FreetownCity

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Economy

Freetown is the economic and financial center of Sierra Leone. The country's national television and radio stations, the Sierra Leone Broadcasting Services, are primarily based in Freetown, although they also have regional headquarters in the country's other primary cities of Bo, Kenema Koidu Town and Makeni. Freetown is home to one of the country's two main Universities, the Fourah Bay College, the oldest university in West Africa, founded in 1827.

Many of the country's largest corporations locate their headquarters' home offices in Freetown as well as the majority of international companies. The city's economy revolves largely around its fine natural harbor, which is the largest natural harbor on the continent of Africa and the third largest in the world. . Queen Elizabeth II Quay is capable of receiving oceangoing vessels and handles Sierra Leone's main exports. Industries include food and beverage processing, fish packing, rice milling, petroleum refining, diamond cutting, and the manufacture of cigarettes, paint, shoes, and beer. The Fula and Sierra Leonean-Lebanese play a major role in local trade in the city. The city is served by the Lungi International Airport, located in the city of Lungi, across the river estuary from Freetown.

The mining sector made real GDP growth leap from 6% in 2011 to 16.7% in 2012, with support from agriculture, services and construction; it is projected to stabilise in 2013 and 2014.

Sierra Leone has risen eight places in the latest World Bank report Doing Business (140th out of 185 countries) and ranks as one of the top reformers since 2005 in improving business regulation for domestic firms, property registration and “narrowing the distance to frontier”.

The 2013 Human Development Index (HDI) ranks Sierra Leone at 0.336, near the bottom (180th out of 187 countries), and below the regional average of 0.463.

Overview

Driven by the mining sector (particularly iron ore), real gross domestic product (GDP) growth accelerated from 6% in 2011 to 16.7% in 2012 as a consequence of iron ore production. It has also been supported by agriculture, services and an expansion in construction. GDP growth is projected to stabilise around 7.2% in 2013 before reaching 12.1% in 2014 as iron ore projects become fully operational.

This robust economic growth has been accompanied by a tight monetary policy that has reduced inflationary pressures. As a result, inflation has dropped from 18.5% in 2011 to 11.6 % in 2012 and is projected to return to a single-digit 7.1% in 2013 and 6.9% in 2014 as agricultural production recovers and international food prices fall, aided of course, by the tight monetary policy. Indeed, the government implemented several reforms to contain inflation and has taken appropriate monetary policy measures. Policies to strengthen fiscal discipline in 2012 have helped to reduce the fiscal deficit from 4.5% of GDP in 2011 to 1.8% in 2012, and is projected around 2.3% in 2013, and 2% in 2014. The current account deficit as a percentage of GDP has also been reduced from 52.3% in 2011 to 44.0 % in 2012 as a consequence of an expansion in the minerals and cash crop exports. It is projected to shrink to 11.6% in 2013 but to slightly increase to 12 % in 2014.

The restrictive fiscal and monetary policies contributed to a reduction in the government expenditure and thus the domestic debt burden. This has been supported by strong reforms aiming at fighting corruption, improving the ease of doing business in Sierra Leone and reducing poverty. The Poverty Reduction Strategy Paper (PRSP) II is being succeeded by a new strategy called Agenda for Prosperity 2013-17, which aims to scale up inclusive green economic growth, employment and value addition in various sectors and to accelerating progress towards the Millennium Development Goals (MDGs).

Recent discoveries of iron ore mines and the expansion of the extractive sector in Sierra Leone have initiated a structural transformation of the economy with a shift of productivity from agriculture to mining and construction activities that are now the main driver of GDP. However, labour transfer to these sectors is still low due to the fact that extractive activities and construction are capital intensive. Under its new development strategy, Agenda for Prosperity 2013-17, the government plans to improve its management of natural resources and to enhance revenue collection.

Diamonds
SL Commercial Bank

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