- GDP (PPP):
- $13.1 billion
- 5.1% growth
- -0.4% 5-year compound annual growth
- $1,790 per capita
- Inflation (CPI):
- FDI Inflow:
Sierra Leone’s economic freedom score is 51.7, making its economy the 150th freest in the 2021 Index. Its overall score has increased by 3.7 points, primarily because of an improvement in fiscal health. Sierra Leone is ranked 34th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.
The economy of Sierra Leone escaped from the repressed category this year, making it back into the mostly unfree ranks. As one of the world’s most impoverished and least developed countries, Sierra Leone must overcome daunting challenges to expand economic freedom. The most pressing areas for action are judicial effectiveness, financial freedom, government integrity, and labor freedom, all while continuing to improve fiscal health.
IMPACT OF COVID-19: As of December 1, 2020, 74 deaths had been attributed to the pandemic in Sierra Leone, and the economy was forecast to contract by 3.1 percent for the year.
Sierra Leone became independent from the United Kingdom in 1961. A civil war in the 1990s killed or displaced about a third of the population, and the country enjoyed its first peaceful transition of power in 2007. Former junta leader Julius Maada Bio of the Sierra Leone People’s Party won the presidency in 2018, and his investigations of corruption in the former regime have exacerbated political tensions. The mining of iron ore has been suspended until 2021, and gem-quality diamonds account for nearly half of exports. Sierra Leone remains extremely poor, and much of the population depends on subsistence agriculture. Political instability has hindered development of Sierra Leone’s substantial mineral, agricultural, and fishery resources.
A deficient legal framework leaves property rights and contracts insecure. There is no land titling system. Low salaries, unprofessional policing, and a lack of resources continue to impede judicial effectiveness. Corruption is endemic, especially in government procurement, the award of licenses and concessions, regulatory enforcement, customs clearance, and dispute resolution. Sierra Leone was ranked 119th out of 180 countries in Transparency International’s 2019 Corruption Perceptions Index.
The top individual income tax rate is 15 percent, and the top corporate tax rate is 30 percent. Other taxes include goods and services and interest taxes. The overall tax burden equals 14.4 percent of total domestic income. Government spending has amounted to 21.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.8 percent of GDP. Public debt is equivalent to 60.5 percent of GDP.
Sierra Leone’s historically poor business freedom shows few signs of improvement. The labor market is informal and unregulated, and illegal child labor is still a problem. With fuel subsidies successfully eliminated in 2018–2019, remaining subsidies and transfers were still forecast to consume 2.3 percent of GDP in 2020 according to the International Monetary Fund.
Sierra Leone has one preferential trade agreement in force. The trade-weighted average tariff rate is 12.7 percent. Steps have been taken to dismantle nontariff barriers, including the elimination of export permits. In general, foreign and domestic investors are treated equally under the law, but state-owned enterprises distort investment flows. About 20 percent of adult Sierra Leoneans have an account with a bank.