A handful of companies have invested in Sierra Leone, signaling a slow but steady rise in Foreign Direct Investment to the West African nation after the twin shocks of iron ore decline and Ebola. Between 2014 and 2016, Sierra Leone’s real GDP growth went from 20% to -20% growth per annum. The downfall was after Foreign Direct Investment in the mining sector specifically iron ore, made Sierra Leone the fastest growing economy in the world in 2012.
FDI is important for all economies but especially for developing and emerging markets with long term Balance of Payment problems. In Sierra Leone, Foreign Direct Investment in the mining sector increases exports which in turn reduces the country’s trade deficit.
After the collapse of African Minerals and London Mining, at the same time as the sub-region was experiencing an ebola outbreak Sierra Leone’s GDP growth declined to below zero. Foreign Direct Investment plummeted from $900 million in 2011 to $138 million in 2016.
However, Sierra Leone’s FDI is slowly on the rebound. Investment is not at pre-ebola levels but there was a 400% increase in FDI from 2016 to 2017. FDI to Sierra Leone in 2017 was estimated at $560 million accounting for 34% of its Gross Domestic Product (GDP).
Today iron ore production has resumed at Marampa with a $300 Million investment into SL Mining by the Gerald Group. Other FDI in Sierra leone include: Bolloré Group’s – $120 Million New Dock & Infrastructure Project at Freetown Port, Winch Energy’s Public-Private partnership funded by DFID to build the largest off-grid solar project in Africa, Agrotop & Integrated Solutions Africa’s are developing a $60 Million large scale poultry farm. and Dole Asia’s $36 Million investment into Sierra Tropical Limited an agribusiness that will export local fruit from Sierra Leone to the world.
Sierra Leone’s GDP is projected to grow by 5.3% this year in large part due to FDI. The government has to ensure that inflows from FDI go towards its national development plan and not white elephant projects proposed as “infrastructure” development. The economy needs to be strengthened against global shocks so that 2015 does not repeat itself. Sierra Leone should focus on value addition in agriculture and improvements to its tourism sector. Investments in these sectors will not only add to the GDP, but they will curb unemployment while giving a boost to local entrepreneurs.