October 19, 2015 By Alusine Sesay
While acknowledging Sierra Leone as one of the most successful countries in post-conflict reconstruction and development, the recently launched African Economic Outlook (AEO) states that the impressive reconstruction was now at risk of reversal due to the far-reaching adverse effects of the Ebola Virus Disease outbreak.
The report projects economic uncertainties from 2015 and 2016, blamed on the Ebola Virus Disease and the financial difficulties facing the two main iron-ore mining companies which are expected to have negative impact on growth.
“Regarding the EVD, the government has made great efforts to contain and eradicate the disease although even after the outbreak ends, its effect on economic activity is expected to linger for some time,” states the report.
The report also notes that the shutdown of African Minerals, which exported $550 million worth of iron-ore, and the takeover by another investor of London Mining, which exported $125 million worth of iron-ore, has raised pessimism over when production of the mineral would resume.
“The impact of Ebola and of the crisis in the mining sector will continue to dampen economic activity in 2015 and possibly into 2016,” the report indicates. “It is projected that the economy will contract by 2.5% in 2015 but will pick up gradually in 2016. Due to the effects of Ebola, inflationary pressures have been higher in 2014 than anticipated and only a gradual easing is projected.”
The report further reveals that the impact of the Ebola outbreak in 2014 could not be properly assessed due to several risk factors associated with the disease.
“For 2014, preliminary estimates indicate an output loss; lowering real GDP to 6%. Supply chain disruptions as well as a deceleration in agricultural growth are fuelling inflationary pressures. In 2014 inflation reached 10%, higher than the 7% originally estimated,” the report says.
It continues that: “There were increased risks to financial sector stability as credit to the economy was expected to decline while non-performing loans were likely to rise, consistent with slow economic activity. Most experts expect the epidemic to have lingering effects on economic growth and macroeconomic stability in 2015 and beyond.”
In the area of agricultural development, the report states: “While agriculture, including forestry, fishing and hunting continued to account for more than half of the GDP in 2014, its relative weight has been declining (50.5% in 2014 from 58.2% in 2009), indicating a structural shift towards mining and quarrying (20.2% in 2014 up 3% in 2009.”