Sierra Leone’s economic growth is likely to slow to 15 percent this year from 21 percent in 2013, a top finance official said on Thursday, with the expansion powered by fresh foreign investment in the mining and farming industries.
A 15 percent growth rate would still be among the fastest in Africa, Momodu Kargbo, minister of state in the West African nation’s finance ministry, told Reuters on the sidelines of a meeting in the Kenyan capital.
The current growth rates come after the economy of Sierra Leone was all but crippled by civil conflict in 2002. Growth is now racing ahead largely through exploitation of the West African nation’s iron ore deposits, Kargbo said.
“We have serious agricultural companies coming in. We have new mining companies coming in, and they are fuelling the growth,” he said. Delivering strong growth is vital to creating jobs and preventing a slide back into war, he said.
The aid-dependent country is seeking a credit rating to see if it can tap international capital markets and may gain one by mid-2015, Kargbo said.
The International Monetary Fund has forecast its 2014 growth at about 14 percent and 10.8 percent in 2015.
Excluding mining, growth for the rest of the economy was expected to be steady at about 6 percent this year, Kargbo said.
African Minerals operates iron ore mines in the north of the country, while another firm, London Mining, is re-opening an abandoned iron ore mine, Kargbo said.
“The agricultural sector is expected to grow significantly,” he added, citing a company called Gold Tree and another, Socfin, which were investing in palm oil while a U.S. investor, who he did not name, was planning to grow pineapples and other fruits.
Sierra Leone urgently needs to create jobs – youth unemployment stands at 50-60 percent – to prevent a slide back into conflict, the minister said.
“We are just coming out of a fragile state,” he said. “You know there was a war in the country, and you don’t always say the elements that caused the war are all totally finished.”
Despite strong growth, the government has reined in inflation, bringing it down to 8.1 percent from 15 percent two years ago. The minister said the government wanted it to stabilise at about 8 percent.
Sierra Leone, which relies on concessional loans and grants to fund its budget, wants its creditworthiness to be assessed by a ratings agency to see if it can use international capital markets at commercial rates.
“We are going through the procurement process now, so I believe by mid-next year, it will have been completed,” he said.
The minister said the main risks facing the economy are external shocks beyond the control of officials, such as a jump in the price of oil in global markets. He also noted that a recent outbreak of the Ebola virus killed at least 16 people in Sierra Leone and could hurt the economy.
“When something like that happens … you have the image problem for the country,” Kargbo said. “One of the mining companies has been slowing down on non-essential workers.”