Sierra Leone has witnessed a mixed bag of fortunes in recent years. Between 1991 and 2002, the country witnessed a Civil War that killed thousands. However after the war, the country had witnessed impressive growth based largely on mining exploration. In 2013, the economy grew at 20%, making it one of the world’s fastest growing economies.
Unfortunately, in May 2014, the Ebola virus broke out in the country. It took advantage of the underdeveloped health care system and misconceptions about the disease to spread. The virus killed over 3,000 people in the country. But thanks to domestic and external forces, the virus was defeated, and Sierra Leone was declared Ebola-free in March 2016.
The post-Ebola Sierra Leone provides a new opportunity for strategic planning and investment in the country. The government has declared the Economic Recovery Strategy that would shore up investments in critical areas and infrastructure. Other actors such as the mining industry have also reopened for business. In 2016, the IMF believed the economy would grow by 4.3% as business reopened.
Yet, the investment climate in Sierra Leone is still fraught by challenges, most predating the Ebola outbreak. First, despite years of consistent growth, more than half the population remain in poverty and large number of youths are unemployed and unskilled.
Second, Sierra Leone’s economy is highly reliant on the mining for export revenue and growth. This makes the country extremely vulnerable to price shocks whenever global commodities prices decline. A phenomenon it presently faces as Chinese demands for commodities has declined since 2014. This reduces foreign exchange, increases inflation and causes reduction in government spending.
Third, the World Bank ranked Sierra Leone 147 among 189 countries for the ease of doing business in 2016. This ranking was influenced by challenges such infrastructural dearth as road networks remain underdeveloped, low electricity generation, difficulty in accessing credits, high interest rates, and difficulty registering property.
Fourth, corruption remains widespread in the country, and little government efforts have been made to curb it. In 2015, a report by the country’s Auditor General showed that the country had failed to properly account for large sum funds allocated to fight Ebola. A lack of transparency also in the mining sector, the country’s most important sector, threatens the credibility of negotiations and contracts.
Despite these challenges, Sierra Leone offers great investments opportunities. Its domestic political system has remained stable since 2002, thus providing a peaceful environment for business. Also, the fact that many resources remain untapped provides interesting investment opportunities. Sectors such as agriculture, tourism and natural resource exploration are yet to be fully harnessed. But most importantly, Sierra Leone’s location, and its membership of the 300 million ECOWAS body, grants it huge access to the economies of other West African nations. And through the African Growth and Opportunities Act (AGOA) and the Everything But Arms Initiative, Sierra Leone is granted duty-free access to the US and EU economies respectively.
Summarily, the Ebola outbreak of 2014-2015 was a huge setback to Sierra Leone’s development. However, the country, with foreign support has been able to wither that crisis, and has since resumed economic growth. However, like most developing countries, doing business with the country is not without challenges. Nevertheless, Sierra Leone does have some important advantages investors would be wise to key into in the post-Ebola world.