedom. Sierra Leone is ranked 34th out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world average.
Over the 20-year history of the Index, Sierra Leone’s economic freedom score has improved by 0.7 point. Improvements in half of the 10 economic freedoms include double digit growth in trade freedom, fiscal freedom, and freedom from corruption. Grading of Sierra Leone was suspended from 2001 to 2002 due to internal conflicts.
Achieving its highest economic freedom score ever in the 2014 Index, Sierra Leone has advanced from economically “repressed” for the second time. Reforms have been targeted at improving regulatory efficiency and strengthening the enforcement of contracts. However, weak protection of property rights and pervasive corruption still jeopardize the emergence of a sustainable private sector.
Opposition candidate Ernest Bai Koroma was elected president in 2007 in Sierra Leone’s first peaceful transition of power since independence in 1961. He was re-elected in 2012. Recovery since the end of the 10-year civil war in 2002 has been fragile, and the military is increasingly involved in state affairs in the name of stability. The U.N. still maintains a peace-building office in the country. Infrastructure remains poor, and corruption is pervasive. Mining is the primary industry and accounts for almost one-quarter of GDP. Mineral exports are the principal foreign exchange earner, with gem-quality diamonds accounting for nearly half of exports. Several offshore oil discoveries were announced in 2009 and 2010, and initial development of these reserves spurred 20 percent GDP growth in 2012.
Corruption remains a serious problem, and President Koroma has encouraged and supported the work of the Anti-Corruption Commission. The rule of law is fragile and uneven across the country. In the absence of an effectively functioning legal framework, property rights and contracts are not secure. There is no land titling system, and judicial corruption is significant. Traditional tribal justice systems are still used in rural areas.
The top individual income and corporate tax rates are 30 percent. Other taxes include a goods and services tax (GST) and an interest tax. Total tax revenue makes up about 11.5 percent of the domestic economy. Government spending equals 22 percent of gross domestic income. Public debt has fallen below 45 percent of GDP. Revenues are projected to get a boost as the economy moves toward resource extraction.
Launching a company takes fewer than 10 procedures, but licensing requirements continue to be time-consuming and costly. Making additional hiring burdensome, an increase in the minimum wage has exceeded labor productivity growth in the formal sector. A plan for gradual reduction of fuel subsidies was suspended in 2012 in advance of elections but was due to be reinstated in 2013.
Sierra Leone’s average tariff rate is 9.9 percent. Tariffs account for over 20 percent of government revenue. The country’s “Agenda for Prosperity” recognizes the benefits of foreign investment in reducing poverty, but Sierra Leone remains a challenging environment for investors. The state controls the majority of bank assets, and much of the population operates outside of the formal banking sector.