Sierra Leone - Prospects for growth and equity

Report No. 3375-SL FILE COPY Sierra Leone Prospects for Growth and Equity july 31, 1981 West Africa Region FOR OFFICIAL USE ONLY Document of the Wxod Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents (April 1981) US$1 = Le 1.05 Le 1 = US$0.95 Le 1 = SDR .7315 Fiscal Year July 1 to June 30  FOR OFFICIAL USE ONLY SIERRA LEONE: PROSPECTS FOR GROWTH AND EQUITY Table of Contents Page No. COUNTRY DATA COUNTRY MAPS SUMMARY AND POLICY RECOMMENDATIONS ............................... i-x I. ECONOMIC PROBLEMS .......................................... 1 A. Growth Performance ..................................... 1 B. Balance of Payments .................................... 2 C. Public Finance ......................................... 6 D. Money and Banking ...................................... 9 E. Inflation .............................................. 11 F. External Debt and Creditworthiness ..................... 12 II. STIMULATING GROWTH .14 A. Changes in Development Strategy .14 B. Future Prospects with Strategy and Policy Changes 15 C. Second Development Plan .21 III. EMPLOYMENT ..25 A. Labor Shortages in Agriculture .27 B. Employment Generation Outside Agriculture .29 C. Public Sector Salaries and Employment ............. 31 D. Summary of Policy Recommendations .34 IV. POVERTY, INCOME DISTRIBUTION, AND BASIC NEEDS .35 A. Absolute Poverty .35 B. Distribution of Income and Wealth .37 C. Access to Basic Needs .46 D. Summary of Policy Recommendations .51 V. SELECTED POLICY ISSUES ..................................... 53 A. Agricultural Pricing ................................... 53 B. Tax Reform ............................................. 66 C. Energy .......... ....................................... 72 ANNEX A: RECENT ECONOMIC PROGRAMS .81 ANNEX B: HEALTH SECTOR SURVEY .87 ANNEX C: MACRO-MODEL - Projections .............................. 125 ANNEX D: SOCIAL AND ECONOMIC STATISTICS ......................... 138 ANNEX E: SELECTED REFERENCES .................................... 205 This report is based on the findings of an economic mission comprising Ms. F. Aynur Uluatam (Chief of Mission), Messrs. David Lindauer and Michael O'Byrne, who visited Sierra Leone in May 1980. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without WoAid Bank authorization.   SIERRA LEONE ECONOMIC INDICATORS OROSS NATIONAL PRODUCT IN 1978 r 79 ANNUAL RATE OF GROWH ' 1972/73 constant prices) USs Ml % 196/9-70/71 1970/71-77/78 1978/79 GNP at Market Prices 871.4 100.0 7,4 0.9 1.6 Gross Domestio Investment 135.2 15.5 1.1 -1.2 11.1 Gross National Saving 22.6 2.5 - -6.8 -45.0 Current Aocount Balance -116.6 13.0 Exports of Ooods, NFS 209.7 24.1 -2.0 -2.0 -3.1 Importa of Goods, NFS -313.8 36.0 1.5 -0.6 14.5 OUTPUT, LABOR FORCE AND PRODUCTITY IN 1978/79 Value Added Labor Force V. A. Per Worker US$ Mn. ..Mi. _ LU Agriculture 285.5 35.9 .820 67.0 348.2 53.5 Industry 174.1 21.9 .195 16.0 892.8 137.2 Services 336.0 42.2 .184 15.0 1826.1 280.7 Unallocated - .024 2.0 Total/Average 795.6 127 3 65'30.lO OOVERNMENT FINANCE General Oovernment Central Government (Le fMln.) % of ODDI-;C 197 197 lF96-7 1978/79 1978/79 1974-1975/76 Current Receipts 172.8 20.7 17.5 Current Expenditure 166.0 19.9 16.2 Current Surplus -7T* Capital Expenditures 41.6 5.0 5.4 External Assistance (net) 36.2 4.2 4.7 MONEY. CREDIT and PRICES 1974 1975 1976 977 1978 1979 1980 2/ -TMllion Le outstanding end periodT Money and Quasi Money 84.6 91.6 111.9 136.2 179.3 214.5 261i5 Bank credit to Public Sector 3/ 23.0 56.7 107.3 119.7 182.4 252.5 338.8 Bank Credit to Private Sector 39.7 41.1 43.7 46.8 64.9 71.0 84.1 (Percentages or Index Numbers) Money and Quasi Money as % of OD? (m.p.) 17.7 16.0 18.2 18.3 22.0 23.0 25.4 General Price Index (1961 - 100) 4/ Amual percentage changes in: General Price Index 14.4 19.9 17.2 8.3 10.9 21.2 11.2 Bank credit to Public Sector 52.3 146.5 89.2 11.6 52.4 38.4 34.2 Bank credit to Private Sector 40.8 3.5 6.3 7.1 38.6 9.4 18.5 NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocatet" consists mainly of unemployed workers seeking their first job. 2/ 1980 figures are preliminary. 3/ Credit from the Banking System. 4/ Consumer Price Index (Freetown). not available not applicable  SIERRA LEONE TRADE PAYMENTS AND CAPITAL FLOWS BALANCE OF PAYMENTS MERCHANDISE EXPORTS(US $ Million) 1973-75 1977-79 1974 1976 1979 Average % Average % (Millions US $) - Exports of Goods, NFS 153.5 120.0 230.0 Minerals 99.1 74.1 105.8 58.4 Imports of Goods, NFS -217.2 -162.5 -304.2 lJamonds 80.4 60.1 97.7 53.9 Iron Ore 14.3 10.7 - _ Resource GaP (deficit = 63.7 - 42.5 - 74.2 Bauxite 4.4 3.3 8.1 4.5 (net)7 - 42.5 - 74.2 Agr'l. Commod. 24.8 18.5 64.1 :35.4 Interest Payments (net) Coffee 7.8 5.8 32.5 .17.9 Workers' Remittances Cocoa 8.2 6.L 22.8 L2.6 Other Factor Payments (net) - 18.8 - 25.2 - 40.9 Palm kernels & Prod. 8.8 6. 6 8.8 4.9 Net Transfers 21.9 10.7 28.6 All other Commodities 9.9 7.ei I0.9. _ 6. Balance on Current Account - 60.6 - 57.0 - 86.5 Total 133.8 100.0 181.1 100,0 Direct Foreign Investment 10.3 8.5 7.6 Net MLT Borrowing 26.8 16.4 37.0 Disbursements 38.5 32.3 86.1 EXTERNAL DEBT, December 31, 1930 1/ US m Amortization -11.7 -15.9 -49.0 Subtotal 37.1 24.9 44.6 Public Debt, incl. guaranteed 334..7 Capital Grants 3.5 5.6 6.7 Non-Guaranteed Private Debt - Other Capital (net) 10.4 4.3 7.6 Total outstanding & Disbursed 334.7 Other items n.e.i _._.8 - 2.1 -1'5. Increase in Reserves (+) 7.8 -24.3 -43.1 DEBT SERVICE RATIO FOR 1980 - , Gross Reserves (end year) 49.2 21.8 46.7 Net Reserves (end year) 36.5 - 4.9 -26.2 Public Debt. incl. guaranteed 2!1.6 Non-Guaranteed Private Debt - Fuel and Related Materials Total outstanding & Disbursed 29.6 Imports of which: Petroleum 25.3 11.2 67.0 2/ Exports of wqhich: Petroleum - - - IBRD/IDA LENDING (May 31, 1981) (Million US $) RATE OF EXCHANGE IBRD _DA Outstanding & Disbursed 18.5 29.9 Through -_1971 In - 1980 Undisbursed 0.2 4.1 US $ 1.OO .8297 Le US$$ 1.00 = 1.050 Le Outstanding incl. Undisbursed 18.7 34.0 Le 1.00 = US $1.2053 Le 1.00 = US $ .9518 1/ Preliminary. 2/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. Excludes debt servicing of arrears ($16.3 million in principal and $4.9 million in interest). not available not applicable JJ1y 31, 1981  TABLE 3A SIERRA 5RE- SOCIAL INDICATORS DATA SHEET SIERRA LEONE REFERENCE GROUPS (WEIGHTED AV5RAGES lAND AREA (ThOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 7.7 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 27.7 1960 /b 1970 /b ESTIMATE lb AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (US$) .. 150.0 250.0 238.3 794.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 30.6 127.3 89.1 70.5 707.5 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 2164.7 2692.1 3381.0 URBAN POPULATION (PERCENT OF TOTAL) 13.0 18.1 23.8 17.5 27.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 6.0 STATIONARY POPULATION (MILLIONS) 17.0 YEAR STATIONARY POPULATION IS REACHED 2130 POPULATION DENSITY PER SQ. KM. 30.2 37.5 47.2 27.7 55.0 PER SQ. KM. AGRICULTURAL LAND 79.9 97.9 118.8 73.7 130.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 41.7 43.0 44.0 44.8 46.0 15-64 YRS. 55.0 53.8 52.8 52.4 51.2 65 YRS. AND ABOVE 3.3 3.2 3.2 2.9 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 2.2 2.5 2.6 2.8 URBAN 5.2 5.5 5.6 6.5 5.1 CRUDE BIRTH RATE (PER THOUSAND) 46.8 45.7 45.5 46.9 46.9 CRUDE DEATH RATE (PER THOUSAND) 26.6 21.9 18.5 19.3 15.8 GROSS REPRODUCTION RATE 3.0 3.0 3.0 3.1 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. USERS (PERCENT OF MARRIED WOMEN) .. .. FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 99.0 82.0 89.5 89.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 85.0 96.0 93.0 90.2 92.3 PROTEINS (GRAMS PER DAY) 43.0 47.0 48.0 52.7 52.8 OF WHICH ANIMAL AND PULSE 13.0 14.0 17.0 17.8 16.1 CHILD (AGES 1-4) MORTALITY RATE 41.0 32.2 25.4 27.3 20.2 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.2 42.4 46.8 45.8 50.8 INFANT MORTALITY RATE (PER THOUSAND) .. .. ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 12.0 .. 23.9 27.4 URBAN .. 75.0 .. 55.0 74.3 RURAL .. 1.0 .. 18.5 12.6 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 26.2 URBAN .. .. .. 63.5 RURAL .. .. .. 20.3 POPULATION PER PHYSICIAN 20421.4 18067.7 .. 31911.8 13844.1 POPULATION PER NURSING PERSON 5904.0/c 3802.0 *- 3674.9 2898.6 POPULATION PER HOSPITAL BED TOTAL 1311.8 1095.2 *- 1238.8 1028.4 URBAN 288.9 361.1 .. 272.8 423.0 RURAL .. .. .. 1745.2 3543.2 ADMISSIONS PER HOSPITAL BED .. .. HOUS ING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 6.5 URBAN *. 5.7 RURAL .. 6.7 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN .. 2.1/d .. RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. URBAN .. .. .. RURAL 2.O/c .. ..  TABLE 3A SIERRA LEONE - SOCIAL INDICATORS DATA SHEET SIERRA LEONE REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTIMATE)L- MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA soUrH OF SAHARA EDUCATION ADUJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 23.0 33.0 37.0 56.4 73.7 MALE 30.0 40.0 45.0 70.7 95.8 FEMALE 15.0 26.0 30.0 50.1 79.0 SECONDARY: TOTAL 2.0 9.0 11.0 10.0 15.2 MALE 3.0 12.0 15.0 13.6 25.3 FEMALE 2.0 5.0 7.0 6.6 14.8 VOCATIONAL ENROL. (X OF SECONDARY) 9.0 2.0 2.0/g 8.0 5.3 PUPIL-TEACHER RATIO PRIMARY 36.0 32.0 32.0 46.5 36.2 SECONDARY 17.0 20.0 19.0/g 25.5 23.6 ADULT LITERACY RATE (PERCENT) 7.0 15.0 ,, 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 2.0 8.7 6.0 2.9 32.3 RADIO RECEIVERS PER THOUSAND POPULATION 4.3 14.9 98.3 32.8 69.0 TV RECEIVERS PER THOUSAND POPULATION 0.2/e 1.1 4.7 1.9 8.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 6.0 16.7 10.0 2.8 20.2 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.1 0.1 .. 1.2 0.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 910.5 1055.6 1243.9 FE4ALE (PERCENT) 36.6 35.8 34.9 34.1 36.7 AGRICULTURE (PERCENT) 78.0 71.0 65.6 80.0 56.6 INDUSTRY (PERCENT) 12.0 15.0 18.6 8.6 17.5 PARTICIPATION RATE (PERCENT) TOTAL 42.1 39.2 36.8 41.7 2,7.2 MALE 54.7 51.5 48.8 54.3 47.1 FEMALE 30.0 27.5 25.2 29.2 .7.5 ECONOMIC DEPENDENCY RATIO 1.1 1.2 1.3 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 33.8/f HIGHEST 20 PERCENT OF HOUSEHOLDS .. 64.17 . LOWEST 20 PERCENT OF HOUSEHOLDS .. 4.5/f LOWEST 40 PERCENT OF HOUSEHOLDS .. 10.17 . POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 105.0 136.0 381.2 RURAL .. .. 75.0 84.5 1'6.2 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. . 198.0 99.1 3:14.3 RURAL '' '' 40.0 61.2 1:7.6 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. ,. 39.7 RURAL .. .. 65.0 68.8 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1961 and 1971; and for Most Recent Estimate, between 1976 and 1979. /c 1962; /d 1967; /e 1963; /f Population; /S 1975. 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