2018 Index of Economic Freedom

Sierra Leone

overall score51.8
world rank151
Rule of Law

Property Rights33.6

Government Integrity22.0

Judicial Effectiveness29.6

Government Size

Government Spending89.8

Tax Burden79.9

Fiscal Health65.9

Regulatory Efficiency

Business Freedom51.3

Labor Freedom30.5

Monetary Freedom69.5

Open Markets

Trade Freedom69.4

Investment Freedom60.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 6.4 million
  • GDP (PPP):
    • $10.8 billion
    • -21.5% growth
    • 5.0% 5-year compound annual growth
    • $1,672 per capita
  • Unemployment:
    • 3.0%
  • Inflation (CPI):
    • 11.3%
  • FDI Inflow:
    • $516.0 million
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Sierra Leone’s economic freedom score is 51.8, making its economy the 151st freest in the 2018 Index. Its overall score has decreased by 0.8 point, with steep declines in fiscal health and property rights outweighing higher scores for the government integrity and judicial effectiveness indicators. Sierra Leone is ranked 33rd among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

The government is trying to improve Sierra Leone’s legal framework, tax administration, and public debt management to address pervasive corruption. Other structural weaknesses also strain the fragile economy. Growth is hampered by a restrictive regulatory environment, inadequate infrastructure, and weak enforcement of contracts. Protection of property rights is nearly nonexistent. The financial system remains in post–civil war recovery mode and lacks the capacity to provide sufficient credit for the entrepreneurial business activity needed to reduce dependence on diamond production.

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Background

Sierra Leone became independent from the U.K. in 1961. A devastating civil war in the 1990s killed thousands and displaced about a third of the population. Opposition candidate Ernest Bai Koroma of the All People’s Congress, elected president in 2007 in Sierra Leone’s first peaceful transition of power, won reelection in 2012. Gem-quality diamonds account for high rates of economic growth and nearly half of exports, but Sierra Leone remains extremely poor, and many people depend on subsistence agriculture. Damage to the country’s institutions has hindered development of its substantial mineral, agricultural, and fishery resources. The 2014 Ebola epidemic in West Africa killed nearly 4,000 of Sierra Leone’s people, and the country was not declared Ebola-free until 2016.

Rule of LawView Methodology

Property Rights 33.6 Create a Graph using this measurement

Government Integrity 22.0 Create a Graph using this measurement

Judicial Effectiveness 29.6 Create a Graph using this measurement

The constitution protects property rights, but the legal framework functions ineffectively. There is no land titling system. The judiciary has demonstrated a degree of independence, but low salaries, police unprofessionalism, and a lack of resources continue to impede judicial effectiveness. Corruption remains endemic at all levels of government, and perceptions of corruption in Sierra Leone are among the highest in Africa.

Government SizeView Methodology

The top individual income and corporate tax rates are 30 percent. Other taxes include goods and services and interest taxes. The overall tax burden equals 14.5 percent of total domestic income. Over the past three years, government spending has amounted to 18.4 percent of total output (GDP), and budget deficits have averaged 4.2 percent of GDP. Public debt is equivalent to 53.4 percent of GDP.

Regulatory EfficiencyView Methodology

Business freedom is held back by inadequate infrastructure, such as power and roads. In 2016, Sierra Leone made starting a business easier by reducing registration fees. The labor force is informal and lacking in specialized skills. Approximately 90 percent of laborers work in the informal sector, mostly in small-scale agriculture. The government reduced fuel and electricity subsidies in 2017.

Open MarketsView Methodology

Trade is significant for Sierra Leone’s economy; the combined value of exports and imports equals 77 percent of GDP. The average applied tariff rate is 10.3 percent. Nontariff barriers impede some trade. The government does not screen foreign investment, but the inadequate rule of law still discourages long-term investment. The state controls the majority of bank assets, and much of the population lacks access to banking services.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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