Unlocking Sierra Leone’s Potential: A Blueprint for Growth, Jobs, and Stability

The 2025 Sierra Leone Country Economic Memorandum, jointly produced by the World Bank Group’s constituent institutions, the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), casts a compelling light on a nation rich in promise but mired in persistent underperformance. Despite a landscape blessed with mineral wealth, fertile land, and a youthful, increasingly educated population, Sierra Leone ranks eleventh from the bottom in global per capita GDP as of 2023. The memorandum, subtitled “From Potential to Progress: Structural Transformation and Job Creation on the Road to Middle-Income Status,” outlines both the root causes of this economic stagnation and the ambitious reform path necessary to reverse it. Decades of policy missteps, weak institutions, and volatile global shocks have left the country struggling to translate its assets into sustainable development outcomes.

Growth, Interrupted: From Independence to Instability

In the immediate years following independence in 1961, Sierra Leone showed strong economic promise, posting annual growth near 4 percent, supported by commodity exports and relative political stability. But this momentum faded due to poor governance and fiscal mismanagement. The economy deteriorated rapidly in the 1980s, inflation soared, and the civil war of the 1990s devastated institutions, infrastructure, and livelihoods. Though peace returned in 2002, growth since then has been erratic. Two major episodes, the post-war reconstruction boom and the surge in iron ore mining in the early 2010s, boosted GDP briefly but failed to deliver lasting progress. Epidemics, global commodity shocks, and the COVID-19 pandemic exposed the fragility of the economy. Per capita GDP grew at just 2 percent annually from 2002 to 2023, well below the performance of peers like Rwanda and Ethiopia. Agriculture continues to dominate employment but contributes little to growth due to low productivity. Mining, while a growing contributor to GDP, has brought volatility rather than resilience.

A Private Sector in Chains: Too Small to Transform

Sierra Leone’s private sector remains severely underdeveloped. The majority of firms are micro or small enterprises, often informal and with few growth prospects. According to the 2022 Business Census, most firms are one-person operations in the trade sector, with only 12 percent in manufacturing and even fewer in services or agro-processing. Only 2 percent of firms export, and just 3 percent have any foreign ownership, reflecting limited integration with regional or global markets. Firms struggle to grow: the average large firm in Sierra Leone employs only 8 people, compared to 38 in neighboring Liberia. Productivity is hampered by a lack of access to credit, expensive and unreliable electricity, weak land tenure systems, and distortionary state involvement in commercial activity. State-owned enterprises (SOEs) and “businesses of the state” dominate key sectors and are shielded from competition, undermining private investment. In mining, discretionary agreements override tax laws, eroding investor confidence and government revenue alike.

Crisis in the Macroeconomy: High Inflation, Deep Debt

The report lays bare the deep-rooted macroeconomic instability that has plagued Sierra Leone for much of the past two decades. Fiscal indiscipline, pro-cyclical spending, and poor coordination between the Ministry of Finance and the central bank have contributed to repeated crises. Inflation peaked at 55 percent in 2023, and the national currency, the Leone, depreciated by 58 percent in just two years. Public debt has doubled over the past decade and now stands at more than 50 percent of GDP, with debt service consuming over 100 percent of revenue in some years. The country’s narrow tax base is further weakened by widespread exemptions and poor enforcement, particularly in the mining sector, where corporate tax obligations are frequently undermined by bilateral deals. The financial sector is shallow, crowding out private borrowers in favor of short-term, high-interest government securities. These dynamics limit public investment in infrastructure and social services and discourage private sector expansion.

Investing in People and Climate Resilience

While school enrollment has improved dramatically, learning outcomes remain poor, and the education system is not producing graduates with the skills employers need. Only 30 percent of students pursue degrees in STEM or agriculture, and the technical and vocational education and training (TVET) system is underfunded and disconnected from labor market realities. Employers across sectors report difficulty finding workers with the necessary technical or practical skills. Sierra Leone must create roughly 75,000 new jobs each year through 2050 to keep pace with its growing labor force, almost double the current rate of job creation. Compounding these challenges is the growing threat of climate change. The report estimates that climate-related damages, ranging from reduced labor productivity due to heat stress to losses in rainfed agriculture, could cut GDP by nearly 10 percent by 2050. The country’s high vulnerability to floods, landslides, and extreme weather, combined with weak climate adaptation systems, threatens to reverse development gains unless urgently addressed.

A Roadmap for Reform: Reaching Middle-Income Status

The memorandum outlines two future scenarios. Under a baseline trajectory, Sierra Leone will not reach lower-middle-income status until 2037. However, if it adopts and implements a suite of ambitious reforms, this milestone could be achieved by 2032. The roadmap calls for restoring macroeconomic stability through fiscal consolidation, improved debt management, and a more independent monetary policy. It urges recalibrating the role of the state to reduce market distortions, strengthen competition, and improve SOE governance. Private sector development should be supported through better access to power, finance, and land, alongside trade facilitation and investment policy reform. Finally, building human capital, especially through education quality improvement and labor-market-aligned training, is deemed essential. With political will and coordinated implementation, Sierra Leone has the chance to shift from a history of stagnation to a future of inclusive, resilient, and transformative growth.