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Sierra Leone: one big GDP leap

Posted on August 9, 2012 at 11:36:06 PM AEDT

Sierra Leone: one big GDP leap

It’s rainy season in Sierra Leone, but officials here aren’t at all gloomy when it comes to economic forecasts.

The country’s GDP is expected to grow by a sky-high 32.5 per cent in 2012. That’s revised down a few notches from the 35.9 per cent reported by the IMF earlier this year. However, growth might be a bit more down-to-earth in 2013.

The increase is on the back of listed iron ore companies London Mining and African Minerals, both of which have begun exporting iron ore from large scale projects. African Minerals has the Tonkolili project, while London Mining is focused on its Marampa mine. With a strengthened mines and minerals law and amended contracts with several mining companies, Sierra Leone is looking at around $98m in taxes, royalties and fees this year, according to Minister of Finance Samura Kamara.

The figures make Sierra Leone the second fastest-growing economy in Africa. Libya is in first place, with about 61 per cent expected growth due to a post-war comeback.
“It echoes the very rapid growth we can also see in Mongolia, and what we may also see in Mozambique in coming years,” said Charles Robertson, global chief economist for Renaissance Capital.

But it’s a one-off, a one-time boost for the country. In real numbers, Sierra Leone’s GDP stood at $2.02bn in 2011, based on World Bank estimates for the year. The expected 2012 increase would push that figure up $656m to $2.7bn for 2012. Growth for 2013 is expected to be between 5 and 7 per cent.

If the mining windfall is excluded, Kamara expects the country to grow about 6 per cent, which is in line with other West African nations. (Ghana’s economy is expected to grow 8.5 per cent, according to Renaissance Capital.)

Sierra Leone’s civil war ended about 10 years ago, and the country is rebuilding. Focus has been placed on providing a secure and stable economic and political climate for businesses to feel comfortable investing.  And the abundance of natural resources – diamonds, gold, bauxite, iron ore and (potentially) oil – is alluring to investors.

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