A report by professional services business Adam Smith International, released in June, reveals that a struggling iron-ore sector and Ebola-related quarantine restrictions severely damaged Sierra Leone’s economy.
The report, funded by the UK’s Department for International Development, reveals that Sierra Leone has been adversely affected by its struggling iron-ore sector, which has left a 16% gross domestic product deficit.
Sierra Leone’s weakened mining sector has been ignored. The iron-ore sector’s crash, due to a sharp decline in the price of its product, has been much more significant than any negative impact on the agriculture sector, says Adam Smith International.
In addition, the Ebola virus also posed significant challenges for the country.
The report affirms that economic challenges in Sierra Leone were largely due to quarantine measures, not Ebola deaths. The report states that movement restrictions, a 19:00 curfew, closure of markets and a ban on public gatherings were “disastrous” for Sierra’s Leone’s economy.
While 90% of companies reported a fall in sales, only 5% reported that their staff had been infected. It was precautionary action and movement restrictions that significantly curtailed parts of the economy, suggests the report.
Along with Liberia and Guinea, Sierra Leone was the worst hit of the three countries severely affected by the disease, with economic growth plunging from 16.7% in 2012 to an estimated 4% in 2014.
International trade was disrupted by the closure of borders, suspension of flights and soaring insurance costs. Banks also saw an increased level of debt while unemployment heightened.
Adam Smith International argues that governance and government provision are poor, and the rule of law is weak. In addition, the private sector suffers from low skills and poor financing, and has no real voice. Addressing these challenges is central to a proper recovery, says the company.
The report recommends that short-term measures to repair the economy include action to provide short-term capital.