July 11, 2019
The Word Bank would today launch the Sierra Leone Economic Update (SLEU), an annual publication that reports on and analyzes recent economic developments, reviews regional and global contexts and analyzes the implications for the country, and presents the medium-term outlook and prospects for the economy.
The 2019 Update, which features a selected topic relevant to promoting inclusive growth and poverty reduction, namely Financial Inclusion for Economic Growth and Development, positions Sierra Leone’s macroeconomic situation challenging despite bold and courageous policy measures taken by the new Government.
“Macroeconomic imbalances remain in both the fiscal and external accounts. Growth is still low (3.7 percent); inflation and exchange rate depreciation are high (16.8 and 7.3 percent, respectively); the fiscal and current deficits are high (6.6 and 13.8 percent, respectively) and increasing debt has resulted in the country being downgraded from moderate to high risk of debt distress.”
The Update which would be launched today at the Radisson Blu Mammy Yoko Hotel in Freetown noted that, unlocking the bottlenecks to robust and sustained real economic growth through economic diversification and addressing pre-existing macroeconomic weaknesses will be crucial for building a resilient economy that promotes inclusive growth and reduces poverty.
It however stated that the medium-term outlook is promising, with economic growth expected to reach 5.2 percent by 2021, anchored primarily by supply side factors, including favorable agricultural output, uptick in mining activities and strong performance of the services sector.
The special topic of the 2019 Update focuses on deepening the financial sector for inclusive economic growth and development.
According to the report, usage of the financial system is low in Sierra Leone with only about 5 percent of adults using formal savings products and about 54 percent saving money within the past year.
It also indicates that access to finance for enterprises is a significant barrier to growth of the private sector with 40 percent of firms indicating lack of credit as their biggest constraint.
“Only 11 percent of Sierra Leoneans have mobile money accounts compared to 20.8 percent in Liberia, 38.9 in Ghana and 72.9 percent in Kenya. The government plays a significant role in the financial sector and could spur financial sector development by creating the financial infrastructure to provide financial services to underserved populations.”
It recommended that bolstering the role of Digital Financial Services in Sierra Leone would be critical to ensuring affordable and accessible financial services through, for instance, mobile phones.
“We are pleased to present a rich menu of policy options in this second edition of the SLEU. It is my hope that this 2019 Update will inform and stimulate policy debate and help set an agenda for prioritizing financial sector development in Sierra Leone.”