Sierra Leone has been ranked as one of the world’s worst-performing economies according to the 2024 World Economic Freedom Index.
The country’s economy is classified as “repressed,” placing it 163rd out of 176 countries globally, and 41st out of 47 in the Sub-Saharan Africa region.
Sierra Leone’s dismal performance is attributed to poor scores in poverty rights, government integrity, and fiscal health.
“Sierra Leone’s economic freedom score is 44.6, making its economy the 163rd freest in the 2024 Index of Economic Freedom,” the report states. “Its rating has decreased by 5.6 points from last year, and Sierra Leone is ranked 41st out of 47 countries in the Sub-Saharan Africa region.”
The report highlights that neighboring countries such as Liberia, Guinea, and Ivory Coast are significantly ahead in economic performance.
While there have been efforts to improve legal and physical infrastructure, the report underscores that “the foundations of economic freedom remain beset by structural and institutional problems.” The weak rule of law and persistent corruption are significant barriers to private-sector development.
“Economic freedom in Sierra Leone is severely hampered by inefficient regulatory enforcement, legislative, institutional, and regulatory challenges,” the report elaborates. “Licensing requirements are time-consuming, and outmoded labor regulations have little practical impact because much of the labor force is employed in the informal sector.”
The fiscal landscape is similarly bleak, with high inflation and a substantial public debt burden. The top individual income tax rate is 15 percent, while the top corporate tax rate stands at 30 percent. The tax burden equals 11.7 percent of GDP, and government spending averages 27.9 percent of GDP with a budget deficit of 7.9 percent.
“The overall rule of law is weak in Sierra Leone,” the report continues. “The country’s property rights score, judicial effectiveness score, and government integrity score are all below the world average.”
Sierra Leone’s business freedom score, labor freedom score, and monetary freedom score are also far below global averages, contributing to an environment that is not conducive to entrepreneurial activity.
With a trade-weighted average tariff rate of 13.2 percent and additional non-tariff barriers, the cost of trade remains high. “Instability and the weak rule of law continue to discourage much-needed long-term investment,” the report notes, adding that the state controls the majority of bank assets.
This comprehensive analysis paints a stark picture of Sierra Leone’s economic challenges, underscoring the urgent need for reforms to improve its economic freedom and overall performance.
