Sierra Leone
Poverty Reduction Strategy Paper
Author: International Monetary Fund
Publication Date:
10 Jun 2005
eISBN:
9781451834505
Language:
English
Keywords:
ISCR; CR; private sector; civil society; economic recovery; extended family; job creation
Download PDF (1.2 MB)

This paper examines Sierra Leone’s Poverty Reduction Strategy Paper (PRSP). Sierra Leone’s PRSP considers a number of short- to medium-term challenges that should not only impact immediately on the living conditions of people but also lay solid foundations for addressing the long-term causes of conflict and poverty. These have been identified through extensive national consultations. In addition, the PRSP also considers a number of short-term challenges that need to be met immediately.

Abstract

This paper examines Sierra Leone’s Poverty Reduction Strategy Paper (PRSP). Sierra Leone’s PRSP considers a number of short- to medium-term challenges that should not only impact immediately on the living conditions of people but also lay solid foundations for addressing the long-term causes of conflict and poverty. These have been identified through extensive national consultations. In addition, the PRSP also considers a number of short-term challenges that need to be met immediately.

CHAPTER ONE

INTRODUCTION

For Official Use Only

February 2005

1.0 Political and Economic Context

1. Sierra Leone became an independent on the 27th April 1961 and subsequently declared a Republic on 19th April 1971. Independence was achieved with promised hopes for rapid development, based on the country’s abundant natural resource endowment, including a wide variety of rich mineral, agricultural, forestry and marine wealth. These hopes were, however, quickly dashed by the end of the first decade. Since the mid-1960s, the country has suffered from dramatic economic decline and political instability and has gone through five military coups and a brutal armed conflict that lasted for just over ten years (March 1991-January 2002).

2. Compared to other conflict-affected developing countries, the source of Sierra Leone’s political instability lies less in ethnic and religious rivalry but more in extremely poor governance, widespread corruption, and the marginalisation and disempowerment of the rural communities, through overpowering and inefficient central government intervention in the delivery of public services. These problems have been compounded by the collapse of local government administration shortly after independence and the worsening terms of trade for the country’s limited export commodities, social and other adverse developments in the world economy.

3. On the economic front, annual growth averaged about 4 percent and 3.5 percent in the 1960s and 1970s respectively, but slowed down dramatically to an average of 1.5 percent in the 1980s, largely on account of misguided economic policies and economic mismanagement. In the late 1980s, Government introduced a series of macroeconomic and structural reforms in consultation with its development partners, aimed at stabilising the economy and restoring growth (reduction of the budget deficit, liberalisation of the exchange rate, abolition of price controls and exchange restrictions). The civil war that ensued in the 1990s derailed this programme and the economy plunged to an average rate of–4.5 percent per annum between 1990 and 2000.

4. Poverty increased as the economy declined, but became more pervasive and intensified during the 1990s as the GDP per capita nearly halved during that period, reaching US$142 in 2000. About 82 percent of the population lived below the poverty line, and with a Gini Index of 66, Sierra Leone had one of the most skewed income distribution in the world. Since 1996, Sierra Leone has been ranked among the least in the UNDP Human Development Index, and is ranked bottom in the 2004 Index. The poverty situation is worsened by the rising incidence of HIV/AIDS, typhoid, malaria and communicable diseases including tuberculosis.

1.1 The Civil War and its Aftermath

5. The social and economic impact of the 10-year civil conflict was devastating. The brutal attacks by the Revolutionary United Front (RUF) that began in March 1991 and backed by cross sections of the national armed forces left a trail of human tragedy. An estimated 20,000 people were killed and thousands more injured or maimed. Over 2 million people were displaced (500,000 fled to neighbouring countries). There was a mass exodus of skilled professionals, to Freetown and out of the country, leaving most of the country drained from any skilled manpower. The damage extended to significant loss of property and the abduction of women and children for sex, labour and combat. Most of the country’s social, economic and physical infrastructure was destroyed. Local community social and productive infrastructure such as markets, stores, rice mills, and community service buildings were completely vandalised.

6. At the height of the civil conflict, there was almost a complete breakdown of civil and political authority in the country, giving rise to tremendous human rights abuses. Mining and agricultural activities, the lifeline of the country, were essentially brought to a halt. Farms were rampaged or abandoned while the livestock population was almost entirely wiped out.

1.2. Conflict Resolution and Peacekeeping

7. National elections in March 1996 saw the peaceful transition of power to Sierra Leone’s first democratically elected Government in nearly 30 years, and the new President, Alhaji Dr. Ahmad Tejan Kabbah, quickly commenced tangible talks with the rebels, which resulted in the first Peace Agreement which was signed in Abidjan, La Cote d’Ivoire, on 30th November 1996. This agreement and the peace process collapsed in May 1997 until 7th July 1999, when a second Peace Agreement was signed in Lome, Togo. These agreements ushered in the arrival of the West African Peacekeeping Force (ECOMOG) and later the UN peacekeeping mission (UNAMSIL).

8. The final phase of disarmament and demobilisation of all combatants got underway from May 2001 to January 2002 with the support of the multi-donor funded Disarmament, Demobilisation and Reintegration (DDR) programme. A total of 72,490 combatants were disarmed and 71,043 demobilised, including 6,845 child soldiers. The rebel war was declared over on 18th January 2002. By the end of February 2004, over 56,000 ex-combatants had received support for their reintegration into active community life. The Reconstruction, Resettlement and Rehabilitation (RRR) programme supported the resettlement of refugees and internally displaced persons (IDPs) in their communities. These events paved the way for peaceful National Elections (both legislative and presidential) in May 2002, in which the RUF participated as a political party, and the gradual restoration of civil authority all over the country.

9. A Truth and Reconciliation Commission (TRC) was set up as a mechanism to help heal the war-related “wounds”. The Commission successfully concluded its work in June 2004 after two years. A UN-sponsored Special Court was established in 2003 for prosecuting those that “bore the greatest responsibility for the war damages”. The court has commenced the trials process, scheduled to end in 2006. In 2004, the United Nations Security Council commenced a gradual, phased withdrawal of the United Nations Peacekeeping Mission in Sierra Leone (UNAMSIL), taking into account a number of security-related factors, including the continued restructuring and development of the national military and police forces to prevent any renewed instability.

1.3. Post-Conflict Challenges

10. Sierra Leone’s post-conflict economic, social and political rebuilding stems primarily from the aftermath of decades of economic mismanagement, wide-spread corruption, inefficient state control over economic and political activity, lack of investment in critical economic and social areas, and a decade-long devastating civil war, which also severely constrained the Government’s ability to sustain any reforms. Although significant progress has been made in stabilising the economy and removing many of the structural impediments to growth, despite fundamental disruptions from the rebel war combined with continuously higher than programmed security-related spending, overall, the implementation of the macroeconomic and structural adjustment programmes has not brought to the country the expected benefits in terms of sustained growth and human development. The fundamental ideology of the programmes and their implementation stressed stabilisation and macroeconomic balance without adequate attention to the human conditions, especially of the poor, as well as the social and economic dimensions of the war. This brought in the realization not only within Sierra Leone but also among the country’s cooperating partners- notably the World Bank, IMF, AfDB, UNDP, EU and UK-DFID, that there was need for a fresh approach to the post-conflict development agenda.

1.3.1 The Interim Poverty Reduction Strategy Paper (I-PRSP) and the National Recovery Strategy (NRS)

11. Government formulated a poverty reduction strategy in the form of Interim-PRSP, which was finalised in June 2001, and subsequently endorsed by the Joint Executive Boards of the IMF and World Bank in September of the same year. The I-PRSP reflected Government’s priority to address the challenges of transition from war to peace and the first assessment of actions needed to achieve this objective. The I-PRSP aimed at rebuilding the country by addressing the causes of the war through a responsive poverty reduction and pro-poor economic growth.

12. The I-PRSP’s objectives, which were cast in a medium-term framework, were to be implemented in two phases. In the transitional phase (2001-2002), emphasis was placed on: (i) restoring national security and good governance; (ii) re-launching the economy; and (iii) providing basic social services to the most vulnerable groups. The medium-term (2003-2004) would focus on good governance, revival of the economy and social sector development. In a Consultative Group Meeting held in Paris in November 2002, Government and its development partners laid out an updated agenda for poverty reduction and development, designed to support the transition from peace-keeping to peace-building and relief to equitable growth and sustainable development, to ensure that “Sierra Leone leaves conflict behind forever and provides a better life for its people”. The new focus reinforced Government’s commitment to its overarching goal of poverty reduction through a participatory approach and monitorable poverty outcomes. The emphasis was on measures to: (i) maintain economic stability; (ii) enhance the population’s capacity to undertake income-generating activities, raising productivity and employment; (iii) secure the resources to fight poverty and deliver quality public services; and (iv) rebuild security, governance, justice, human rights and security. The new agenda also took into account implementation of a national recovery strategy to improve the provision of social and economic services in the immediate post-conflict period and the preparation of a full PRSP that would consolidate and build on the gains made in implementing the I-PRSP.

13. The National Recovery Strategy (NRS) was prepared and launched in October 2002 on the basis of detailed district assessments and local recovery plans. The NRS focused on: (i) the consolidation of state authority and peace-building; (ii) promotion of reconciliation and enforcement of human rights; (iii) facilitating resettlement and reintegration and rebuilding communities; (iv) facilitating access to previously inaccessible areas and expediting service delivery; and (v) stimulating economic recovery. The NRS constituted the combined efforts of the Government and its development partners, particularly UNAMSIL and UNDP. The strategy was people-centred, seeking community empowerment and participation and was seen as a bridge between emergency humanitarian assistance and longer-term development challenges.

14. Both the I-PRSP and the NRS were successfully implemented during the 2001-2004 period. With the full support of the international community, considerable progress was made in restoring security and consolidating peace throughout the country. Following the conclusion of the disarmament and demobilisation programme in February 2002, the ex-combatants were reintegrated and virtually all IDPs and refugees resettled. A National Social Action Programme, implemented by the National Commission for Social Action (NaCSA) was launched with the intention to rebuild the social and economic capital at community level. The entire country is now accessible to Government and development partners, while business and consumer confidence has been substantially strengthened.

15. In terms of lending fiscal support to I-PRSP and the NRS implementation, Government allocated significant amount of budgetary resources, including HIPC debt relief, to fund critical poverty reduction activities especially in the social sector comprising of health, education, water and sanitation. A number of safety net programmes were developed for supporting the variety of war victims, including children, women, amputees, wounded soldiers (WIAs) and the surviving families of soldiers killed in action (KIAs). In the health sector, the increase in allocation was to enhance such areas as maternal and child health care, the school health and expanded immunization programmes as well as the purchase of drugs and medical equipment. In the education sector, the increased allocations catered for implementing the universal primary education programme through the provision of additional teaching and learning materials for primary schools, payment of examination fees, and the provision of textbooks to all secondary schools. The I-PRSP and NRS also resulted in sustained recovery of the economy in 2001-2004. Real GDP expanded by 5.4 percent in 2001 from 3.8 percent in 2000. Real GDP further expanded by 6.3 percent in 2002. To consolidate these gains, the Government is fully embracing bold economic and structural reforms aimed at sustaining economic recovery and improving public financial management and service delivery. Major sector reforms are at an advanced stage and progress has been made in strengthening accountability and transparency, anti-corruption and monitoring of service delivery.

16. Political devolution has also progressed with the enactment of the Local Government Act 2004. The first local government elections in 32 years were successfully held in May 2004. Nineteen local councils were installed and after extensive consultations with line ministries and other stakeholders including local communities, Government prepared a comprehensive plan for devolving central government functions to the local councils. The Devolution Plan also specified the sequencing of the devolution process.

1.3.2. Long-term Development Challenges: VISION 2025

17. Government’s poverty strategy is also set within the overall vision of Sierra Leone’s long-term development agenda articulated in Vision 2025. This document identifies the key objectives that need to be attained for Sierra Leone to leave conflict behind forever and provide a better life for its people. (See Box 1).

Vision 2025

The decision to embark on Vision 2025 was based on the desire to create a better future for Sierra Leone - a future that is characterised by the virtuous circle of peace, stability and wealth creation, in place of the vicious circle of poverty and underdevelopment. As the country has experienced an unprecedented social, economic and political decline over the last three decades, it has become increasingly important to tackle certain critical challenges on its development agenda. The overall thrust of these challenges is the imperative of embarking on an extensive economic recovery programme for sustained growth and human development, in a peaceful and stable environment.

Sierra Leone Vision 2025 recognises that in spite of this appalling state of human development, Sierra Leone has tremendous potential for raising the quality of life of its entire peoples. The aspirations and the strategic analysis undertaken led to the formulation of a national vision for Sierra Leone. This vision statement will become the new guiding light for the nation. It will provide the sense of purpose and direction for all national actions.

Sierra Leone’s Vision 2025, which was developed through consensus, aptly summarises the development principles, which Sierra Leoneans agreed must guide their development efforts for the foreseeable future. The strategic areas of focus chosen which must become the basis for plans and policies for Sierra Leone are to:

  • Attain a competitive private sector-led economic development with effective indigenous participation;

  • Create a high quality of life for all Sierra Leoneans;

  • Build a well-educated and enlightened society;

  • Create a tolerant, stable, secure and well-managed society based on democratic values;

  • Ensure sustainable exploitation and effective utilisation of our natural resources while maintaining a healthy environment; and

  • Become a science and technology driven nation.

They represent the core strategic issues that must provide the objectives for all plans, policies and programmes that aim to contribute to the development of Sierra Leone.

1.4. The Poverty Reduction Strategy Paper (PRSP)

18. Although noticeable achievements have been made in implementing the I-PRSP and NRS over the immediate post-conflict years, poverty reduction still remains a major challenge for the Government and the people of Sierra Leone. New responsibilities have also emerged, with the need to pursue accountable, transparent and corruption-free policies for stability as well as to ensure a carefully sequenced opening up of investment and trade to deliver economic growth. There are also new opportunities including capacity for making the investments in health, education and infrastructure that would allow the country to attain the Millennium Development Goals (MDGs) in the widest participatory manner. In addition to supporting the long-term aims of Vision 2025, the Government is aware of the need to prepare a more comprehensive poverty reduction strategy that builds on the gains from the Interim Poverty Reduction Strategy and the NRS and whilst striving to achieve the MDGs and other socioeconomic indicators. The PRSP thus consider a number of short to medium-term challenges that should not only impact immediately on the living conditions of the people but also to lay solid foundations for addressing the long-term causes of conflict and poverty. These have been identified through extensive national consultations. The two major challenges are promoting food security and job creation through i) achieving high and sustained broad-based economic growth particularly in rural areas where agricultural development and increased food production are central; (ii) providing essential and economic services and infrastructure to the poor; and (iv) improving governance. Consolidation of peace and security is also essential if the country is to attract the kind of investment necessary to break the cycle of poverty. Continued broadening and deepening of reform on several fronts will ensure that growth translates into improved poverty and human development outcomes.

19. In addition to these aims, the PRSP also considers a number of short-term challenges that need to be met immediately. These challenges include the impact of the spread of HIV/AIDS and other diseases such as malaria, typhoid and wide-ranging communicable diseases, the need to ensure affordable shelter for those households that are still deprived of it, the process of re-integration, and the need of labour-intensive approaches to sector programmes, especially public works, mining and agriculture. The high unemployment in rural areas results in low wages, which offers a window of opportunity for broad-based labour-intensive works that supplement incomes of the poor, while supporting rural development. The need to arrest the poverty situation in the country is now at the core of all government policies and programmes and the strategy also includes the devolution of central government functions to local communities. These elements are directly linked to the results of the poverty diagnostics from both qualitative and quantitative surveys and assessments. Generally, the findings show the very low level of human development and the pressing need for moving towards the MDGs.

1.4.1 Alignment between the PRSP and the Millennium Development Goals (MDGs)

20. The Government’s PRSP objectives in particular, Pillar Three objectives, are therefore set with reference to the MDGs, which aim at reducing poverty and its different symptoms by 2015, and for the international community to strive side by side, with national governments to achieve these goals within a partnership and cooperative framework. As is the case with most of the developing countries, Sierra Leone has adopted and firmly committed itself to attaining the eight MDGs. However, 2005 is a crucial, defining year for Sierra Leone. It marks the commencement of the full PRSP implementation. The year also marks five years out of the fifteen years of the historic task of meeting eight MDGs. For Sierra Leone, the task of meeting the MDGs is more onerous, given that PRSP implementation will commence only ten years to the 2015 target date. By implication, and given the country’s post-conflict situation and the risks associated with the external economic environment, Sierra Leone would likely take a far much longer period to achieve the MDGs.

21. The Government however recognises that in the PRSP, the people of Sierra Leone, supported by the international community, are taking the first big, conscious step towards the attainment of the MDGs. The Government also recognises that external resources are only a supplement to domestic resources, and that it must endeavour to substantially increase the latter. But while the Government will be making desperate efforts to mobilise its own resources, it is now very clear that the magnitude of the resources required to meaningfully work towards the MDGs is such that the continued support of development partners is essential. It would mean new responsibilities for the development partners–to transfer resources, facilitate private sector development especially in the area of value-added enterprise development, and increase market access for Sierra Leonean products.

1.4.2 Partnership with the Donor Community

22. In preparing its PRSP, the Government has adopted the comprehensive development framework in a way that will systematically link diagnosis and public actions on poverty outcomes. The framework’s focus on poverty outcomes and the link between policies and actions on the ground also underpin the PRSP for Sierra Leone. In implementing the strategy, as domestic resources alone cannot effectively cope with the myriad challenges defined in the document, the Government is committed to building a strong partnership with both civil society and its development partners.

23. The preparation of this PRSP underwent extensive consultations with all stakeholders. Given the participatory process on which its legitimacy is based, the Government will encourage all development partners and other actors to use the PRSP as a frame of reference in designing individual country programmes, including sector development plans and investment programmes.

24. Government recognises the need to establish in-country coordination mechanisms that can provide more frequent opportunities for dialogue on policy and structural issues as well as for tracking overall progress and facilitating donor coordination. Consequently, the Government established the joint Development Partnership Committee (DEPAC) in 2003 within the Framework of the Consultative Group Meeting, and in Paris in November 2002. Co-Chaired by the Vice President of the Republic of Sierra Leone, the World Bank and UNDP, the Committee has had the responsibility of monitoring the agreed Consultative Group benchmarks, which included completion of the full PRSP. DEPAC meets bi-monthly in Sierra Leone and has guided the preparation of the PRSP. It has also provided an excellent opportunity for the donor community, government and several other development stakeholders (including Civil Society partners) to exchange views on the country’s development efforts and to respond to challenges while plotting the way forward. Overall, DEPAC has led to significant improvements in the quality and focus of post-conflict policies, including aid coordination and effectiveness.

1.4.3 Core Principles and Risks of the PRSP

25. In formulating its Paper, Government has fully adopted the key principles underlying the development and implementation of poverty reduction strategies, building on those that underpin the World Bank’s Comprehensive Development Framework (CDF). In this context, the strategy is: (i) country-owned, community-owned, involving broad-based participation by key stakeholders; (ii) results oriented, focusing on monitorable outcomes that benefit the poor and vulnerable; (iii) comprehensive in recognizing the multidimensional nature of poverty and vulnerability; (iv) prioritised so that implementation is feasible and impacting, in both fiscal and institutional terms; (v) partnership oriented, involving coordinated participation of development partners (bilateral, multilateral, and non-governmental); (vi) based on a long-term perspective for poverty reduction; and (vii) aligned with the MDGs. Both the process and content of the PRSP are viewed as dynamic in nature, and the paper itself is a living document based on the above principles.

26. While these principles obtain, the PRSP can be undermined by several risk factors unless mechanisms are evolved over time for mitigating them. They include the shortfall and unpredictability of long-term aid and investment; poor domestic revenue performance; regional insecurity; delays in providing basic social services and re-launching viable economic activities in rural communities; collapse of fiscal and monetary discipline and public financial management; weak political commitment to devolution; failing anti-corruption agenda; and weak institutional and human resource capacity. There are also risks associated with adverse developments in the world economy, which could threaten global as well as national economic stability and growth. The most significant external risks come from high and rising international oil and commodity prices, continued protectionism by developed countries, depriving market access for Sierra Leone traded goods, and any deterioration in terms of trade. For rich and poor countries alike, stability in the world economy is a precondition for global prosperity and growth.

1.4.4 Structure of the PRSP

27. The rest of the Paper is structured as follows: Chapter Two describes the participatory and consultative processes pursued in the last two years in preparation of this PRSP. Chapter Three describes the current poverty situation in the country and provides data on poverty profiles and the causes and determinants of poverty. Chapter Four addresses economic developments and the medium term macroeconomic framework for poverty reduction. The chapter ends with an analysis of growth and poverty linkages that underpin the poverty reduction strategies. Chapter Five presents the poverty reduction strategies, starting with a presentation of the goals and pillars of the PRSP and the links with the MDGs. This is followed by the policy objectives, strategies and priority actions needed to address poverty in the next three years in the various sectors. Chapter Six describes the cost and financing of the PRSP while Chapter Seven outlines the Implementation Arrangements and Capacity Building requirements for mainstreaming the PRSP into the activities of MDAs and stakeholders including the Development Partners. Chapter Eight outlines the Framework for Monitoring and Evaluation.

CHAPTER TWO

THE PRSP PREPARATORY PROCESSES

2.0 Introduction

28. The PRSP has been prepared through extensive national consultations. Since 1996, the Government has been developing a long-term strategic vision by involving a wide-range of stakeholders in a participatory process. This participatory approach has allowed for collaborative decision-making, broad-based consensus and popular ownership. It has also afforded Sierra Leoneans the opportunity to contribute to the formulation of a long-term development strategy for poverty reduction. Preparation of the PRSP has built on this approach.

29. The overall objective of the participatory process for the PRSP was to generate qualitative information on poverty for policy formulation, programme design, monitoring and evaluation. The specific objectives were to: a) share information with the population on the process and their role in formulation of public policy; b) generate information on the dimensions, coping mechanisms, and trends in poverty; c) assess the impact of government policies on the poor; and d) build the capacity of local communities to analyse problems, identify priorities, propose solutions and establish linkages with policy makers.

30. The outputs from these consultations have already led to: a) increased public awareness of the PRSP concept and process; b) improved perception of poverty by key stakeholders, including the poor, women, children and youths, and a reflection of these perceptions in defining public policy priorities; c) the impact of policies on poor people and their coping mechanisms are better understood for policy design and implementation; d) mainstreaming of gender and child’s right issues in poverty assessments; and e) well developed local capacities for rigorous problem analysis, priority setting and solution identification.

2.1 The PRSP Preparation Governance Framework

31. Initially, the governance framework for the preparation of the PRSP comprised the Poverty Alleviation Strategy Coordinating Office (PASCO) and three committees: an Inter-Ministerial Committee- (IMC), a Poverty Reduction Steering Committee (PRSC), and Poverty Reduction Working Groups (PRWGs) (see Chart 1). PASCO coordinated the preparation of the PRSP under the direct supervision of the Ministry of Development and Economic Planning (MODEP) until February 2004. The Minister of Development and Economic Planning initially chaired the Inter-Ministerial Committee (IMC), as approved by Cabinet. The committee comprised all cabinet ministers and provided overall policy guidance for the process.

32. The Poverty Reduction Steering Committee (PRSC) was established to manage the preparation of the PRSP. Its specific responsibilities included the structuring of all consultative processes, providing regular reports on the process to Cabinet and the IMC, and overseeing the work of all consultants. The Committee was chaired by the Development Secretary and comprised professionals and Permanent Secretaries of key ministries and government agencies as well as representatives of development partners.

33. The Poverty Reduction Sector Working Groups, comprising all technical heads of key ministries as well as representatives of development partners, NGOs and CSOs who are key service providers in the thematic group, served as sector/thematic focal points and provided support to PASCO and Consultants in drafting the relevant sections from each thematic group. The thematic groups were Governance and National Security; Macroeconomic Policy and Private Sector Development; Transport and Infrastructure, including Housing, Water and Sanitation and Energy; and the Social Sectors - Education, Health, Employment and Youths.

34. The PRSP was not completed by December 2003 as was proposed in the IPRSP. This was largely due to administrative and technical constraints with the original governance framework for the preparation of the document. However, given the importance government attached to the process, the structure was modified in February 2004. In particular, a Technical Working Group (TWG), comprising the Director of the Development Assistance Coordinating Office, the Statistician General, Statistics Sierra Leone, the Director of Economic Policy and Research Unit of the Ministry of Finance and the National Coordinator of PASCO, was subsequently appointed to supervise and fast track the completion of the PRSP preparation process. PASCO was moved to the Office of the Vice President and supervised by the TWG. The Ministry of Finance also became more directly involved in the PRSP preparatory process, while the Vice President chaired the IMC.

2.2 The Participatory Processes

35. The participatory processes for the preparation of the PRSP, as mapped out in the IPRSP, were closely implemented in 2003 and 2004. These were characterised by open and frank dialogue between government and the people represented by key stakeholders–cabinet ministers, parliamentarians, NGOs, members of civil society, the private sector, cooperative associations, local authorities, religious leaders, development partners and beneficiary groups.

36. This approach allowed a frank exchange of views, as well as enabled the general citizenry to have a clear and better understanding of the PRSP process and its likely associated benefits. Hence, the participatory process provided a window of opportunity for networking and collaboration as well as building broad internal consensus around priorities to ensure national ownership.

37. The participatory methodologies included chiefdom sensitisation meetings, the Strategic Planning and Action Process (SPP)/Focus Group Discussions (FGDs), and Participatory Poverty Assessment (PPAs), Civic Engagement on the PRSP was led by NGOs/CSOs. Sector Working Group sessions and National and District Consultations on the proposed poverty strategy, and Validation Workshops for the final draft PRSP were also organised. Radio and television discussions were an important part of the communication and sensitisation strategy. The key elements of each of these methodologies are summarised below.

2.2.1 Strategic Planning and Action Process / Focus Group Discussions (SPP/FGDs)

a) Evolution of the Methodology

38. In 1996, following the first democratic elections in thirty years, Government, with assistance from the World Bank, introduced the Strategic Planning and Action Process (SPP). The aim of the SPP was to identify development priorities and strategies through a highly participatory citizen’s consultative exercise to define a National Strategic Vision (NSV).

39. The SPP approach sought to blend central government planning with bottom-up initiatives, and elicit new partnerships among the Government, civil society, private sector and donor community. The process constituted a new planning tool that transformed the standard centralised planning process by policy makers of the past into a participatory Results-Driven Partnership Model of Governance.

Focus Group Discussions (FDGs): Methodology and Procedures

The FGDs were conducted in a relaxed and informal atmosphere to encourage active participation. The selection criteria for participation in each district required a minimum of five representatives per chiefdom, comprising two adults (male and female), two youth groups’ representatives (male and female) and a representative from the district recovery committee.

The group composition for the FGDs was aimed at capturing a hybrid opinion and perceptions of the various socio-economic groups on poverty, risk, shocks, vulnerability, and the three pillars of ECOWAS/NEPAD. The specific questions addressed during the FGDs were the following: i.) Where are we now? ii.) Where do we want to be? iii). How do we get there? iv) How do we know we are getting there? v) What are the risks and opportunities? All these questions captured the gender dimensions as well.

FGD Concept and Instruments

The instruments and exercises that were developed and carried out during the FGDs were:

  • Name Game: Each focus group discussion commenced with the “name game” which is an “ice breaking” technique to enhance group interaction.

  • Budget Game: In discussing the question ‘how do we get there?’ participants were encouraged to identify and rank broad and specific priorities and strategies for poverty reduction. During the “Budget Game” each participant was allocated a limited number of votes (3) to be cast against one or more of available options displayed on wall-mounted posters.

  • Smiley Game: The “Smiley Game’’ facilitates local communities’ self-assessment and reflection of improvements or deterioration in their welfare or sector based on agreed benchmarks for a specific period. Each participant’s rating was recorded in an active voting process on calibrated flip charts. The aggregated ratings are then displayed on flip charts as “smiley profiles” and used as a basis for group reflection on past and current conditions in their communities.

  • Risks, Shocks and Vulnerability Assessments (RVAs) Templates: During the discussions, participants explored the causes and characteristics of various shocks (idiosyncratic and covariate) and the frequency and severity of these shocks. The participants also identified the mechanisms available to minimise the short and long term consequences of negative shocks as well as the population groups that are especially vulnerable to negative shocks.

  • Gender Analysis: The focus of the discussions was on capturing the gender dimension of poverty by identifying the different gender activities, roles and responsibilities with special focus on opportunities, capabilities, empowerment and security.

40. The National Strategic Vision that emerged out of the 1996 consultations was centred on creating a united, peaceful, educated and healthy population enjoying good governance and a broad based socio-economic recovery and growth in the medium term. Consistent with this vision, five broad development priorities were identified and ranked highest by stakeholders: i) security and war-related issues, especially the Disarmament, Demobilisation and Reintegration (DDR) Programme and the Resettlement, Rehabilitation and Reintegration (RRR); ii) food security; iii) basic education; iv) primary health care; and v) good governance, justice and decentralisation. The results of these consultations, together with follow-up consultations in 1998 and 2000, informed the priorities defined in the I-PRSP.

41. To ensure a more effective participatory process for the PRSP formulation, the SPP/FGDs were sharpened, made gender sensitive, specialised and custom-designed for particular contexts and decision-making bodies such as parliament and cabinet. Given the extension of government authority through out the country, the coverage of the SPP/FGDs was also expanded to encompass chiefdom and village settings. Steps were taken to ensure that focus group discussions were organised with homogenous groups such as Internally Displaced Persons (IDPs), refugees, ex-combatants, women, children and youths. Gender issues were similarly addressed during the consultations.

b) Objectives and Coverage

42. The principal objectives of the FGDs were to; i) gauge the perceptions and opinions of relevant stakeholders, including grassroots representatives of poverty and its main determinants; ii) identify a medium term development vision for poverty reduction; iii) identify and rank development strategies and priorities and agree on benchmarks for implementation, monitoring and evaluation; iv) identify costs, risks and basic characteristics of shocks and vulnerabilities, determining coping mechanisms to manage and minimise these; v) explore the gender dimensions of poverty; and vi) define national and specific priorities for poverty reduction.

43. FGDs were conducted with cabinet ministers, parliamentarians, government officials and specialised groups such as mass media, women, children, youths, local authorities, religious leaders and civil society organisations during September-October 2003. During the same period, FGDs were also conducted at regional and district levels.

44. A second round of focus group discussions that incorporated Risk and Vulnerability Assessments (RVAs) and Gender Analyses (GAs) were conducted during March-April 2004 in all headquarter towns of the twelve districts in the provinces, and the two districts in the Western Area. Participation in each district comprised representatives from all of the 149 chiefdoms in the provinces and the 5 wards in the Western area. Participants were drawn from civil society, government, private sector, NGOs, students, the marginalised, the aged and disabled, women, parliamentarians, faith groups, and local administration.

45. A total of about 1,260 representatives nation-wide participated in the FGDs. At district level, 90 participants from all chiefdoms in the districts participated. District participants were disaggregated by sex and other socio-economic variables such as age, educational level, and disability. At least six to seven participants per chiefdom in a district participated in the harmonised methodology of FGDs, which included Risks and Vulnerability Assessments and Gender Analyses.

2.2.2 Participatory Poverty Assessments (PPAs) -Voice of the Poor

46. By contributing to the poverty strategy formulation process, PPAs, a) ensure that the voices, perspectives and priority needs of poor people are reflected in government policy; b) provide information on people’s perceptions of the definitions, causes, categories, impact and characteristics of poverty; c) engage a wide range of stakeholders in the research process so as to stimulate local activities for poverty alleviation; d) reveal the general problems confronting communities, including seasonality and coping strategies; and e) provide recommendations on how government service delivery can be improved in poor communities.

47. PPAs were carried out in Sierra Leone to collect information on poverty by asking the poor themselves about their experiences of poverty. They provided detailed information about the perception and attitude of poor people in the country in respect of the causes, consequences and characteristics of poverty. Information was also obtained on dimensions of poverty, coping strategies and priority public interventions to reduce poverty.

Coverage

48. Two PPAs were conducted in 42 communities in all the districts in March 2003. Additional assessments were done in 14 communities in March 2004. The exercises covered four communities per district, including the Western Urban and Rural areas. The selection of communities was based on a number of socio-economic, political, cultural and environmental criteria that are reflective of each district and region. These criteria included geographical location, levels of deprivation, economic activity, ethnicity, language and remoteness.

PPA Methodology

A family of PPA techniques was used to allow poor people to express and analyse their situation, plan what action to take, monitor and evaluate results. Applying different techniques also provided greater depth to the data collected. Group discussions were held in an informal and mutually respective atmosphere. Given that people and diverse groups experience poverty differently, participants were divided into different groups by sex, age and status to better capture their different perspectives of poverty.

A core set of facilitators from different government departments/ministries were trained to act as ‘trainers of trainers’ and supervised the research. Community people, (district trainees) who were mostly school teachers, were further trained by the core set of facilitators to carry out the exercises in the various communities to break the language barrier and to enhance the participation of ordinary people through equality and trust.

49. Community participation in the selected areas was high, involving almost every member and averaging about 130 participants per location. A total number of 8,591 community people participated in the PPAs nationwide.

2.2.3 Civic Engagement

50. Two processes characterised the participatory aspects in the formulation of the PRSP. First, the main government processes coordinated by the Poverty Alleviation Strategy Coordinating Office (PASCO) and second, a ‘Civic Engagement Process’ that started in early 2004 and coordinated by an International NGO, Action Aid Sierra Leone (AASL) with financial support provided by DFID, UK. The Civic Engagement exercise strongly complemented other ongoing initiatives in the formulation of the PRSP.

51. However, prior to the Action Aid-led civic engagement process, in early 2003, with financial support provided by UNDP, Network Movement for Justice and Development (NMJD), a local NGO, organised sensitisation workshops on the PRSP in all 14 administrative districts. The sensitisation covered over 1,500 participants from a broad spectrum of civil society and the citizenry, including youths, women, disabled, government officials, traditional and religious leaders, ex-combatants, war victims, students, etc. A key outcome from this exercise was the emergence of voluntary regional and district civil society groups known as PRSP Task Teams. These Task teams were formally constituted and remained operational and worked closely with PASCO and partner organisations/institutions in the PRSP civic engagement process.

Objectives

52. The Civic Engagement Process provided a comprehensive national framework that synchronised the different programmes for civic engagement on the PRSP process. Its purpose was twofold: a) promote learning, sharing and debate on the PRSP; and b) provoke response and feedback into the PRSP process. The key objectives were to: a) create awareness of the PRSP process and contribute to understanding of the underlying principles, b) compliment ongoing initiatives through the creation of a communication environment c) provide information on poverty related issues and appropriate strategies for addressing them from the perspective of the poor and CSOs; and d) monitor the process of formulation, implementation and recommend corrective actions.

2.2.4 The Process

53. As a first step, partners embarked on intensive collaboration and networking with major stakeholders. A team of four CSOs (known as Regional Implementing Partners) was contracted and assigned the responsibility of coordinating the civic engagement process in the four regions. The partners were: Network Movement for Justice and Development (NMJD), responsible for the Southern Region; Council of Churches Sierra Leone (CCSL), responsible for the Northern Region; Movement for the Restoration of Democracy–Sierra Leone (MRD–SL), responsible for the Eastern Region; and Urban Development Area (UDA–AASL)/FAWE, responsible for the Western Area. The lead partners identified other CSOs and CBOs that were either resident or active within the respective regions to further advance the process.

Methodology

Various methodologies used to advance the civic engagement process included the following:

a) Participatory Learning and Action Forum

This Forum provided an opportunity for partner institutions and stakeholders to use cooperative efforts to raise awareness generate understanding on the PRSP process and provoke discussions on poverty issues. The feedback from the groups were shared and crosschecked at general forums to validate the findings for accuracy and ensure that views of all stakeholders were included in the analysis.

b) Rural Dialogue Forums

The Rural Dialogue forums were a key citizen-engagement initiative that involved thousands of people living in rural and remote communities, community leaders, stakeholder organisations, and representatives from various levels of society. The dialogue focused on identifying specific community actions for poverty reduction and provided feedback to PASCO, government and development partners on required actions.

c) Mobile Multimedia Vans

Mobile vans with multi-media facilities were used to involve youths, women, community members and community leaders in the dissemination of educational materials on the PRSP. Relevant PRSP materials were recorded on video and tape cassettes at location and produced as documentaries for dissemination to both rural and urban communities. Video clips and recorded radio jingles were viewed and listened to at village and district levels and televised and/or broadcasted on radio.

d) Broadcast Media, Performing Arts, and Popular Theatre:

Radio, television and the print media were used to disseminate information and facilitate discussions on the PRSP. Performing arts and popular culture offered excellent opportunities for delivering information to large sections of the population. These appealed to broad audiences and served a combined entertainment and educational function while reaching audiences with varying levels of education.

e) Public Education

Public education programmes were organised in community schools, churches, mosques, market places, public forums, consultative workshops and symposiums in both urban and rural communities, and took advantage of every forum to raise awareness on the PRSP. A workshop was conducted in early January 2004 for 48 Sierra Leonean artiste who composed the theme song for the process titled “Leh wi fet po wit PRSP” (Lets fight poverty with the PRSP). Furthermore, a one-day workshop was conducted for Journalists, Editors and Media Houses in January 2004.

54. Planning workshops at both the national and regional levels were conducted in early 2004 to sensitise all stakeholders on the PRSP process and its relevance to the development efforts. Workshops were also organised for the Regional Implementing Partners, message development experts, the media and other CSOs and these culminated into the development of an effective communication strategy that employed diverse channels of communication relevant to the needs of each audience. The channels included the electronic and print media, workshops and seminars, and special supplements in the national dailies. A comprehensive framework and national action plan was also developed to ensure accuracy and consistency in programme implementation.

Target and Coverage

55. The civic engagement project targeted all levels of society irrespective of sex, generational and ethnic differences throughout the country. In all, 699 men, 599 women and 268 children were consulted. About 757 men and 354 women participated in Participatory Learning Forums (PLFs).

CHART 2:
CHART 2:

CIVIC ENGAGEMENT AND THE CONSULTATIVE PROCESS FOR THE SL-PRSP

Citation: IMF Staff Country Reports 2005, 191; 10.5089/9781451834505.002.A001

2.3 Sector Reviews

56. Five sector/thematic working groups were established for the formulation of the PRSP: i) Macro-economic Policy and Private Sector Development; ii) Social Sector Development; iii) Reconstruction, Rehabilitation and Reintegration; iv) Agriculture Natural Resources and the Environment; and v) Governance and Security. The sector working sub-groups covered five Cross Cutting Issues-Gender, Youths, HIV/AIDS, Children, the Disabled and the Environment. The working groups collaborated with both local and international consultants and reviewed existing policies and programme and identified gaps, defined new policies, and developed monitorable targets and indicators through workshops and consultations with the poor rural communities, staff in sector ministries and relevant players in each sector.

2.4 Gender Mainstreaming

57. Consultations on mainstreaming gender into the PRSP were held with the sector working groups and the Gender Advisory Committee that was established at the Ministry of Social Welfare, Gender and Children’s Affairs (MSWGCA). A three-day dialogue with stakeholders was also held in April 2004 to develop a Poverty Reduction Gender Action Plan. The participants included gender activists, professionals, social workers, NGOs, private sector and civil society representatives. The Women’s Forum also held a two-day workshop with women’s associations in June 2004 on the PRSP process.

2.5 Child Mainstreaming

58. A 3-day national level workshop was organised on Child mainstreaming for all relevant stakeholders in March 2004. The objective was to determine priority areas of interventions in addressing child deprivation and poverty, and to develop a framework for long-term national policy on children to inform the PRSP.

2.6 National and District Consultations and Validation Workshops

59. A national consultative conference on the SL-PRSP pillars was held in early May 2004 with district level consultations on the same pillars conducted in early June 2004. Four validation workshops were also held at regional level in August 2004 with representation from all the chiefdoms and districts across a broad spectrum of society to validate the final draft PRSP framework.

60. Figure (Annex 1) shows the key groups and their participation in the formulation of the PRSP in various consultative processes.

CHAPTER THREE

THE SIERRA LEONE POVERTY PROFILE

3.0 Introduction

61. The population of Sierra Leone is estimated at about 4.8 million people (2002), or 935,820 households. For the period 1975-2002, the population growth rate is estimated at 1.8 percent. About 66 percent of the population live in rural areas. The country remains poor despite its rich resource base. The 1995 Poverty Profile, based on the household expenditure survey of 1989/90 used in the I-PRSP, estimated that about 75 percent of the population lived in poverty and that more than two-thirds of the poor could be described as living in conditions of extreme poverty.1

62. Several years of civil conflict intensified the decline in social indicators, putting Sierra Leone at the bottom of the UNDP’s Human Development Index. The UNDP 2004 Human Development Report estimates that during 1990-2002, about 57 percent of the population lived below US$ 1 a day and about 74.5 percent lived below US$2 a day.

63. This chapter analyses the country’s current poverty profile with a view to shedding light on important questions that are relevant to the formulation of strategies for poverty reduction country-wide under the full PRSP. A number of key questions are relevant to this analyses such as “what is poverty? Who are the poor? What are the dimensions of poverty? Where are the poor?” are relevant to this analysis.

3.1 Sources of Data

64. Two main data types and sources were utilised for this analysis, namely, quantitative data from the 2003/2004 Sierra Leone Integrated Household Survey (SLIHS) and qualitative data from the Participatory Poverty Assessments (PPAs), Focus Group Discussions (FGDs) and Participatory Learning Forums (PLFs) as described in Chapter 2. The 2003/2004 Household survey covered 3720 households, of which 2400 households were drawn from rural areas. The overall sampling frame was stratified into urban and rural, with sampling carried out separately in each stratum. The “household expenditure aggregate” was defined as the categorical composition of expenditures of a household, while “welfare” was defined as those expenditures that could be said to improve the general wellbeing of a household.

65. Qualitative information on poverty was also obtained from the poor themselves through the Participatory Poverty Assessments (PPAs), the Strategic Planning Process/Focus Group Discussions (SPP/FGDs) and the civic engagement process pioneered by NGOs and civil society organisations. PPAs were carried out to ensure that the voices of the poor were adequately reflected in policy design while gauging their understanding and experiences of poverty.

66. The PPA tools used in the analysis also included social maps, poverty analyses, wealth or wellbeing ranking, preference scoring and seasonality analysis. Focus Group Discussions were conducted to identify the main types of risks and the characteristics of various shocks as well as the mechanisms available to minimise and/or manage the short or long term consequences of adverse shocks.

67. Sector reviews were also undertaken to provide secondary data and situation analysis and challenges in each sector.

3.2 The Definitions of Poverty

68. Poverty has been defined on the basis of the qualitative and quantitative tools used. Quantitatively, poverty has been defined with respect to the poverty line. The data obtained from the Integrated Household Survey was used to compute two poverty lines: Food/Extreme and Full Poverty lines. The Food/Extreme Poverty Line was defined as the level of expenditures required to attain the minimum nutritional requirement of 2700 calories per equivalent adult. This translated into an expenditure of Le1, 033 per day or $1 equivalent or Le377, 045 per year per equivalent adult, as at May 2004 national prices. A person whose expenditure on food fell below this threshold was considered to be food poor. If a household was unable to provide the level of theoretical expenditure to attain the minimum nutritional requirement, it implied that even if the total household’s expenditure were dedicated to food, the household would be unable to minimally feed itself. The household was then said to be in Extreme Poverty.

69. However, since it is not realistic that a household will dedicate every expense solely to food, basic needs such as health and education need to be added to this Food/Extreme poverty line. The average non-food expenditure per adult equivalent around the poverty line was estimated at Le393, 633 per year for basics such as health and education.

70. The National Poverty Line corresponds to the full poverty line of Le770, 678 per year or Le2, 111 per day per capita as shown in Table 3.2. An individual whose expenditure on food and basic needs falls below this level is considered to be poor.

Table 3.2:

Poverty Lines

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Source: SLIHS, 2003/04

71. According to this definition, Figure 3.2 shows that about 26 percent of the population in Sierra Leone is food poor. This translates to about 1, 248,000 persons who cannot even afford as basic a necessity as food. When other basic necessities are added, the percentage increases to about 70 percent. The basic needs often referred to are: food, safe water and sanitation, shelter, good health, basic education, and a household’s easy access, both in terms of affordability and distance, to various economic and social infrastructure such as schools, health facilities, markets and public transportation.

Figure 3.2:
Figure 3.2:

National Poverty Headcount

Citation: IMF Staff Country Reports 2005, 191; 10.5089/9781451834505.002.A001

Source: SLIHS 2003/2004

72. Qualitatively, the people have defined poverty from a basic needs perspective as “the lack of basic needs and services such as food, money, shelter, clothing, health facilities, schools and safe drinking water.” Although both men and women also mention lack of money and shelter, the common perception of poverty from all socio-economic groups is the lack of food. Hunger is a primary concern for children in particular.

The views of a boy and a woman about poverty are described in the boxes below

‘When you are hungry you are tired. It is difficult to concentrate in school. You fall asleep. Your stomach hurts like you have worms. You fight. It is so hard; you cannot do anything except think of food.’ (A boy in Mathinka, a village in Bombali District, Northern Province).

‘We feel the pain of poverty the way the chicken screams, manifesting the pains of laying eggs’. (A woman in Kpangba Village, Pujehun District, Southern Province)

The people’s perceptions of Poverty in Sierra Leone are summarised in Box 1.

What is Poverty? The Peoples’ Definition

  • Poverty is hunger and the uncertainty of where the next meal is going to come from;

  • Poverty is lack of shelter;

  • Poverty is living in a very large household with not enough to go around;

  • Poverty is being sick and not being able to see a doctor;

  • Poverty is not being able to go to school and not knowing how to read;

  • Poverty is not having a job, fear for the future and living one day at a time;

  • Poverty is working everyday and not being able to feed your family;

  • Poverty is losing a child to illness brought about by unclean water;

  • Poverty is powerlessness, lack of representation and freedom.

Table 3.2a below summarises the characteristics of the poor in Sierra Leone as revealed by the PPAs.

Table 3.2a:

Characteristics of the Poor in Sierra Leone

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3.3 Where do you find the poor?

73. In order to understand and interpret the poverty measures, poverty indices are presented not only across provinces, by gender and age of the head of households, but also for the three groups of poor, food poor and other poor2.

3.3.1 National Poverty

74. Table 3.3.1 shows poverty in Freetown, rural areas, other urban areas and national level poverty. At the national level, about 26 percent (1.5 million) of Sierra Leoneans cannot afford adequate daily food intake. When non-food basic needs are added, the percentage jumps up to 70 percent. The table also shows that the rural areas contribute about 73 percent of all poverty in Sierra Leone, while other urban areas contribute 25 percent, leaving Freetown with 2.2 percent. The national average poverty gap is 29 percent, and the rural gap is 34 percent, while the other urban gap is 26 percent. At the national level, the poverty gap (P2=29 percent) means that the average poor person’s consumption is 29 percent from the poverty line. The poverty line was estimated at Le770, 648. This means that the average poor person is Le223, 488 short of the poverty line. It is estimated therefore that 70 percent of Sierra Leoneans (3,360,000 persons) live in poverty.

Table 3.3.1:

Incidence, Depth and severity of Poverty by Strata

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Source: SLIHS, 2003/04

3.3.2 District Level Poverty

75. Table 3.3.2 gives the incidence, depth and severity of poverty by district. It shows that the poorest districts in order of the incidence of poverty are Kailahun, Bombali, Kenema, Bonthe and Tonkolili. More than 8 out of 10 people in these districts live in poverty. It is estimated that 4 out of 10 people in Kailahun and 6 out of 10 people in Bombali district live in extreme poverty. The poor in Bombali district in particular cannot meet half of their basic needs while those in Kailahun, Kenema, Bonthe and Tonkolili districts can meet only about two-thirds of their basic needs. Poverty is also relatively more severe in Bombali and Kailahun districts with severity indices of 30.4 and 21.5 percent respectively.

Table 3.3.2:

Incidence, Depth and severity of Poverty by District

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Source: SLIHS, 2003/04

76. The high incidence of poverty in Kailahun District could in part be explained by the civil war, and its impact on cocoa and coffee production as the main income earning activities3. Most of the tree crop plantations were abandoned for over ten years as a result of displacement of the population. In peace time, the crops are harvested once a year and the income from the sales is used to acquire other goods and services through out the year. There is therefore the need to diversify into other economic activities in order to broaden the sources of income. The devastation of the basic economic and social infrastructure was worsened by its remoteness and isolation. In the case of Kenema, the majority of the working population is engaged mainly in artisan mining activities, which is not a reliable source of income. The people of Bombali District rely mostly on subsistence agriculture. There is no other economic activity or source of income and employment. Port Loko and Kenema districts, which accounted for 9.8 and 8.9 of the sample population, recorded the highest contribution to poverty of 11.5 percent and 11.1 percent respectively.

3.3.3 Urban Poverty

77. Table 3.3.3 shows the incidence of poverty by district in terms of urban/rural split. The highest incidence of urban poverty is in the Bonthe urban areas with about 89 percent of the population in poverty, followed by urban Tonkolili with 88 percent and Urban Kailahun with 86 percent. In the same table, the depth and severity of poverty is presented and Tonkolili urban, with 49.3 percent depth and 26.6 percent severity of poverty, is the highest in the country.

Table 3.3.3:

Incidence of Poverty by District and Rural/urban Split

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Source: SLIHS, 2003/04

78. The ranking of the top five urban areas from the poorest to the least poor shows the following result: Tonkolili, Bonthe, Kailahun, Koinadugu, and Bombali; this should influence urban poverty reduction strategies. At the other end of the spectrum, the least candidates for urban targeting should be Freetown and Kono urban according to the survey results. The results from the qualitative assessments indicate otherwise.

79. Results from the participatory poverty assessments in the five top districts revealed that the most frequently perceived causes of poverty by the poor are laziness (where laziness is defined as a negative attitude to work), poor health, the civil conflict, disunity, victim of theft and illiteracy. Conflict-related poverty is the most widespread perceived cause of poverty throughout the country. Unrest and chaos resulting from social divisions are far more important factors characterising poverty than what may be expected from the non-provision of services. A woman in the Bombali District aptly described the impact of the civil conflict in Box 2 below.

Impact of Civil Conflict in Bombali

‘The war has destroyed all our properties, assets and savings. It has made people useless and unproductive through amputations and other forms of disability. It has increased ill health, and has disrupted our livelihoods, farming, trading and schooling.’ (A woman in Mathinka village, Bombali District)

80. Differences in the socio economic group’s perceptions of the causes of poverty are also interesting. For example, men perceive the civil conflict, disunity, lack of social cohesion, unemployment and lack of social services as contributing to poverty much more than laziness. Women see the causes of poverty as emanating from within the persons themselves through, for example, ill health and laziness. For children, the lack of or inability to access education is the main issue, as the lack of education causes poverty while access to it provides a better life.

3.3.3.1 Freetown

81. Freetown is rather better off than the other urban towns, but a pattern of severity is piling up in the big city. The severity of poverty is higher than expected.

82. A key concern with Freetown is congestion and the sanitary conditions in which the poor live. The average household size in Sierra Leone is 6.2 persons, while the average household size in Freetown is 6.0, about the national average. However, when household size is computed over poverty levels, it comes clear that the average number of persons in extreme poor households is about 12.5 in Freetown. The number reduces to 6.3 in moderately poor households and 5.9 in non-poor households. Further analysis of the data on the number of persons per room shows that in Freetown, the average number of persons per room in extreme poor households is 9.5 compared to 4.8 for the moderate poor and 3.6 in the non-poor households. What compounds the problem is that in Freetown, about 7 out of the 9.5 are dependent household members. Jointly, these perspectives have determined how the urban informal sector work has been approached. Labour is the main asset of the poor, but it is likely to be poorly educated and low valued. Hence it is likely that in poor households, women and even children are forced to enter the informal sector and are likely to face competitive, dead-end occupations with low pay and long hours.

Table 3.3.4:

Poverty in Sierra Leone by District and Rural-Urban place of Residence

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Source: SLIHS, 2003/04

3.3.4 Rural Poverty

83. With the exception of Bonthe, Kambia and Koinadugu, the incidence of poverty is relatively higher in the rural than urban areas of all the other districts. Kenema, Kailahun, Bombali, Port Loko and Tonkolili districts have the highest incidence of rural poverty.

84. The relatively low incidence of poverty in the rural areas of these districts could be explained by the availability of economic activities in these areas. The Urban area of Bonthe district (Bonthe Island) is remote, isolated and generally inaccessible while the Mainland, comprising most of the rural areas, is endowed with arable land and rich fisheries resources. The rural areas of Kambia District are predominantly rice growing and fishing areas and there is a lot of cross border trading activities with neighbouring Guinea. In Koinadugu District, the people in the rural locations are engaged mostly in gardening and animal husbandry.

85. Poverty is also more severe in the rural areas (severity index of 17 percent compared to 11 percent in the urban areas). The rural areas contribute nearly 73 percent to total poverty, exceeding their population share of 66 percent. The major causes of poverty in the rural areas according to the qualitative data from the PPAs and the Civic Engagement processes are mainly: the wide gap in the availability of social services (health, education, safe water and sanitation) between the urban and rural areas; lack of agricultural inputs, market access and low incomes from the sale of produce; weak infrastructure (bad road networks, lack of storage facilities); lack of economic and employment opportunities; devastation by the war; and social barriers such as large family size within the rural communities.

3.4 Incidence of Poverty by Age and Gender of Household Head

86. The age of the household head can be associated with a number of the features of a household’s stock or portfolio of human assets. These features might include an indication of the age structure of the household. With young household heads having smaller and younger families, while older heads might be expected to have larger families. Similarly, the age of the household head may be associated with some aspects of the productivity and self-perception of the household. For example, the older household head might have more opportunities for information gathering through long-established contacts that enable income-generating opportunities to be developed.

87. On the other hand, educational levels of older heads may be lower than the younger heads and their work experience and skills may be inappropriate for the demands of a changing economy, thereby reducing their opportunities for income generation. Young households that start with limited resources as recent school-leavers or recent migrants to urban areas are expected to be more vulnerable. As the household matures, it accumulates productive resources and other assets, and becomes less poor. However, as the household head nears retirement, vulnerability will recur.

88. Table 3.4 presents poverty indicators by age group and gender of the head of household. Certain clear patterns emerge regarding gender of heads and poverty. The headcount for female-headed households is 67.6 percent compared to 70.2 percent in male-headed households. The intensity (P1=30.1) and severity of poverty (P2=12.8) is highest in male-headed households. Taking the three indicators together, poverty in male-headed households is deeper and more severe than in female-headed households.

Table 3.4:

Poverty in Sierra Leone by Age Group and Gender of Head

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Source: SLIHS, 2003/04

89. In the age groups of 15 to 25 and 26 to 35, poverty is higher in female-headed households than it is in male-headed households. The reverse is true in the age group of 36 years and above. The intensity and severity of poverty tells a similar story. At 78.5 percent, the incidence of poverty is highest in households headed by men aged 65 years and over, compared to 60 percent for those headed by women of the same ages.

3.5 Poverty by Household Structure

90. This section indicates which household structure is most likely to be in poverty. Evidence and research from other countries has shown that larger households tend to be poorer. The survey estimated that about 56 percent of the population lives in a traditional household structure. This is the one-man-one-wife structure. The average household size in this structure is estimated at about 6 persons. About 23 percent of the population lives in polygamous households. This is the one-man-several wives household. The average number of persons in these households is about 9 persons. About 3 percent of the population lives in single male-headed households while 18 percent lives in female-headed households. Only 3 percent lives in de facto and 15 percent in de jure female-headed households. The survey also estimates that the average households size in these household is 4 for the single male and 6 for the female headed households.

91. Table 3.5 shows poverty by the structure of the household. Although the difference in poverty levels among households is not so distinct, polygamous households stand out very sharply, with about 75 percent of the population in these households in poverty and 36 percent in extreme or food poverty. These households are the most prone to food security problems, as well as literacy and school attendance problems.

Table 3.5:

Poverty by Marital Status of Household Head

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Source: SLIHS, 2003/04

92. De facto female-headed households are households that are headed by men, who might have left their spouse for work in the diamond mines or in town. The survey found that in the rural areas, the men tended to have several wives who did not live in the same households. That these households are showing such high levels of poverty is no surprise as such. What is a bit surprising from table 3.5 is the fact that the depth and severity of poverty in these households is not markedly different.

3.6 Poverty and the Size of the Household

93. It is sometimes suggested that many households are in poverty because there are too many dependants (many of them children) for too few workers, who do not earn enough to cater for their needs. The data in Figure 3.9 supports this conjecture. Poor households are generally larger than the typical Sierra Leonean household. The average household size in male-headed poor households is 6.9 compared to 5.7 in the non-poor male headed. In female-headed households the average poor household is 5.8 compared to 5.2 for the non-poor. Figure 3.9 gives a clear picture of poverty increasing monotonically with household size. Households beyond six members are most likely going to have poverty levels above the national average.

Figure 3.6:
Figure 3.6:

Graphic Illustration of Poverty by Household Size

Citation: IMF Staff Country Reports 2005, 191; 10.5089/9781451834505.002.A001

Source: SLIHS, 2003/04

3.7 Poverty by Sector of Employment of Head of Household

94. The core issue in any poverty alleviation strategy is to assist poor people in getting access to work opportunities, which give them a pay level that keeps them and their families above the poverty line. As shown in Table 3.7, the incidence of poverty is highest in the agricultural sector, with about 79 percent of those engaged in the sector being poor. The intensity of poverty in the agricultural sector is more than twice as high as in the construction sector.

Table 3.7:

Poverty in Sierra Leone by Occupation of Head of Household

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Source: SLIHS, 2003/04

95. In Sierra Leone, and particularly the urban areas, although a large share of the population finds work or manages to start some informal small or medium scale business or income generating activity, the pay is not high. In families where at least both husband and wife find work, the average family might remain poor but will be able to provide enough calories for the family. However, there are still problems including the following:

  • The informal market has an artificial structure with a very large proportion of people working in retail and petty trading. There are relatively few people working in production of goods and other services and those who do earn less than people engaged in trading.

  • Many women have a large double workload, both at home and at the work place.

  • While on average people doing trading are doing relatively well, there are still quite large pockets with very low returns for work.

3.8 Poverty by Place of Employment

96. Table 3.8 shows the incidence of poverty by the employment status of household heads. Among the selected groups, those households headed by farmers have the highest incidence of poverty, estimated at 83.1 percent, s well as the highest intensity of poverty, estimated at 38.6 percent. The incidence of poverty among unpaid family workers is about 77 percent, and the intensity of about 31.6 percent. It is not surprising that the incidence of poverty among staff working in non-agricultural activity private sector is lowest since their wage rates are usually much higher than the national average wage.

Table 3.8:

Poverty Incidence by Place of Employment of Household Heads

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Source: SLIHS, 2003/04

3.8.1 Agriculture, Fisheries and Poverty

97. Although agriculture (including livestock) is the largest employer in the country (75 percent of the population) and the largest contributor to GDP (45 percent on average), survey results and sector reviews show that farmers, especially subsistence food crop farmers, are among the poorest in the country. This is largely due to the several challenges in the sector at both the farmer and institutional levels. Some of the major problems include:

  • i) Low capital investment (especially by the private sector); weak level of support for research technology generation and poor extension services;

  • ii) Weak or total absence of vital agricultural support services including the absence of viable technology-based inputs;

  • iii) Weak credit and micro-finance markets to support input purchase and output marketing. Community-based organisations and Farmers Associations are yet to deliver vital information and other services to the majority of rural farmers;

  • iv) Poor network of roads, transportation and communication facilities o support input delivery, product transportation and marketing;

  • v) Low participation of farmers in policy formulation processes, thereby alienating the majority of small-scale farmers that dominate the agricultural landscape in Sierra Leone. Urban-based farmers associations have not been able to bridge the huge gap between those who make policy at the centre and the farmers located in smaller settlements across the country;

  • vi) Institutional weaknesses, especially the shortage of trained and qualified technical/professional staff and unreliable management information systems.

98. The fisheries sub-sector alone contributes 9.4 percent of GDP and is the most important economic activity along the coastline of Sierra Leone. Fish is the largest single source of animal protein for the majority of Sierra Leoneans. The sector and its contribution to sustainable livelihood were badly affected by the war throughout the 1990s. Destruction of fishing infrastructure led to a drastic reduction in production of fish from pre-war levels. Poverty data also indicate that some of the poorest communities live in these coastal areas (in the Kambia, Moyamba, Bonthe and Pujehun Districts).

99. The fisheries sub-sector faces similar challenges outlined in the agriculture sector. However, additional specific problems exist which limit production levels. Among these are the following:

  • i) Institutional weaknesses, especially shortage of trained human resources and inadequate funding for monitoring, control and surveillance of the country’s territorial waters and for fisheries research;

  • ii) Weak infrastructure and support services, particularly the lack of a fishing harbour for supporting industrial fisheries;

  • iii) Inadequate extension services support for the sector and low production. These are manifested in under developed inland fisheries and aquaculture, inappropriate fishing gears, destructive fishing methods, lack of adequate skills and technology in seafood preservation, processing and packaging, and high post-harvest losses, especially in artisanal fisheries.

According to the SLIHS 2003/2004, Poverty is likely to increase when

  • a) the household lives in the rural area,

  • b) the household is polygamous male headed,

  • c) the age of the head of household increases,

  • d) the household head cannot read and write a simple phrase, and

  • e) the household head works as a subsistence crop framer

3.9 Other Household Characteristics and Poverty

100. Table 3.9 provides selected household characteristics by quintile from the poorest to the non-poor. These are categorised under demographic, economic and social characteristics.

3.9.1 Economic Characteristics

101. The poorest households allocate about 63 percent of their expenditure to food compared to 36 percent for the non-poor. Household savings are generally low and are largely through informal savings channels such as ‘Osusu’. Net saving is negative across all households. Survey results also show that the poorest households do not own consumer durables such as refrigerators, radio, TV, etc. Across quintiles, not more that 17 percent of households own livestock. However, over 90 percent of all poor households rare chicken.

3.9.2 Social Characteristics

3.9.2.1 Housing

102. About 67 percent of the poorest households own the houses they occupy, while less than 8 percent live in rented housing, compared to 42.3 percent and 34 percent respectively for the non-poor. However, the quality of houses owned by the poorest households is low. About 76 percent of houses owned by the poor are constructed with mud or poor quality corrugated iron sheet commonly known as pan bodies.

103. Overall, the country is facing a serious housing crisis after years of a destructive war. Poor housing is one of the manifestations of poverty in both rural and urban areas. More than one million people were displaced by the war and almost all of whom were resettled mainly in rural communities. Less than 20 percent of received support for family shelter from the NGO community or government through NaCSA. The problem is both quantitative in terms of the number of facilities for the population and qualitative in terms of the type of housing units they occupy. The majority of the resettled are poor and generally live in poor shelter. In the urban areas, there is also an acute shortage of housing. This is reflected in the existence of large, heavily populated slums, especially in Freetown.

3.9.2.2 Energy

104. About 83.4 percent of all households use kerosene as the major source of fuel for lighting. Electricity serves as the main source of light for only 8.5 percent of households and these are mainly in urban towns (Pilot Census, 2004). Both poor and non-poor households use wood as the main source of fuel for cooking, while some of the poorest households in rural areas also use wood as a source of light and heating.

Table 3.9:

Selected Characteristics of Households by Quintiles

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Source: SLIHS, 2003/04

3.10 Income Inequality and Poverty

105. Figure 3.10 shows that in Sierra Leone, 10 percent of the population with the highest income accounts for 30 percent of total consumption expenditure, whereas the poorest 10 percent accounts for only 2.7 percent. In the urban areas, the richest 10 percent accounts for 28.3 percent of total consumption spending compared to 28.7 percent in the rural areas. The poorest 10 percent in the urban and rural areas accounts for 2.6 percent and 3.0 percent of total spending respectively. In Freetown, the richest 10 percent accounts for 23.8 percent of total consumption spending, whereas the poorest 10 percent account for 3.2 percent.

Figure 3.10:
Figure 3.10:

Income Distribution by deciles

Citation: IMF Staff Country Reports 2005, 191; 10.5089/9781451834505.002.A001

3.11 Non-Income Aspects of Poverty

3.11.1 Health and Nutrition

106. The state of health of Sierra Leone’s population is poor. Life expectancy at birth declined to 34.3 years in 2002 from 42 years in 1990. It is 35.6 years for female and 33.1 years for male. In 2002, infant and under-five mortality rates were estimated at 165 and 284 deaths per 1000 live births compared to 185 and 323 respectively in 1990. The maternal mortality rate during 1985-2002 was estimated at 1800 deaths per 100,000 live births. Child mortality rates are directly linked to the incidence of poverty. Urban mortality rates are lower relative to rural rates. High rates of mortality are also negatively correlated with the levels of a mother’s educational attainment.

107. Fertility rates are also high. The fertility rate for women for the period 2000-2005 is estimated at 6.5. High fertility rates are associated with rural residence and low socioeconomic status. The age at first childbirth for girls is low. The contraceptive prevalence rate also remains low at 4 percent.

108. The percentage of the population undernourished in 1999/2001 was estimated at 50 percent compared to 46 percent in 1990/92. The MICS II 2000 survey revealed that about 27 percent of children under the age of 5 were found to be underweight or too thin for their age. About 34 percent were stunted or too short for their age and 10 percent were wasted or too thin for their height.

109. The link between malnutrition and the incidence of poverty is evident. Children in rural areas are more likely to be stunted and wasted than children in urban areas. Similarly, children of illiterate mothers are more likely to be underweight than children of women with some education.

110. Malaria and tuberculosis are prevalent and widespread. Recently, the HIV/AIDS epidemic has posed a particularly serious challenge for the country. The estimated national prevalence of HIV/AIDS is 4.9 percent with the Western Area having the highest, at 6.1 percent.

111. The first HIV/AIDS case was detected in Sierra Leone in 1987 and since then, about 2,399 individuals have tested positive for HIV/AIDS, of which 794 of these have developed the AIDS disease, and 438 are reported to have died. In April 2002, a National Zero-prevalence Survey, conducted jointly by the Sierra Leone Statistics Office (SSL) and the US Centres for Disease Prevention and Control (CDC), showed a national HIV prevalence of 0.9 percent with 2.1 percent in Freetown and 0.7 percent outside Freetown.

112. Also, the results of the first antenatal prevalence study based upon a total of eight testing sites in the country reported an overall national prevalence of 3.4 percent, and 4.7 percent for the capital, Freetown. These more reliable figures regarding HIV prevalence in the country further demonstrate the urgent need for assistance to control or rapidly stem a potential post conflict epidemic. According to this result, at least 100,000 Sierra Leoneans may be living with the HIV virus.

113. Some of the major challenges to the fight against HIV/AIDS include: a) the limited understanding of the disease and the methods of its spread or transmission; b) low acceptance, poor utilisation and limited access to condoms; and c) low capacity for implementation, especially among Community-based organisations and NGOs. Sierra Leone needs more as well as better quality data on the disease to provide more information for strategy formulation at all levels. Also, the outreach services are limited in scope to address the huge number of cultural factors that inhibit the adoption of safer-sex methods.

3.11.2 Poverty and Access to Health Care

114. Like education, health is both a human goal, a human investment, a means to increase income and avoid poverty. Poverty is both a consequence and a cause of ill health. Ill health, malnutrition and high fertility are often the reasons why households end up in poverty, or sink further into it, if they are already poor. Illness in a bread-winner–and the consequent loss of income–can determine a poor household’s ability to cope financially. Out-of-pocket payments for health services can make the difference between a household being poor or not. Additionally, and high fertility places an extra burden on households–by diluting the resources available to other household members and by reducing the earnings opportunity, especially for women. Poor people lack the financial resources to pay for health services, food, clean water, good sanitation, and other key inputs for “producing” good health. However, it is not only low income that causes the high levels of ill health among the poor. It is evident that the health facilities available to them are often dilapidated, inaccessible, inadequately stocked with basic medicines, and run by poorly trained personnel. Furthermore, poor people are also disadvantaged by the lack of knowledge about prevention as well as when and how to seek health care. In short, poor people are caught in a vicious circle–their poverty breeds ill health and this, in turn conspires to keep them poor.

115. When Sierra Leoneans perceive themselves as ill, there is a difference in seeking medical assistance between the poor and non-poor. While 49 percent of the “food poor” and 37 percent of the “other poor” go to a nurse, only 26 percent of the non-poor also goes to a nurse. Only 9 percent of the food poor and 14 percent of the other poor go to a doctor compared to 33 percent for the non-poor. Table 3.11.2a also shows that the nurse (32 percent) is the most popular person to go to for consultation. Of all those who visit the nurse, 56 percent are the poor. The survey also showed that, of all those who visit the doctor, about 76 percent are the non-poor, and only the poor visit the traditional birth attendant.

Table 3.11.2a:

Health Consultations by Poverty Levels

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Source: SLIHS, 2003/04

116. While the poor at least manage to arrange for some years of education, they have considerable problems with affording health service. In some areas, only people who can afford to travel or pay for private service have access to health service. But for the poor, the situation is worse, even if there is health service available, they cannot afford it. Hence, they often end up either making their own diagnosis and buying drugs at the local market or consulting traditional healers. The majority of the poor, including the extremely poor, do not even buy drugs for malaria. In some cases, this may reflect that these drugs are not available in the market, or where they are, they are sold at prices that the poor cannot afford.

117. In Sierra Leone, the health care delivery system is characterised by a plurality of health service providers with the government accounting for about 70 percent. The general population utilisation rate of health care facilities is estimated at 0.5 contacts per capita per annum, implying that only one-half of the population attends a health care facility once a year.

118. Physical distance to health care facilities and the unavailability of drugs represent a major barrier to accessing health care. About less than one-half of the population is estimated to have sustainable access to affordable drugs. The percentage of births attended by skilled health personnel is estimated at about 42 percent.

119. There are wide variations in the number of health care workers available per district with an over concentration of health personnel per capital in the Western Area. The number of physicians per 100,000 persons is estimated at 9. For Kailahun, this ratio is about 25 times the recommended target.

120. A summary of demographic and other health related indicators are provided in Table 3.11.2b below.

Table 3.11.2b:

Demographic and Other Health Indicators

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Sources: MOHS Statistical Information Sheet 1, July 2002, Various UNDP, HDRs and2004 Pilot Sierra Leone Population and Housing Census

3.11.3 Water, Sanitation and Poverty

121. According to the 2004 HDR of the UNDP, about 57 percent of the population had access to improved drinking water in 2000. The urban / rural disparity was indicated by the 2000 MICS II Survey, which estimated that about 74 percent of the population in urban areas had access to safe drinking water compared to 46 percent in the rural areas. Data from the 2003 Pilot Population Census show that majority of households (42.6 percent) depend on rivers/streams, and another 25.9 percent on ordinary wells for water supply. Small proportions depend on mechanical wells (11.9 percent), public taps (12.4 percent), tap in compound (5.9 percent) and pipe indoor (1.2 percent). Similarly, less than 5 percent of all poor households have access to an inside standpipe as a source of drinking water compared to nearly 88 percent for the non-poor households. The majority of people in the rural areas rely on water collected from rivers, pools, shallow wells, springs and swamps, all of which are often polluted and serve as the main sources for contracting typhoid, cholera, dysentery, worms and parasitic diseases.

122. The problem of water is compounded by the lack of long-term maintenance and/or destruction of existing facilities in many rural and urban towns during the war.

123. The sanitation situation is also unsatisfactory. Eighty-three percent of households nationwide use pit latrines, buckets, bush and rivers/streams as their sanitation systems for human waste disposal. Hardly any rural village has adequate pit latrines, posing serious health and environmental problems for the communities. In the urban areas, sanitation problems arise mainly from poor systems of solid waste disposal. It is a common practice for most households to dispose of refuse by dumping on roadsides, in drainages, or in backyards. The problem has been further compounded by the increasing rate of urbanisation coupled with the inadequate infrastructure and services for solid waste disposal. The 2000-MICS2 reported sewage and refuse disposal facilities to be grossly inadequate and contribute to the spread of water borne diseases and malaria.

3.11.4 Education and Poverty

124. Table 3.11.4a shows poverty incidence by formal education attainment. At 75 percent, the incidence of poverty is extremely high among households whose heads have no education. The incidence of poverty decreases with the attainment of higher levels of education. For example, the incidence of poverty among university graduates is 17.2 percent.

Table 3.11.4a:

Poverty Incidence by Formal Educational Attainment

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Source: SLIHS, 2003/04

125. School attendance across households improves with the income of the household. School attendance is higher among males than females for both poor and non-poor households, rising among males from nearly 50 percent in the poorest households to over 70 percent for the non-poor. For females, it rises from about 33 percent to 60 percent.

126. At 31 percent, Sierra Leone’s adult literacy rate is one of the lowest in the world. Adult literacy rates by gender much lower outside the Western Area. Four out of five male are literate in the Western Area compared to 1 in 13 female in the Northern Region and 1 in 10 female in the Eastern Region.

127. According to the survey results shown in Table 3.11.4b, 18 percent of adult females (above 18 years) can read English, compared to 35 percent for adult males; while 20 percent and 37 percent of adult females and males can do written calculations respectively.

Table 3.11.4b

Literacy Level by Gender

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Source: SLIHS, 2003/04

128. The survey also shows that 2.3 percent and 1.4 percent of males and females attended adult literacy classes, respectively. The reasons for not attending literacy classes for both males and females include non-availability, large number of household chores (8 percent males and 16 percent females) and lack of caretakers for children.

129. In the early 1990’s, the primary Gross Enrolment Rate (GER) declined to 51 percent. It was 17 percent in secondary schools. In 2001, the Gross Enrolment Rate for primary school was estimated at 90.4 percent. Results from the Integrated Household Survey show that the overall GER rose to 121.8 percent at the end of 2002/03 school years. The GER for secondary schools was 40.9 percent, with JSS 46.7 percent and SSS 34.0 percent in mid 2003.

130. According to SLIHS results, the gender enrolment ratio increased from 87.2 percent in 2001 to 98 percent in mid 2003. At 112 percent, the primary gender enrolment ratio is highest in the Western Area and lowest in the Northern Region (42 percent). The gender enrolment ratio for the Eastern and Southern Regions are 52 percent and 76 percent respectively (MICS 2, 2001).

131. As shown in Table 3.11.4c, gender enrolment disparities at the secondary school level are very wide. The gender ratios for Junior Secondary School (JSS) and Senior Secondary School (SSS) are 0.72 and 0.51 respectively. The GER gender gap for JSS is more than 20 percentage points for six districts, Bonthe (30), Pujehun (33), Kailahun (24), Kono (39) Kambia (43), and Port Loko (24). In recent years, the JSS gender enrolment ratio has improved significantly, rising from 0.63 in 2000 and 2001 to 0.72 in mid 2003.

Table 3.11.4c:

Primary and Secondary Gross Enrolment Rates by Location and Gender

(Percent)

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Source: SLIHS, 2003/04

132. The provision of basic education and increasing access, especially in the rural areas, are still key challenges for government in most rural communities in the country. Poverty assessments reveal the absence of the essentials of life and low income earning opportunities among the rural poor as the main reasons for their isolation and this in turn explains the near absence of educational opportunities in many rural communities. Also, many rural locations that have primary schools do not have trained and qualified teachers for the same reasons. In villages with qualified teachers, the pupil to teacher ratio is very high. Government’s recent drive to encourage children to go to school has also created the unintended effect of overcrowding, even in urban areas.

133. Equally challenging is the provision of facilities at junior Secondary School level to meet the growing demand from children successfully completing primary education in all parts of the country. Not all chiefdoms in Sierra Leone presently have junior secondary schools to meet the needs of children desiring to continue at that level. Potential access to secondary education is a central motivation for parents’ decision to invest in primary schooling for their children. Evidence shows that where the chance of access to secondary schools has not kept pace with primary enrolment, enrolment in primary education has fallen.

134. The inadequate number of qualified teachers for all the basic and tertiary levels, the poor state of science teaching and the absence of ICT in secondary schools are major concerns for human resource development and capacity building. Higher learning institutions also face considerable resource constraints, leading to shortages of essential personnel for science and technology teaching, applied agricultural research and extension, and health care. This state of affairs in education has negative effects on the country’s ability to sustain the fight against poverty.

3.12 Other Causes of Poverty in Sierra Leone

135. The causes of poverty in Sierra Leone are many and closely interrelated. As analysed so far, the pervasiveness and severity of poverty in the country result from a combination of bad domestic policies, adverse external developments and other natural factors. In addition to quantitative and qualitative descriptions of poverty in Sierra Leone. The most frequently mentioned causes of poverty during the PPAs, Focus Group Discussions and PLFs are: a) bad governance, especially corruption; b) the 11-year civil conflict; c) Unemployment (or the lack of economic opportunities); d) inadequate Social Services; e) the debt burden; and f) vulnerability to risks and shocks such as fluctuating prices, heavy dependence on donor aid, illness and seasonal factors that affect livelihoods.

3.12.1 Bad Governance

136. For almost thirty years, bad governance in Sierra Leone was characterised by an over centralised system of administration, an over burdened and ineffective judicial system, weak and inefficient public and local government institutions, thriving corruption, mismanagement, inappropriate fiscal and ill-conceived economic policies. Over centralisation of political power and management of public financial resources in Freetown precipitated exclusive governance and lack of access to basic social services for the majority of the rural populace. This created a conducive environment for massive corruption at all levels of society, as the legal, political and economic structures and processes of the state were perverted and transformed to serve the private interests of the governing elites and their associates rather than society. Presently, corruption is generally regarded as a key factor that undermines the country’s socio-economic and political development.

137. Similarly, the justice system is plagued with outdated laws, inadequate personnel and logistical problems, leading to backlog of cases, delays in proceedings and too many adjournments, making it difficult for the poor to access impartial and equitable justice. For the rural poor, access to justice is usually through the local courts presided over by court chairmen and clerks. The courts are also constrained in many ways, including limited jurisdiction over relatively minor matters, illiterate court chairmen with limited training in court procedures and human rights, lack of logistics, and most importantly, discriminatory laws against women and children especially in matters relating to land ownership and inheritance. Heavy fines and unreasonable punishments form part of the long list of problems.

138. Added to this plethora of problems is the weak and inefficient civil service with a poor record of service delivery, especially to the poor. Favouritisms and nepotism in recruitment of key personnel, low salaries and poor conditions of service, limited training opportunities, corruption and abuse of public office, lack of effective enforcement of rules and regulations are some of the challenges to good governance in this important public service. This has resulted in weak capacity for economic policy formulation and implementation.

139. The country also lacks a vibrant and organised civil society to influence government policies and programmes in favour of the poor. Civil society in Sierra Leone is highly unstructured and fragmented. Most of the organisations lack technical capacity and other resources to effectively carry out their functions.

140. Other major governance issues mentioned by the people include a relatively weak parliamentary oversight, lack of policies to protect the vulnerable, weak and inefficient channels of communication, human rights abuses, lack of effective mechanisms to enforce rules and regulations and inadequate financial allocation and logistical support to district and chiefdom authorities. The cumulative effect of all of these factors resulted in weak and ineffective service delivery mechanisms that contributed to high levels of poverty in the country. It is not surprising therefore that, Good Governance emerged as one of the top national priorities from the SPP Focus Group Discussions and the district PRSP consultative exercise.

3.12.2 The Civil Conflict

141. The ten-year civil conflict resulted in a large scale devastation of the economy, undermined political processes and institutions, retarded human development resulting in massive deaths and human suffering. The conflict only intensified an already bad situation that was characterised by bad governance, a declining economy, high levels of poverty and general frustrations.

142. Economically, the war led to macroeconomic disequilibria as manifested by declining per capita GDP, widening balance of payments deficits, rising inflation, exchange rate depreciation, and increased debt burden. It further negatively impacted on economic resources and institutions, and private investment, thereby damaging the local and national economy and productive assets. The GDP per capita estimated at US$237 in 1990 declined by about 40 percent during the subsequent decade to about US$142 in 2000 (GOSL, 2001).

143. The conflict also resulted in the destruction of the limited social services available. It is estimated that about 50 percent of health and educational facilities were vandalized. Death/migration of trained health staff, combined with insecurity and unaffordable costs of medical services drastically reduced accessibility to primary health care services. The insecurity created by the war disrupted the livelihoods of poor people, created economic shocks, unemployment (about 5,000 workers were laid off in 1999 following the collapse of the manufacturing and private sector establishment) and massive displacement and dislocation of persons. It was estimated that over two million persons were displaced with about 1.5 million fleeing to neighbouring countries. The meagre government resources needed for socio-economic development were diverted to the war effort. For example, in 1999, security related expenditures were estimated at 4.6 percent of the GDP compared to 1.1 percent for social and economic sectors. The conflict destroyed the social fabric of society and the coping mechanisms of the rural poor, disrupting support often provided under the extended family and kinship systems, exacerbating divisions and hostilities between groups and families and resulting to a breakdown in social networks and inter-group economic relations.

144. The conflict has been perceived as the most important cause of poverty in the country. Thus, unrest and chaos caused by social divisions are far more important factors characterising poverty than what may be expected from lack of service provision in, for example, education and health care. This has left a feeling of powerlessness among many people since their homes have been destroyed, their children maimed, and many killed. Feelings of disunity, distrust and revenge are still present in many communities.

3.12.3 Weak Economic Growth

145. Although economic decline had began in the 1980s, the situation became precarious in the 1990s has been largely dictated by the worsening security situation. The protracted civil war and the general insecurity associated with it resulted in loss of confidence, a sustained contraction in output and substantial increase in poverty. The particularly violent episodes of rebel activities in 1995, 1997 and 1999 reversed any economic gains made during the intermittent peace moments during the conflict period, and disrupted the implementation of key policy reforms, thereby constraining the progress that could have been made in alleviating poverty. In 1997, real GDP plunged by 18 percent, stagnated in 1998 and declined by 8 percent in 1999, resulting in high unemployment levels and decline in per capita incomes.

146. Following improvements in the security situation in late 1999 and a consequent expansion in economic activities, the economy began to recover with real GDP increasing by 3.8 percent in 2000. The economy continued to expand with real GDP rising by 5.4 percent in 2001, 6.3 percent in 2002, and 6.5 percent in 2003 and projected to grow by 7.4 percent in 2004. However, given the high incidence, depth and severity of poverty, the levels of growth attained so far are still insufficient to substantially reduce poverty in the country.

3.12.4 Unemployment

147. Unemployment or the lack of economic opportunities was cited by the poor themselves as one of the major causes of poverty. The capacity of the agricultural sector, which employs over 70 percent of the economically active rural population is underutilised. Hence, most of the rural working population is underemployed and its productivity is very low with most of the production being home consumed and in most cases inadequate to meet the basic daily caloric requirements. Thus, one of the main causes of rural poverty is the insufficiency of incomes received from the sale of agricultural products. The low productivity and incomes in the agricultural sector have forced the able-bodied youths to migrate to the urban areas to seek employment and improve their standards of living. Unfortunately, most of them could not fulfill their dreams and consequently joined the ranks of the urban poor and unemployed. The private sector is also not operating at optimum capacity given the low level of private investment and therefore could only provide few job opportunities.

148. The 2003/2004 Sierra Leone Integrated Household Survey also shows that the incidence of poverty among the youth is about 58 percent. This is manifested in the high rate of unemployment and underemployment in their group in both rural and urban areas. The extremely poor among them are largely marginalised and include the disabled, school dropouts, unemployed, commercial sex workers, drug addicts, diamond diggers, HIV/AIDS infected and sexually/physically abused young boys and girls, pregnant girls, teenage mothers and the homeless. The young men and women in this category are vulnerable and face the risk of staying or sliding into poverty as economic and social conditions get more difficult and as they have limited coping options. Their inability to cope with the growing hardship has increased their perception of being marginalised, a condition for participation and anti-social behaviour, especially in the informal sector where they reside.

3.12.5 Inadequate Social Services

149. Another major cause of poverty in the country is the limited availability and weak delivery of social services to the rural poor. As indicated earlier, accessibility to basic social services such as health, education and safe drinking water remains a severe constraint to majority of the people. For example, the health sector is plagued with shortage of qualified health personnel, inadequate and unaffordable drugs and other essential medical supplies, and inequitable distribution of health facilities. Similarly, the education sector is faced with several challenges; including shortage of trained and qualified teachers, insufficient teaching and learning materials, and deplorable and inadequate school infrastructure. Access to safe water and sanitation facilities is very limited.

3.12.6 Debt Burden

150. The unsustainable large debt faced by the country is also another major source of poverty. High debt service payments crowd out high priority investment in the social and economic sectors, which enhance human development and economic growth. Sierra Leone’s external debt including arrears is estimated at about $1.6 billion or 205 percent of GDP and domestic debt at 22 percent of GDP in 2003. External debt service payments are estimated at 56.6 percent of exports of goods and non-factor services.

3.12.7 Vulnerability to Risks and Shocks

151. Sierra Leone, like other countries in Sub-Saharan Africa, is often adversely affected by external shocks transmitted through changes in international prices of primary exports as well as imports. International prices of the country’s major exports (cocoa, coffee, bauxite and rutile) continue to fluctuate with a downward trend. At the same time, the prices of imports especially petroleum products remain high. This unfavourable terms of trade lead to shortages in foreign exchange and eventual depreciation of the nominal exchange rate and increase in domestic prices.

152. The heavy dependence on donor aid has also compounded the problem considering the fact that about 50 percent of the national budget is donor funded. Shortfalls or delays in donor disbursements often force the government to cut down expenditures including poverty related expenditures. Alternatively, the government resorts to borrowing from the domestic banking system to fund key expenditures thereby increasing domestic debt burden and fuelling inflation. These developments in turn adversely affect the welfare of the poor and increase the levels of poverty.

153. At the household level, illness is the most common frequently shock mentioned by all communities. In the case of a household head or breadwinner in the family, illness can have devastating consequences. During the rains when labour is needed in the fields, illness is most common and can render a shock that is particularly devastating to a family or community and put with a successful harvest at risk.

154. Seasonal factors also provide risks and shocks to livelihoods. Although these could be said to be anticipated, many suffer from damage to crops and homes during the violent storms in the rainy season, as well as the increase in sickness and food costs during the period.

155. The poverty assessments for the PRSP including Risk and Vulnerability Analysis have revealed that the vulnerable constitute the category of extremely poor Sierra Leoneans with a high risk of staying poor, following the general weakness and slow recovery of economic and social conditions. As a group, they have a low capacity to cope with the various economic and social shocks that threaten survival in a post-conflict economy, due to their inability to accumulate and retain assets and the loss of the informal safety net provided by extended families and friends. They are thus trapped in a vicious circle.

156. The major problems and challenges they face, in addition to their disability, include: a) limited access to food and jobs or income earning opportunities; b) lack of medical facilities and psycho-social services; c) lack of adequate shelter; d) high rate of sexual and other abuses; and e) discrimination and stigmatisation, even within their own extended families.

Categories of the Vulnerable in Sierra Leone

Amputees

Widows and Female Single Parents

Widowers

Unmarried Single Girl/Mothers

The Aged or Elderly

Street Children

Children in conflict with the war

Homeless

Polio Victims

Slum Dwellers

Orphans

Discharged Prisoners and Children prisoners

3.12.8 Vulnerability and Child Poverty

157. The vulnerability of children has become very acute since the end of the war. As one of the most powerless groups in society, children often bear the heaviest burden of extreme poverty and deprivation. When the family’s source of revenue fails, children leave school, their health and nutrition suffer and they have to take paid and unpaid labour, particularly household labour, and other productive activities such as mining and farming for their livelihoods. Others end up as street children.

158. The war succeeded in destroying a high proportion of children. They were not only used as perpetrators of violence but were also victims of separation, displacement and violence. Their vulnerability was further worsened by the absence of educational facilities and opportunities, shelter, food, health and recreational facilities.

159. The child is the most vulnerable in the area of protection with a contribution in the magnitude of 66 percent to overall child vulnerability. In the recent poverty assessment for the PRSP, children mentioned poor food, lack of support from parents and lack of education as the most serious manifestations of poverty. In terms of coping strategies, they relied more on the sale of their labour, processing wood, charcoal and palm oil and street begging.

160. Some of the key challenges to fighting child poverty include: a) absence of a national framework to address the issue of children; b) poor quality child service delivery, especially in the social sectors; c) decline in family, cultural and traditional values; d) powerlessness; and e) dreadful child labour. (See Box–for details)

3.13 Conclusion

161. From the forgoing analysis, it is clear that poverty is widespread and deep in Sierra Leone. The eleven-year war compounded an already bad situation, deepening the level of poverty in both the rural and urban settings. However, combined with bad governance, the violent conflict is generally perceived as the major cause of poverty in Sierra Leone as it affected the livelihoods of virtually every Sierra Leonean.

162. The people considered the lack of food or hunger as the strongest manifestation of poverty in their communities. There is also wide disparity in the spatial/geographical distribution of poverty. Poverty in Sierra Leone is essentially a rural phenomenon though the urban areas outside Freetown also have a high incidence of poverty. Poverty is relatively higher in the remote districts of Bonthe in the Southern Province and Kailahun in the Eastern Province as well as the economically less productive districts of Bombali and Tonkolili in the Northern Province.

163. The SLIHS shows that the employment status of household heads and the sector in which they are employed as well as their level of education determine the degree of poverty. The incidence of poverty is higher among farmers, most of whom are engaged in subsistence farming on smallholdings and using crude implements, as well as households whose heads have little or no formal education. Also, school attendance across households improves with the income of the household. Poverty is also high across all ages of household heads. In particular, the poverty rate of 58 percent among the youthful working population indicates clearly the lack of employment and economic opportunities for the productive bracket of the labour force.

Box-: Challenges of Child Poverty in Sierra Leone

  • a) Lack of National Framework for Child Survival, Protection and Development

    • - Absence of a policy framework makes it difficult for child survival and protection

    • - Widespread human rights abuses leave girls and boys in need of social service such as psycho-social care, counselling, foster homes and disability programmes

  • b) Unequal distribution of household’s resources in favour of adults

    • - The child always suffers as a result of unequal distribution of household resources in favour of adults, especially in terms of food

    • - Leakages of budgetary resources allocated to child related sectors such as health and education increase child deprivation

  • c) Poor quality of child service delivery

    • - Available evidence indicates that poor service delivery in education, health and other social sector s have resulted in adequate accessibility to these facilities. This problem is compounded by large regional and gender disparities

  • d) Decline in family, cultural and traditional values

    • - The decline of the family unit and community approach to child rearing undermines the much-needed supervision of children inside and outside their family setting. This leaves children exposed to all forms of abuse. The availability of food and food taboos affect the nutritional status of the children.

  • e) Child powerlessness and the subsequent high poverty cost;

    • - The view that children are passive, ‘right less’ and ‘voiceless’ members of society has led to their low participation in the decision making process on issues that affect their lives.

  • f) Child Labour

    • - Children, particularly in environment of hardship, are often required to contribute to the economy of households. Various exploitative forms and practices of child labour are widespread and endemic and must be curtailed as they significantly affect the growth and development of children.

    • - Child labour has many faces in diamond mining, petty trading, farming and domestic chores and is often hidden by cultural perceptions and child rearing practices.

    • - Increasing child trafficking and child sexual abuse.

164. In addition to the high incidence of income poverty, the social indicators including infant and maternal mortality, illiteracy rates, access to education, health care and safe drinking water reflect the low level of human development in Sierra Leone. For example, one of the consequences of a person’s ill health is that he/she cannot undertake any productive activity, including agricultural labour, petty trading or wage employment, and cannot therefore provide for the family.

165. The human development indicators clearly reveal the severity of poverty among women. The maternal mortality, infant mortality and fertility rates are extremely high among women and among the worst in the world. The contraceptive prevalence rate and the age at first childbirth for girls remain low. School attendance is higher among males than females for both poor and non-poor households. The quantitative data also indicated that income levels are extremely low among women, particularly those in the rural areas.

166. Finally, vulnerability of the population to various economic and social shocks has gained significance in explaining the state of poverty in Sierra Leone. One of the recommendations from this analysis of the country’s poverty profile is for more systematic surveys to be undertaken to throw more light on this trend and others, which have not been adequately treated in preparation of this PRSP. However, the foregoing analysis underpins the choice of poverty reduction pillars and associated policies in the ensuing chapters.

CHAPTER FOUR

MACRO-ECONOMIC DEVELOPMENTS AND STRUCTURAL REFORMS

4.1 Introduction

167. The experience of new economic developments policies and structural reforms in Sierra Leone up to the time of formulating the PRSP provides a useful basis for determining the enabling macroeconomic environment and sufficient structural reforms for successful implementation of the national poverty reduction strategy. The analysis reflects three major phases in Sierra Leon’s economic history: (i) two decades of progressive economic decline (1970-1990); (ii) the civil war (1991-1999); and (iii) post-conflict reconstruction and nation building.

4.2 Macro-economic Performance

168. At independence in 1961, Sierra Leone’s economic prospects were sound and promising, based largely on some of the important legacies of colonial economic management, especially corporate mining of alluvial diamonds, iron ore and bauxite. Table 4.2 below shows the growth in real GDP and GDP per capita during the first three decades of independence. The economy grew significantly during the 1960s by about 4.5 percent on average per annum, except for three years of negative growth–1967/68 and 1968/69, because of the first experience of military interventions in the country. Growth was largely driven by strong mining and agricultural productivity and exports. The economy however slowed markedly during the 1970s and 1980s as the decline in corporate mining spread through the monetised economy. By the end of the 1980s, the economy was near collapse, characterised by declining GDP per capita, rapid inflation, and a severe external payments imbalance. The economic and financial decline was also caused by adverse international market conditions for domestic exports and inappropriate domestic policies. The institutional setting weakened and growing inefficiencies emerged in the infrastructure and marketing systems. In absolute terms, per capita income remained rather positive, cushioned mainly by the external financing of the trade deficit. Income per capita growth however fell correspondingly with the GDP decline during the three decades.

Table 4.2:

Growth rates of real GDP and GDP per capita in Sierra Leone

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Source:

169. As the economy slipped into decline, inflation also rose significantly, from about 3.2 percent on average per annum in the 1960s to over 12 percent and 50 percent in the 1970s and 1980s respectively. The terms of trade deteriorated from an annual rate of 4.6 percent in the 1960s to–2.6 percent in the 1970s and about–1 percent in the 1980s. The external shocks to the export sector resulted in serious balance of payments difficulties.

170. An estimated amount of US$75 million was lost in the 1980s in export earnings from the decline of mineral production, representing about half the average value of exports for the previous decade. This loss was however partly offset by the significant increase in the export value of the three major tree crops - coffee, cocoa and palm kernels.

171. The war began in mid-1991 and thereafter, continued for the rest of the decade with recurring outbreaks of country wide hostilities and political instability. As described in Chapter One, most of the country’s economic and physical infrastructure was destroyed. Mining activity was halted and many farms were abandoned, tree crop plantations were swallowed by bush and mangroves reclaimed lowland rice fields. The provision of key social services outside the capital city virtually stopped owing to the large-scale destruction of education and health infrastructure.

172.

173. Growth performance during the war period was mixed, though substantially negative and with high inflation. Real GDP declined by 10 percent in 1995 but grew by 5 percent in 1996. The overall budget deficit fell to 6.3 percent in 1996 from 12 percent in 1991. Annual inflation also fell from 115 percent in 1991 to 6 percent in 1996. The exchange rate also remained relatively stable. However, in May 1997, the new democratically elected government was overthrown by a violent coup. The resulting instability in the country once again adversely affected the country’s economic performance and disrupted the implementation of structural adjustment programmes. This constrained the progress that could have been made in addressing growth and poverty. However, the actions and measures adopted on the return of the elected government in February 1998 saw a modest recovery in economic activity.

174. The rebel attack on Freetown in January 1999 and the renewed fighting across the country all over again put an end to the modest economic recovery that started during the second half of 1998. Output fell, and the associated reduction in the domestic revenue base led to a 56 percent decline in revenue during the first half of 1999. With rising Government expenditures driven by security-related outlays, the overall budget deficit (excluding grants) reached an estimated 15 percent of GDP during the year. Without access to external budgetary assistance during this period, the Government financed the budget deficit almost entirely through recourse to the domestic banking system. Reflecting these trends and the increasing supply shortages, the end-period inflation surged from 6 percent in December 1998 to 37 percent at end December 1999.

Figure 4.3
Figure 4.3

Sierra Leone: War Impact on Key Economic Indicators, 1991 - 2004 Projections

(In percent of GDP, unless otherwise indicated)

Citation: IMF Staff Country Reports 2005, 191; 10.5089/9781451834505.002.A001

175. The cessation of hostilities and eventual restoration of security country-wide strengthened confidence, which facilitated economic recovery during 2000-2004. Economic activity was spurred by the countrywide reconstruction and rehabilitation work. Real GDP, which had increased by 3.8 percent in 2000, rose sharply by 18.5 percent in 2001. It further increased by 27.5 percent in 2002 and 9.4 percent in 2003, largely on account of the broad recovery in agriculture, mining, manufacturing, construction and services sectors. Real GDP grew by 7.4 percent in 2004, supported mainly by the continued recovery of the agricultural sector, expanded reconstruction and other investment activities. Domestic revenue also increased from 7 percent of GDP in 1999 to 12.4 percent of GDP in 2003 and at relatively the same level in 2004.

176. Inflation also fell sharply in 2001, reaching a negative figure in most of 2002, and contained at a single digit in 2003. The official exchange rate remained relatively stable during 2001-2002 and the first half of 2003. Interest rates remained generally stable and positive in real terms during 2001-03. However, inflationary pressures re-emerged in the second half of 2003 and continued into 2004. Average annual inflation rose to 8.2 percent, resulting initially from higher fuel costs, expansionary monetary policy, partly owing to delays in donor support, and a depreciation of the exchange rate.

177. Diamond exports grew strongly by 36.4 percent in 2003. At the same time, imports growth remained at a high 14.9 percent due to continued expansion in reconstruction activities and higher oil prices. As a consequence, the current account deficit, excluding official transfers, widened to 26.8 percent of GDP in 2003 from 25.6 percent in 2002. The current account deficit is projected at 25.2 percent of GDP in 2004.

4.3 Macro-economic, Financial and Structural Reforms

4.3.1 Macroeconomic Reforms

178. Since independence, successive governments have sought to deal with the nature and causes of economic decline through substantial programmes for stabilisation and institutional reforms supported by external development partners, including the IMF, WB, AfDB etc. These programmes, which were accentuated by the special post-conflict emergency and reconstruction requirements, aimed to improve the standard of living of the people by halting further deterioration at the macroeconomic level, and moving to a phase of continuous economic growth. The focus was on two major axis: (i) stabilisation policies, which sought to restore the overall economic balance and control inflation; and (ii) structural reforms, which aimed to set the economy on a high growth and sustainable development path by correcting institutional and systemic inefficiencies.

179. In the 1970s and 1980s, Government launched a series of IMF-supported Standby Programmes of stabilisation and adjustment that focused on measures to reduce budget deficits, provide balance of payments support, eliminate over-valuation of the exchange rate, and improve resource allocation. These policy interventions, however, failed to reverse the economic decline as the programmes did not run their full course, partly because of the government’s inability to meet the stipulated conditionalities. These earlier efforts therefore made little impact in improving economic conditions. The situation was compounded by extensive government intervention in the economy through impulsive wage and price fixing, control of bank credit, nationalization and foreign exchange control and payments restrictions. Consequently, by August 1987, Sierra Leone’s relations with the IMF and World Bank had deteriorated into a non-accrual status largely on account of the continued build up of huge debt service arrears. After protracted negotiations with the IMF, the government initiated a new economic recovery programme (Shadow Programme) in late 1989, which sought to normalise relations with the IMF while correcting the large macroeconomic imbalances and improving public financial management.

180. The overall assessment of the nature of the decline of the economy in the first three decades of independence as well as of the subsequent policy interventions rested on the success or failure in government’s effort in reviving the economy and accelerating growth. It was evident that the economy required major policy changes and substantial investments if growth would be revived. While the decline in mining production and export might not have been foreseen and therefore prevented, it was also clear that the decline was probably beyond government control. The likelihood of a significant expansion in the volume of the major export commodities, or the development of new export commodities was unlikely, given the continued contraction of the major sources of domestic revenues, expenditure reduction as structural adjustment policy interpreted the crisis as fiscal deficit, and the unavailability of direct donor intervention. With the continued decline in per capita income, it was hardly realistic to expect an increased savings rate in a low-income economy when living standards fell. At the same time, the economy continued to suffer a severe foreign exchange constraint while the government’s capacity to invest declined.

181. With the commencement of the war, the government’s reform agenda under the shadow programme was seriously interrupted by the diversion of attention to war-related challenges including war financing.

182. Notwithstanding, the government had to continue with efforts to re-establish normal relations with external donors and creditors. In this respect, the government adopted a Rights Accumulation Programme (RAP) with the IMF in 1992. The World Bank extended a quick disbursing Reconstruction Import Credit (RIC) in the same year, followed by a Structural Adjustment Credit (SAC) in 1993, and sector-related assistance. These programmes resulted in stabilisation gains, laid the foundation for major structural reforms, and renewed support from other bilateral and multilateral donors, including the African Development Bank, European Union, British Overseas Administration, and the Commonwealth. Upon completion of the RAP, Sierra Leone adopted a three-Year Enhanced Structural Adjustment Facility (ESAF) arrangement with the IMF in March 1994. In addition to sound macroeconomic policies, structural reforms were implemented including improvements in fiscal management through strengthening of revenue collection and expenditure control, trade and exchange rate liberalisation, public enterprise, civil service and financial sector reforms. However, in early 1995, fighting escalated between the government and rebel forces.

183. The rebels overran the rutile and bauxite mines in January 1995, which at the time accounted for nearly 70 percent of Sierra Leone’s official exports and 17 percent of government revenue. The spread of rebel attacks outside the eastern and southern provinces led to a further large displacement of the population, loss in agricultural and diamond mining output, and disruption to major transport links. The heightening of the conflict was also a setback to macroeconomic stability.

184. The temporary ceasefire in November 1996 paved the way for the Resettlement, Rehabilitation and Reconstruction (RRR) and Demobilisation, Disarmament and Reintegration (DDR) programmes to be implemented over the medium and long term. Donor resources for a Quick Action Programme (QUAP) to support the two initiatives were pledged at a Round Table meeting in September 1996 and a Consultative Group (CG) meeting in March 1997. The QUAP sought to reintegrate persons displaced by the war into economically productive roles, reconstruct basic social and economic infrastructures, and demobilise ex-combatants. Next, the government adopted a medium-term adjustment programme, whose policies and objectives were set out in a Policy Framework Paper (PFP) for 1996-1999.

185. Policy execution was generally good at this time and there was marked progress in stabilising the economy. Prospects for rapid economic recovery were bolstered by the peaceful parliamentary and presidential elections held in February and March 1996; the new government’s commitment to macroeconomic stability and structural reform; and more significantly, strong donor support. The policies aimed at ensuring a successful post-conflict reconstruction and an uninterrupted transition from humanitarian relief and emergency assistance to sustainable growth and poverty eradication.

186. With the signing of the Lome Peace Accord in July 1999, Government adopted more comprehensive economic recovery programmes supposedly the IMF (Emergency Post Conflict Assistance Facility) and the World Bank (Economic Recovery and Rehabilitation Credit (ERRC I). The European Union and the British Government, through its Department for International Development (DFID, UK) also supported the government’s economic recovery programme. The programme aimed at re-establishing macroeconomic stability, rehabilitating the economic and social infrastructure and rebuilding capacity for policy formulation and implementation.

187. The immediate attention for the government in the post-conflict era was the compelling need to mainstream major post-conflict challenges in its policies and strategies. These included conflict resolution; restoration of security, democracy and good governance; safety nets for war victims and ex-combatants; and rebuilding the economy and the physical infrastructures that would lay the foundation for achieving sustainable growth and poverty reduction.

188. Continued improvements in the security situation strengthened confidence and led to further support programmes from all donors. In September 2001, the IMF approved Sierra Leone’s Interim Poverty Reduction Strategy Paper (I-PRSP) and simultaneously agreed the first three-year programme under the Poverty Reduction and Growth Facility (PRGF). The overall objective of the programme was to address the desperate poverty situation in a more comprehensive manner and to enhance the growth prospects of the economy. The PRGF has supported the immediate post-conflict years and ends in June 2005. Sierra Leone attained the Decision Point under the enhanced heavily indebted poor countries (HIPC) initiative in March 2002 and began to receive HIPC relief in that same year. The World Bank, the African Development Bank, DFID, UK, the European Union, the Islamic Development Bank and other development partners agreed programmes in support of strategic sectors including governance, security, agriculture, health, capacity building and public financial management. Reforms in these important areas are detailed in appropriate sections of the PRSP.

4.3.2 Financial Sector Reforms

189. Sierra Leone’s financial sector is dominated by the banking sector, which comprises of the Bank of Sierra Leone at the apex, 7 Commercial Banks and 4 Community Banks. During the war, the commercial banks’ network of branches across the country was substantially affected as many branches were either burnt down or severely looted. The number of branches currently stands at 34 following reconstruction work and these are mainly located in Freetown and the provincial headquarter towns. There are also other financial institutions such as the National Development Bank, National Co-operative Development Bank, Post Office Savings Bank, Sierra Leone Housing Corporation, Finance and Trust Corporation, First Discount House Limited, Home Finance Company, 44 Foreign Exchange Bureaus and 8 Insurance Companies. Excepting the discount house, insurance companies and foreign exchange bureaus, the rest of these institutions are largely dysfunctional in terms of providing meaningful financial intermediation services. The community banks, which have replaced the now defunct rural banks, have the important role of providing more concessional financial services to local communities compared to the commercial banks. These pilot banks are expected to empower communities to own and manage their development process, broaden the financial system, and provide institutional anchor to the Government’s micro-financing programme.

190. Diagnostic studies of the financial sector in 1994 and subsequent assessments identified both systemic and institutional inefficiencies in the financial sectors, which has contributed to the high cost of financial intermediation and limited the availability of financing for productive investments, especially to small and medium-sized enterprises. Legislative and several other structural inadequacies also handicap the financial sector. These inadequacies include: a high volume of non-performing loans; inadequate judicial procedures for loan recovery; inadequate credit risk evaluation mechanisms for bank clients; high intermediation costs, aggravated by a protracted period of civil strife and generally limited outreach facilities.

191. To address these problems, the Bank of Sierra Leone and Banking Acts were revised in 2000 to provide a sound legal framework for the banking system consistent with a more independent central bank and effective banking supervision. New banking regulations were issued to the commercial banks for increased capital, reporting comparable with international standards and actions to make the institutions more robust. The Bank is now better placed to pick up early warning signals of weaknesses in financial institutions and because of this, commercial banks were able to survive the devastating events of 1997 and 1998. The regulatory and supervisory role was extended to other financial institutions, which led to the enactment of the Other Financial Services Act in 2001. One fundamental intermediation gap that requires urgent attention in the context of providing appropriate financing for the PRSP is the lack of medium to long term lending facilities by commercial banks in particular.

4.3.3 Structural Reforms

192. The dramatic decline of the economy, the aftermath of the civil war and the perceived widespread corruption in state institutions also forced a number of structural issues to receive priorities in Sierra Leone’s reform programme. The major ones were: (i) the fiscal dimensions and social impact of the reforms; (ii) raising productivity and accountability; (iii) expansion of the role of the private sector in investment, production and employment; and (iv) administrative capabilities for implementing the measures and policies of the programmes. Most of these reforms were envisioned during the 1990s and the early years of post-conflict reconstruction. They were largely aimed at strengthening financial and economic management, building capacity in the civil service and improving service delivery.

193. Significant progress has been made in structural reform, with donor support. Among these, the budget is now presented in the form of a medium-term expenditure framework; a National Commission for Privatisation was established to implement the divestiture programme; the National Revenue Authority was set up to improve domestic revenue generation and tax and non-tax administration to reduce over time the current heavy dependent on donor assistance; public procurement reform underpinned by a new Public Procurement Act 2004; human resources and functional reviews of line ministries have been undertaken; local government has been restored aimed at decentralising service delivery; judicial and legal reforms are improving the justice system; the security system has been significantly restructured to improve its functioning; an Anti-money Laundry Act has been enacted and most of the other key government institutions are receiving capacity building support. The investment climate has been substantially deregulated to boost investment and private sector development while an Investment Code was been legislated. As indicated earlier, aspects of these structural reforms will be covered in other parts of the Paper. It suffices to conclude that the reforms so far have helped in kick-starting the more comprehensive requirements of the PRSP implementation, including an accountable and transparent public procurement and service delivery systems and a level playing field for private investment.

4.4 Medium Term Economic and Financial Strategy, 2005-2007

194. In the context of implementing a PRS, the government is assuming growing responsibility for consolidating peace, security and good governance, while effecting the decentralization of public administration and related services to local authorities. Government is fully aware of the critical importance of sustaining high real growth, maintaining a stable macroeconomic and financial environment, and, above all, reducing poverty. This section describes the medium-term macro-economic focus and growth prospects envisaged to achieve the broad objectives of the PRSP.

4.4.1 Medium Term Framework for Economic Growth and Stability

195. The analysis in this section reflects the policy environment in the 3-year PRGF arrangement with the IMF, after five successful reviews, the most recent being in November 2004. The sixth review in 2005 and ex-post assessment will determine the main elements of a successor PRGF arrangement. Meanwhile, real GDP growth is projected to rise by 6-9 percent during 2005 to 2007. The growth in real GDP is expected to come from putting into use the under-utilised capacity in the agricultural and mining sectors; an expansion in manufacturing and services sectors, and higher public investment in infrastructure projects. Growth will also be underpinned by the expected substantial increases in agricultural production as the food security takes hold; and increases in both domestic private and public investments and higher domestic savings, including from the large Sierra Leonean expatriate community.

196. Price stability will be maintained so that the country will benefit from a stable performance and competitive exchange rate and lower nominal interest rates. In this regard, the medium-term framework seeks to contain the rate of inflation to a single digit through the pursuit of prudent fiscal and monetary policies. Hence, the economy is expected to sustain steady growth with price stability.

197. The current account deficit, excluding official transfers, is expected to narrow down from 13.6 percent of GDP in 2005 to 7.8 percent of GDP in 2007 following the anticipated resumption of rutile and bauxite exports and the gradual reduction of reconstruction imports. Gross foreign reserves of the Bank of Sierra Leone are programmed to rise to the equivalent of at least 3 months of import cover by 2007.

198. To achieve these objectives, the Government will seek to further reduce the budget deficit and money supply growth, while maintaining a flexible exchange rate regime and a liberal exchange and trade system. Structural impediments to greater factor mobility and improved resource allocation will be removed, particularly in the mining and fisheries sectors, and implementation of civil service and public enterprise reforms will continue. External trade policies will be directed toward bringing about greater export diversification to help Sierra Leone better exploit its comparative advantage in international trade. The Bank of Sierra Leone will build up a comfortable cushion of foreign exchange reserves so that adverse external shocks can be absorbed without subjecting the economy to downturns. Financial intermediation will be strengthened further by the establishment of a Stock exchange Market and a Venture Capital Fund.

4.4.2 Fiscal Policy Framework

199. Sound fiscal policy lies at the core of the Government’s economic reform efforts. The maintenance of strict fiscal discipline will continue to be a prime focus of fiscal policy during the implementation of the PRSP, while keeping overall expenditures consistent with price stability and overall external balance. In this regard, Government’s fiscal policy will continue to be driven by measures to rationalize the tax system and strengthen control over spending. Given good prospects to achieve the fiscal objectives for 2004, the fiscal framework for 2005-2007 will consolidate the gains already achieved in macroeconomic stability.

200. Fiscal policy will seek to enhance revenue and improve expenditure management and control systems, and phase out bank financing of the budget deficit. Fiscal policy will thus contribute to macroeconomic stability while re-orienting public expenditures in favour of security, social services, infrastructure and economic activities. This in turn will help create an attractive climate for investment, facilitate job creation and improve the quality of life.

201. The requirements for reconstruction, poverty reduction and improved services will result in high Government expenditures in 2005 of about 27.6 percent of GDP. In 2006 and 2007, total expenditure and net lending are projected at 25.8 percent and 21.4 percent of GDP, respectively. Development expenditure will be increased, as a significant amount of resources will be allocated for the development of new infrastructure and maintenance and rehabilitation of existing infrastructure. Non-military current spending is also expected to rise significantly, owing to peacetime savings. As the UN and bilateral assistance for defense and security phases out, the Government will have to assume a greater share of the cost of defense and security outlays, putting increased pressure on domestic resources. This increased responsibility would not allow the Government to maintain real growth in spending on social safety nets that target the most vulnerable groups in society without continued donor support. Hence, as the domestic resource base remains limited and fragile over the medium-term, to avoid the negative consequences of central bank financing, Government will continue to seek substantial increase in international assistance, beyond HIPC relief, to finance the budget deficits.

202. The overall budget deficit, excluding grants is projected to decline from 14.6 percent of GDP in 2005 to 11.2 percent of GDP in 2006 and 5.7 percent in 2007. Bank financing of the deficit will be limited to around one percent of GDP in 2005 and eliminated in 2006-07, thus reducing the risk of inflationary financing and the consequent price instability. In the past, the deficit was financed from a combination of external and domestic sources including a substantial accumulation of arrears to suppliers, amounting to 3 percent of GDP in 2000. Better budget and expenditure management would reduce the incidence of arrears accumulation as revenue generation is significantly improved. However, as the UN and bilateral assistance for defense and security phases out, the Government will have to assume a greater share of the cost of defense and security outlays, putting increased pressure on domestic resources. This increased responsibility would not allow the Government to maintain real growth in spending on social safety nets that target the most vulnerable groups in society without continued donor support. Hence, as the domestic resource base remains limited and fragile over the medium-term, to avoid the negative consequences of central bank financing, Government will continue to seek substantial increase in international assistance, beyond HIPC relief, to finance the budget deficits.

4.4.3 Domestic Revenue Mobilisation

203. Domestic revenue performance has been impressive in the post-conflict period, largely on account of rising urban activity and rapid import growth. The fiscal framework depicts steady progress in the revenue effort, rising from 12.4 percent of GDP in 2004 to 13 percent, 14.6 percent and 15.7 percent in 2005, 2006 and 2007 respectively. Government will intensify efforts to strengthen tax administration by providing the revenue collecting agencies with the requisite logistics and appropriate incentives to enhance their capacity in tackling issues of tax evasion and avoidance. The Authority will seek technical assistance for training tax auditors to deal with the audit of companies without adequate records. The NRA is actively considering the introduction of Taxpayer’s Identification Numbers (TINS). To this end, the NRA will establish a task force for the designing of a Taxpayers’ Identification Numbers (TIN), developing procedures for registering taxpayers, and for assigning and using TINS.

204. The Customs Department will adopt a work plan for the introduction of the WTO valuation rules, including a study of the revenue implications, legislative and training needs, and detailed valuation instructions. Customs valuation procedures will be reviewed and the Automated System for Customs Data Management (ASYCUDA) will be established at the Customs department to facilitate the speedy processing of customs declarations.

205. The Government will align its tariff rates with those of the ECOWAS Common External Tariff (CET) using a phased approach to allow for a broadening of the tax base and offset the revenue loss resulting from harmonisation of tariff with the ECOWAS CET. Efforts will be intensified to minimise revenue leakages. Losses from the rate reductions are expected to be compensated for by higher non-tax revenues, revised presumptive income tax standard assessments, the elimination of selected exemptions and concessions, and increased efficiency in tax administration.

206. By the end of 2007, Government will introduce the Value-Added Tax (VAT). As a step towards implementing VAT, Government will broaden the base of the sales tax by selectively taxing a wide range of services, including professional services, electricity, water and domestic telecommunications. In the medium-term, Government will incorporate expected revenue streams from the mining sector by preparing medium-term revenue forecasts for each major mining company project using a model that incorporates the fiscal regime specific to each project. The revenue forecast will be based on the latest available information on production, price, and cost discounted by a percentage to reflect the considerable downside risks to all mineral projects. The discounted revenue forecast would be incorporated into the medium-term revenue framework used for the budget.

4.4.4 Monetary and Financial Policies

207. Monetary and financial policies in the medium-term will continue to aim at subduing inflation and maintaining positive real interest rates in order to promote domestic savings and ensure efficient allocation of financial resources. Up to 2003, the Bank of Sierra Leone’s main instrument of monetary policy was operations in the primary market for government securities. Reserve and liquidity ratios were mainly used for prudential controls and with the small size of the financial market and the high liquidity of the commercial banks there was very little activity at the secondary market. The Bank had relatively good successes in meeting the monetary targets within the Fund supported programmes. Lately, with a reduction in external budgetary support, central bank credit to the Government has been on the increase. At the same time, there has been a rapid expansion of credit to the private sector in support of higher economic activity especially in productive sectors like construction, manufacturing and services. The corresponding increase in the money supply, depreciating exchange rate and higher inflation now pose a real challenge for the central bank in the short and medium term.

208. Within the current macro economic programme, broad money is projected to expand on average by 14 percent over the next 3 years to 2007. The Bank of Sierra Leone is expected to manage its net domestic assets to achieve these targets whilst at the same time ensuring that sufficient credit of a more longer term nature is available to the private sector to support economic recovery and job creation.

209. To further improve the effectiveness of monetary policy, the Bank will continue to adjust the statutory reserve requirements of the commercial banks to control the excess liquidity in the system. This requirement will be extended to foreign currency deposits. It will also seek to make the open market operations more effective by introducing a wide range of securities and strengthen its monetary operations. In this respect, securities repurchase agreements (repos) and dematerialised form of government securities will be introduced in the medium-term. These actions as well as the development of an electronic book entry system will deepen the money market, enhance secondary market trading and provide greater flexibility for the Bank in its monetary policy operations.

210. In conducting monetary policy using market-based indirect monetary controls, the central bank could only maintain control over liquidity in the economy and achieve its stated objectives with a sound liquidity-forecasting framework. The central bank will develop such a framework, which will, among other things, enable the Bank to identify determinants of short-run fluctuations in liquidity demand, limit financial market volatility, and determine the quantum of liquidity to inject or withdraw from the system, consistent with the country’s overall macroeconomic objectives. Properly understanding the channels, through which monetary policy impulses are transmitted through the economy to impact on the ultimate objectives of inflation and economic growth, and the duration of impact, is germane to its effective conduct. In this regard, the Bank will determine the transmission mechanism of monetary policy in the country. In addition, the relationship between broad money and reserve money, the Bank’s respective intermediate and operational monetary targets within the current monetary policy framework will be investigated.

211. Development of an efficient payments system to foster monetary policy operations will continue to receive the attention of the central bank in the short and medium term. The Bank will pursue modernisation of the national payments system by developing a payments system framework and strategy that will encompass a comprehensive review of legislation, rules, regulations and procedures in support of the system. Appropriate bills and acts, aimed at ensuring efficiency of the payments system, will be enacted. Furthermore, the payment system will be modernized with the introduction of an Electronic Clearing House to expedite the settlement of cheque payments with a long-term objective of a Real Time Gross Settlement (RTGS) System being introduced. Payments system workshops will be organised to sensitise all stakeholders on the broad requirements of the reform and modernisation programme. These reforms will also be undertaken within the framework of the proposed harmonisation of national payments systems in the West African Monetary Zone (WAMZ).

4.4.5 Financial Sector Reforms

In the medium term, financial sector reforms will be geared towards ensuring a competitive and efficient financial sector to support development of the private sector. In this regard, the Bank will seek to intensify the supervision and regulation of commercial banks and non-bank financial institutions and strengthen prudential controls. The BSL will also seek to improve the credit risk assessment capacity of commercial banks and will explore the possibility of setting up a Credit Bureau to improve the flow of information on current and potential bank customers. In order to facilitate medium and long term lending and borrowing transactions in money and money denominated instruments and subsequently enhance development of both the private and public sectors, the Bank is supporting the establishment of a Stock Exchange which will also assist the privatisation efforts of Government. At the same time it will put in place institutional measures for the regulation of capital market activities. Actions to review existing legislation, and the enactment of new legislations, such as the Companies, Bankruptcy and Anti Money Laundering Acts as well as the setting up of a commercial court are all being supported by the Bank. The Bank of Sierra Leone will continue to spearhead the establishment of community banks throughout the country to promote financial intermediation and spur savings and investment in the rural areas

4.5 The Financial Sector and Poverty Reduction

212. The major limitation of the financial sector is its thinness relative to the rising demand for its services nationwide. In addition, financial services are still very basic and rudimentary as the institutions adopt what is evidently a-wait-and-see approach to service delivery. The main challenges facing the country in the post-conflict period and for driving growth and poverty reduction include: a) expanding rural financial institutions and improving rural credit; b) improving competition and efficiency as most banks and non-bank financial institutions operate exclusively in the capital city and a few district headquarter towns and invest mainly in government debt instruments; c) and building public confidence especially in light of limited diversification of services..

4.6 External Sector Policies and Poverty Reduction

213. The Government will continue to maintain a market-determined exchange rate regime based on weekly foreign exchange auctions by the Bank of Sierra Leone. The Bank’s foreign exchange objectives will also be achieved through the auction.

214. On trade policy, Government will continue to maintain a liberalised trade system to promote and diversify exports. Within the framework of regional economic integration under ECOWAS and the West African Monetary Zone (WAMZ), Government will restructure its import tariffs consistent with the ECOWAS Common External Tariff (CET) and the ECOWAS Trade Liberalisation Scheme (ETCS) for goods locally produced within the sub-region. In order to boost official receipts from diamond exports, Government will step up efforts to increase participation of actors in the UN-sponsored diamond certification scheme. The resumption of Bauxite and Rutile mining is crucial to increasing Sierra Leone’s export capacity. Imports will, however, increase substantially in the medium term due to the large requirements for reconstruction and rehabilitation. As indicated elsewhere in this Paper, Government is also committed to do everything possible to fully exploit the gains to be provided under the Doha Round, the African Growth Opportunity Act (AGOA), the Everything–but-Arms (EBA), and above all, the New Partnership for Africa’s Development (NEPAD) international initiatives.

Table 4.4.2:

Sierra Leone: Selected Economic and Financial Indicators, 2001-05

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Sources: National and IMF staff estimates and projections.