Sierra Leone Prospects for Growth and Equity Public Disclosure Authorized

Report No. 3375-SL FILE COPY Sierra Leone Prospects for Growth and Equity Public Disclosure Authorized

july 31, 1981 West Africa Region FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Document of the Wxod Bank

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalents (April 1981)

US$1 = Le 1.05

Le 1 = US$0.95

Le 1 = SDR .7315

Fiscal Year

July 1 to June 30 FOR OFFICIAL USE ONLY

SIERRA LEONE: PROSPECTS FOR GROWTH AND EQUITY

Table of Contents

Page No.

COUNTRY DATA COUNTRY MAPS

SUMMARY AND POLICY RECOMMENDATIONS ...... i-x

I. ECONOMIC PROBLEMS ...... 1

A. Growth Performance ...... 1 B. Balance of Payments ...... 2 C. Public Finance ...... 6 D. Money and Banking ...... 9 E. Inflation ...... 11 F. External Debt and Creditworthiness ...... 12

II. STIMULATING GROWTH .14

A. Changes in Development Strategy .14 B. Future Prospects with Strategy and Policy Changes 15 C. Second Development Plan .21

III. EMPLOYMENT .. 25

A. Labor Shortages in Agriculture .27 B. Employment Generation Outside Agriculture .29 C. Public Sector Salaries and Employment ...... 31 D. Summary of Policy Recommendations .34

IV. POVERTY, INCOME DISTRIBUTION, AND BASIC NEEDS .35

A. Absolute Poverty .35 B. Distribution of Income and Wealth .37 C. Access to Basic Needs .46 D. Summary of Policy Recommendations .51

V. SELECTED POLICY ISSUES ...... 53

A. Agricultural Pricing ...... 53 B. Tax Reform ...... 66 C. Energy ...... 72

ANNEX A: RECENT ECONOMIC PROGRAMS .81 ANNEX B: HEALTH SECTOR SURVEY .87 ANNEX C: MACRO-MODEL - Projections ...... 125 ANNEX D: SOCIAL AND ECONOMIC STATISTICS ...... 138 ANNEX E: SELECTED REFERENCES ...... 205

This report is based on the findings of an economic mission comprising Ms. F. Aynur Uluatam (Chief of Mission), Messrs. David Lindauer and Michael O'Byrne, who visited Sierra Leone in May 1980.

SIERRA LEONE ECONOMIC INDICATORS

OROSS NATIONAL PRODUCT IN 1978 r 79 ANNUAL RATE OF GROWH ' 1972/73 constant prices) USs Ml % 196/9-70/71 1970/71-77/78 1978/79

GNP at Market Prices 871.4 100.0 7,4 0.9 1.6 Gross Domestio Investment 135.2 15.5 1.1 -1.2 11.1 Gross National Saving 22.6 2.5 - -6.8 -45.0 Current Aocount Balance -116.6 13.0 Exports of Ooods, NFS 209.7 24.1 -2.0 -2.0 -3.1 Importa of Goods, NFS -313.8 36.0 1.5 -0.6 14.5

OUTPUT, LABOR FORCE AND PRODUCTITY IN 1978/79 Value Added Labor Force V. A. Per Worker US$ Mn. .. LU _ Mi.

Agriculture 285.5 35.9 .820 67.0 348.2 53.5 Industry 174.1 21.9 .195 16.0 892.8 137.2 Services 336.0 42.2 .184 15.0 1826.1 280.7 Unallocated - .024 2.0 Total/Average 795.6 127 3 65'30.lO

OOVERNMENT FINANCE General Oovernment Central Government (Le fMln.) %of ODDI-;C 197 197 lF96-7 1978/79 1978/79 1974-1975/76 Current Receipts 172.8 20.7 17.5 Current Expenditure 166.0 19.9 16.2 Current Surplus -7T* Capital Expenditures 41.6 5.0 5.4 External Assistance (net) 36.2 4.2 4.7

MONEY. CREDIT and PRICES 1974 1975 1976 977 1978 1979 1980 2/ -TMllion Le outstanding end periodT Money and Quasi Money 84.6 91.6 111.9 136.2 179.3 214.5 261i5 Bank credit to Public Sector 3/ 23.0 56.7 107.3 119.7 182.4 252.5 338.8 Bank Credit to Private Sector 39.7 41.1 43.7 46.8 64.9 71.0 84.1

(Percentages or Index Numbers) Money and Quasi Money as %of OD? (m.p.) 17.7 16.0 18.2 18.3 22.0 23.0 25.4 General Price Index (1961 - 100) 4/ Amual percentage changes in: General Price Index 14.4 19.9 17.2 8.3 10.9 21.2 11.2 Bank credit to Public Sector 52.3 146.5 89.2 11.6 52.4 38.4 34.2 Bank credit to Private Sector 40.8 3.5 6.3 7.1 38.6 9.4 18.5

NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 1/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocatet" consists mainly of unemployed workers seeking their first job. 2/ 1980 figures are preliminary. 3/ Credit from the Banking System. 4/ Consumer Price Index (Freetown).

not available not applicable SIERRA LEONE TRADE PAYMENTS AND CAPITAL FLOWS

BALANCE OF PAYMENTS MERCHANDISE EXPORTS(US $ Million) 1973-75 1977-79 1974 1976 1979 Average % Average % (Millions US $) - Exports of Goods, NFS 153.5 120.0 230.0 Minerals 99.1 74.1 105.8 58.4 Imports of Goods, NFS -217.2 -162.5 -304.2 lJamonds 80.4 60.1 97.7 53.9 Iron Ore 14.3 10.7 - _ Resource GaP (deficit = 63.7 - 42.5 - 74.2 Bauxite 4.4 3.3 8.1 4.5 (net)7 - 42.5 - 74.2 Agr'l. Commod. 24.8 18.5 64.1 :35.4 Interest Payments (net) Coffee 7.8 5.8 32.5 .17.9 Workers' Remittances Cocoa 8.2 6.L 22.8 L2.6 Other Factor Payments (net) - 18.8 - 25.2 - 40.9 Palm kernels & Prod. 8.8 6.6 8.8 4.9 Net Transfers 21.9 10.7 28.6 All other Commodities 9.9 7.ei I0.9. _ 6. Balance on Current Account - 60.6 - 57.0 - 86.5 Total 133.8 100.0 181.1 100,0

Direct Foreign Investment 10.3 8.5 7.6 Net MLT Borrowing 26.8 16.4 37.0 Disbursements 38.5 32.3 86.1 EXTERNAL DEBT, December 31, 1930 1/ US m Amortization -11.7 -15.9 -49.0 Subtotal 37.1 24.9 44.6 Public Debt, incl. guaranteed 334..7 Capital Grants 3.5 5.6 6.7 Non-Guaranteed Private Debt - Other Capital (net) 10.4 4.3 7.6 Total outstanding & Disbursed 334.7 Other items n.e.i _._.8 - 2.1 -1'.5 Increase in Reserves (+) 7.8 -24.3 -43.1 DEBT SERVICE RATIO FOR 1980 - , Gross Reserves (end year) 49.2 21.8 46.7 Net Reserves (end year) 36.5 - 4.9 -26.2 Public Debt. incl. guaranteed 2!1.6 Non-Guaranteed Private Debt - Fuel and Related Materials Total outstanding & Disbursed 29.6 Imports of which: Petroleum 25.3 11.2 67.0 2/ Exports of wqhich: Petroleum - - - IBRD/IDA LENDING (May 31, 1981) (Million US $)

RATE OF EXCHANGE IBRD _DA Outstanding & Disbursed 18.5 29.9 Through -_1971 In - 1980 Undisbursed 0.2 4.1 US $ 1.OO .8297 Le US$$ 1.00 = 1.050 Le Outstanding incl. Undisbursed 18.7 34.0 Le 1.00 = US $1.2053 Le 1.00 = US $ .9518

1/ Preliminary.

2/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. Excludes debt servicing of arrears ($16.3 million in principal and $4.9 million in interest).

not available not applicable

JJ1y 31, 1981 TABLE 3A SIERRA 5RE- SOCIAL INDICATORS DATA SHEET

SIERRA LEONE REFERENCE GROUPS (WEIGHTED AV5RAGES lAND AREA (ThOUSAND SQ. KM.) - MOST RECENT ESTIMATE)- TOTAL 7.7 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 27.7 1960 /b 1970 /b ESTIMATE lb AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA

GNP PER CAPITA (US$) .. 150.0 250.0 238.3 794.2

ENERGYCONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 30.6 127.3 89.1 70.5 707.5

POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 2164.7 2692.1 3381.0 URBAN POPULATION (PERCENT OF TOTAL) 13.0 18.1 23.8 17.5 27.7

POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 6.0 STATIONARY POPULATION (MILLIONS) 17.0 YEAR STATIONARY POPULATION IS REACHED 2130

POPULATION DENSITY PER SQ. KM. 30.2 37.5 47.2 27.7 55.0 PER SQ. KM. AGRICULTURAL LAND 79.9 97.9 118.8 73.7 130.7

POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 41.7 43.0 44.0 44.8 46.0 15-64 YRS. 55.0 53.8 52.8 52.4 51.2 65 YRS. AND ABOVE 3.3 3.2 3.2 2.9 2.8

POPULATION GROWTHRATE (PERCENT) TOTAL 1.8 2.2 2.5 2.6 2.8 URBAN 5.2 5.5 5.6 6.5 5.1

CRUDE BIRTH RATE (PER THOUSAND) 46.8 45.7 45.5 46.9 46.9 CRUDE DEATH RATE (PER THOUSAND) 26.6 21.9 18.5 19.3 15.8 GROSS REPRODUCTION RATE 3.0 3.0 3.0 3.1 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. USERS (PERCENT OF MARRIED WOMEN) .. ..

FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 99.0 82.0 89.5 89.9

PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 85.0 96.0 93.0 90.2 92.3 PROTEINS (GRAMS PER DAY) 43.0 47.0 48.0 52.7 52.8 OF WHICH ANIMAL AND PULSE 13.0 14.0 17.0 17.8 16.1

CHILD (AGES 1-4) MORTALITY RATE 41.0 32.2 25.4 27.3 20.2

HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 37.2 42.4 46.8 45.8 50.8 INFANT MORTALITY RATE (PER THOUSAND) .. ..

ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 12.0 .. 23.9 27.4 URBAN .. 75.0 .. 55.0 74.3 RURAL .. 1.0 .. 18.5 12.6

ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL ...... 26.2 URBAN ...... 63.5 RURAL ...... 20.3

POPULATION PER PHYSICIAN 20421.4 18067.7 .. 31911.8 9 4 13844.1 POPULATION PER NURSING PERSON 5 0 .0/c 3802.0 *- 3674.9 2898.6 POPULATION PER HOSPITAL BED TOTAL 1311.8 1095.2 *- 1238.8 1028.4 URBAN 288.9 361.1 .. 272.8 423.0 RURAL ...... 1745.2 3543.2

ADMISSIONS PER HOSPITAL BED .. ..

HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 6.5 URBAN *. 5.7 RURAL .. 6.7

AVERAGE NUMBEROF PERSONS PER ROOM TOTAL .. .. URBAN .. 2.1/d .. RURAL ......

ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL ...... URBAN ...... RURAL 2.O/c .. .. TABLE 3A SIERRA LEONE - SOCIAL INDICATORS DATA SHEET

SIERRA LEONE REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTIMATE)L-

MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA soUrH OF SAHARA

EDUCATION ADUJUSTEDENROLLMENT RATIOS PRIMARY: TOTAL 23.0 33.0 37.0 56.4 73.7 MALE 30.0 40.0 45.0 70.7 95.8 FEMALE 15.0 26.0 30.0 50.1 79.0

SECONDARY: TOTAL 2.0 9.0 11.0 10.0 15.2 MALE 3.0 12.0 15.0 13.6 25.3 FEMALE 2.0 5.0 7.0 6.6 14.8

VOCATIONAL ENROL. (X OF SECONDARY) 9.0 2.0 2.0/g 8.0 5.3

PUPIL-TEACHER RATIO PRIMARY 36.0 32.0 32.0 46.5 36.2 SECONDARY 17.0 20.0 19.0/g 25.5 23.6

ADULT LITERACY RATE (PERCENT) 7.0 15.0 ,, 25.5

CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 2.0 8.7 6.0 2.9 32.3 RADIO RECEIVERS PER THOUSAND POPULATION 4.3 14.9 98.3 32.8 69.0 TV RECEIVERS PER THOUSAND POPULATION 0.2/e 1.1 4.7 1.9 8.0 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 6.0 16.7 10.0 2.8 20.2 CINEMA ANNUALATTENDANCE PER CAPITA 0.1 0.1 .. 1.2 0.7

LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 910.5 1055.6 1243.9 FE4ALE (PERCENT) 36.6 35.8 34.9 34.1 36.7 AGRICULTURE (PERCENT) 78.0 71.0 65.6 80.0 56.6 INDUSTRY (PERCENT) 12.0 15.0 18.6 8.6 17.5

PARTICIPATION RATE (PERCENT) TOTAL 42.1 39.2 36.8 41.7 2,7.2 MALE 54.7 51.5 48.8 54.3 47.1 FEMALE 30.0 27.5 25.2 29.2 .7.5

ECONOMIC DEPENDENCY RATIO 1.1 1.2 1.3 1.2 1.3

INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 33.8/f HIGHEST 20 PERCENT OF HOUSEHOLDS .. 64.17 . LOWEST 20 PERCENT OF HOUSEHOLDS .. 4.5/f LOWEST 40 PERCENT OF HOUSEHOLDS .. 10.17 .

POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 105.0 136.0 381.2 RURAL .. .. 75.0 84.5 1'6.2

ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. . 198.0 99.1 3:14.3 RURAL '' '' 40.0 61.2 1:7.6

ESTIMATED POPULATION BELOWABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. ,. 39.7 RURAL .. .. 65.0 68.8

Not available Not applicable. NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1961 and 1971; and for Most Recent Estimate, between 1976 and 1979.

/c 1962; /d 1967; /e 1963; /f Population; /S 1975.

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SIERRA LEONE: PROSPECTS FOR GROWTH AND EQUITY

SUMbMARY AND POLICY RECOMMENDATIONS

1. At the start of the 1980s, the Sierra Leone economy was behind where it was in the early 1970s: per capita real incc,me had declined nearly 2 percent a year. The most immediate development issue, therefore, is how to bring a halt to long-lasting economic stagnation by building the dynamics of growth into the economic structure. The economy suffered not only from a stagnating domestic income in the 1970s, but also from unfavorable external factors such as worldwide inflation, particularly the sharp increase in oil prices, as well as a set of problems relating to misallocation of resources. Rates of domestic saving (5.5 percent of GDP) and domestic investment (13.5 percent of GDP) were exceptionally low for a developing economy. Public savings were often negative. Although import requireraents of the productive sectors were low because of the narrowness of the industrial base and the low capital-labor ratio in agriculture, import demand, mostly for final products, was allowed to grow beyond what could prudently be afforded. To finance the high import demand, external borrowing was expanded at unfavorable terms beyond the country's repayment capacity. Nor was the tax effort impressive. And the low marginal efficiency of capital was closely associated with unproductive capital spending by the public sector.

2. Domestic demand, external debt and fiscal management, problems for Sierra Leone since the mid-1970s, are still the most immediate short-term policy issues. But in FY80 the government introduced several stabilization measures and took steps to improve its external debt management. Economic performance under the stabilization program was quite satisfactory. Also in FY81 the government entered a three-year arrangement with the IMF under an Extended Fund Facility. The main objective of this program is to support Sierra Leone's medium-term development efforts and to ease the attendant balance of payments constraint. The program includes a set of measures in the areas of public sector investments, pricing policies, fiscal and monetary policies and external sector policies (Annex A). Recently, however, there have been some implementation problems which are currently under discussion with the IMF.

3. The exchange rate issue has not been discussed fully in this report. However, reference has been made to the exchange rate policy where appropriate, since it is clearly one important policy instrument for address- ing both the short-term financial and the longer-term growth problems of the economy.

4. This report concentrates on two immediate development issues: growth and poverty alleviation. It examines the implications of alternative development strategies on growth and suggests changes in long-term economic policies that can affect growth and equity in the 1980s. The Sierra Leone government is preparing its Second National Development Plan covering 1982-86. So the time is opportune to take stock of what led to economic stagnation during the 1970s, to review in detail the critical development issues, and to analyze what economic progress, if any, can be expected in the 1980s--with and without changes in development strategy and key development policies.

A. Changes in Development Strategy

5. The development of Sierra Leone over the past two decades was based on an export-led growth strategy relying solely on the mineral sector. The development of agriculture and other renewable resources received insuffi- cient attention in government policies. Overdependent on diamonds in the 1970s, the economy has been highly vulnerable to production and market disturbances in this single commodity. As the mineral wealth has been depleted, the country has no longer been able to maintain its earlier living standards and per capita real income.

6. This development strategy needs to be changed in the 1980s if per capita real income growth is to be sustained. A revised strategy should try to reduce the country's overdependence on diamonds through export diversification in and outside the mining sector. Efficient import substitution should also be encouraged. With rich mineral, water and land resources, Sierra Leone has good potential for export diversification in mining and agriculture and import substitution in energy and processing industries.

7. To carry out this change in development strategy, the whole incentive system needs to be revised. The tax structure, the exchange rate, and the policies for agricultural pricing, credit and government empe-f-lre- should be geared towards encouraging production and new investments for export diversification and import substitution. To stimulate and later to accelerate economic growth in the 1980s, domestic savings and investment in both the public and private sectors will need to be stepped up considerably. In the short run the Sierra Leone economy again will have to rely on the mining sector to provide the initial push to growth, to ease its domestic resource gap, and to generate additional foreign exchange. The public sector may need to assume a leadership role in increasing the level of domestic investment since it can mobilize external savings more readily than the private sector and since part of the overall investments will be for the expansion of public services. To finance an increased level of public investments, greater amounts of public savings will have to be generated through restraint on public consumption and additional taxation.

8. A change in development strategy would only begin to have a favorable effect on the economic growth by the mid-1980s because of the long gestation period of investments in tree crops, hydropower, and mining. The GDP growth rate could at best be around 2 percent a year between FY80 and FY83, which implies continuing deterioration in already eroded per capita real incomes. But if new investments in mining and energy begin in FY82, and if investment incentives are provided to farmers and manufacturers in the private sector, an economic revival should start around FY85. Between FY82 and FY86, the GDP growth rate may then average around 4.0 percent. More favorable - iii -

growth effects of a changed development strategy should be realized between FY85 and FY90. With export diversification and more rapid growth in mining and agriculture, import substitution in thermal power and manufacturing, and carefully monitored demand management policies during the first half of the 1980s, it is feasible that Sierra Leone can achieve sustained growth in per capita real income.

B. Changes in Long-Term Policies

9. There is a clear need for a resumption of growth. There also is a clear need for poverty alleviation. Sierra Leone is well endowed with natural resources, but a vast majority of the population subsists in poverty. Average per capita income in 1979 was estimated at US$250, which amounts to about US$100-120 in subsistence farming. Most of the population is malnourished. Life expectancy at birth is extremely low, about 40 years. This is largely because infant and child mortality rates are high; in fact, among the highest in the world. School enrollment ratios are low; the illiteracy rate is very high--around 85 percent. Also, the distribution of both incomes and access to basic services is highly skewed.

10. How to achieve both growth and poverty alleviation, is a delicate question. No single policy instrument will achieve one objective without having an impact on the other. Heavy concentration on growth may lead to further deterioration in income inequalities and inadequate complementary action to address poverty issues directly. Similarly, heavy concentration on poverty issues may have adverse effects on growth. While trade-offs between the two are inevitable, these are not so pronounced in Sierra Leone because of its economic structure: the agricultural sector is very large, and income in agriculture, although quite low, is fairly equitably distributed. Therefore, any development policy which aims at improving agricultural productivity, through price and nonprice incentives would directly improve per capita agricultural income--that is, the per capita income of about 75 percent of the population. The wealthiest sector of the economy, on the other hand, is undertaxed. If the overall tax ratio can be brought to a par with other mineral-based economies and if the incremental tax revenues are spent in part to improve public services in the rural areas, the standard of living of most Sierra Leoneans could improve substantially. So far only slow progress has been made toward either effectively rais:Lng the incomes of the poor or adequately taxing the incomes of the rich. Both are necessary. Agricultural growth needs to be stimulated. Agricultural income needs to be raised. Public services in the rural areas need to be improved. And to facilitate all these, additional tax revenues need to be generated.

11. Thus there is a close inter-relationship between the policy changes required for growth and for poverty'alleviation. In order to provide increased incentives to agricultural production the tax burden on the agricultural sector needs to be reduced. At the same time public investments which, at least in the short-term, will provide the initial stimulus to growth, can only be financed if increased public revenues and savings are generated. A change in the tax structure would not only have important beneficial growth effects but, by shifting the tax burden from the relatively overtaxed agricultural sector to the relatively undertaxed mining sector, would also result in significantly improved income distribution. - iv -

12. The following is a summary of recommendations for changes in selected policies for growth and poverty alleviation.

1) Tax Reform

13. Sierra Leone's tax ratio (15.5 percent) is quite low compared with other mineral-based economies in Africa (which average more than 20 percent). A reform of the tax structure is urgently called for as one major policy instrument of resource mobilization and allocation. Up to now the tax system has provided extensive tax privileges to the Alluvial Diamond Mining Scheme in direct tax exemptions--as well as indirect tax privileges to other mining ventures. Diamond diggers and dealers under the Alluvial Diamond Mining Scheme are explicitly exempt from personal income tax. The elasticity of the system is low, for it relies heavily on indirect taxation. Less than a third of tax revenue comes from direct taxes. The personal income tax is minimal in size and its nominal progressivity is largely nullified by large-scale tax evasion. Although less easy to document, corporate taxes are likely to follow a similar pattern. Indirect taxes come mostly from import duties, export taxes, and excise taxes. In sharp contrast to the minimal 2.5 percent export tax on alluvial diamonds, coffee and cocoa have faced a high rate of effective taxation--ranging from 30-40 percent of the export price throughout the 1970s.

14. Fiscal policy actions to achieve higher government revenues, more rapid growth, and a more equitable fiscal system need to address both taxation and expenditure issues. Steps required include a long-run commitment to relieving agriculture's tax burden while increasing mineral and urban wage- earner tax rates and cracking down on income tax evasion. The elasticity and equity of the tax system should be improved by changes in direct taxation:

o Effective taxation of the diamond sector should be introduced. This will be a difficult task - in view of the ease with which diamonds can be smuggled - but an important one for equity and for growth as well. This requires a special study by tax and mineral experts.

o Property taxes should be explored.

O Abolition of exemptions from income tax for certain categories of income should also be explored.

o The rate structure of individual income tax should be simpli- fied, such as by eliminating favoritism in the treatment of rental incomes.

o Institutional efforts to collect taxes and reduce evasion should be strengthened.

And through changes in indirect taxation:

o More than 50 percent (54 percent in FY80) of Sierra Leone's imports are exempt from import duties. These exemptions should be substantially reduced. Given the problem of the valuation of the Leone, further study might show that exemptions should be abolished entirely. o About 20 percent of goods imported are subject to specific rather than ad valorem rates. These should be converted to ad valorem rates to keep up automatically with inflation.

o The tree-crop subsector in agriculture is the most heavily taxed sector in the economy. Even though the narrowness of the tax base creates temptation to tax agriculture, the heavy tax burden on this sector creates a disincentive for agricultural growth. Export taxes on coffee and cocoa should gradually be reduced as taxable incomes are generated and tapped elsewhere in the economy.

2) Agricultural Pricing

15. Nearly 80 percent of Sierra Leoneans live in the rural areas; more than 70 percent of them deal primarily with agriculture; more than half of all agricultural activities are unmonetized. Including subsistence farming, agriculture contributes a third of the GDP and 35 percent of export earnings. Over the past decade the agricultural growth rate was no more than 1.6 percent a year, on the average. Although the growth rate accelerated somewhat to 2.2 percent a year after 1975, it still is moderate and behind the population growth rate. In the face of declining minling output, agricultural growth needs to be stimulated. Improvements in producer prices should (1) correct undue discrimination against farm incomes, (2) stimulate production and the use of improved technology, (3) encourage rehabilitation of existing tree crops, and (4) encourage reinvestment in export crops through new plant- ing.

(a) Export Crops

16. Between 1970 and 1980 the producer prices for coffee and cocoa remained around 50 percent of the export prices. The large profit margins between the export prices and the producer prices have been shared between the central government, in the form of export taxes, and the Sierra Leone Produce Marketing Board as profits. Since tax revenues collected from the agricultural sector have exceeded government expenditures (both capital and recurrent) on agriculture, the policies for agricultural pricing and government expenditure have been in contrast with agricultural production goals.

17. As a general policy principle, a greater share of world market prices should be passed on to the producers of export crops. Price subsidies, on the other hand, should be avoided to prevent market distortions.

18. The relative price structure and the relative price incentives for each crop should reflect the long-term profitability of each crop relative to the others. Economic and financial price projectiorns for export crops over the next ten years indicate the relative profitability of coffee over cocoa. Therefore the producer prices for coffee should be improved relative to cocoa prices. - vi -

19. Between 1980 and 1985 world price prospects in real terms are unfavorable for coffee and cocoa and favorable for palm kernels. But even with these depressed. prices and the heavy tax rates on export crops, the average return per man-day of family labor is higher from tree crops--coffee, citrus fruits, cocoa, oil palm, rubber, and coconut--than from rice and other food crops. This implies that, given the availability of suitable land, both the production of and investment in tree crops should be encouraged. The government may also wish to encourage domestic and foreign investment in rubber production and coconut development, especially in Southern and Northern provinces.

(b) Rice

20. Sierra Leone has had a national objective of becoming self-sufficient in rice production since its independence. Throughout the 1970s the country had a rice deficit of around 40,000 tons a year, equivalent to about 10 percent of its domestic consumption needs. The rice deficit widened sharply towards the end of the 1970s as the rate of growth of rice production slowed down from its long-term average. The country is expected to continue to have a rice deficit throughout the 1980s.

21. The government's rice price policy has been consistent with the self-sufficiency objective. World market prices of rice are expected to increase both in current and constant prices over the next decade. In a recent study done by the West Africa Rice Development Association, Sierra Leone has been shown to have a comparative advantage in rice production with respect to neighboring countries. With a high population growth rate and high income elasticity of rice consumption, the demand for foodcrops and especially of rice should grow even faster in the next ten years as the GDP gLowLh raLe picks up in the mid-1980s. Self-sufficiency in rice, therefore, should remain a national development objective and the rice price policy should continue providing incentives to producers. To retain consistency with world price projections, the current producer price of rice (Le 8 per bushel) can be increased to about Le 9 in FY82. Price incentives, combined with nonprice production incentives--light mechanization, better extension services, seedlings, increased use of fertilizers, and improved marketing facilities--should improve yields and provide better growth prospects for rice in the future. The government should be aware of the fact, however, that even with improved price and nonprice production incentives, self-sufficiency in rice production may be an unattainable development objective for Sierra Leone, given the more profitable tree crops, the rural mining activities, and the inadequately profitable upland farm technologies. From a viewpoint of maximizing domestic income and foreign exchange, this should be a perfectly acceptable outcome as long as the production of more profitable tree crops is stimulated. Trying to achieve self-sufficiency in rice through direct government participation with large-scale mechanized rice farming would not only upset the existing land tenure system but would also be uneconomical given the higher net value of production from tree crops. This would also bring about issues regarding the marginal efficiency of public investment in alternative uses. - vii -

3) Income Distribution

22. Sierra Leone has significant problems of equity and income distribution--this despite some key features of the economy which would mitigate distributional concerns. Most important among these features is the relatively equal distribution of agricultural incomes and land holdings. As for the mining sector, compared to most minerals economies employment benefits are greater, and there is less foreign domination of the sector. About half the diamond output is mined by a corporation in which the government is the majority shareholder; the other half is mined by small-scale domestic operations using relatively labor-intensive technologies. Elsewhere in the economy, the relative lack of high-wage islands in the public and private sectors and of preferential consumer subsidies also assists in mitigating inequalities.

23. The serious concerns for distribution which exist nevertheless are essentially for three reasons. Firstly, in spite of the advantages noted above, minerals incomes are inevitably highly concentrated; and minerals account for about 60 percent of export earnings in Sierra Leone. Secondly, incomes are further skewed by the ologopolistic character of the commercial sector. In diamonds, there is a sharp concentration in wholesale and export trade; there is a similar concentration of wholesale and retail trade in agricultural goods and in most imports. The lack of competition appears to exacerbate the wide spread between producer prices and final consumer or export prices. And thirdly, the fiscal policies of the government, both in their orientation and implementation, are regressive. Agriculture is heavily taxed, and relatively little of this revenue is directed back to the rural areas through government expenditures. Effective tax rates on minerals are at best marginal, while evasion of taxes has been rampant. In essence, fiscal policy transfers income from the poor to the less poor, while leaving the rich carrying much less than a fair share of the tax burden.

24. To reduce inequalities in income distribution, the following steps need to be taken:

o Mineral income needs to be more equitably distributed.

00 The small-scale sector in diamond mining needs to be encouraged. Better credit facilities, govern,ment-leased equipment and easier access to foreign exchange should improve entry to the production market.

oo Sierra Leone's capacity to manage the mineral sector needs to be improved. This includes capacity to negotiate with foreign companies and capacity to set regulations for the mineral sector.

o Marketing of diamonds and agricultural commodities needs to be made more efficient to reduce high trade margins and so allow a larger proportion of the value of these commodities to accrue to the producers. This requires increased competition in the diamond export trade and more effective maintenance of support prices in agriculture. - viii -

o Mining taxation needs to be reorganized in such a way that this sector bears a more equitable share of public revenue requirements. And finally,

o The proportion of development spending by the government in rural areas needs to be substantially increased.

4) Basic Needs Services

25. Sierra Leone has a poorly developed social and economic infrastructure. Public services for human development have so far been concentrated in the Western area and particularly in Freetown. The Western area, which has about 12 percent of the population, is well endowed with public and private health care facilities. But the rest of the country, with almost 90 percent of the population, has extremely limited health care facilities. Universal primary education has been a national goal of Sierra Leone since its independence. But the illiteracy rate remains high and there is considerable disparity in educational opportunities between urban and rural areas. Access to safe drinking water is almost solely limited to Freetown. Nearly the entire population of Greater Freetown is served with good quality piped water through house connections and an excellent standpipe system. In the rural communities, however, less than 5 percent of the population has access to any type of improved water supply scheme. Housing and sanitation problems, on other hand, are more acute in urban centers, especially where the urban poor live. The country as a whole suffers from malnutrition. One-fourth of all children under five are undernourished; two-thirds of all children are anemic.

26. The greater the growth in a country the more resources there are for human services--and continued growth. However, action on growth alone is not enough to alleviate poverty. There is a clear need for improved public services for most Sierra Leoneans. Under a severe budget constraint, however, at least until the mid-1980s, it is particularly important to be selective among provinces as well as among basic needs services. How the scarce resources of the government would be best divided among each of the public services, or which basic needs sectors should have priority over others, depends on a variety of social and political as well as economic factors. One important point in making decisions in this area is that there are close interactions between health, education, and growth. Better-fed children do better in school. Healthier and better-educated farmers are more likely to adopt and implement better methods of production than those who are not. Better-educated women are likely to raise healthier children. Therefore, of the basic needs services, health and education should perhaps have highest priority. And since the public services so far have been heavily concentrated in the Western area, the government's attention should now switch to rural agricultural areas, particularly in the Northern and Southern provinces, tlhere per capita incomes are lowest. - ix -

5) Energy and Energy Pricing

27. Sierra Leone relies almost solely on imported oil for primary commercial energy. Demand for petroleum products currently amounts to some 550 long tons a day--plus another 150 long tons a day in international jet fuel and bunker sales--for a total demand of 700 long tons (about 5,250 barrels) a day.

28. Crude oil prices increased nearly 150 percent from US$14.30 per barrel in 1978 to US$34.70 in 1980. This more than doubled the country-s import bill from $34 million in 1978 to US$71 million in 1980. With the import requirements of the blending material (about US$5.5 million a year), the total cost of petroleum imports now claims about :35 percent of Sierra Leone's foreign exchange earnings. It is estimated that the western system's power generating plants will be near full firm capacity by March 1984, possibly earlier. That means additional generating plants may have to be commissioned before 1984. In provincial centers (Makeni and Lunsar) additional diesel-electric units will have to be installed before these towns are linked to and supplied by hydroelectric energy.

29. With conservative assumptions about future demand for energy and optimistic assumptions about price increases of crude oil, Sierra Leone's import bill for petroleum products will reach alarming levels by 1986 (somewhere around Le 190 million at current prices). Unless mining ouput is revived by that time, this bill may claim as much as 45 to 50 percent of the country's projected export earnings. This points to the urgency of investments in the Bumbuna hydropower scheme and to the intensification of oil exploration efforts, already begun with a pilot project in 1980.

30. The Bumbuna hydropower project will, however, be able to replace only 60 to 70 percent of thermal generation. Most of the thermal plants in the western system will remain operational to firm up hydroelectric generation and to undertake peaking duty during the rainy season. The diesel generators in the mining areas will also remain operational, at least until the early 1990s. Demand management policies will therefore be needed to increase the efficiency of energy use and to generate foreign exchange savings, particularly before the mid-1980s.

31. The retail prices of petroleum products in Sierra Leone are generally comparable with their international equivalents. This policy of economic pricing should continue in the future. The government has been pursuing consumer protection policy only on kerosene, which is socially justified because it is used exclusively by the lower income groups. There seems to be a hidden subsidy, however, on gas oil which needs to be studied further and, if necessary, corrected. The existing electricity tariff structure, which is based on declining unit prices for larger consumers, needs to be reviewed and changed to allow for some degree of progressivity to encourage energy conservation. There is also an urgent need for major increases in electricity tariffs. With fuel oil prices having increased 130 percent since the tariffs were last increased in January 1977, an immediate average increase of about 80 percent is warranted. 32. That economic conditions have steadily worsened In Sierra Leone and that many critical development issues still have to be addressed point to the urgency of all these policy matters. To achieve the twin objectives of growth and poverty alleviation will require a commitment by the government to social and economic development--and to what it takes to foster that development. Given the right policy decisions it will also be important to strengthen economic development institutions to increase the country's ability to implement policies and development programs. Without that ability Sierra Leone's future development will be severely constrained. SIERRA LEONE: PROSPECTS FOR GROWTH AND EQUITY

CHAPTER I. ECONOMIC PROBLEMS

A. Growth Performance

1.1 Sierra Leone's economy was stagnant in the 1970s. Between FY71 and FY79 the growth of GDP was less than 1.5 percent a year, and between FY75 and FY79 less than 1 percent (table 1.1). Economic stagnation was caused by contraction in mining output as a result of the depletion of alluvial diamond deposits and the closure of the iron ore mine. Between FY71 and FY79 value added in mining declined 8.5 percent a year in real terms. Despite some acceleration of growth in agriculture and industry, the growth rates in services, energy, and construction--all linked substantially to mining--declined significantly from their long term trends in 1960s. With the population growing 2.5 percent a year, per capita real income (GNP per capita) in FY79 was 20 percent less than in FY71.

1.2. During the 1970s real growth in the total supply of goods and services was sluggish. Domestic output and imports of goods and services in real terms grew slower than the population--at around 2 percent a year between FY69 and FY79. This rate decelerated to 0.1 percent between FY74 and FY79, during which period there was zero growth in gross domestic capital formation, and exports of goods and services in real terms declined 1.5 percent annually. Fixed investments in the private sector picked up only in mid-1970s, after a significant decline. Public investments remained modest and unchanged at around 4 percent of GDP.

1.3. Nor was there real growth in per capita private consumption, which deteriorated sharply between FY74 and FY79. But public consumption grew 6 percent a year on the average, from 12 percent of GDP in FY69 to 18 percent in FY79. That growth led to serious fiscal imbalances between FY74 and FY79. The government relied heavily on short-term suppliers credits and inflationary domestic resources to finance the widening budget deficits, which built up inflationary pressures and aggravated balance-of-payments problems.

1.4 Preliminary estimates of national income for FY80 indicate that the mining output, which picked up somewhat in FY79 in response to favorable world diamond prices, again declined in FY80. Coffee production also declined slightly, but rice and cocoa production was more buc,yant in FY80 than in FY79. In FY80 the growth of the economy was again modest, between 1.5 and 2 percent. Table 1.1: ECONOMIC PERFORMANCE - SUMMARY, 1970-75 and 1975-80 1/

FY70-75 FY75-80

GDP Growth rate 2.3 0.9 - Agriculture 1.3 2.2 - Industry -1.5 -4.8 - Services 5.8 3.2 Investment growth rate -6.3 5.2 Consumption growth rate 4.4 0.6 Investments/GDP mp 13.4 14.0 Public Savings 2//Public I 30.0 -22.7 Exports, GNFS/GDP mp 29.2 24.6 Imports, GNFS/GDP mp 38.3 33.7 Current Account Balance 3/ -57.5 -118.9 Budget Deficit 3/ -60.0 -119.8 Import Elasticity 0.8 0.9 ICOR 6.5 18.5 Tax Ratio (T/GNP) 3/ 14.8 15.6 Debt Service Ratio 4/ 8.8 28.6 Domestic InflaLion Rate 17.2 20.0 Population Growth Rate 2.5 2.5

1/ In constant prices, except tax ratio,debt service ratio, budget deficit and current account balance. 2/ After external debt amortization. 3/ End period. _/ Including arrears on principal, end period.

B. Balance of Payments

1.5 Until the end of 1973 Sierra Leone's balance of payments performance and reserve position had been satisfactory. Difficulties first emerged in 1974 and 1975, when import prices rose sharply as a result of the oil crisis and the upsurge in international inflation, while export performance remained modest. The balance of payments began to deteriorate in 1974 and showed increasing overall deficits afterwards. Petroleum imports jumped from US$8 million in 1971 to about US$70 million in 1979, claiming more than a third of the country-s export earnings. The balance of payments deficit rose to US$43 million in 1973 from about US$7 million in 1974. Net foreign eichange reserves stood at around US$36 million at the end of 1974, but have declined steadily and remained tight since then. In December 1980 gross official reserves were US$32 million, of which only US$7.7 million (equivalent to one week-s imports) were freely disposable (annex tables D2.1 and D2.2). - 3 -

SIERA LEONE: TOTAL RESOURCES AND USES CIN MIIONS OF LEONES) AT CONSTANT PRICES 709-

62- TOTAL RESOURCES

51ilO-/ EXPORT TOODSOF WNFS

3e -

29S

AX.s A 40e-

SCOOtOODOMESI N NANRTIOPNDAL RSAVINGS OCO 39 DO* S T\\ I SA \\tv\\\\VZN

30 - DMT SVC 22 8e- NATIONAL ~ 1RoS CPAV2",RTIc ye70 7 72 S 74 75 7 7'7 78 78 PEROWAPIA 6PXTLFWT

Leones (ADlETZ1AND 73 CONSTAN PRVICES

140

6g 79 71 72 73 74 75 78 77 78 79

619 70 71 72 73 74 7E; t8 77 78 79 -4-

1. Exports

1.6. Until the early 1970s Sierra Leone was among the few developing countries which enjoyed a surplus on its external trade account. But this changed sharply in 1974 as the country's import bill doubled in two years while export earnings grew more moderately. Since 1974 there has been a relative improvement in the trade account only in 1977 and that primarily as a result of the commodity price boom for the country-s major exports. How- ever, Sierra Leone's export performance over the past decade was better than might be expected given the decline in the quantity of mineral exports. In the early 1970s the mining sector contributed nearly 80 percent of total export earnings. Diamond mining alone accounted for 61 percent. While diamond production and exports declined around 60 percent in real terms over the past ten years, overall export earnings from merchandise exports in current prices increased nearly 150 percent because of substantial gains in the terms of trade. The terms of trade improved only after FY76, having deteriorated considerably between FY71 and FY76. The changing composition of exports reflects the continuing decline in the importance of the mining sector. The share of diamond exports in total exports fell from 61 percent to 54 percent over the past decade, even with the unprecedented surge in the unit value of diamonds. The share of agricultural exports in the value of all exports rose from 18 percent to about 30 percent because of favorable world market prices for coffee and cocoa.

2. Imports

1.7. After the oil crisis in 1973 and 1974, Sierra Leone's imports grew 17 percent a year, compared with an annual average of around 11 percent before. The growth rate of total imports accelerated to an annual average rate of 21 percent between 1976-79. The substantial increase in merchandise imports, however, was only partly attributable to factors outside the control of the government. High import demand was mostly stimulated by expansionary fiscal and monetary policies. Sierra Leone's imports, classified by end use, indicate an unchanged demand profile over the past ten years: capital goods imports are always less than one-fourth of the total import bill, reflecting low levels of domestic investment. Consumer-goods imports, on the other hand, are high, accounting for more than one-third. Sierra Leone could have improved its balance of payments performance with some restraint on import demand.

1.8 Sierra Leone's trade balance and current account balance marginally improved in FY80, compared with the previous year. Export earnings increased by about 10 percent above the FY79 level as a result primarily of favorable export receipts from diamonds. The total import bill, on the other hand, was kept at a reasonable level, despite sharp increases in crude oil prices and a higher-than-expected level of rice imports. This was achieved through restrictive credit policies, intensified administrative controls on low priority items, and centralized procurement procedures of the public sector. However, largely because of heavy debt service obligations, the foreign exchange situation remained extremely tight throughout the fiscal year. Table 1.2: ECONOMIC CLASSIF'ICATION OF EXPORTS (percentage shares)

1970-72 1973-75 1976-78 1979-80 Average Average Average Average

1. Minerals 77.2 74.1 59.9 60.1 Diamonds 60.7 60.1 55.6 54.4 Iron Ore 12.4 10.7 - - Bauxite 2.8 3.3 4.3 4.8 Rutile 1.2 - . 0.9

2. Agricultural Commodities 17.6 18.0 29.7 32.9 Coffee 6.3 5.8 16.6 15.4 Cocoa 3.5 6.1 10.7 14.1 Palm Kernels 6.5 5.0 1.2 2.4 Other 1.2 1.1 1.2 1.0

3. Processed Goods 2.8 5.3 6.8 5.6 Palm Kernel Products - 2.5 4.1 3.7 Other 2.8 2.8 2.7 1.9 Re-Exports 2.4 2.7 3.5 1.4

TOTAL 100.0 100.0 100.0 100.0

SIERRA LEONE, BALANCE GF PAYMENTS, lOe3-19I32 C=4 MfL.UCNS OF LEONES) 2:,

-251

inPrvA Ia

00~~71 ~~7X3 TERMSf 7 OF TRADE~ 7 ~~ 9 4 C1971 1 ee) -6-

C. Public Finance

1.9. Sierra Leone's budgetary system and the expenditure control mechanisms have, for a number of years, been seriously defective. Until FY80, Ministries of Works, Agriculture, and Defense and the Post Office had self- accounting privileges which inhibited the provision of financial information and control of government expenditures. The Treasury accounts have always been incomplete. Some payments have been issued without proper authority; some revenues have not been recorded in the Consolidated Revenue Fund. Some expenditures have been held in suspense accounts, and some have not been recorded at all.

1.10. In FY80, with technical advice from the IMF under the current standby arrangement, there was some progress towards centralizing the expenditure control process and strengthening the proper recording of government accounts. But the management of government transactions--that is, proper budgeting and expenditure control--remains as an important structural weakness of the public sector. If expenditure control is to improve, the public spending authority must firmly be centralized within the Ministry of Finance. Qualified personnel, notably accountants, must be attracted to the Treasury, and the Treasury accounts should include the external debt records of the government.

1. Revenue

1.11. Sierra Leone's tax system relies heavily on indirect taxes. Export and import duties, together with excise taxes, yield more than 70 percent of tax revenues. Import and export taxes alone contribute more than 50 percent of tax revenues and are highly sensitive to changes in world market prices. The contribution of personal income taxes to total tax revenue has been very low at around 5 to 7 percent; company taxes have always been less than 20 percent of the total. The elasticity of the tax system remained low at around 0.8 between FY71 and FY76. This improved slightly between FY76 and FY80.

1.12. During the first half of 197 0s the tax ratio was low at around 14.5 percent and public revenues were stable. 1/ Since FY74 the tax ratio and public revenues have fluctuated as a result of rapidly rising import demand, import costs, and year-to-year fluctuations in world market prices for the country's major exports. The tax ratio increased to 18 percent in FY78 as diamonds and tree crops enjoyed an unprecedented price boom. Also in FY78 and FY79 several tax adjustments were effected, mostly on import duties and excise taxes to boost public revenues. Again in FY80 under the current standby agreement additional tax measures were introduced. Nevertheless, the tax ratio fell to 15.6 percent primarily because of a decline in export prices of cash crops and a decline in corporate income tax from rutile and diamond mining.

1/ The tax ratio varies between 9.3 percent (Burundi) and 27.2 percent (Zaire) in low-income African countries and between 15.0 percent (Sierra Leone and Central African Republic) and 25.0 percent (Gabon and Liberia) in mineral-based African countries (Table 5.10). -7-

2. Expenditures

1.13. The public expenditure policies have been highly expansionary over the past decade. Current expenditure rose by a yearly average of nearly 25 percent between FY73 through FY79, with wide year-to-year fluctuations. Outlays on wages and salaries grew moderately as general wage and salary increases have been kept to a minimum. Public employment, however, grew steadily over the past decade, adding to the total wage bill of the public sector. Current expenditures on goods and services and interest payments on external debt grew much more rapidly--around 30 percent a year on the average. In the functional classification of current expenditures, public spending on general services, including defense, has generally accounted for nearly 40 percent of the total. Expenditures on education and other social services averaged around 30 percent; the remaining 30 percent have been spent on economic services and interest payments on external debt.

1.14. Over the past decade overall investment (13.5 percent of GDP) and particularly public investments (4 percent of GDP), have been exceptionally low for a developing country. In the period of the first plan between FY75 and FY79, development spending through the development budgets amounted to Le 150 million, or about 45 percent less than the plan target. Of this, about 22 percent was spent on agriculture, 20 percent on road transport, 17 percent on energy, 15 percent on social services, and 25 percent on other economic and general services. Starting in 1978 there was a temporary revival of public investments due to capital spending on non-developmental infrastructure for the OAU conference held in Freetown in July 1980.

3. Central Government Finances

1.15. Total government spending increased from Le 75.1 million in June 1973 to Le 286.8 million in July 1979 with an annual rate of expansion of around 47 percent at current prices. With respect to GDP, total government expenditure increased from 13.5 percent in June 1969 to 19.1 percent in June 1973 and 30.1 percent in June 1979. In the light of slower growth in public revenues--around 17.8 percent annually between FY73 and FY79--the budget deficit jumped from Le 10.5 million in FY73 to Lie 114.0 million in FY79, and the domestic and external indebtedness of the government has increased substantially. During this period, there was also a significant shift in the composition of both domestic and external public debt. In domestic debt, the largest increase was in central bank borrowing, which rose from Le 3.2 million in June 1973 to Le 67 million in June 1979. Out- standing treasury bills more than quadrupled from Le 10 million to Le 49 million during the same period. Meanwhile, the external debt profile deteriorated as a result of increasing reliance on external borrowing with relatively short maturities. Increasing recourse to deficit financing created inflationary pressures on the stagnant economy while heavy debt service obligations on external borrowing led to severe balance of payments difficulties. 1.16. The FY80 budget was drawn up in the light of the government's decision to implement a stabilization program to be supported by the IMF. Fiscal policies under the standby arrangement (agreed on in November 1979) were geared towards reducing the budgetary deficits and inflationary financing through additional revenue measures and restrictions on public spending. Revenue increasing tax adjustments (primarily on import fees) were introduced with the budget. In December 1979 the government took additional revenue- increasing measures on (a) excise duties on cigarettes and alcoholic beverages, (b) on import duties on tobacco and tobacco products and spirits, and (c) on excise duties on petroleum products amounting to the equivalent of ad valorem rate of 5 percent. In March 1980 another ad valorem rate of 10 percent was imposed on petroleum products. All these measures were expected to yield an incremental tax revenue of around Le 15 million in FY80. In FY80 there was also an extra effort to control public expenditures through expenditure ceilings and improvements in the administrative mechanism. These were (a) establishment of a Central Procurement Unit, (b) centralization of self- accounting ministries through the establishment of an Expenditure Control Unit in the Ministry of Finance, (c) establishment of monthly and quarterly expenditure ceilings, (d) a 15 percent across-the-board cut on appropriations for goods and services, and (e) a limit of Le 100 million on capital expenditures for the OAU conference.

1.17. The government was successful in implementing the revenue measures, and revenue was expected to exceed the program targets. But the expenditure control measures, introduced midway through the fiscal year, encountered several implementation problems. As a result, as of April 1980, the recurrent expenditures had risen faster than the program targets while capital expenditures on OAU-related infrastructure had exceeded the limit of Le 100 million by about Le 23 million. The faster-than-programmed increase in recurrent expenditures, aside from continued weaknesses on expenditure control mechanisms, were due to unpredicted sharp increases in oil and other import prices and exceptionally high levels of rice imports.

SIERRA LEONE: CENTRAL GOVERNMENT OPERATIONS CIN MILLIONS OF CURRENT LEONES) 400-

350-

TOTAL PIJBLIC EXP 300- -8F

20-l

es 70 71 72 73 74 75 7e 77 78 79 80 - 9 -

Table 1.3: CENTRAL GOVERNMENT OPERATIONS

FY69 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Estimate

Revenue 51.2 64.6 91.7 97.0 95.4 118.3 160.7 172.8 196.3 Current Expen(li-tiir- 3. ,7.' <".O 85.6 89.3 116.6 134.8 166.0 183.0

Budgetary Savings 13.8 7.1 23.7 11.4 6.1 1.7 25.9 6.8 13.3

Development Expenditure 7.6 13.7 18.7 23.2 35.2 29.3 20.6 41.6 48.3 Extra-Budgetary Expenditure - 3.9 26.1 48.2 23.2 23.5 85.5 79.2 84.8

Overall Surplus or Deficit (-) 6.2 -10.5 -21.1 -60.0 -52.1 -51.1 -80.2 -114.0 -119.8

External Borrowing (Net) 2.1 0.8 13.0 33.3 18.0 14.7 40.6 36.2 - Domestic Borrowing (Net) -3.0 11.2 7.9 26.7 34.1 36.6 39.6 77.8 -

Other -5.3 -1.5 -4.7 0.7 0.7 4.4 2.8 10.8 -

Memo items: Total Taxes/GDP (fc) 16.8 16.2 19.4 16.1 14.8 16.4 19.9 18.9 17.2 Total Taxes/GNP (mp) 15.4 14.7 17.5 14.8 13.6 14.9 18.3 17.2 15.6

Note: Revenues include minimal amounts of income grants. Current expenditures exclude repayment of loans. Extra-budgetary expenditures are calculated residually.

D. Money and Banking

1.18. Sierra Leone's banking system consists of a monetary authority (Bank of'Sierra Leone), four commercial banks, three of which are foreign-owned and managed, an investment bank, and a savings bank. The monetary authority was established in 1964 to execute the traditional central banking functions. In practice, however, the Bank of Sierra Leone assumed these responsibilities only in late 1960s due to constraints on its resources as well as its technical capabilities. Although the Central Bank was fully authorized under its Establishment Act to use the instruments of direct monetary control and control over the banking system, it has in practice opted to exercise this authority through close cooperation with the Ministry of Finance and the commercial banks. - 10 -

1. Monetary Policy

1.19. Since the mid-1970s the indebtedness of the government has increased rapidly, and the banking system, mainly the Bank of Sierra Leone, has assumed an increasingly larger portion of the domestic debt. The central bank lends to the government under prescribed statutory limits. These limits, however, have been raised substantially in recent years and furthermore were not effectively enforced until 1979. The limit on the central bank's advances to the government was raised in 1977 from 5 percent to 10 percent of estimated current revenue for the fiscal year. The limit on government bonds was raised in 1976 from 20 to 40 percent of the central bank's total demand liabilities. The limit on holdings of treasury bills was raised from 20 percent to 30 percent in 1974 and to 40 percent later in 1979, of estimated current revenue for the fiscal year.

1.20. Therefore, primarily because of increases in government borrowing from the banking system, domestic credit expansion has been very high--nearly 50 percent a year since 1973. Despite substantial increases in domestic credit, however, annual growth of money supply remained relatively modest at around 25 percent (M1) and 27 percent (M2 ) due to a significant decline in the country's foreign exchange reserves to finance the balance of payments deficits (Annex table D4.1).

1.21. Between 1975 and 1979 credit to private sector by the commercial banking system increased relatively slowly--around 14 percent annually. Available data on the distribution of commercial bank loans (annex Table D 4.5) indicate that commerce has the largest share of bank loans and advances.

1.22. In FY80 expansionary money and credit policies were contained under the current stabilization program. As of June 1980, the rate of expansion of money supply (M2 ) was substantially lower than the year before (14.8 percent compared with 28 percent). Again, during the first three quarters of the program period (June 1979-March 1980) net credit to the government rose 18 percent, compared with an increase of 39 percent in the same period of the preceding year. Similarly, the rate of credit expansion to the private sector has been substantially reduced through increases in liquidity ratios and in lending rates. As a result, the increase in total domestic credit was kept around 14 percent, compared with an increase of nearly 40 percent in the previous year.

2. Medium-Term Credit

1.23. Medium-term credit is virtually nonexistent in Sierra Leone. Although the National Development Bank (NDB) was established in 1968 as a development finance company to provide medium- and long-term financing of between three and fifteen years, its authorized capital has been kept small, and the NDB has suffered from inadequate financial resources since its establishment. Initially most of NDB's shareholders were private individuals and companies. After a change in the equity structure, the public sector, including parastatal organizations, now owns more than 50 percent of the shares. - 11 -

1.24. The authorized share capital of the NDB was Le 3 million. As part of NDB's original financing, the government also provided an interest-free loan of Le 1 million subordinated to the Loan and Equity of the Company in the event of liquidation. But no new funds became available to the bank in 1976 and 1977. The share capital of the NDB was increased in 1978 from Le 3 million to Le 10 million. Nevertheless, only Le 2 million of the increment has so far been paid. Between 1968 and 1978 the NDB has extended credit totalling only Le 7.5 million, equivalent to less than 0.01 percent of capital outlays by the private sector during the same period.

1.25. Apart from inadequate resources, the NDB also has been facing acute problems liquidity due to the accumulation of arrears on its outstanding loans. On 31 December 1978, 63 percent of the loan portfolio was three or more months in arrears. This compares with 39 percent in 1976.

1975 1976 1978 1979 Dec. 31 Dec. 31 Dec. 31 Sept. 30

Unpaid principal 64,075 264,096 833,345 1,302,229 Unpaid interest 101,329 220,108 304,556 544,790

Most of the debts owed outside the Western area cannot be recovered. The NDB's financial position remained poor throughout the last five years, but it has deteriorated even further since 1977 as a result of increasing financial loses.

1.26. A thorough review of the NDB's financial and technical position, together with its lending objectives, are urgently cal:Led for. In many developing countries, national development banks have been important in promoting small and medium-size private investments, especially in manufacturing and services. There is no reason the government should not use the NDB efficiently for the same purpose, especially when there is an urgent need for stimulating investments throughout the economy.

E. Inflation

1.27. After a long period of stable prices, the domestic inflation rate surged between 1974 and 1977, and again in 1979. In the mid-1970s imported inflation was behind the rise in domestic prices.l/ But rising import costs

1/ Almost all of the price indices in Sierra Leone suffer from coverage problem as well as deficiencies in price collection methods. Because of these widely known limitations of the price indices, the accuracy of the domestic inflation rate is often questioned. These measurement problems, although not unique for Sierra Leone, need to be corrected. - 12 - were also fueled by substantial increases in domestic demand. In addition to these factors, severe foreign exchange scarcities in FY79, coupled with quantitative restrictions on imports, created substantial windfall profits on all imported commodities, particularly on those for which the domestic demand appeared to be inelastic (drugs, spare parts and certain food items). The domestic inflation rate accelerated to 21 percent in 1979 from about 10 percent in the two previous years.

Table 1.4: DOMESTIC INFLATION RATES

Annual Percentage Changes Freetown Mining Areas GDP Implicit Cost-of-Living Cost-of-Living Wholesale Deflator Index Index Price Index (1972/73=100) (1961=100) (1961=100) (1970=100)

1970 3.1 6.8 7.1 - 1971 -3.9 -1.7 -3.0 0 1972 3.1 5.6 1.5 - 1973 7.3 5.5 4.9 26.2 1974 16.8 14.4 20.0 26.1 1975 16.4 19.9 11.4 16.8 1976 10.4 17.2 8.9 20.8 1977 19.0 8.3 5.5 15.5 1978 9.1 10.9 11.4 10.9 1979 12.4 21.2 14.9 32.2

F. External Debt and Creditworthiness

1.28. Since the mid-1970s the government has relied heavily on foreign borrowing to finance its capital expenditures. The total external public debt outstanding increased about $132 million between 1975 and 1979. As of 30 June, 1979 Sierra Leone's public debt outstanding, including arrears of principal, amounted to $329.7 million, of which $277.6 million were disbursed. Debt outstanding and disbursed consisted roughly of 47 percent in commercial credits, 28 percent in bilateral loans, and 25 percent in loans and credits from international institutions. As of 30 June 1979, the World Bank Group held about 13 percent of Sierra Leone's external debt outstanding and disbursed. Assistance from bilateral government sources came mostly from the Federal Republic of Germany, China, and the Netherlands.

1.29. The maturity structure of Sierra Leone's external public debt has deteriorated sharply since 1975 as a result of increased reliance on suppliers' credits. The average maturity of all new commitments declined from sixteen years (in the early 1970s) to around five years in 1978-79. The average grace period also decreased from four years to one. Furthermore, a considerable amount of suppliers' credits was covered in 1979 by revolving - 13 - irrevocable letters of credit, which in practice reduced the loan repayment periods to as short as three months. The largest amount of the suppliers credits obtained in 1978 and 1979 was contracted in connection with projects related to the OAU conference. Based on the external debt commitments made until December 1979, it was estimated that without debL relief the service payments for external public debt in 1980 would stand at around $72 million, equivalent to about 33 percent of expected export earnings and about 46 percent of expected government revenues.

1.30. Faced with increasing difficulties in servicing external debt, the Government in November 1979 approached the creditor countries through the Paris Club and in February 1980 successfully negotiated a second debt-relief agreement. The relief granted by this agreement amounts to an estimated $10 million for 1980 and $7.5 million for 1981. After taking the debt relief into account, debt service payments due would have declined from $72 million to about $62 million in 1980. This second amount represents 28 percent of expected export earnings and about 40 percent of expected government revenues in 1980.

1.31 Sierra Leone's debt service ratio is expected to remain high in FY81--about 22 percent of projected export earnings. Thereafter, it should decline assuming Sierra Leone does not contract significant amounts of new short-term debt. - 14 -

CHAPTER II. STIMULATING GROWTH

A. Changes in Development Strategy

2.1 At the start of the 1980s, the Sierra Leone economy was behind where it stood in the early 1970s: per capita real income had declined nearly 2 percent a year. The economy suffered not only from stagnating domestic income--the result of a narrowly based development strategy--it also suffered from misallocation of resources. Rates of domestic saving and domestic investment were exceptionally low for a developing economy. Public savings often were negative. Although import requirements of the productive sectors were low because of the narrowness of the industrial base and the low capital- labor ratio in agriculture, import demand, mostly for final products, was allowed to grow beyond what could prudently be afforded. To finance the high import demand, external borrowing was expanded at unfavorable terms beyond the country s repayment capacity. Nor was the tax effort impressive. And the low marginal efficiency of capital was closely associated with unproductive capital spending by the public sector.

2.2 The most immediate development issue is how to bring a halt to economic stagnation by building the dynamics of growth into the economic structure. The development of Sierra Leone over the past two decades, similar to that of many other mineral-based economies, was based on an export-led growth strategy that relied almost solely on the mineral sector. Agriculture and other renewable resources received little attention in government policies. The ready wealth from the mineral sector was at first adequate to generate a satisfactory rate of growth and to meet foreign exchange requirements. Overdependent on diamonds, however, the Sierra Leone economy has been highly vulnerable to production and market disturbances in a single commodity. The incentive structure--the exchange rate policy, agricultural pricing policies, the tax structure, and public expenditure policies--has been biased against agriculture. As its mineral wealth has been depleted, the country has no longer been able to maintain its earlier living standards and per capita real income. Moreover, this development strategy has also led to serious problems of income distribution and basic needs (see Chapter IV).

2.3 This development strategy needs to be changed in the 1980s if per capita real income growth is to be sustained. A new development strategy should be followed in the 1980s. This strategy should aim at reducing the country's overdependence on diamonds by diversifying production and exports both in and outside the mining sector. Where domestic resources are available, efficient import substitution should also be encouraged. With rich mineral, water, and land resources, Sierra Leone has good potential for (a) export diversification in mining and agriculture and for (b) import substitution in energy and processing industries. With such a change in its development strategy, the incentive structure also needs to be reviewed and revised. Changes in that structure should aim at encouraging production and new investments for export diversification and import substitution and reducing vast income disparities between individuals and economic sectors. The government is preparing a Second National Development Plan covering FY82 through FY86. It is therefore an opportune time to question the validity of past - 15 - economic policies. Viewed as a major policy document, the Second National Development Plan will be critical in shaping the prospects for growth and equity.

2.4 To stimulate and later to accelerate economic growth in the 1980s, domestic saving and investment must be stepped up considerably in both the public and private sectors. In agriculture this can be achieved by providing investment incentives to the farmers through agricultural pricing policies,

2.5 The initial stimulus to growth, however, will have to come from new investments in mining. The public sector may need to assume leadership in stepping up domestic investment since it can mobilize external savings more readily than the private sector and since a part oE investment will be for the expansion of public services. To finance public investments, public savings will need to be increased through restraint on public consumption and additional taxation. Additional taxation should be introduced together with a tax reform which will aim at transferring income from diamond mining to other mining and nonnmining activities, as well as securing a more equitable distribution of the tax burden among individuals and economic sectors.

2.6 To keep a viable balance of payments position, especially in the short run, and to meet the foreign exchange requirements of development projects, foreign exchange will have to be saved through demand management of nonessential imports. About 20 percent of Sierra Leone's imports are luxury consumer goods. Essential food, crude oil, and capital goods account for about two-thirds. The size of the imports of intermediate goods are relatively small because of the small size of the industrial sector. Capital expenditures have a very high import content: machinery, equipment, and most construction material is imported. In addition, the country is expected to have a rice deficit throughout the 1980s. Demand for crude oil, on the other hand, should begin to decrease in real terms in FY87 and remain constant thereafter if import substitution of thermal power takes place around FY86. But the demand for capital goods should begin to increase substantially in FY82 because of domestic capital formation during the second plan period and afterward.

B. Future Prospects With Strategy and Policy Changes

2.7 To make a long-run analysis of Sierra Leone economy with and without the major policy changes outlined in Chapter V, a macroeconomic model was applied. The model is essentially a savings-gap model in which exports and investments are estimated exogenously (target variables) and imports are adjusted (policy variable). Investments, however, are also determined by domestic and external savings. Moreover, since the import component of investments is high in Sierra Leone, investments were also cross-checked for their implications for imports. The objective was to help identify, given the economic structure today, what are likely growth prospects and what policy options are open to the government to stimulate growth. - 16 -

1. Growth

a. Short-Run (FY81-FY83)

2.8 Given the structure of the economy and the world price prospects for the country's major exports, the growth prospects are poor for the next few years. The GDP growth rate can at best be around 2 percent on the average between FY80 and FY83, implying a continued deterioration in already eroded per capita real incomes. Mining output is expected to decline somewhere between 1.3 to 2.0 percent annually. The National Diamond Mining Company (DIMINCO) is planning to phase out its alluvial operations within the next five to seven years. Unpredicted increases in diamond prices may stimulate production from the Alluvial Diamond Scheme, which consists of a small number of private diggers. This would be on temporary basis, however, and would not affect the declining production trend. Between FY81 and FY83 agricultural output is estimated to grow at about the same rate as the population. Although limited by the stock of trees, there still is scope for pushing the tree-crop production to its limit by providing price incentives to producers. Unfavorable world price prospects for the country-s major export crops over the next several years make the adequacy and stability of the producer prices even more important. Output from subsistence farming can be improved by better agricultural services, the use of modern inputs, and with some light mechanization.

Table 2.1: MACRO-ECONOMIC PROJECTIONS, SHORT RUN (FY81-83) (millions of Leones in 1980 prices)

Growth Rates FY79 FY80 FY81 FY82 FY83 FY81 FY82 FY83 (FY80-83) (Actual) (Estimate) ----Projected ----- Average

GDP fc 960.3 974.7 1002.2 1015.2 1039.9 2.8 1.3 2.4 2.1 - Agriculture 342.0 352.4 361.3 365.6 377.0 2.5 1.2 3.1 2.2 - Industry 203.7 196.9 201.6 202.2 198.0 2.4 0.3 -2.2 0.2 - Services 414.6 425.4 439.8 447.7 464.3 3.4 1.8 3.7 3.0 GDP mp 1056.3 1072.7 1102.4 1127.2 1153.6 2.8 2.2 2.3 2.4 Exports, NFS 238.6 240.9 249.1 246.6 246.6 3.4 -1.1 - 0.8 Imports, NFS 399.3 339.3 332.1 357.3 358.3 -2.2 7.5 2.8 1.8 Fixed Investments 158.3 161.0 143.0 180.3 184.5 -11.2 26.1 2.3 4.6 Consumption 1058.7 1009.6 1042.4 1057.6 1080.8 3.2 1.5 2.2 2.3 Trade Balance 1/ -83.5 -75.0 -83.8 -94.8 -76.6 Current Account Balance 1/ -122.5 -115.8 -123.8 -134.8 -115.6 I/GDP mp 15.0 15.0 13.0 16.0 16.0 M, NFS/GDP mp 37.8 31.6 30.1 31.7 31.0

Source: IBRD Staff Estimates

1/ At current prices. - 17 -

2.9 A vigorous investment effort can start in FY82. The economy will still have to rely on the mining sector to provide the initial push to growth, to ease its domestic resources gap, and to generate additional foreign exchange. New investments in mining--in underground diamond mining and in the expansion of bauxite and rutile mining--should therefore be encouraged in the early 1980s. An increase in investment to 16 percent of GDP in FY82 from an estimated 13 percent of GDP in FY81 should be financially feasible (table 2.1). In the past, import demand in real terms has averaged around 34-38 percent of GDP, while capital goods imports were quite modest. With capital-goods imports substantially increased, import demand will have to be kept at 30-31 percent of GDP to prevent continued deterioration in balance of payments. This can be achieved through measures that directly restrain aggregate import demand and demand for non-essential imports.

b. Medium Run: Second Plan Period (FY82-86)

2.10 If new investments in mining and energy begin in FY82 and if investment incentives are provided to farmers and manufacturers in the private sector, an economic revival should start before the end of the second plan period somewhere around FY85. Between FY82 and FY86 the GDP growth rate would then average around 4.0 percent a year, and per capita real income would improve modestly (table 2.2).

2.11 A change in development strategy would have only a limited favorable effect on the economy during the plan period. This is due to the long gestation period of investments in tree crops, hydropower project, and some mining ventures. Favorable growth effects, however, should be realized in the longer run between FY85 and FY90. But changes in the incentive structure (that is, in agricultural pricing policy, tax policy, energy policy, exchange rate policy and credit policy) would stimulate production in the medium term mostly outside mining.

Table 2.2: MACRO-ECONOMIC PROJECTIONS MEDIUM RUN: SECOND PLAN PERIOD (FY82-86) (millions of Leones in 1980 prices)

Without Policy Changes With Policy Changes (FY81-86) (FY81-86) FY81 FY86 Average Growth FY81 FY86 Average Growth Rates Rates

GDP fc 1002.2 1161.5 3.0 1002.2 1214.6 4.0 - Agriculture 361.3 404.6 2.2 361.3 426.1 3.4 - Industry 201.6 238.9 3.5 201.6 244.5 4.0 - Services 439.8 518.0 3.3 439.8 544.0 4.4 GDP mp 1102.4 1300.9 3.4 1102.4 1355.8 4.3 Exports, NFS 249.1 281.7 2.5 249.1 290.2 3.1 Imports, NFS 332.1 455.3 6.5 332.1 417.6 4.7 Fixed Investments 143.0 195.1 6.4 143.0 244.0 11.3 Consumption 1042.4 1279.4 4.2 1042.4 1239.2 3.5 Trade Balance 1/ -83.8 -167.6 -83.8 -103.6 Current Account Balance 1/ -123.8 -206.6 -123.8 -142.0 I/GDP mp 13.0 15.0 13.0 17.0 M, NFS/GDP mp 30.1 35.0 30.1 30.8

Source: IBRD Staff Estimates. - 18 -

c. Long-Run (FY80-FY90)

2.12 It is possible--with export diversification in mining and agriculture, import substitution in thermal power and manufacturing, and carefully monitored demand management policies during the first half of the 1980--that Sierra Leone can maintain and even accelerate sustained growth in per capita real income in the longer run. Macroeconomic projections clearly indicate that if the past development pattern is not replaced by a broadly based development strategy, economic growth in the longer run would be unsustain- able, even with new investments in the mining sector. The new mining projects in the early 19 80s would generate income growth only between FY85 and FY87. Unless growth is stimulated elsewhere and other mining projects are steady and timely, the GDP growth rate would again decline after FY87--from an estimated 4.5 percent to somewhere around 2 percent, which would be below the population growth rate between FY85 and FY90 (table 2.3).

Table 2.3: MACRO-ECONOMIC PROJECTIONS, LONG RUN (FY80-90) (millions of Leones in 1980 prices)

Without Strategy & With Strategy & Policy Changes Policy Changes FY80 FY85 FY90 FY80-85 FY85-90 FY85 FY90 FY80-85 FY85-90 Estimate --Growth Rates-- --Growth Rates--

GDP fc 974.7 1135.6 1272.5 3.1 2.3 1151.1 1437.2 3.4 4.5 - Agriculture 352.4 392.9 446.6 2.2 2.6 407.4 394.2 3.0 4.0 - Industry 196.9 238.5 241.4 3.3 0.3 238.5 265.2 3.9 3.0 - Services 425.4 504.2 584.5 3.4 3.0 544.0 640.8 3.4 5.8 GDP mp 1072.7 1260.5 1425.2 3.3 2.5 1298.2 1581.0 3.8 4.2 Exports, NFS 240.9 282.0 270.3 3.2 -1.0 291.0 304.4 3.8 1.0 Imports, NFS 339.3 441.0 498.9 5.5 2.5 400.9 444.0 3.4 2.1 Fixed Investments 161.0 189.0 213.7 3.3 2.5 232.0 282.2 7.6 4.0 Consumption 1009.6 1230.0 1440.1 4.0 3.2 1167.1 1438.4 3.0 4.3 Trade Balance 1/ -75.0 -164.5 -213.0 -94.0 -55.0 Current Account Balance 1/ -115.8 -203.5 -251.0 -133.0 -93.0 I/GDP mp 15.0 15.0 15.0 16.0 18.0 M, NFS/GDP mp 31.6 35.0 35.0 31.0 28.3

Source: IBRD, Staff Estimates

1/ At current prices.

2. Balance of Trade

2.13 Sierra Leone's export performance is oversensitive to the quantity and price of diamond exports. Even with a more diversified structure in the - 19 -

late 1980s, diamonds will still be one of the major export items, though their contribution to merchandise exports in real terms should decline from 60 percent in 1980 to about 40 percent towards the end of the decade, assuming that the Kimberlite diamond project starts production in 1985. Diamond prices are expected to increase around 15 percent annually, or faster than international inflation.

2.14 World price prospects for rutile and bauxite are also favorable. Exploitation of the Lanti mine around the mid-1980s should help Sierra Leone to maintain its rutile exports. If bauxite production from Port Loko comes on stream in 1986, the quantity of bauxite export:s should at least double, and the contribution to export earnings should increase even more, depending on the stage of processing. If iron ore exports start in the 1980s, the export performance of the country would improve further.

2.15 Agricultural exports are projected to increase considerably as a result of improved incentives to farmers and as a resu:Lt of new and ongoing agricultural projects. Up to now ongoing agricultural projects had modest production targets as against large infrastructure components (see annex table D 1.9). This is one issue to be corrected in the design of future development projects in agriculture.

Table 2.4: BALANCE OF TRADE PROJECTIONS WITH STRATEGY AND POLICY CHAqGES (millions of Leones in current prices)

Second Plan Period FY80 FY82 FY83 FY84 FY85 FY86 FY90 ------(Pro7jected)------

Trade Balance -75.0 -94.8 -76.6 -126.9 -94.0 -103.6 -55.0

Exports (fob) 233.9 307.9 325.1 361.5 492.1 549.3 856.4 Imports (fob) -308.0 -402.7 -440.5 -488.4 -586.1 -652.9 -911.4

Resources Balance -98.4 -125.6 -149.1 -164.7 -133.7 -148.6 -76.8

Exports, NFS 240.9 317.4 335.1 373.0 506.9 565.9 924.9 Imports, NFS -339.3 -443.0 -484.4 -537.7 -640.6 -714.5 -1001.7

Services (net) -68.3 -71.5 -72.0 -73.5 -75.0 -76.5 -80.0

Transfers 28.0 31.5 33.0 34.0 36.0 37.5 42.0

Current Account Balance -115.8 -134.8 -115.6 -166.4 -133.0 -142.0 -93.0

Source: IBRD Staff Estimates. - 20 -

2.16 In the light of heavy capital-goods imports required for investment projects and the limited export potential of the country in the medium- term, Sierra Leone's demand for imports of luxury-consumer goods will need to be reduced to a minimum over the next five years. Essential food imports are projected to increase around 2 percent a year in real terms in the 1980s. About 25 percent annual import substitution of primary energy resources is projected between FY87 and FY90, while demand for intermediate goods imports are projected to increase as a function of GDP growth rate with a unitary import elasticity.

2.17 World price prospects for the country's major exports and imports indicate deterioration in the country's terms of trade between FY79 and FY87. A gradual improvement is expected after FY87 as a result of relative improvement in agricultural export prices (see annex table C.8).

2.18 Sierra Leone's trade balance and current account balance will deteriorate almost steadily until FY85 (table 2.4). The deterioration, however, will be manageable if the country can contain import demand and attract capital inflows on concessionary terms. With changes in the development strategy and in the incentive structure, the trade balance and the current account balance should improve in the second half of the 1980s.

3. Domestic Savings and External Borrowing

2.19 Domestic savings in real terms were negative in FY79. Large capital expenditures on OAU-related infrastructure projects, together with part of the recurrent costs, were financed totally by heavy external borrowing. In FY80 domestic savings improved, and the country was able to finance about 40 percent of domestic investment with domestic savings.

2.20 The domestic savings gap will be the most important constraint to growth in the medium term. With a GDP growth rate of about 3.7 percent between FY80 and FY86, and per capita real consumption growth of 0.8 percent, domestic savings will at best finance about 50 percent of domestic investment. Quick-yielding income-generating projects, especially in mining and agriculture, will need to be implemented in the early 1980s to stimulate growth. The domestic savings gap will have to be met partly by external borrowings, at least until the economic revival around the mid-1980s.

2.21 Large foreign capital inflows are feasible only if they are used to improve the pay-back capacity of the economy and are on highly concessional terms. The government should pursue a policy to attract private foreign investors to quick-yielding, profitable sectors--such as forestry (processing), fisheries, rubber (developing existing trees), mining, and import substitution of such light consumer goods as fruit juices and preservatives. It should also encourage bilateral and international donors to provide sizable local-cost financing in their assistance to development projects. Unrecorded income and capital flight, now sizable, needs to be retained in the domestic economy through adjustments in exchange rate policy and investment incentives to the private sector. - 21 -

2.22 In addition, fiscal, monetary, and pricing policy adjustments are required to improve the domestic savings. The tax effort (now 15.6 percent of GNP) should be increased within the framework of a tax-reform package (see Chapter V). Public corporations should be allowed to adjust their tariffs and pass on cost increases to the consumers. Direct or cross subsidies by public corporations, as for electricity and some petroleum products, should either be abolished or minimized. Consumption demand and current public expenditures should be restrained. Finally, the banking system should be more conducive to stimulating domestic savings and investment through medium-term credit facilities

C. Second Development Plan

2.23 Sierra Leone's First National Development Plan became effective in FY75 covering the five years until FY79. The plan was the first comprehensive policy document of the government on the development goals of the country. Given the country's good economic performance during its first decade of independence, the plan objectives were reasonable and the policy instruments were all conducive to achieving a per capita real income growth of around 3 percent a year and to distribute the benefits of growth.

2.24 Plan implementation, however, differed significantly from plan objectives and the stated goals of the government. First, many key development projects--such as a possible hydropower plant, rutile mining, port rehabilitation, the Makeni-Kabala road, and bauxite mining expansion--did not materialize. These projects required foreign technology and know-how and substantial capital inflows, which were difficult to attract in a worldwide recession. Second, iron ore mining stopped at the beginning of the plan period. Third, the government's priorities for resource allocation did not always coincide with the stated goals of the plan. Fourth, major economic policies stayed the same, providing extensive privileges to the diamond mining sector.

2.25 In the later years of the plan period, the l:Lnk between the development plan and the annual development budget was broken. With negligible public savings, the development budget became more and more a residual item in public resource allocation.

2.26 To stimulate development projects and attract more concessional aid, the government initiated in FY78 the preparation of an interim investment program covering FY79 through FY81. In FY80 the government also initiated the preparation of the second development plan, for FY82 through FY86.

2.27 The second plan is expected to focus on two major development issues: (a) the problem of economic growth and domestic income generation with an ultimate objective of improving the living standards of all Sierra Leoneans, and (b) a more progressive distribution of income and economic well-being. The distribution of income is basically a government policy matter that needs to be determined and handled by the public sector through specific measures and actions. The generation of income requires, in addition, decisionmaking by the private sector, which dominates all productive activities in the economy: mining, agriculture, manufacturing, and construction. One practical problem is determining how to secure private - 22 -

sector participation in planning, such that implementation of some key private projects materializes. Even a more difficult problem is securing greater benefits to the country while maintaining adequate incentives for private foreign investors, when foreign private capital and technical know-how is a must to exploit the rich mineral resources. There are no obvious and easy answers to these questions. There is a clear need however to improve the country's capacity to manage the minerals sector including exploration, negotiations with foreign companies and regulation of the sector.

1. Size of the Plan and Public Sector Investments

2.28 Including the private sector, a plan size of around Le 1,030 million in 1980 prices (about Le 1,430 million in estimated current prices) seem to be financially feasible--assuming that 45 to 50 percent of the investments will be by the private sector and that large private sector projects, especially in mining, will carry large long-term private capital inflows. The public sector investments will depend on public savings, the availability of external finance, and the debt service capacity of the public sector. The share of development expenditures in total fixed capital formation has averaged around 35 percent. Over the second plan period this share is expected to increase to around 50 percent and remain at this level throughout the rest of the decade.

2.29 Total budgetary revenue during the plan period--with an annual average GDP growth rate of about 4 percent (2.2 percent between FY80 and FY84, and 6.5 percent between FY84 and FY86) and a medium-term domestic inflation rate of around 15 percent--would amount to somewhere near Le 1,855 million without additional taxation (table 2.5). If recurrent expenditures grow as much as the domestic inflation rate, budgetary savings would be negative until FY86, even before external debt amortization on committed and expected external borrowing. To achieve a reasonable level of public savings for counterpart funding of development projects, additional taxation will be required while keeping the growth of the recurrent budget to no more than 11.5 percent a year on the average. Interest payments on public debt now account for about 15 percent of the recurrent budget. The remaining 85 percent is for economic and social services (55 percent) and general government services (30 percent), which include expenditures on defense, internal security, and general administration. Restrictions on the recurrent budget should be focused on low priority general services. Even with selective cuts, however, economic and social government services will most likely decline in real terms until the economic revival in FY85. Between FY82 and FY86, a continuation of revenue raising and expenditure control measures should generate public savings (after debt amortization) of about Le 124 million through FY85 and about Le 245 million through FY86. If the domestic financing requirements of development projects can be kept as low as 15 to 17 percent, these public savings would imply a development budget of about Le 725-800 million in current prices over the plan period (see annex table C.13). - 23 -

Table 2.5: DEVELOPMENT BUDGET FOR THE SECOND PLAN PERIOD (millions of Leones in current prices)

Total FY82-86

Revenue 1,855 Additional Taxation 168 Recurrent Expenditures 1,625

Budgetary Savings 398 Development Expenditures 724

Overall Deficit/Surplus -327

Financing External Borrowing 554 Amortization -153 Other -74

Budgetary Savings after Debt Amortization 245

2.30 The second development plan should first favor income-generating sectors and projects. Plan investments both in public and private sectors should concentrate on productive sectors (mining, agriculture, energy,and manufacturing) during the early years of the plan period. Meeting such objectives as alleviating poverty, improving access to basic needs, and expanding employment opportunities, especially outside agriculture, all depend on satisfactory growth and the mobilization of domestic resources.

2.31 Not enough resources have been devoted to meeting the basic needs of the population, particularly in rural areas (see chapter IV). The access to basic needs is poor: only about 12 percent of the population has access to safe drinking water, mostly in the urban areas. Health facilities are inadequate; infant and childhood mortality rates are among l:he highest in Africa and the world. Malnutrition is acute. Primary and secondary school enrollment ratios are low (37 and 11 percent respectively) and the illiteracy rate is high around 85 percent.

2.32 Poverty alleviation should be one of the primary obejctives of the second development plan. Under a severe budget constraint, however, it is particularly important to be selective among provinces as well as basic needs services. - 24 -

2.33 Except perhaps in FY86, the economy will be extremely constrained by inadequate domestic resources and by low levels of domestic and public savings. The public investment program should not allow for unnecessary infrastructure such as low-priority building construction, low-priority road construction, or any prestige investment either in Freetown or in the rural areas.

2. Absorptive Capacity

2.34 Other than resource availability and appropriate policies, Sierra Leone's future development efforts depend on the country's capacity to implement development programs and policies. Not unlike many developing countries, Sierra Leone suffers from relatively new and weak institutions, an inadequate stock of skilled manpower at all levels, and a public administration which can be strengthened by a number of administrative reforms. In the long run, improvement in implementation capacity will depend on the spread of education, on the development of institutions, and on skilled manpower. In the short run, this capacity can be improved by intensified training and greater use of technical assistance.

2.35 The Sierra Leone government has recently taken a number of measures to improve public administration in general and the administration of several ministries. These include consolidating the self-accounting ministries into the central accounting system and making them accountable to the Treasury; establishing a central procurement unit for the public sector; establishing an institute for public administration; establishing planning units in each operational ministry. While the effectiveness of all these measures is yet to be demonstrated, they all represent the consciousness of the government on these issues.

2.36 This report does not focus on institutional issues and issues related to public administration. However, future study in this important area is required in order to provide suggestions for improvements in the effective implementation of economic policies. - 25 -

CHAPTER III. EMPLOYMENT

3.1 The employment situation in Sierra Leone worsened throughout the 1970s. Mining has been declining due to the depletion of known reserves of diamonds and iron ore. The public sector, a leading sector for employment growth since independence, has run into severe fiscal constraints and can no longer rapidly generate new job opportunities. Other forms of formal employment display stagnating trends. Meanwhile, informal activities have grown, and there is concern in agriculture about "labor shortages." Without some policy initiatives, the prospects for the 1980s are not good.

3.2 Information on employment is scarce. The most recent, reliable source is the 1974 census. Annual Ministry of Labor reporting of employment in establishments of six or more workers is sufficiently unrepresentative of the formal sector to make these estimates useless in mapping employment trends. But other independent sources help in piecing together an overview of the structure of employment.

3.3 Between 1963 and 1974 the working-age population increased more than 1 percent a year to 1.7 million persons above the age of twelve by 1974. The 1963 and 1974 censuses classify these individuals into three categories: "working", "not working", or "housekeepers, students, etc." Only a quarter of the increase in the working-age population has been absorbed by the working category, reflecting a disappointing emp'Loyment growth trend (see table 3.1). This trend is further reflected by the changes in nonagricultural employment between the census years. Table 3.2 shows the stagnation in the productive sectors of mining, manufacturing and construction where annual employment growth rates were -5.2 percent, 0.9 percent, and 0.6 percent. Only the tertiary activities of commerce, transport, and services showed much increase in employment. In the tertiary sector more than 40 percent of the new jobs were in small-scale retailing activities in the informial sector, where underemployment is likely. There are no statistics for measuring open unemployment.

Table 3.1: POPULATION OF WORKING AGE BY ECONOMIC ACTIVITY

1963 1974

Working 908,147 (59.7%) 967,181 (55.4%) Not Working 30,795 ( 2.0%) 138,785 ( 7.9%) Housekeepers, Students, Etc. 583,393 (38.3%) 640,823 (36.7%)

Total 1,522,335 (100.0%) 1,746,789 (100.0%)

1/ Employment data are also available from the Sierra Leone Labour Congress. Unions cover a subset of both public and private workers organized around eighteen trade groups. Although collective bargaining agreements are negotiated for all eighteen groups, the union movement's power to influence wage and employment decisions is thought to be marginal. (Employment data provided by the Labor Congress appear in annex table D7.6). - 26 -

3.4 Few macroeconomic events since 1974 suggest a major change in the structure of employment. More people are thought to be working in the mining sector, probably close to 50,000, but this represents less of a new employment trend than it does serious undercounting of alluvial diamond digging as a mining occupation in the 1974 census. (Many such diggers are likely to be counted as "Others Not Adequately Described"--an alarmingly large category--or in agriculture). In the services sector the rapid growth during 1963-74 was in part due to a rapid increase in government employment, and this growth has leveled off in the past five years. The preparations in 1979-80 for the OAU conference bolstered the construction sector and generally rippled through Freetown's economy, but these events are likely to represent only a short-run injection.

Table 3.2: EMPLOYMENT BY ECONOMIC SECTOR!./

Sector 1963 1974 Annual % Change

Mining 47,649 (23.1%) 20,317 ( 6.6%) -5.2 Manufacturing 41,197 (20.0%) 45,470 (14.7%) +0.9 Construction 16,175 ( 7.8%) 17,257 ( 5.6%) +0.6 Utilities 2,246 ( 1.1%) 2,095 ( 0.7%) -0.6 Commerce 53,125 (25.8%) 91,364 (29.4%) +6.5 Transport 16,170 ( 7.9%) 25,339 ( 8.2%) +3.3 Services 28,604 (13.9%) 56,699 (19.2%) +9.9 (Others Not Adequately Described) 925 ( 0.4%) 48,567 (15.6%) n.a.

Total 206,091 (100.0%) 310,108 (100.0%)

1/ Excluding agriculture.

3.5 Agriculture continues to be the most important sector for employment, engaging at least three-quarters of the economically active population. Within the agricultural sector, income generation rather than employment generation should probably be considered the primary development objective. Still, given the proper complementary inputs, agriculture could productively sustain a larger work force. Sierra Leone's high birth rate of earlier decades will affect the labor supply throughout the 1980s, and employment growth in all sectors will be needed to absorb the growing numbers of the working age population.

3.6 There are three important issues and policy areas: Labor shortages in agriculture, employment generation in the private nonagricultural sector, and public sector salaries and employment. These are discussed in detail in the following sections. - 27 -

A. Labor Shortages in Agriculture

3.7 Discussions of a shortage of labor in agriculture are widespread. This shortage is seen as one of the major barriers to agricultural development. To overcome this obstacle, it has been suggested that the small farmer cannot be relied upon and that a system of state farms, using capital- intensive technologies, will solve the problem of agricultural development, especially that of self-sufficiency in rice. To assess this labor shortage, it is important to appreciate Sierra Leone's agricultural system and the mobility of its population.

3.8 Both the prevailing man-land ratios and the communal land tenure system insure that few rural Sierra Leoneans are landleass. The absence of a significant pool of landless rural labor implies ithat the rural labor market will depend upon its supply of labor from farming households. The alternative of working one's own land or someone else-s will always exist. In a 1974-75 study of farm household behavior Spencer (1979) reports that 83 percent of farm labor is provided by the household. The remaining 17 percent is "hired," often in work gangs, whereby neighboring households pool their labor and work on each other's land. Meals often are t:heir only payment. In fact, Spencer notes that 42 percent of all hired workers are paid in this way. During seasons of peak labor demand all available labor appears to be fully used. According to the study by Spencer and Byerlee (1977), adult men and women substantially increase their working time during peak farming seasons.

3.9 Additional labor does not appear to be available in the rural community. During peak periods farmers could, in a technological sense, use more labor to work their land resources more efficiently. Sowing, weeding, and harvesting often are not optimal because farmers are forced to stagger their tasks in response to the labor available. Thus, in a technical sense, a shortage of labor exists.

3.10 In an economic sense it is less obvious whether farmers face any shortages. Given output prices and available technologies farmers find that they cannot get as much hired labor as they would like in peak seasons at a wage rate which they find cost-effective. In other words, better wage opportunities exist elsewhere in the economy, and farmers, given their own resource constraints, cannot successfully compete for labor. Farm households do not have a high enough return on their efforts to discourage members, especially younger and more educated ones, from migrating. The rural labor market appears to be clearing at a low wage rate with a correspondingly low level of labor supplied. Whether more labor would be forthcoming if wages and returns to farming were higher is a matter of conjecture. Managers of integrated agricultural development projects say that it is extremely difficult to induce labor to come to rural areas at any reasonable wage offer. And yet, experience elsewhere in Africa argues for the price-responsiveness of labor and suggests that given the pecuniary inducement to do so, ample amounts of labor tend to come forth. Without a detailed farm management survey, it is impossible to resolve this issue, but accepting the potential for some wage elasticity in labor supply seems warranted as a working hypothesis. Under this hypothesis the real problem in agriculture is the low relative return to labor, not an absolute shortage of workers. - 28 -

3.11 If agriculture can anticipate a supply response to wage changes, it will face competition for additional workers. Unskilled urban jobs, alluvial and ancillary diamond mining employment, and urban educational opportunities attract potential agricultural workers from the rural areas. The extent of these attractions is reflected in regional population growth statistics for 1963-74. The Western Area, dominated by Freetown, grew 4.4 percent a year while the mining district of Kono grew 5.7 percent. Not one agricultural region grew at a rate as high as the national population growth rate, implying a pattern of net out-migration from rural areas. If it is assumed that economic incentives--in employment or educational opportunities--are at the root of migration, the problem of rural labor supply must be considered in the national labor market. By making agriculture relatively more attractive, shortages of rural labor are likely not to be a binding constraint on agricultural development.

3.12 Can agriculture be made relatively more attractive to the potential labor force? In all probability, yes. Alluvial diamond mining activities continue to draw labor away from other areas but there are reasons to believe that the trend is slowing down, if not reversing. The "gold rush" days of diamond digging are over, and the risks and costs of small-scale prospecting are increasing as surface level stones are exhausted. Although unit values of diamonds are higher in real terms than ever before, the dimin- ished probability of finding alluvial stones probably discourages many would- be migrants. Since poverty forces on most people an attitude of risk aver- sion, it would be expected that mining will offer agriculture at least slightly decreasing competition for workers. It is more difficult to specu- late on the trend in rural-to-urban migration. Any broadly based development strategy will probably entail urban-based growth, which in turn will increase the flow of labor to Freetown and the provincial cities. Attention to any widening of urban-rural differentials will be required if the rural areas are to maintain a greater share of the stock of labor. As a policy prescription, the actions required to increase returns to agriculture, discussed throughout this report, are likely to be the most effective tools for resolving bottlenecks in rural labor supply.l/

1/ Two other dimensions of rural labor supply are worth noting. Migra- tion to date appears to have been neither age nor sex neutral. Young adult males form the bulk of migrants, especially to the mining districts. Effective labor supply for agricultural work has therefore been further reduced by the loss of such individuals. Observers also report sociologi- cal obstacles to the efficient use of rural labor resources. Certain tasks, such as coffee harvesting, are identified as male activities that women do not engage in. Other examples include weeding and tending vegetable plots, both of which are primarily female responsibilities. Sensitivity to these rigidities in the division of labor is necessary in assessing problems related to rural labor supply. - 29 -

B. Employment Generation Outside Agriculture

3.13 The private nonagricultural sector consists of both a formal and an informal component. The formal or modern sector consists of large establishments, located primarily in Freetown; the informal sector consists of the self-employed and small establishments dispersed throughout the country. Although accurate data are not available, the census results give some idea of the employment in these sectors. Deleting all public employment from the figures of table 3.2 yields the private nonprimary employment trends of table 3.3. The magnitude in 1974 of the "Others Not Specified" category limits a precise interpretation of these data. With this constraint in mind, the table suggests that private employment has grown by more than 60,000 jobs. But 82 percent of this increase has been in commerce and the services, suggesting that most employment growth has been in the informal sector, since both commerce and private services are dominated by small establishments.!/

Table 3.3: PRIVATE EMPLOYMENT TRENDS

Sector 1963 1974 Absolute Change

Manufacturing 39,002 43,781 +4,779 Construction 9,420 8,955 -465 Utilities 403 227 -176 Commerce 52,443 89,973 +37,530 Transport 10,114 17,373 +7,459 Services 11,877 25,223 +13,346

Total 123,259 185,732 +62,373

Other Not Specified 872 47,281 +46,409

3.14 Acknowledging the limitations of available data, it is safe to conclude that the formal nonagricultural private sector is small and has not shown signs of growth. Stagnation in this sector can be traced to a

1/ More detailed information on the modern sector is contained in the Ministry of Labor's Survey of Employment in Establishments with Six or More Workers. By definition this survey should cover the entire public sector plus larger private establishments. The survey's 1974 estimate for total employment, averaging that in FY74 and FY75, is 64,864. This number appears suspect when contrasted with the 1974 census result for total public employment which, by itself, equals 65,800 jobs. Since the 1974 census does not distinguish private employment by firm size, it is difficult to determine the private sector's contribution to modern employment; nonetheless, the Ministry of Labor's survey obviously underestimates formal employment. (Recognizing the limitations of the Ministry of Labor data a UNIDO team attempted to conduct an Industrial Census of large-scale establishments. A summary of their projections of the size of the large-scale industrial sector appears in annex table D6.8.1). - 30 - number of causes. First, the government has not made a commitment to industrial growth. The Ministry of Trade and Industry is inadequately staffed for stimulating and directing industrial development. Furthermore, although the need for a new industrial code has long been acknowledged, the proposed Devel- opment of Industries Law is stalled in the judicial process. Second, private capital is not being productively reinvested. Local private capital, holdings of which are highly concentrated, appears reluctant to invest heavily in domestic projects in the face of the stagnation of the economy. In essence, no leader in the economy is taking responsibility for industrial growth.

3.15 Although the private modern sector has been stagnant, this should not be interpreted as an absence of potential. The domestic market is limited, but export demand for such products as textiles, furniture, and processed food does exist, especially in neighboring West African nations. A UNIDO team of experts has evaluated the potential for industrial growth and in an enterprise-by-enterprise analysis has encouraged: development of already established firms, increased capacity use of plants, and increased domestic value added in new export-oriented ventures. Their report contains a valuable starting point for a national program of industrial development. Institu- tional reform is a major prerequisite for such a program. The relevant ministries, especially Trade and Industry, and the domestic lending institutions (the National Development Bank) must be restructured and reoriented towards promoting industrial growth.

3.16 In the informal sector, it is clear that most private nonagricultural employment is in small establishments or self-employment. The most detailed information is for the noncommercial sector. A Michigan State study by Liedholm and Chuta (1976) found that tailoring (31.3 percent), carpentry (16.4 percent) and blacksmithing (15.1 percent) were the most common establishments. A large proportion, 86 percent, of small-scale industrial employment is outside of Freetown, which highlights the links between these activities and agriculture. Estimates of the income elasticities of goods produced by this sector reveal that sizable increases in demand will follow increases in agricultural incomes. Liedholm and Chuta thus conclude that a rural-based development strategy will have significant secondary effects on income and employment in the small-scale industrial sector.

3.17 A considerable part of the informal sector appears to have potential for raising the earnings of lower income groups and for providing employment. However, in the Ministry of Industry and Trade, there is no institutional infrastructure to deal with the small-scale sector. Improved credit facilities and small-business extension services are needed to remove obstacles facing informal sector enterprises. Government procurement of small- scale sector outputs, encouragement of agro-based linkages, and discontinuation of preferential tax and tariff treatment of large domestic firms are other relevant policy measures.

3.18 The small-scale industrial sector has potential, but concern must be raised over informal commercial and services activities. These two activities accounted for 62 percent of all specified, private, non-primary good employment in 1974, as well as for 82 percent of the increase in such - 31 -

employment between 1963 and 1974. This employment growth may reflect only the absorption of the growing working age population into low productivity jobs in Freetown and other areas, and thus may only be a signal of growing underemployment. Without more detailed information, the income level and employment of these groups are difficult to analyze. Whether improvements in the marketing structure of agricultural, import, and other goods will improve the earnings of these commerical occupations cannot be easily determined. What the census figures and other available sources suggest is that significant heterogeneity characterizes the entire small-scale sector. If policy prescriptions directed toward the small-scale sector are to be effective, they must be sensitive to these differences.

3.19 Sierra Leone has a profitable mining sector and productive agricultural resources. But these two areas alone cannot be relied on to bring economic development to the nation. The industrial sectors, both formal and informal, are important to the nation's economic progress, and the historical neglect of these sectors should end. Commitments in the form of institutional reforms for directing industrial growth, improved creclit market facilities, and an overall incentive program directed at domestic entrepreneurs should be able to reverse the stagnating tendencies in industrial growth, especially in employment.

C. Public Sector Salaries and Employment

3.20 As the dominant employer in the modern sector, the government has a major impact on the urban labor market. In considering the nature of this impact, two issues will be discussed. First, the growth of public employment and its distribution across economic sectors will be described, and some qualitative assessments of future public sector growth will be offered. Second, the role of public sector wages in determining the national wage structure will be discussed, including a general review of public sector salaries and of the emerging tension between civil service and public enterprise employment. The matter of OAU-generated employment will also be addressed.

3.21 The public sector is estimated to have betwieen 65,000 and 70,000 workers (table 3.4). Public sector employment grew from 36,509 jobs at an average annual rate of 7.3 percent, reaching 65,800 positions in 1974.1/ This represents 5.5 percent of all employment or 19.8 percent of all nonagricultural employment. In 1974, 30 percent or more of the employment in construction, utilities, transport, and the services was public. Between 1963 and 1974 significant increases in public employment occurred in agriculture (2,600 positions), mining (4,000 jobs in DIMINICO), and mostly in the services (17,750 positions). No private activity in the formal sector generated as many new jobs. Only in agriculture and in the informal sector was employment growth greater.

1/ A 7.3 percent rate of growth in public sector employment in the post- independence decade is about average for African nations. Other Anglo- phone nations had the following rates: Ghana 4.9 percent; Kenya 6.0 percent, Malawi 9.0 percent, and Tanzania 10.7 percent. - 32 -

3.22 Since 1974 the public sector has continued to grow, but periodic employment freezes have slowed down the rate of expansion. Precise data on the size of the public sector is not available. Even without more recent estimates, it is possible to make projections about the public sector's growth potential. The public sector is unlikely to expand as rapidly as it did after independence. Most employment growth since the early 1960s was in the services--public administration and the human services. Although there is considerable potential for expanding the health sector, neither public administration nor education are likely to grow as quickly as they have. Education was a prime objective of the 1970s: whether it can continue to expand rapidly is a question of fiscal constraints and implementation capacity. If there is to be a new growth spurt in public employment, it will likely have to come from productive public enterprises. But there are no serious plans for such enterprises. In essence, the outlook for the public sector as an engine of wage-employment generation is not promising.

Table 3.4: PUBLIC SECTOR EMPLOYMENT* (Percentage breakdown)

Sector 1963 1974 Public Total % Public Public Total % Public

Agriculture, Fishing, etc. 4.81/ 77.32/ 0.2 6.71/ 69.22/ 0.5 Mining 1.2 5.2 0.9 6.8 2.0 22.2 Manufacturing 6.0 4.5 5.3 2.6 4.5 3.7 Construction 18.5 1.8 41.8 12.6 1.7 48.1 Utilities 5.0 0.3 82.1 2.9 0.2 89.2 Commerce 1.9 5.8 1.3 2.1 9.1 1.5 Transport 16.6 1.8 37.5 11.8 2.5 30.6 Others Not Specified 0.2 0.1 5.7 2.1 4.8 2.8

Total 100.0 100.0 4.0 100.0 100.0 6.5

36,509 908,147 65,800 1,009,872

1/ Percentage of public employment.

2/ Percentage of employment.

(* See also annex table D6.7).

3.23 Such a prognosis does not bode well for future school graduates. The public sector, especially the Ministry of Education, has been a prime source of job placement, especially for secondary school graduates. Simi- larly, some 63 percent of all university graduates were publicly employed in 1974. The public sector has been a heavy demander of educated labor, and it is difficult to envision what sector will absorb the slack as public employment opportunities lessen. Without any data on youthful unemployment, it is - 33 -

difficult to quantify likely shortfalls in employing school leavers. But the simple arithmetic of growing output of the education system facing slower growth in the public sector's labor demand suggests that education-specific unemployment may be forthcoming.

3.24 The effectiveness of the civil service is related to the reward structure. Most civil servants experienced a 30-50 percent decline in real cash earnings during the 1970s (see chapter IV). Only the lowest paid public employees appear to have maintained their real wage position. Given the periodic nature of civil service salary reviews over the 197 0s, a ratchet effect has operated in real wage determination in the public sector. Nominal wages have been eroded by inflation until pressure has built up within the system requiring salary reform. After each wage round (increases occurred in FY75, FY78, and FY80) most civil servants received higher nominal salaries but rarely attained their former real wage position.l/

3.25 The apparent decline in the relative wage pcsition of the civil service appears to have taken its toll. Government morale is considered to be low, and turnover at many levels of public employment is said to be high. In conjunction with determining the rate of public sector employment growth, a thorough rethinking of policies for public sector salary and employment appears warranted. An innovative use of the recent Technical Assistance Credit from the World Bank might include hiring public administration specialists to work with a high level Sierra Leonean commission to reorganize the Civil Service and chart a path for medium-term public sector growth.

3.26 Another important dimension of public sector remuneration is its impact on the rest of the wage structure. Public employment is often accused of being a wage leader, raising all urban wages and exacerbating urban-rural differences. Sufficiently detailed data are not available to empirically substantiate this claim in Sierra Leone. But fragmentary evidence suggests that neither unskilled civil service/urban informal nor unskilled civil service/rural income differentials are large. Supply side pressures in the labor market seem similarly to influence the different sectors of the economy, and thus concern over the potential distortions generated by a public sector high-wage island are not justified.

3.27 On the short-run employment impact of recent spending for the OAU conference, the best estimates are that 6-8,000 additional construction jobs were generated by related investments. Construc:tion by private contrac- tors accounted for most of this increase; road construction, primarily by the Ministry of Works and the military, is thought to have turned a considerable amount of underemployed labor into productive labor. The immediate indirect effects of OAU spending, working through consumption multipliers, no doubt had a positive short-run income and employment effect throughout all Freetown.

1/ Note that this analysis is based on salary scal,ss not on wages received. Grade jumping and noncash payments are mechanisms by which civil servants counter the erosion in their real cash incomes. Data on remuneration are not available. - 34 -

But almost all OAU spending eased after the conference, leading to a considerable fall in labor demand. The resulting open unemployment and underemployment caused a downturn in Freetown's economy after July 1980. The spending on the conference also had a high cost; in terms of development opportunities forgone.

D. Summary of Policy Recommendations

3.28 The interdependent concerns of a more equitable distribution of income and a more rapid rate of employment generation require government action to improve markets and demonstrate initiative in stimulating growth. The labor market does not appear to be seriously constrained by institutional impediments and seems to be responsive to price incentives. Credit markets, however, are fragmented, and commodity marketing appears to be concentrated. These two areas cause serious bottlenecks, redirect incomes, and lead to an unsatisfactory distribution of national income and wealth. Government must work to make these markets more competitive. At the same time, government must encourage agriculture and industrial growth through the provision of infrastructure and a fiscal system that does not damage incentives. For some time, agriculture will remain the critical sector, and successful generation of increased incomes and productive employment must be geared to agriculture directly or through strong backward and forward linkages. - 35 -

CHAPTER IV. POVERTY, INCOME DISTRIBUTION, AND, BASIC NEEDS

4.1 Despite Sierra Leone's relatively abundant natural resources, about two-thirds of the population subsists in poverty. The distribution of income is heavily skewed, and the variance is large in access to basic services. The success of development efforts in Sierra Leone, therefore, will depend on efficiently tapping the country's rich national resources and effectively distributing the benefits to more of the population. What is encouraging is that the government has recourse to policy options that could improve the economic well-being of a vast majority of the population.

4.2 The most recent population census, undertaken in 1974, indicates a population of 2.7 million, compared with 2.1 million in 1963, the year of the previous census. These data imply a population growth rate of 2.1 percent. But a more recent estimate based on the natural rate of increase, immigration rates, and death rates reveals a higher population growth rate of around 2.5 percent. The crude birth rate is estimated at 44 per thousand; the gross reproduction rate, at 2.9. As in many other West African countries, the total fertility rate is high--around 5.8. With expected improvements in health care, fertility rates may rise even higher. The government has no population policy, but some fertility and family planning services are carried out by the Maternal and Child Care Division of the Ministry of Health.

4.3. The population is predominantly rural, with 79 percent living in settlements with fewer than 5,000 inhabitants. With a 4.7 percent urban migration rate, Freetown's population more than doubled between 1963 and 1974. It now accounts for about a tenth (300,000) of the country's population. The average population density is low, around 45 persons per square mile, but the distribution is uneven--ranging from 125 persons per square mile in the Western Area and Eastern Province to 11 persons per square mile in the Koina- dugu District of Northern Province. 1/ The age structure is youthful: about 45 percent of the population is under fifteen. This implies an increasing need for education facilities and employment opportunities.

A. Absolute Poverty

4.4. Sierra Leone's dualistic economy has a small modern sector encom- passed by a large traditional agricultural sector, still generally outside the monetized economy and sustaining about 70 percent of the population. Average per capita income in 1979 was estimated at US$250, with incomes averaging US$100-120 in subsistence farming. Life expectancy at birth is low at about 40 years, and infant and childhood mortality rates are among the highest in Africa and the World. Although the government has in recent years invested heavily in education, enrollment ratios are low, and the illiteracy rate is high--about 85 percent.

1/ According to population estimates for 1977 on the basis of interregional migration between 1963 and 1974, the Northern Province had the largest percentage of population (around 37 percent), followed by Eastern Prov- ince (28 percent), Southern Province (21 percent), and the Western Area (13 percent). - 36 -

4.5 Absolute poverty I/ is more prevalent in the rural areas. The urban population in general earns higher incomes and has better access to public utilities and other public services. No independent studies, however, have been undertaken on the extent of rural and urban absolute poverty. Most of the information on absolute poverty is based on ILO estimates of the distribution of income in Sierra Leone.

4.6 The ILO (Lisk and Van Der Hoeven) estimated that the percentage of households falling below a Basic Needs Income (BNI) in 1977 was 65 percent of the urban population (425,000) and 66 percent of the rural population (1,615,000). Their 1977 BNIs of Le 71.7 per household per month for urban areas (Le 109.0 in 1980) and Le 52.3 for rural areas (Le 80 in 1980) were based on FAO-WHO recommended intakes of calories and protein, adjusted by regionally available food staples and priced according to local cost conditions. To this basic food expenditure was added an essential nonfood budget based on normative assumptions as well as observed consumption expenditure. Food represented 65 percent of the urban BNI and 72 percent of the rural. The 1978 ILO study, which also adopted a BNI, concluded that 55-65 percent of urban residents and 40-45 percent of rural inhabitants were below the BNI. Of these, 20-25 percent of the urban and 10-15 percent of the rural inhabitants fell below the basic food-basket estimate. The different conclusions on the extent of rural poverty reported by these two studies are primarily methodo- logical.

Table 4.1: BASIC-NEEDS BUDGET FOR AVERAGE-SIZED RURAL HOUSEHOLD (1977)

Monthly Cost per Budget Item Household (Leones) % of Total

Food 37.64 72.0

Non-food 14.70 28.0

Fuel 2.00 4.0 Clothing 5.00 9.5 Health 1.40 2.5 Education 5.50 10.5 Transport 0.80 1.5

TOTAL BUDGET 52.34 100.0

1/ Absolute poverty income level is that below which minimum nutrition and consumption needs cannot be met. - 37 -

Table 4.2: MINIMUM FOOD AND NON-FOOD BUDGET FOR AVERAGED-SIZED URBAN HOUSEHOLD

Average Monthly Recommended Cost or Minimum Daily Calorie Food Basket Members of Household Intake (Leones)

1 Active Male 2,700 12.60 1 Moderately Active Female 2,200 10.17 First Child (10-14 years) 2,200 10.17 Second Child (5-9 years) 1,600 7.93 Third Child (0-4 years) 1,100 5.91

Total Food Budget 9,800 46.78

Rent and Fuel 9.00 Clothing 5.00 Health 1.40 Education 5.50 Transport 4.00

Total Non-Food Budget 24.90

TOTAL BUDGET 71.68

Source: "Measurement and Interpretation of Poverty in Sierra Leone." The International Labour Review, Vol. 118, No. 6.

B. Distribution of Income and Wealth

4.7 Sierra Leone is widely, and correctly, perceived as having significant problems of equity and income distribution-this despite some key features of the economy which would mitigate distributional concerns. The land tenure system is generally based on communal not private ownership, and the distribution of land holdings has remained fairly equitable. As for the mining sector, compared to most minerals economies employment benefits are greater. About half the diamond output is mined by a corporation in which the government is the majority shareholder, and the other half is mined by small- scale operators using relatively labor-intensive technologies. Elsewhere in the economy, the lack of substantial high-wage islands in the public and private sectors and of preferential consumer subsidies also assist in mitigating inequalities.

4.8 The serious concerns for distribution which exist nevertheless are essentially for three reasons. Firstly, in spite of the advantages noted above, minerals incomes are highly concentrated; and minerals account nearly 60 percent of export earnings in Sierra Leone. Secondly, incomes are further - 38 - skewed by the ologopolistic character of the commercial sector. In diamonds, there is sharp concentration in wholesale and export trade; there is similar concentration of wholesale and retail trade in agricultural goods and in most imports. The lack of competition appears to exacerbate the sharp spread between producer prices and final consumer or export prices. And thirdly, the fiscal policies of the government, both in their orientation and implementation, are regressive. Agriculture is heavily taxed. Effective tax rates on minerals are at best marginal, while evasion of taxes has been rampant. In addition, the distribution of government expenditures shows a distinct urban bias, favoring the areas which, in terms of either incomes or the meeting of basic needs, are substantially better off than the rural areas. In essence, the fiscal policy transfers income from the poor to the less poor.

4.9 A more detailed discussion of the issues is divided into the following sections: income distribution data, agriculture, mining, and the urban economy.

1. Income Distribution Data

4.10 The ability to quantify the distribution of income is severely hampered by inadequacies in national accounts and household surveys. Previous World Bank documents have cited the results of the 1969-70 Household Survey of the Central Statistical Office, but these statistics are biased by their handling of imputed agricultural incomes. 1/ The ILO study, already referred to, has a pseudo-functional distribution of income based on occupational groups of urban and rural workers. This distribution for 1976 is based on the Michigan State results and unpublished Central Statistical Office data used to compile national accounts (see annex table D7.3). Their results yield the following summary statistics for this pseudo-functional not the size distribution of income:

Gini

Urban .49

Rural .32

Total .60

1/ The calculus of distribution analysis does not permit a simple computa- tion of the direction of bias when the distribution of omitted information is not known. - 39 -

4.11 Another source of aggregate distribution data is from a 1976 Household Budget Survey by the Central Statistical Office. This report focuses on consumption expenditures by region and makes corrections for these expenditures by imputing a value for production for own consumption. The regional distribution is as follows:

% of Total % of Total Area Population Consumption

Urban 14.5 20.4

Mining 9.2 10.2

Rural 76.3 63.9

These data portray less skewness than do the ILO results, in part because the distribution of consumption is always more equal than the distribution of income. This same report goes on to compute the distribution of consumption expenditures in Freetown and finds the distribution to be severely skewed. The top 20 percent of households according to their consumption expenditures consume 50 percent of all such expenditures in Freetown. Taken together the accumulated evidence supports qualitative statements on the regressive features of Sierra Leone's economy.

4.12 Given the paucity of data, it is difficult to assess how the distribution of economic well-being has changed. Nonetheless the direction of change can be discussed given knowledge about the structure of the economy. In assessing distributional trends it is important to distinguish exogenous events and planned interventions. In an open economy like Sierra Leone's, international price movements have domestic distributional consequences. Such outcomes must be evaluated in a light different from those of government decisions to redistribute national income.

4.13 International price movements have affected the distribution of income in Sierra Leone throughout the second half of the 1970s. Coffee and cocoa prices generally increased in real terms to benefit export farmers. Rice prices also increased, in part due to poor domestic harvests, so the net income effect is difficult to determine. Diamond prices skyrocketed after 1977, returning large rents to the entire sector. Oil price increases coupled with the rise in other import prices helped accelerate domestic inflation. The rapid climb in the consumer price index probably reduced urban wages disproportionately, especially Freetown's real wages. 1/ In summary, international economic events probably redistributed national income away from urban dwellers towards farmers and people in mining areas. How progressive this change has been cannot be determined with the available evidence.

1/ Annex table D7.2 illustrates the secular decline in formal sector earnings brought on by both industrial stagnation and rapidly rising consumer prices. - 40 -

2. Agriculture

4.14 At least two-thirds of Sierra Leone's population lives in rural areas. Since the net rate of rural-to-urban migration is positive, some fall in the share of population in rural areas is expected but that share is likely to remain large for some time. Most farmers are smallholders engaged in subsistence farming. Rice and other food crops are grown on small acreages by using simple technologies.

4.15 Because most farming activities are for subsistence, estimating farm household incomes, and their distribution, is a complex task. 1/ And because many household economic activities are not monetized there must be an estima- tion of an imputed income. The most thorough attempt to provide such estimates is reported in the Michigan State study by King and Byerlee (1977). Based on a random sample of 203 farm households, they estimate per capita agricultural income to be Lell6 in FY75 (see annex table D6.10). Independent estimates by the ILO and from a 1976 Household Budget Survey conducted by the Central Statistical Office roughly confirm this figure.

4.16 King and Byerlee also provide a crude estimate of rural income inequality. Their results suggest that the bottom half of the distribution shares less than 30 percent of total income, the top half more than 70 percent. Inequality in agricultural incomes appears to be a function of regional location, since location determines soil conditions, crops, and cultivation practices. In particular, richer farm households are in the tree-crop areas in the Eastern Province.

4.17 These results suggest that the level, not the distribution, of income in the agricultural sector should be the prime concern of policy actions. Raising agricultural incomes through price incentives, improved credit facilities, better infrastructure, extension and marketing services are likely to be more beneficial than specifically designed redistribution schemes.

4.18 This is not to say that policy should disregard rural income distribution. On the contrary, the government must be sensitive to regressive trends in rural incomes which may result from policy actions. In particular, current discussions of changing land tenure must be evaluated with both growth and distribution in mind. In fact, policy decisions on land tenure may be the most critical distribution issue that Sierra Leone faces in the 1980s.

1/ Previous estimates of rural income distribution in Sierra Leone were based on the 1966-69 Household Budget Survey administered by the Central Statistical Office. These estimates do not appear to have taken account of the imputed income of subsistence farming. As a result, the estimated level of income and its distribution are inaccurate. The ILO (1978) estimates that the figures generated by both the urban and rural Household Budget Survey of 1966-69 underestimated national income by 55 percent. - 41 -

4.19 There are no major income inequalities in the rural areas which can be traced to the system of land tenure. In all regions, aside from urban areas and the Western Area, some form of communal ownership of land exists. Freehold or private property rights characterize the Western Area (the former British colony) and urban locales. Although regional differences exist, land tends to belong collectively to the chiefdom, with the tribal authority and paramount chiefs acting as custodians not owners. Extended family groups have come to acquire, for all practical purposes, rights of use of land allocated to them by the community. Land is further allocated wi.thin the extended family to households on the basis of need and familial ties. Rights to the land are extended as long as the land is productively used. A family or household does not have the right to transfer, sell, or lease land to "stran- gers. This right is in the domain of the tribal authority. (The significance of tribal rights is illustrated in annex table D6.11, which relates land holdings to tenure patterns.)

4.20 It is clear that the land tenure system is a major factor in the relative equality of rural incomes. The absence of a landless rural class corroborates the view that access to land is not a determinant of rural poverty. Nonetheless, the land tenure system is being questioned as a major barrier to agricultural development. Opponents of the system claim that the lack of ownership rights is an impediment to agricultural investments. They argue that the system does not guarantee that an investor will capture returns to his investment, and they cite cases where improved lands have been reclaimed by Tribal Authorities without compensation. The absence of legal protection is seen as a particularly severe barrier to outside developers who, lacking tribal ties, are either prevented from or wary of applying their physical and human capital to agricultural endeavors.

4.21 Supporters of the system argue that a freehold system will neither be beneficial to most of the rural population nor by itself increase agricultural output. They claim that common law guarantees that individuals who make investments will receive their return or be adequately compensated. The barriers to greater investments are failures in other input markets, not in the land holding system. Instances of unfair appropriation are rare, and to guard against them better legal procedures in land registration and claim settlements could and should be developed within existing land tenure arrangements. Further evidence of the adaptability of the system can be found in the success of tree-crop farming throughout Sierra Leone. That such crops have long gestation periods and that returns are only realized after many years do not appear to have prevented the successful expansiLon of such cultivation.

4.22 Supporters also claim that a national freehold system will lead to a concentration of rural landholdings and a worsening of the rural income distribution. The simultaneous creation of a landless rural class and a system of absentee landlordism, a subsequent increase in rural to urban migration, the emergence of unproductive land speculation and a general disruption of the nation's social fabric--all these are seen as the negative features of a legislated change in land tenure. - 42 -

4.23 Considerations of both growth and equity suggests that working within the existing system of tenure is likely to benefit the objectives of economic development most. This is not to say that changes are not needed. The protection of individual rights needs to be better guaranteed. But a major institutional change in property rights is not likely to solve the problems of agricultural development. Indeed, it probably could make worse the situation of the poorest members of the society.

3. Mining

4.24 The distribution of mineral wealth, unequal in all mineral economies, is one source of the maldistribution of income in Sierra Leone. The data, scanty as they are, suggest that the profit margin on diamond exports is quite high, with the result that diamond producers, and the Sierra Leone economy, receive an inadequate return from diamond production.

4.25 Sierra Leone is rich in minerals. There are known reserves of diamonds, iron ore, bauxite, and rutile. Of these minerals, diamonds are the most significant in contributions to export earnings, government revenues, and mining employment. In the late 1970s official diamond exports earned the nation close to 120 million leones annually. Determining the distribution of these earnings is central to understanding economic inequality in Sierra Leone.

4.26 Diamonds are mined according to two different schemes. Throughout the 1970s 40-50 percent of the annual export value of diamonds was mined by DIMINCO, a corporation in which the government holds a 51 percent share. The remaining output is mined in small-scale operations, which constitute the Alluvial and Cooperative Diamond Mining Schemes. These schemes exploit government-issued leases using labor-intensive technologies. The pyramid depicted in figure 4.1 illustrates the employment structure of the mining sector.

4.27 DlMINCO employs 3,000-4,000 workers many of whom are highly skilled. All nonmanagerial personnel are unionized and covered by a collective bargaining agreement. Under the Alluvial and Cooperative Diamond Mining Schemes, the government issues about 2,200 leases at a nominal fee. Each lease permits the mining of a 400-square-foot tract. A leaseholder must be a native Sierra Leonean and is entitled to employ not more than twenty workers. Official statistics indicate that 25)000 miners are engaged by leaseholders; the Cooperative Scheme adds another 15,000. These miners are called tributors. They enter contractual agreements with leaseholders, usually reaching a profit-sharing arrangement contingent on finding a diamond. In addition to the formal-sector DIMINCO employees and the informal-sector tributors, an indeterminate number of illegal miners engage in illicit mining activities, primarily by invading DIMINCO's holdings. In the mid-1970s DIMINCO estimated that there were between 5,000 and 20,000 illicit miners. - 43 -

4.28 The marketing of diamonds also has its formal and informal sides. Formally, there are ten licensed exporters of diamonds, each paying an annual fee of Le6O,000. Beneath them are 300 licensed diamond dealers and an indeterminate number of unlicensed dealers. Dealers appear not only to handle the purchase of stones but also to extend credit and unofficial hard currency and to provide capital goods to the small-scale operators (see figure 4.1).

Figure 4.1: EMPLOYMENT STRUCTURE OF THE DIAMOND SECTOR

[ Government Licenqed Illtcit Export Diamond Exporters Export I _ OFficn (10) (?) |

Intermediate f / |Licensed nlicensed DIstribietion Dealers ealers (300) (?)

Managerial 6 Lease Holders {Supervisory (2200) (400)

Production Skilled & Alluvial Tributors Illegal Unskill ed (40,000) Diggers L (2800) ' (?)

DIMINCO ALLIlVIAL 6 COOPERATIVE DIAMOND MINING SCHEMES ILLICIT MINING - 44 -

4.29 The purpose of this exposition of the structure of the diamond sector is to attempt a rough calculation of the functional distribution of mining income. The years since 1977 have witnessed dramatic increases in diamond prices and rapidly rising export earnings, even though output has fallen by as much as 60 percent since 1970. Diamond exports in 1978 yielded close to Le 120 million. Government budget accounts reveal that corporate profit taxes, diamond excise taxes, and DIMINCO dividends and licensing fees yielded approximately Lel5 million. Labor costs for DIMINCO can be estimated on the basis of the salary ranges reported by the collective bargaining agreement: as an average of Lel,000 a year for 3,000 nonmanagerial employees yields a generous estimate of DIMINCO labor costs at Le3 million. Relatively free entry into the labor market for tributors suggests that these 40,000 workers earn wages not far above earnings in the rural or urban informal sector. Again aiming at a high estimate, Le400 per year yields Lel6 million in labor costs to the alluvial sector. What remains after taxes and labor costs is Le86 million. Managerial salaries in DIMINCO, operating costs, marketing costs, and profits remain. Profits cannot be netted out of this figure, but the calculation suggest that the returns to those dealing in diamonds are substantial. The mineral wealth of Sierra Leone is benefiting a relatively small group of individuals--the exporters and dealers. At a minimum, these figures suggest that there is room for an improved distribution of the benefits.

4.30 The future of diamond earnings in Sierra Leone is unclear. Dia- monds are an exhaustible resource, and experts offer conflicting opinions on reserves. What can be safely concluded is that diamonds will be mined for at least the next decade. Before all this wealth is extracted, steps should be taken to promote its more equitable distribution. One such step requires a better arrangement between Sierra Leone and its foreign partners. This is true for diamonds and will become increasingly important as other mineral resources are developed. Two areas are in need of attention in future negotiations with foreign firms: arrangements for training indigenous manpower to assume managerial and technical positions, and formulas that ensure Sierra Leone gets a more favorable share of its mineral wealth.

4.31 In the small-scale sector the returns accruing to the middle and top of the production-distribution-employment pyramid need to be redistributed downward towards the pyramid's base: towards the miners. Improvements in the credit and foreign exchange facilities available to small-scale operators as well as more competitive bidding between diamond dealers and diamond exporters could increase the returns farther down the employment hierarchy. Recognizing the weaknesses in the current credit market, the Ministry of Mines a few years ago initiated the Mining Revolving Fund, which establishes a system for leasing capital goods to small-scale operators. This program needs to be thoroughly evaluated before any other intervention in the mining sector's capital and credit market.

4.32 Attempts to improve the level and distribution of income of the 40,000 tributors face serious obstacles. The basically free entry into this labor market implies that wage determination will be influenced by many exogenous forces, including international price movements, rural and urban - 45 -

incomes, and the long-run depletion of diamonds. Since tributor incomes depend on finding a diamond, both the probability of making such a find and the value of the stone affect the amount of labor supplied. The high export value of diamonds encourages movement into diamond activities, but the depletion of diamond reserves, by lowering the probability of finding any stones, discourages participation. There are no data on the net effect. The probability of finding stores also implies that the distribution of informal mining incomes is skewed, since luck plays a large element in, income determination. If migration, as hypothesized, tends to equalize averaLge informal-sector incomes, incomes in the mining sector will be more unevenly distributed than in the other informal sectors, where luck is not a ma;jor factor and incomes are more evenly distributed.

4.33 Attempts to raise the average earnings of the sizable number of poorly paid mining tributors must acknowledge the mobility of labor in Sierra Leone. Such mobility suggests that wage gains will be difficult to sustain if similar gains are not made by rural and urban informa:L sector workers. Changes in one sector are likely to spread throughout the economy. Marginal improvements can therefore have a pronounced impact once all indirect effects are considered.

4. The Urban Economy

4.34 The urban economy is a residual category that encompasses activities not covered by the first two categories. Similar to the mining sector, the urban economy has a formal and an informal component. The formal sector includes large-scale industry and the public and quasi-public sectors. Freetown is the primary focus of such activities. The informal urban economy, in Freetown and in provincial cities, covers handicrafts, small-scale services, and manufacturing activities. Little statistical information is available on either the formal or informal components, so many of the following statements are qualitative.

4.35 Urban income inequality can usually be traced to the distribution of profits and that of earnings--and within earnings to the distribution of wage income among workers. The identification of high-wage islands usually signals the source of the greatest income inequality. In Sierra Leone, however, few high-wage islands can be identified. Multinational enclaves outside mining are almost nonexistent. Domestic large-scale manufacturers are few, and employment in such enterprises has been estimated at between 5,000 and 15,000 workers. The public sector is the largest formal sector employer, covering about 50,000 public administration and human service employees, plus another 10,000 public enterprise workers.

4.36 Neither the domestic industrial sector nor the public sector appears to offer excessively high salaries except for top administrative positions. Public sector salaries were high after independence and remained high until fiscal realities caught up with remuneration scales. During the 1970s most public sector employees suffered a 30-50 percent decLine in their real wages. In FY79 the least skilled salaried civil servant earned Le360 a year. If each such worker supported one or two dependents, this urlban formal wage is about - 46 -

the same as rural per capita incomes. Differences of 12 to 1 emerge between the top positions (such as a permanent secretary) and the lowest paid jobs (such as a cleaner or, messenger). But by international standards, a permanent secretary earning US$6,000 annually does not seem excessive. Considering the problem in terms of efficiency and not equity, these large relative differences may be warranted. Evidence on the rapid job turnover at all levels of government employment suggests that remuneration is not especially attractive. Given the structure of skilled labor markets, it probably is fair to conclude that top administration salaries do not contain grossly unfair "rents" and that the resulting public sector earning distribution should not be viewed as highly inequitable.

4.37 For the informal sector, reliable data on earnings and employment are scarce. On the basis of official statistics on total and formal employment, informal workers, as a residual, totaled more than 150,000 in manufacturing, construction, trade, and transport. This figure is likely to be a considerable underestimate. Petty trading, tailoring, and blacksmithing are some of the most significant activities. Earnings data on these establishments show wide variances depending on activity, location, and status as proprietor or worker. Relatively free entry into the sector again suggests that income levels are low. According to the ILO study, proprietors are likely to earn higher incomes than comparably skilled workers in the formal wage sector, and informal sector employees are likely to fall below the benchmark minimum wage.

4.38 From what limited information is available, inequities in the urban economy's earnings distribution seem limited. High wages in public enterprise employment and in the formal mining enclave are the chief sources of wage inequality. The absence of substantial earnings differences for unskilled workers in the formal and informal sectors is consistent with our perception of the mobility of the labor market in Sierra Leone. (see annex table D7.2 for a listing of comparative wage data).

4.39 If not chiefly due to the distribution of earnings, urban inequality must be generated by the division of income between returns to labor and returns to capital. The concentration of profits is likely to be the most significant feature of Sierra Leone's regressive income structure. Direct empirical support for this view is difficult to compile due to the inadequacies of both GDP data and household surveys. A functional distribution of income cannot be computed given these limitations.

C. Access to Basic Needs

1. Health and Nutrition

4.40 A nutrition survey in 1978, by government with the assistance of University of California and in cooperation with USAID, identifies Sierra Leone as a country that suffers acutely from chronic malnutrition. At least one-fourth of Sierra Leone's children under five are undernourished. Almost two-thirds of all children are anemic and more than three-quarters of children aged 6-11 months receive no protein, even in vegetables. These figures imply the nonavailability or nonaccessibility of food for at least part of the - 47 -

population. In addition, very high infant and child mortality rates are closely related with inadequate general health care, pa,rticularly with inadequate mother and child care. 1/

4.41 The countrywide infant mortality rate is estimated at 240, among the highest in the world. The range is from 170 in the urbanized Western area to 308 in the Pujehun district of Southern Province. The life expectancy at birth is 33 years for males and 36 years for females for the country as a whole. Greater Freetown (Western area) has the h:ighest life expectancy: 42 years for males and 44 years for females. 2/ The poverty-related diseases-- infectious and parasitic diseases, respiratory diseases, diseases of digestive systems, and nutritional diseases--are among the leading causes of death. During recent years, poverty-related diseases have accounted for 60 percent of deaths in the Western area. Since the Western area is well endowed with public and private health care facilities, this percentage is clearly higher in the provincial areas, where health-care facilities are extremely limited.

4.42 The public and private health-care facilities are concentrated in urban areas, particularly in Freetown. In 1976 the Western area, which had about 12 percent of the population, had 32 percent of the hospital beds in the country (table 4.3). The population per hospital was nearly three times larger in the rural provinces than in the Western area. A person in the rural areas had to track about fifteen miles to reach a hospital; in the Western area this distance was at most two miles.

Table 4.3: DISTRIBUTION OF HOSPITAL BEDS (1976)

Distribution Average of Distribution of No. of Persons Distanc Population Hospital Beds (%) per Hospital from Hospi (%) Public Total (Miles

:ern Area 12.0 45.0 32.0 31,119 1.75

:ern Province 28.0 14.0 24.0 67,373 12.12

:hern Province 21.0 19.0 17.0 88,258 18.60

:hern Province 38.0 22.0 27.0 84,633 18.43

Total/Average 100.0 196.9 340.3 78,506 16.31

Source: Medical Statistics Office, Annual Report 1977, and ILO.

1/ Health and nutrition are extensively covered in the Health Sector Survey (Annex B).

2/ Based on country information, these numbers are lower than those published in the World Development Report, which are based on UN data. - 48 -

4.43 The mean annual current expenditure of the central government on health was Le 296 per household and Le 4.6 per capita in FY79. Although not insignificant in average terms, public expenditures on medical care are heavily concentrated in the Western area. Current public expenditure on health care is low and accounts for about 9 percent of the total current budget. Of this amount about half is for curative medicine. Public capital spending on health facilities was negligible in the 1970s, averaging around 1 percent of the development budget.

2. Education

4.44 Universal primary education has been a national goal of Sierra Leone since its independence. But five adults in six are illiterate. Although primary enrollments increased nearly 7 percent a year between 1968 and 1978, the enrollment ratio in 1978 still was only 37 percent.

4.45 There is considerable disparity in educational opportunities between urban and rural areas. In FY78 about half the primary school enrollments were in towns that have only about 30 percent of the population: Freetown, the provincial and district capitals, and the larger mining and marketing towns (table 4.4). The gross enrollment ratio for these towns is estimated at about 65 percent; for settlements with fewer than 2,000 inhabitants, it is estimated at 25 percent.

Table 4.4: PRIMARY SCHOOL ENROLLMENT RATIOS, (1977/78)

Enrollment Overall Ratio in Enrollment Small Ratio (%) Settlements 1/

Western Area 61.5 53.7

Eastern Province 36.0 27.2

Southern Province 34.5 24.0

Northern Province 21.6 15.2

Source: Education Sector Review, UNESCO (1979).

1/ With a population less than 2,000.

4.46 About 17 percent of recurrent budget is spent on education; primary education absorbs only about a third of that. Both percentages are low even by West African standards, reflecting the limited coverage of primary education and low teachers salaries. Public capital expenditures over the past - 49 - decade have been heavily concentrated in secondary and higher education while the expansion of physical facilities at the primary level has been limited.

4.47 Apart from financial constraints, the settlement patterns in Sierra Leone constitute a major obstacle to increased access to education in rural areas: about 30 percent of the population lives in settlements with fewer than 200 people. In these villages the number of school-age children would be too small to support even one-room schools. New methods, therefore, will need to be developed to provide education to children in small villages (such as starting a new class every two years, as is done in Malaysia).

4.48 The quality of primary education is low even in the urban centers because of the greater emphasis given to the secondary and university level education. Although student teacher ratios are generally low (32.1) in primary education, about 60 percent of the teachers have no professional certification (table 4.5). And there are serious shortages of textbooks and other teaching materials.

Table 4.5: PRIMARY EDUCATION, (1977/78)

Teachers Teachers Enrollment Teacher Pupil/Qualified Ratio Teacher Ratio

Western Area 603 1,435 52,972 37.1 88.1

Eastern Province 791 1,924 60,016 31.1 76.1

Southern Province 840 1,653 48,705 30.1 58.1

Northern Province 543 2,076 66,122 32.1 122.1

TOTAL/NATIONAL 2,777 7,088 227,815 32.1 82.1

Source: Ministry of Education.

3. Water Supply and Sanitation

4.49 Sierra Leone has ample water resources in almost all parts of the country due to a benevolent climate that provides more than six months of heavy rainfall and more than 3,000 mm of precipitation ELnnually. But these resources are not well quantified. Little attention has been paid to surface and groundwater measurements.

4.50 Access to safe drinking water is almost solely limited to Freetown. Nearly the entire population of Greater Freetown (10 percent of the total population) has access to good quality piped water. Some 25 percent of properties have private water concentrations. The rest of the city's population depends on standpipes generally that are located within 200 yards of dwellings. - 50 -

4.51 All provincial urban centers have public water supplies that serve an aggregate population of about 200,000 (8 percent of the total). In the rural communities, however, only about 100,000 of 1.7 million people (or slightly more than 4 percent of the rural population) have access to some type of improved water supply scheme. About 66,000 have access to piped supplies, and a further 20,000 to 40,000 to wells with hand pumps that work. The rest of the rural population depends on drawing water from surface sources that are of reasonable quality in the rainy season but grossly polluted during the dry season from December through May.

4.52 Except for Freetown the status of sanitation facilities is not known. The great majority of the population are believed to use pit privies or latrines, often shared. In Freetown about 16 percent of properties use septic tanks followed by rubble-filled cesspits; 65 percent or more use pit privies. A small number of low-income houses depend on night pails. In the downtown area two short sewers serve several commercial buildings and the port area. The human waste being deposited in the open, on waste land, and into watercourses and drains creates a serious health hazard. Drainage is inadequate or nonexistent in areas where the urban poor live.

4. Housing

4.53 Housing problems are most acute in urban centers. In the rural areas the problems of basic facilities--such as the lack of safe drinking water, toilets, and electricity--are more critical. A recent survey (1979) by the Ministry of Housing and Country Planning on housing conditions and a recent ILO report on Freetown revealed severe overcrowding among the low- income families occupying one-room and two-room houses. Severe housing shortages and unsatisfactory housing and sanitation conditions particularly affected the low-income groups. In 1978, 65 percent of all households in Freetown had more than two persons per room. The sizes of most rooms were much smaller than the minimum standards: more than two-thirds of the households had an average living space of less than 35 square feet per person. Only about 35 percent of residential buildings were structurally satisfactory; the rest were either substandard or unfit for habitation.

4.54 More than 75 percent of rural dwellings have three or more bedrooms; one-room dwellings account for less than 10 percent of all rural houses. About 30 percent of the rural houses have no latrine, the rest have pit latrines. More than a third of the rural homes have no organized method for disposing of refuse, the rest either burn it or leave it to rot away. More than 70 percent of rural households obtain their drinking water from a river or stream; only 3 to 4 percent get it from a piped water source. During the dry season the majority of villages have inadequate supplies of drinking water. More than 85 percent of all rural households rely on kerosene for lighting.

4.55 There has been virtually no public investment in low-cost housing in Sierra Leone. The population of Freetown has doubled since the early - 51 -

1960s and is growing at about 4.5 percent a year, about twice the national rate. But in late 1979 the government established the Housing Finance Company (HFC) to promote the construction of low-cost housing, especially in Freetown. Without government participation in low-cost housing and expanding all public utility services, the housing problem together with access to basic facilities will get consistently worse for the poorer segments of the society.

D. Summary of Policy Recommendations

4.56 To reduce inequalities in income distribution, the following steps are recommended: In the agricultural sector it is the level not the distribution of income should be the prime concern of policy action. A long run commitment to both reducing agriculture's tax burden and increasing agricultural output should satisfy both growth and equity objectives. Farm output is likely to increase if price incentives are forthcoming and if improvements are made in input markets, including rural credit, marketing, and basic infrastructure. Major changes in the land tenure system do not appear to be warranted. Increased government spending in rural areas should be part of any agricultural development effort.

4.57. In mining sector:

(a) Mineral income needs to be more equitably distributed:

(i) The small-scale sector in diamond mining needs to be encouraged. Better credit facilities, government-leased equipment and easier access to foreign exchange should improve entry to the production market.

(ii) Sierra Leone's capacity to manage the mineral sector needs to be improved. This includes capacity to negotiate with foreign companies and capacity to set regulations for the mineral sector.

(b) Marketing of diamonds needs to be made more efficient to reduce high trade margins and so allow a larger proportion of the value of the commodity to accrue to the producers. This requires increased competition in the diamond export trade; and

(c) Mining taxation needs to be reorganized in such a way that this sector bears a more equitable share of the revenue requirements.

4.58. There is a serious need to improve public services for most Sierra Leoneans, Under a severe budget constraint, however, at least until the mid-1980s, it is particularly important to be selective among provinces as well as basic needs services. How the government's scarce resources would be best divided among each of the public services or which basic needs sector should have priority over others, depends on national preferences. One important point well-confirmed by research results in many countries is that - 52 - there are interactions between health, education and growth. Malnourished children have little concentration and do not do well in school. Farmers with a few years of primary education are more likely to adopt new and more productive farming methods than those with none. The children of better educated women have lower death rates and are likely to be healthier. Therefore, of the basic needs services, health and education should perhaps have highest priority. And since the public services so far have been heavily concentrated in the Western area, the government's attention should now switch to rural agricultural areas, particularly in the Northern and Southern provinces, where per capita incomes are lowest. - 53 -

Chapter V. SELECTED POLICY ISSUES

5.1 The previous chapters make it clear that there is an absolute need for stimulating growth and an absolute need for reducing poverty. How to achieve both is a delicate question. No single policy instrument will achieve one objective without having an impact on the other. Hleavy concentration on growth may lead to further deterioration in income inec[ualities and inadequate complementary action to address poverty issues directly. Similarly, heavy concentration on poverty issues may have adverse effect:s on growth. While tradeoffs between the two are inevitable, these are not: as pronounced in Sierra Leone because of its economic structure: the agricultural sector is very large, and income in agriculture is rather equitably distributed. Therefore, any development policy in agriculture which aims at improving productivity, expanding agricultural production, and providing better price incentives to producers in a nondiscriminatory way wou:Ld directly improve per capita agricultural income--that is, the per capita income of about 75 percent of the population. The wealthiest sector of the economy, on the other hand, is undertaxed. If the overall tax ratio can be brought to a par with other mineral-based economies and if the incremental tax revenues are spent to improve public services in the rural areas, the standard of living of most Sierra Leoneans could improve substantially.

5.2 In this chapter we discuss three major policy issues that have implications for growth and equity: agricultural pricing, tax reform, and energy. Fiscal policy and pricing policies are major components of the incentive structure. They can also be used as major instruments for distributional objectives.

A. Agricultural Pricing

5.3 Nearly 80 percent of Sierra Leoneans live in the rural areas; more than 70 percent of them deal primarily with agriculture; more than half of all agricultural activities are unmonetized. Including subsistence farming, agriculture contributes a third of the GDP and 35 percent of export earnings.

5.4 Of 3 million hectares of cultivable land, 600,000 are cultivated. About 65 percent of the cultivated land is under rice. Tree crops, mainly coffee, cocoa, and wild oil palms, account for the remaining 35 percent. Rice is grown basically in the Northern and Southern Provinces, tree crops in the Eastern Province. As has been noted, the land tenure system is one of the most equitable in the world: nearly 90 percent of all farms operate on communal land, and there is almost no landless labor in agriculture. The farming structure is dominated by smallholder farming; nearly two-thirds of all farmers have farms of less than five acres. The 'Largest concentration of such farms is in the Northern and Southern Provinces; the Eastern Province has the largest proportion of farms of more than five acres. - 54 -

Table 5.1: AGRICULTURAL LAND USE AND DISTRIBUTION OF LAND HOLDINGS

Cultivated Land Total 0.1-4.99 5-9.99 10-499 Unknown ('000 ha) Acres Acres Acres

Northern Province 183.8 100.0 60.5 25.8 10.2 3.5 Southern Province 137.7 100.0 76.9 21.0 2.1 - Eastern Province 203.8 100.0 31.5 32.4 20.9 12.5

TOTAL CULTIVATED LAND 528.3

5.5 Between FY69 and FY79 the average agricultural growth rate was no more than 1.6 percent a year, but it accelerated somewhat to 2.2 percent a year after 1975. In the face of declining mining output and rapid population growth, the stimulation of agricultural growth remains one of the most important development issues confronting the Sierra Leone economy.

5.6 Slow growth has been related more to the inefficient or inconsistent use of policy instruments than to the lack of well-formulated development objectives. Also responsible has been the choice of a regional approach to agricultural development. Regional development often tackles sectoral development issues on a regional or project basis, and brings partial not general solutions to the issues of sectoral development. Regional development is the best way of pursuing the development of the agricultural sector in Sierra Leone with respect to increasing production through improved farming techniques, supply of inputs, diversification, and so on. But this is one policy instrument with one objective in mind. There should be other instruments for dealing with such sectoral issues as pricing, marketing, storage, and processing.

5.7 This section concentrates on the problems of agricultural pricing in stimulating growth in agriculture. The questions are: (a) Have the agricultural pricing policies been consistent with the agricultural growth objectives? (b) Is there a need to reassess the growth objectives? (c) Have price incentives been adequate? and (d) What should be the policy guidelines for future action?

1. Rice

5.8 Self-sufficiency in rice has been a national development objective since independence in 1961. In the rice-growing Northern and Southern Provinces, about 300,000 farm families with smallholdings rely largely - 55 -

on rice for their subsistence. The land resources surveys completed so far have shown little production potential for tree crops in these regions, except for citrus fruits. Rubber and coconut are being tested in the North, but these cannot be an alternative or supplementary source of income for rice-growing farmers at least until the early 1990s.

5.9 Before independence, the agricultural productiLon policy in Sierra Leone was based on the traditional small-scale farming. Direct foreign investments in large-scale plantations were not encouraged, and direct government participation in agricultural production was not at:tempted. The country was self-sufficient in rice production until the mid-1950s. Starting in 1954, however, rice shortages developed in the urban centers a1s the diamond boom led 100,000 farmers to leave their farms and migrate to the mining areas. After 1954 Sierra Leone had to import about 30,000 tons of rice a year.

5.10 Between 1961 and 1967 there was a radical shift in agricultural production policy towards direct government participation in subsistence farming as well as in production of export crops. Both the Sierra Leone Producing Marketing Board (SLPMB) and the Rice Department (later Rice Corpora- tion) engaged in direct production with sizable investments in large-scale plantations. Both experiments failed. The domestic rice deficit remained more or less constant until the early 1970s, but it widened sharply towards the end of the 1970s as the rate of growth of production slowed down from a long-term average of more than 3.5 percent a year to about 1 percent.

5.11 Between 1970 and 1980 the rice price policy was consistent with the objective of self-sufficiency. Producers' prices generally protected producers, a policy that has been particularly pronounced since the mid-1970s, when world market prices of rice began to decline steadily from their peak levels in 1973 and 1974. Between 1974 and 1980 the producers' price for paddy was held above the world price and cheaper rice imports were not allowed to dampen prices on domestic markets.

5.12 Similar to the situation in many other developing countries, the public institution responsible for price support in Sierra Leone (first the Rice Department, later the Rice Corporation, now the SLPMB) does not have adequate storage capacity or enough offical buying stations and agents. As a result--and due also to the personal loans (to farmers for production and consumption) that the private rice dealers provide by holding agricultural produce in escrow--producers' prices have usually been 20 to 40 percent below the officially announced producers' prices. While there is clear scope for improvement in marketing arrangements, a critical question yet to be answered is: Even if producers received the full support price, would they be willing and able to push the production of rice to self-sufficiency?

5.13 There are no obvious answers to this question and certainly no reliable empirical evidence in Sierra Leone about the iarmers' supply response. Nevertheless, it has been proven in other countries that farmers respond positively to price incentives. - 56 -

5.14 Farmers' supply response for a given commodity depends not only on the price of that commodity but also on the prices of all alternative commodities. In the rice growing Northern and Southern provinces, maize, cassava, and citrus fruits seem to be the only known alternatives to rice production. Maize and cassava, however, are preferred less than rice in the Sierra Leone diet. Citrus fruits have not yet been developed.

5.15 Farmers budgets calculated for Eastern and Northern Provinces indicate that returns per man-day for family labor are the lowest for rice (especially upland rice) when compared with all the other food crops and export crops. This is true despite the heavy taxation on export crops and the rising world prices for rice. The expected income from alluvial diamond mining, on the other hand, far exceeds the return from any agricultural activity, including tree crop production.

5.16 All these findings demonstrate the rational, benefit-maximizing behavior of farmers. Alluvial diamond mining activities in Kono District (Eastern Province) provides steady competition for agriculture, which is a unique feature of Sierra Leone economy. Farmers, after securing enotigh rice for household consumption, move freely for higher returns. What does this imply for future policy action?

2. Policy Recommendations

5.17 World rice prices are expected to increase in real terms in the 1980s. In a recent study by the West Africa Rice Development Association, Sierra Leone has been shown to have a comparative advantage over its neighbors in rice production. With a high population growth rate and a high income elasticity of rice consumption, the domestic demand for foodcrops, especially rice, should grow even faster in the next ten years, as GDP growth picks up in the mid-1980s. Self-sufficiency in rice, therefore, should remain as a national development objective, and the rice price policy should continue to protect producers. Price subsidies, however, should be avoided to prevent market distortions. To be consistent with world price projections for the next few years, the farmgate price of rice (Le 8 a bushel) can rise to Le 9 in FY82. Additional nonprice production incentives such as seedlings, light mechanization, better extension services, increased use of fertilizers and improved marketing facilities, should improve yields as should the growth prospects for rice.

5.18 The government should be aware, however, that even with improved price and nonprice production incentives, self-sufficiency in rice production may be unattainable for three reasons: tree crops are more profitable, rural mining activities offer better pay, and upland farm technologies are inadequate. From a viewpoint of maximizing domestic income and foreign exchange, this outcome should be perfectly acceptable as long as the production of more profitable tree crops is stimulated. - 57 -

5.19 Trying to achieve self-sufficiency in rice through direct government participation in large-scale mechanized rice farming would upset the land tenure system. It would also be uneconomical because of the higher net value of production from tree crops. This would also bring about issues regarding the marginal efficiency of public investment in alternative uses.

3. Export Crops

5.20 The government's price policies for export crops have been inconsistent with agricultural growth objective. Between 1970 and 1980 the nominal protection coefficients for coffee and cocoa were less than one (mostly around 0.50); those for palm kernels fluctuated between 0.47 and 1.20.

Table 5.2; NOMINAL PROTECTION COEFFICIENTS (1980)

Palm Coffee Cocoa Kernels Rice

1. Producer Price (Le/tn) 2,007 2,125 201.6 382.0

2. Border Price Equivalent of Producer Price 2,138 2,237 284.4 418.0

3. Border Price 3,799 3,275 426.0 401.0

NPC (2/3) .56 .68 .67 1.04 - 58 -

Table 5.3: NOMINAL PROTECTION COEFFICIENTS 1/

Coffee Cocoa Palm Kernels

1970/71 .53 .53 .74

1971/72 .67 .88 1.01

1972/73 .46 .65 1.05

1973/74 .56 .45 .53

1974/75 .68 .50 .61

1975/76 .51 .53 1.20

1976/77 .32 .41 .68

1977/78 .41 .46 .83

1978/79 .57 .61 .47

1979/80 .53 .62 .53

1/ Producer prices are adjusted for border price equivalents in nominal terms.

Source: Annex tables D2.3, D2.4 and D2.5.

5.21 The large profit margins between the export price and the producer price have been shared by the central government, as export taxes, and by the Sierra Leone Produce Marketing Board, as profits. Because tax revenues from the agricultural sector have always exceeded the government expenditures (both capital and recurrent) in agriculture, the policies for agricultural pricing and for government expenditure have conflicted with agricultural production goals. Heavy taxation on the tree-crop subsector has been primarily due to the narrowness of the tax base. Unless the country's tax base is broadened as taxable income is tapped elsewhere in the economy, the scope for government action to reduce the heavy tax burden on agriculture will be limited (see the following section on tax reform). - 59 -

SIERRA LEONE: COFFEE PRODUCER AND EXPORT PRICES s.. see

4,500 -

see- ... a.. /

2Isse-4,008- - P

0-SlOlOl l l l l 71 72 73 74 75 78 77 78 79 88

- COfEE lEXPORTPRICES .a COCFOAPRODUCER PRICES 3,000- ...,'

SIERRA LEONE: COCOA PRODUCER AND EXPORT PRICES -4..see ...... 0 ---z'''' -- 3,.see-

2,508- N2,00se,

1,5800-~,.

1.088 ,."

78 71 72 73 74 75 7e 77 78 79 80

**COCOA EXPORT PRICES **.- * COCOA PRODUCER PRICES - 60 -

Table 5.4: SHARE OF THE PRODUCER, THE GOVERNMENT, AND THE SLPMB FROM EXPORT RECEIPTS

Producers' Share Government Share SLPMB's Share (Producer Price/Export Price) (Rate of Taxation) (Net Profit Margin) Palm Palm Palm Coffee Cocoa Kernels Coffee Cocoa Kernels Coffee Cocoa Kernels

1970/71 49.0 56.0 54.2 22.0 18.0 10.0 21.4 17.3 4.6 1971/72 61.1 81.0 72.2 18.9 10.0 10.0 10.3 -3.8 -25.8 1972/73 42.2 60.0 77.4 28.0 17.0 10.0 13.4 13.8 -31.5 1973/74 53.1 42.6 43.5 31.1 38.3 10.0 8.2 12.8 30.4 1974/75 65.0 47.8 52.8 40.0 40.0 10.0 12.7 7.2 21.0 1975/76 49.5 51.3 101.5 40.0 40.0 10.0 5.8 3.2 4.6 1976/77 32.1 40.5 55.1 40.0 40.0 10.0 25.6 16.3 12.3 1977/78 40.1 45.0 61.5 40.0 40.0 10.0 16.6 11.3 3.4 1978/79 55.5 59.4 36.8 15.9 25.0 10.0 24.3 11.4 36.0 1979/80 51.9 61.4 43.4 35.0 35.0 10.0 10.0 5.7 29.5

Source: Annex D.

4. General Recommendations

5.22 In principle, a greater share of world market prices should be passed on to the producers, both for growth and for equity. This means that the nominal protection coefficients for export crops should gradually be increased toward 1.00. But price subsidies (or nominal protection coefficients larger than one) should be avoided. Improvements in producers' prices should (a) correct undue discrimination against farm incomes, (b) stimulate production and use of improved technology, (c) encourage rehabilitation of existing tree crops, and (d) encourage reinvestment in export crops through new plantings. Tree crops have long gestation periods. The full supply effect of favorable producer prices will not be felt for about five years. This long-term supply response should not be ignored if the tree-crop subsector is to develop. Moreover, development experience in tree crops elsewhere in the world over the past 20 years reveals positive supply response even in the short term. When prices are favorable, to increase yields and production from existing coffee and cocoa trees the farmers apply greater amounts of farm inputs and allocate more labor for tree rehabilitation; they also increase labor input for harvesting.

5.23 It often is argued that higher producers' prices (or a redistribution of income in favor of lower income groups) would result in a decline in domestic saving and investment because farmers would have a higher marginal propensity for consumption. Although true in general as a first round effect in the short run, this argument would not hold in the medium and longer runs, where the positive supply response of farmers to price incentives would stimulate growth and therefore improve domestic income, saving, and investment. Judging by the historically low (even negative) budgetary savings in Sierra Leone, it would be difficult to argue that the public sector would have a higher marginal savings rate than farmers. - 61 -

5. Issues and Specific Guidelines

(a) Relative Price Distortions

5.24 The relative price structure and the relative price incentives for cash crops should reflect the long-term profitability of each crop relative to the others. Economic and financial price projections for export crops in the 1980s indicate that coffee will be more profitable than cocoa and palm kernels. This needs to be reflected in the structure of producers' prices, which currently favor cocoa. The producer prices for coffee should be raised above cocoa prices, and this relative price structure should be kept unchanged until there is a major shift in world demand. 1/

(b) Unfavorable Price Trends - Favorable Returns to Labor

5.25 Between 1980 and 1985 world price prospects in real terms are unfavorable for coffee and cocoa and favorable for palm kernels. But even with these depressed prices and the heavy tax rates on export crops, the average return per man-day of family labor is higher from tree crops--coffee, citrus fruits, cocoa, oil palm, rubber, and coconut--than from rice and other food crops. This implies that both the production of and investment in tree crops should be encouraged. The government may wish to attract domestic and foreign investment to rubber production and coconut development, especially in Southern and Northern Provinces where farmers are at subsistence and can use some cash income.

Table 5.5: NET VALUE OF PRODUCTION AND RETURN PER MAN DAY OF FAMILY LABOR (1980 CONSTANT LEONES)

------Net Value of Production (Le/ha.) ------Palm Swamp Upland Swamp Upland Coffee Cocoa Rernels Rice Rice Groundnut:s Groundnuts Maize Citrus

1980 532 587 374 193 - 183 340 - 1990 737 373 850 454 725 532 773 2,350

------Return per Man Day of Family Labor (Le/md) ------

1980 15.2 24.4 3.7 0.8 - 1.5 2.1 - 1990 17.6 8.5 7.4 1.7 4.1 2.5 4.1 13.8

Sources: IBRD

1/ The International Coffee Agreement has recently set an export quota of 10,000 tons for Sierra Leone--or less than its medium-term production potential. The government should try to increase this quota to 12-13,000 tone - 62 -

5.26 The pricing policies are easier to handle when short-term or long- term price prospects are more or less identical and prices move only in one direction. Difficulty arises when price trends are unstable or differ from each other significantly in nominal and real terms. For coffee, the world price prospects in both nominal and real terms are expected to worsen until 1984 and improve gradually thereafter. Nominal cocoa prices, on the other hand, are expected to increase gradually until 1985, while real cocoa prices will have a secular decline until 1990.

Table 5.6: WORLD PRICE PROSPECTS FOR MAJOR EXPORT COMMODITIES AND RICE

(US$/Ton)

Current Prices (1977) Constant Prices

Coffee Cocoa Kernels Rice Coffee Cocoa Kernels Rice

1980 3,620 3,523 462 469 2,500 2,431 319 320 1981 3,320 3,629 518 511 2,100 2,297 328 323 1982 3,330 3,798 544 589 1,950 2,226 319 345 1983 3,380 3,813 584 643 1,850 2,100 321 353 1984 3,800 3,828 627 702 1,950 1,981 323 361 1985 4,360 3,891 674 764 2,100 1,850 325 368 1990 6,390 3,500 870 1,056 2,300 1,260 313 380

5.27 Unless there is a dramatic change in world market prices, coffee producer prices should be kept constant in nominal terms until 1984, at the expense of government revenues or the profit margin of the SLPMB. A 6 percent increase in the producers price of coffee and a 5 percent decrease in the export tax rate would reduce the profit margin of the SLPMB (per ton) from 10 percent in FY80 to 6 percent in FY81. Without the decrease in export tax, the project margin would be 1 percent in FY81. Coffee production in FY81 may reach 10,000 tons. A 5 percent reduction in the tax rate means a revenue loss of approximately Le 1 million for the government. - 63 -

Table 5.7: COFFEE - MARKETING COSTS TO SLPMB (Le per Ton)

1979-80 1980-81 Without Tax With Tax Actual Adjustment Adjustment

Average Producer Price 2,016.00 2,140.00 2,140.00 Buying Agents Commission 66.00 74.00 74.00 Export Duty (per ton) 1,359.75 1,220.00 1,045.80 Other Charges 54.01 62.11 62.11

Administrative Charges 24.00 27.60 27.60 Porterage 8.00 9.20 9.20 Harbor Duties 6.61 7.60 7.60 Road Freight 15.40 17.71 17.71

Break Even Price 3,495.76 3,434.00 3,259.80 Average Export Price 3,885.00 3,486.00 3,486.00 Profit Per Ton (SLPMB) 389.24 52.00 226.20

- Average Rate of Taxation 35.00 35.00 30.00

5.28 While absolute and relative (to cocoa) price incentives are granted to coffee producers, the cocoa prices can be stabilized at their current levels until world cocoa prices begin to decline at current terms in 1985. Because current price prospects until 1985 are favorabLe for cocoa, the profit margin of the SLPMB (per ton) should increase from 5 percent in FY80 to 10 percent in FY81 with a 5 percent adjustment in the tax rate--or to 6 percent without it. Total cocoa production in FY81 should remain unchanged or decline slightly compared with FY80. A 5 percent tax adjustment would again mean a revenue loss of slightly more than Le 1 million for th,e government. - 64 -

Table 5.8: COCOA - MARKETING COSTS TO SLPMB (Le per Ton)

1979/80 1980/81 Without Tax With Tax Actual Adjustment Adjustment

Average Producer Prices 2,128.00 2,128.00 2,128.00 Buying Agents Commission 74.00 80.00 80.00 Export Duty (per ton) 1,212.75 1,333.68 1,143.15 Other Charges 54.01 62.11 62.11 Administrative Charges 24.00 27.60 27.60 Porterage 8.00 9.20 9.20 Harbor Duties 6.61 7.60 7.60 Road Freight i5.40 17.71 17.71 Break-Even Price 3,267.75 36,037.90 3,413.26 Average Export Price 3,465.00 3,810.50 3,810.50 Profit Per Ton 197.25 206.80 397.24 - Average Effective Rate of Taxation 35.00 35.00 30.00

5.29 World market prices for palm kernels are expected to stagnate at in real terms over the next decade. Current price prospects, however, are favorable. As a policy principle, export price increases in nominal terms should be passed on to the producers. But without any reduction in the tax rate, this would eventually diminish the profitability of the SLPMB.

5.30 Two types of administered prices with different policy objectives are applied to oil palm at different stages of production. One is the fresh fruit bunch (ffb) price set for outgrowers to induce enough raw material (oil palm) for the palm-oil companies. The ultimate objective is gradually to modernize palm-oil extraction, which today is primarily for subsistence. The other price is that for palm kernels, set by the SLPMB to stimulate export earnings.

5.31 These two objectives are reasonably compatible, but a third objective, related to consumer protection, complicates price setting. This is the low-price policy the government would like to follow in urban centers for palm oil, the second most important food item in Sierra Leone diet.

5.32 Sierra Leone's annual domestic demand for palm oil is estimated at around 48,000 long tons. Two domestic oil companies established in mid- 1970s with the financial assistance of the IBRD (Daru) and of the ADB (Gambia-Matru), should meet about 25 percent of domestic consumption at their normal production capacity. About 10 percent of the palm oil to meet domestic consumption is imported. The remaining 65 percent is produced by traditional production techniques, mostly for household consumption. - 65 -

5.33 Both Daru and Gambia-Matru are semipublic ent:ities. For their production they each rely (a) on a nucleus estate (Dartu 1,782 acres; Gambia- Matru 315 acres) and (b) an outgrowers (Daru 4,700 acres; Gambia-Matru 6,895 acres). Prices for fresh fruit bunches (ffb) are administered by the Ministry of Industry, in collaboration with the companies with a view to providing enough incentives for the outgrower and to keeping the cost of production (and factory selling prices) of palm oil reasonably low. Both oil companies have been working at 50 percent capacity and incurring losses primarily because of the weak outgrower response to ffb prices. Set at Le 55 per ton, the ffb prices compare very unfavorably with palm kernel prices of Le 204.0 per ton (plus the value of palm oil extracted in between).

Table 5.9: TREE CROP PRODUCERS PRICES (in Leones per Ton)

Oil Palm: Oil Palm: ffb Kernel Coffee Cocoa

1976 40.0 137.0 717 672 1977 40.0 117.0 1,497 1,210 1978 40.0 134.0 1,613 1,568 1979 40.0 162.5 1,748 2,128 1980 55.0 204.0 2,012 2,128

5.34 With traditional extraction methods and an 8 percent extraction rate, 1 ton of ffb would produce 80 kgs of palm oil an,d 50 kgs of palm kernels. 1/ With prevailing market prices for palm oil (1.30-1.40 Le/kg) and palm kernel (0.20 Le/kg) the value of 1 ton of ffb for the farmer would amount to about Le 115, more than twice the amount farmers receive for fresh fruit bunches. Since oil extraction can be done by any family member, including children and the elderly, it is possible to assume a very small opportunity cost for labor used in extraction.

5.35 So long as the unit income to farmers from palm kernels (plus the palm oil extracted) exceeds that from fresh fruit bunches, there will be no incentive for outgrowers to deliver fresh fruit bunches to the oil companies. Until those companies control a sizable amount of the domestic production, they will have to rely solely on nucleus estates to work at full capacity and increase their market shares.

1/ The technical coefficients vary as follows: 1 kg (ffb) - .08 - .22 kg palm oil. 1 kg (ffb) = .05 - .06 kg palm kernels. - 66 -

5.36 Since Daru and Gambia-Matru at full capacity can produce about 25 percent of the total domestic production, their ex-factory selling prices will not have much impact on the market price of palm oil. One policy option would be to let the companies determine their selling prices freely. This would increase the ex-factory selling prices close to market prices, improve the profitability of the companies, and generate investable funds, preferably for the expansion of modern processing facilities. Another policy option would be to keep the ex-factory selling prices low and encourage the palm oil factories to engage in retail trading. This option would not dampen the overall market price of palm oil but would keep prices low for some urban dwellers. Financially this option might require large government subsidies, which under the tight budgetary prospects is not desirable.

5.37 If the companies begin to control a sizable share of the palm oil production, the producer pricing policy can be switched from palm kernel to ffb stage where ffb prices would include the value of the palm kernels plus a margin for the oil. The companies then would sell the palm kernels directly to the SLPMB.

(d) Need for a Price Stabilization Fund

5.38 Because of the prospect of fluctuating world prices, a price stabilization fund--financed by the accumulated profits of the SLPMB both from cash crops and from marketing imported rice--should be established to help protect the producers from downward spirals in world market conditions.

B. Tax Reform

5.39 A reform of the tax structure is urgently called for as one major policy instrument of resource mobilization and allocation. Up to now the tax system has provided extensive tax privileges to the Alluvial Diamond Mining Scheme in direct tax exemptions--as well as indirect tax privileges to other mining ventures. Diamond diggers and dealers under the Alluvial Diamond Mining Scheme are explicitly exempt from personal income tax. The elasticity of the system is low, for it relies heavily on indirect taxation. Less than a third of tax revenue comes from direct taxes. The personal income tax is minimal in size and is mildly progressive. Large-scale tax evasion throughout all income ranges nullifies the codified progressiveness of direct taxation. Although less easy to document, corporate taxes are likely to follow a similar pattern. Indirect taxes come mostly from import duties, export taxes, and excise taxes. In sharp contrast to the minimal 2.5 percent export tax on alluvial diamonds, coffee and cocoa have faced a tax rate so high--ranging from 30-40 percent of the export price throughout the 1970s. With the heavy taxation of agricultural export crops and with the urban bias in government expenditure policies, there have been net income transfers from the rural- agricultural sector to the urban and nonagricultural sectors.

5.40 A broadly based development strategy for the 1980s calls for major changes in tax and fiscal policies. The revenue and equity objectives of a tax system often conflict, which forces a government to make choices. In Sierra Leone the trade-offs are less pronounced, because of the structural characteristics of the economy. The mining sector, which is the most productive sector in the economy, should pay its fair share of the government's revenue needs, particularly if public investment is to be increased and - 67 - agriculture to be encouraged. In the 1980s, the income transfers will need to be from mining to nonmining sectors and from Freetown to rural areas. An effective form of taxation, therefore of the alluvial diamond sector needs to be introduced. This clearly is a difficult task in view of the ease with which diamonds can be smuggled, nevertheless, an important one for equity and growth as well. This requires a special study by tax and mineral experts. Additionally, a number of policy actions may be needed (a) to eliminate premiums on foreign exchange which further induce smuggling; (b) to enforce criminal penalties for unofficial marketing of diamonds; and, finally, (c) to create investment opportunities in the country for reinvestment of domestic income.

1. Tax Structure

5.41 Sierra Leone's tax ratio is quite low compared with other mineral- based economies in Africa (Table 5.10). The tax structure is dominated by indirect taxation. Customs duties are most important, followed by excise taxes and export duties. Indirect taxes generated Le 113 million in FY79, or 71 percent of all tax revenues and about 13 percent of GDP. Less than a third of total tax revenues came from direct taxes in the 1970s. Personal income taxes have always been relatively unimportant: in FY79 they amounted to only 7 percent of tax revenue and 1.3 percent of GDP. The tax system does not have any property or wealth taxes.

Table 5.10: MINERAL-BASED COUNTRIES OF SUB-SAHLRAN AFRICA - INTERNATIONAL TAX COMPARISON (ITC) - 1977

Actual Country Tax/GDP Ratio

1. Botswana (Diamonds) 22.61 2. Central Africa Rep. (Diamonds) 14.92 3. Gabon (Petroleum) 24.76 4. Liberia (Iron ore) 25.34 5. Mauritania (Iron ore) 17.46 6. Nigeria (Petroleum) 22.16 7. Sierra Leone (Diamonds 14.71 8. Zaire (Cobalt, Copper) 22.35 9. Zambia (Copper) 22.13

Source: IMF

5.42 The elasticity of the tax system is estimated at 0.8, which is low by international standards. (Typical rates for low income countries are well above 1.0). The buoyancy of tax revenues has been secured by frequent rate adjustments, not by structural changes to improve the elasticity of the tax system. Most indirect taxes are highly regressive with respect to income, as is the system as a whole, which is not only unjustified on equity grounds but also is one of the major factors behind the low elasticity of the system. - 68 -

In resource allocation, the tax structure creates disincentives for agricultural growth by heavy taxation of export crops, for foreign exchange savings by maintaining low levels of effective tax rate on all imports, and for energy conservation by granting tax exemptions on crude oil and fuel oil. 1/

5.43 The elasticity and equity of the tax system should be improved through improvements in direct taxation and changes in indirect taxation.

2. Direct Taxation

(a) Tax Exemptions on Individual Income Tax

5.44 The inelasticity of the tax system is primarily due to the heavy dependence on indirect taxes. Without improvements in direct taxation, its contribution to revenue growth will remain limited and the elasticity of the system will remain low. There is scope for introducing property or wealth taxes as well as for minimizing tax exemptions on individual income tax. Even with a declining mineral base, the greatest potential for government revenues rests in more effective taxation of the diamond sector. Currently the diamond diggers and the diamond dealers under the Alluvial Diamond Mining Scheme are explicitly exempt from personal income tax. That scheme provides about 60 percent of diamond exports, and about 35 percent of total export earnings. For revenue and equity, there is a need to incorporate both diggers and dealers in the income tax framework. Since the number of licensed diggers and dealers is small, taxing their incomes and auditing them should not be too difficult, even if the income declared may differ substantially from income. Meanwhile, substantial increases in license fees should also be considered.

(b) Progressivity of Individual Income Tax

5.45 The individual income tax is mildly progressive, starting from a zero tax rate for annual incomes below Le 400 and rising to an average tax rate of 42.7 percent for residents and 56.1 percent for nonresidents for annual employment incomes above Le 24,000. There are rate structures for residents on rent income, employment income, and trading income--and two rate structures for nonresidents on employment income and trading income. The maximum average rate is 51 percent on trading income for residents and 52.8 percent on trading income for nonresidents. Rental incomes are taxed less heavily (the maximum average rate is 27 percent) while tax exemptions are also provided on the value of a residence supplied to the taxpayer by his employer. These privileges help property owners and those who are already relatively well off.

5.46 According to the ILO study, in 1975/76 8,000 people paid income taxes amounting to Le6 million. Applying the available earnings data to income tax legislation calls for not 8,000 but 400,000 people to be paying taxes. If all those who should have paid had done so, the government would have quadrupled its direct tax receipts from FY76.

1/ In January 1981, the government introduced 8 percent import duty on crude oil. - 69 -

5.47 There is a need to simplify the rate structure of the individual income tax, to improve elasticity and equity by minimizing tax exemptions and to collect a larger share of taxes actually due.

5.48 In mid-1970s company income taxes, as a percentage of tax revenues, increased from 20 percent to nearly 30 percent. Towards the end of the decade, however, their share returned to 20 percent. A large part of the increase in the mid-1970s was due to the higher profitability of DIMINCO (National Diamond Mining Corporation). DIMINCO's share in company income taxes declined after the mid-1970's with the decrease in its alluvial diamond mining operations. Taxes collected from nonmining companies increased, significantly, from negligible amounts in the early 1970s to nearly 10 percent of tax revenues in FY79.

5.49 Domestic companies pay income tax on their profits at the rate of 55 percent plus a 10 percent surtax that brings the total to 60.1 percent. 1/ The large mining companies are subject to special arrangements. Profits of DIMINCO are subject to a tax rate of 70 percent. SIEROMCO (bauxite) and SIERRA RUTILE (rutile) are subject to a tax rate (royalty plus income tax) not to exceed 50 percent of their assessed income in each year. Sierra Leone Petroleum Refining Company is subject to a 55 percent income tax. The distributed profits (dividends) of the companies are, however, deductible from the taxable income of the shareholders.

5.50 Such a policy encourages distribution, acts as a tax avoidance device, and reduces the effective rate of taxation below the intended 55 percent. Alternatively, the dividends earned by the shareholders would be added to the taxable income of shareholders, thus becoming subject to individual income tax.

5.51 The gains in company tax collections over the past decade have been impressive, but there still is a serious need for improved administration of income taxes of companies and individuals. Progress in FY80 in enforcing the income tax legislation and reducing the arrears on income tax payments can be furthered by (a) strengthening the legal powers of the Income Tax Depart- ment, (b) reducing the manpower shortage of the Income Tax Department, and (c) making more use of technical and training assistance from bilateral and international donors.

3. Indirect Taxation

5.52 The revenue and allocative aspects of indirect taxation are important because Sierra Leone is preparing a full-fledged development program for the next decade. The allocative aspect of indirect taxation, especially of export duties and excises, is much more important than that of direct taxation.

1/ or 3.5 percent of turnover, whichever is higher., - 70 -

(a) Customs Duties

5.53 The important issues are (a) low effective import tariff rates or excessive use of import duty exemption, (b) specific or ad valorem rates, and (c) the complexity of the tariff structure. Significant adjustments in the tariff structure are needed to reduce the regressivity of the system and improve the revenue elasticity.

5.54 Although the nominal tariff rates could be considered high, the effective tariff rates are low because of exemptions. In FY80 the effective rate of customs duties was around 13 percent; the overall effective rate of taxation on imports, including import fees, averaged around 20 percent. More than 50 percent (54 percent 1979/80) of Sierra Leone's imports are exempt from import duties. While zero duty rates may be maintained on essential foods and selected capital-goods imports for allocative reasons, the tax exemptions on crude oil, beverages, and other consumer foods need to be abolished to save foreign exchange and improve the elasticity of the system. In doing so, however, the government should not to distort trade policies for fiscal purposes.

5.55 A sizable proportion (about 15 percent) of goods imported by Sierra Leone is subject to specific rather than ad valorem rates, and the specific rates have been unchanged since FY 78. The specific rates contribute to the inelasticity of the tax system since they do not increase with the prices of commodities. Furthermore, they are mostly regressive since the specific rates exert a higher tax burden on relatively inexpensive items under the same heading. There is a clear need, for reasons both of revenue and equity, to convert the specific rates to ad valorem rates.

5.56 The effectiveness of customs administration is limited by the geo- graphy of Sierra Leone and the complexity of the tariff structure. Although there has been a recent review of the tariff structure under the Mano River Union agreement--which resulted in harmonization of tariff rates between Liberia and Sierra Leone in FY78--a simpler and more uniform tariff structure, together with stronger customs posts outside Freetown, should raise more revenue from import duties and help reduce illicit border trading.

(b) Excise Taxes

5.57 Excise taxes are levied on goods that are locally manufactured. With the growth of local manufacturing and production (petroleum products, tobacco and cigarettes,beer and stout, footwear, clothing, and so on), excise tax revenues have grown from 1.7 percent of tax revenues in FY70 to 16 percent in FY79. The current structure of excise taxes--it is progressive--imposes a relatively small tax burden on goods widely consumed by lower income groups. No major revision of the excise tax structure is warranted. But the question of energy pricing--that is, the pricing of primary and secondary energy resources--needs to be studied. (See Chapter V.C). - 71 -

5.58 Export taxes are levied on cocoa, coffee, palm kernels, a few other agricultural commodities, and alluvial diamonds (DIMINCO output is taxed through corporate taxes). Throughout the 1970s agriculture provided an increasing share of export duties, contributing 86 percent in FY77. This share has been increasing over time, rising rapidly from 43 percent in FY69. A reduction in the diamond export duty from 7.5 percent to 2.5 percent--a move allegedly designed to reduce smuggling and increase official foreign exchange--coupled with the boom in international commocdity prices during the 1970s led to this change in agriculture's share. In contrast to the 2.5 percent tax on alluvial diamonds, coffee and cocoa have faced a tax rate ranging from 30-40 percent of the f.o.b. price. Farmers producing for export face an even larger tax burden than this 30-40 percent rate since in recent years the SLPMB has deducted additional income to establish financial reserves designed as protection against falling prices. How these reserves benefit the farming community is subject to debate. It certainly has increased the average agricultural tax rate.

5.59 According to economic and financial analysis of the agricultural sector, tree crops will have the highest economic return per man-day of family labor over the next ten years. This implies that the production of and investments in tree crops should be encouraged. But under the current tax structure, when export prices are high and rising, much of the incentive to increase production and reinvestment is taken away by export taxes and the profits of the SLPMB. A gradual reduction in heavy export taxes on coffee and cocoa as taxable incomes are generated and topped elsewhere in the economy is urgently called for.

4. Summary of Policy Recommendations

5.60 Fiscal policy actions to achieve higher government revenues, more rapid growth, and a more equitable fiscal system need to address both taxation and expenditure issues. Steps required include a long-run commitment to relieving agriculture's tax burden while increasing mineral and urban wage- earner tax rates and cracking down on income tax evasion. The elasticity and equity of the tax system should be improved through improvements in direct taxation:

o Effective taxation of the diamond sector should be introduced.

o Property taxes should be explored.

O Abolition of exemptions from income tax, for certain categories of income, should also be explored.

o The rate structure of individual income tax should be simpli- fied, such as by eliminating favoritismi in the treatment of rental incomes.

o Institutional efforts to collect taxes and reduce evasion should be strengthened. - 72 -

And through changes in indirect taxation:

o About 20 percent of goods imported are subject to specific rather than ad valorem rates. These should be converted to ad valorem rates.

O The tree-crop subsector in agriculture is the most heavily taxed sector in the economy. Heavy export taxes on coffee and cocoa should gradually be reduced as taxable incomes are generated and tapped elsewhere in the economy.

C. Energy

5.61 Sierra Leone relies almost solely on imported oil for primary commercial energy. Demand for petroleum products currently amounts to some 550 long tons a day--plus another 150 long tons a day in international jet fuel and bunker sales--for a total demand of 700 long tons (about 5,250 barrels) a day.

Table 5.11: DEMAND FOR PETROLEUM PRODUCTS (In Long Tons Per Year)

1979 1980

Domestic Market

Premium Motor Spirit 43,000 51,000 Regular Motor Spirit 4,000 4,000 Kerosene 29,000 33,000 Gas Oil 68,000 82,000 Fuel Oil 27,000 41,000 LPG 630 600

TOTAL 171,630 201,600

International Market

Jet Fuels 18,000 22,000 Bunker Sales 37,000 30,000 - Fuel Oil 37,000 30,000 - Gas Oil 11,000 -

TOTAL 66,000 52,000

Total Demand 237,630 253,600 - 73 -

5.62 The domestic demand for energy accounts for 80 percent of the total energy use, including the international market. The industrial sector, including mining and power, is the major user of the primary energy resources: it accounts for more than 60 percent of domestic demand. In the industrial sector the largest proportion of primary energy consumption is used to produce electric power. The transport sector, mainly road transport, is the second largest consumer, accounting for 22 percent of domestic energy use. The remaining 18 percent is used directly by households for cooking (LPG and kerosene) and for lighting (kerosene).

5.63 Exports of petroleum products account for about a fifth of the total production and consist of jet fuels and bunker sales. 1/ Export demand has been stagnant over the past several years due to the stagnant bunker market. This stagnation is attributable to a fundamental change in shipping patterns: the reopening of the Suez Canal reduced the volume of shipping passing through Freetown.

5.64 Imports of crude oil amount to 240,000 to 270,000 long tons or about 2 million barrels a year. Excluded from this is the imported blending material (platformate), one barrel of which is imported for every twenty barrels of crude oil.

5.65 Crude oil prices increased more than 150 percent from US$14.30 per barrel in 1978 to US$34.70 in 1980. This more than doubled the country-s import bill from $34 million in 1978 to US$71 million in 1980. With the import requirements of the blending material (about US$5.5 million a year), the total cost of petroleum imports now claims about 35 percent of Sierra Leone's foreign exchange earnings.

5.66 Demand for energy in developing countries has grown much faster than their GNP growth rates due to rapid urbanization, rapid growth of industries, and expansion of agricultural mechanization, rural electrification, and motorized transport. This has also been true for Sierra Leone, even though its industrial sector remained stagnant until 1975 and declined steadily thereafter. Between 1969 and 1979 total energy consumption in Sierra Leone has grown about 4.5 percent a year in real terms, compared with a 2.2 percent for the average annual growth of GNP.

1/ The petroleum products for both domestic and international markets are produced by the Sierra Leone Petroleum Refining Company which has a throughput capacity of 5,000 to 10,000 barrels per day. The Sierra Leone Oil Refinery was commissioned in 1969 and has been owned and operated since that time by Sierra Leone Petroleum Refining Company in which the Sierra Leone Government has a 50 percent interest. The remaining 50 percent is being heid by BP (10.2 percent), Shell (17.7 percent), Texaco (10.8 percent) and Mobil (11.3 percent). The Refinery was designed to operate on Middle East light crude oil. Currently it operates on Nigerian medium light. - 74 -

1. Future Demand

(a) For Electricity

5.67 Sierra Leone is served by a total installed system capacity of about 95 MW. Of this total 38 MW are in captive plants which serve mining companies directly. Another 55 MW are operated by Sierra Leone Electricity Corporation (SLEC), which owns and operates the Western System, supplying Freetown area as well as the provincial systems of Port Loko/Lunsar and Makeni/Magburaka. Consistent with consumption in the Western Area, the generating capacity of the SLEC is concentrated in its western system of three thermal plants (King Tom, Falcon Bridge and Blackhall Road) and one small hydroelectric power plant (Guma Valley).

Table 5.12: POWER GENERATING FACILITIES (1980)

Installed Firm Maximum Electricity Capacity Capacity Demand Generation MW MW MW GWH

1. SLEC - Western System 43.1 1/ 22.8 19.0 116.5 - Provinces 12.0 3.1 3.0 5.0 2. Private Plants - Mining 38.2 21.8 14.8 2/ 90.7 (a) Marampa 13.5 (b) Sierra Rutile 12.5 (c) SIEROMCO 5.0 (d) DIMINCO 7.2

- Other 1.6 0.3 0.4 1.0

Total 94.8 48.0 - 213.2

1/ Dependable capacity is around 32 MW.

2/ The Marampa Power Plant which has an installed capacity of 13.5 MW has been non-operational since 1975.

5.68 Electricity generation in the SLEC's western system was about 116.5 Gwh in FY80. System losses and station use account for about 23 percent (27.0 Gwh) of the total. About 20 percent of Sierra Leone's population live in urban centers and about 15 percent have direct access to electricity through legal house connections. The residential demand for electricity accounts for 27 percent (32 Gwh) of the total generation of the western system. The nonresidential demand (58 Gwh) constitutes the remaining 50 percent of the total use. Between 1970 and 1980 the residential demand for electricity grew 4.8 percent per annum on the average. The growth rate of nonresidential electricity consumption was slightly lower, averaging around 4 percent per year. - 75 -

5.69 Until 1995 the domestic demand for electricity is projected to grow around 5 percent a year, a conservative straight-line extrapolation of past trends. This growth rate would more than double the current demand for electricity to 250 Gwh per year in 1994 (maximum demand nearly 50 MW) from 116.5 Gwh in 1980 (maximum demand 24 MW). Excluded from ithese projections are the electricity requirements of major mining projects, such as bauxite mining at Port Loko and alumina production at Pepel, and also of any rural electrification scheme.

5.70 In the search for alternatives to imported oil the hydroelectric potential of the numerous rivers has been studied since the early 1970s. And some renewable energy resources--such as wood waste, coconut and groundnut shells, rice husks, and similar waste materials that may be used for producer gas--have been examined. The most advanced research is that of the Bumbuna Falls hydroelectric power scheme, for which the feasibility study was completed in 1980. With EEC assistance studies are also under way for a probable hydroelectric project in the Mano River, under the auspices of the Mano River Union. A small hydroelectric scheme (4 MW) in the Gono River is being carried out will the assistance of China.

5.71 With an installed generating capacity the Bumbuna hydroelectric scheme (Stage I) is expected to be commissioned of 53.4 SW, in 1986 at the earliest. Until then, the electricity demand outside the mining sector would be covered by the thermal plant of the western system. It is estimated, however, that the western system s power generating plants will near full firm capacity by March 1984, possibly earlier. That means addlitional generating plants may have to be commissioned before 1984. In provincial centers (Makeni and Lunsar) additional diesel-electric units will have to be installed before these towns are linked to and supplied by hydroelectric energy.

(b) Energy for Household Use and Transport

5.72 This component of demand has grown faster than total demand for electricity (7 percent a year, compared with 5 percent in real terms). The use of kerosene for household consumption should fall as the percentage of population\served with electricity rises. The use of gasoline for transport will, however, increase in line with the growth of the transport sector, which in turn will depend on the growth of the economy and population.

2. Demand Management Until 1986

5.73 With conservative assumptions about future dem;and for energy and optimistic assumptions about price increases of crude oil, Sierra Leone-s import bill for petroleum products will reach alarming levels by 1986 (somewhere around Lel70 to Lel90 million). Unless the mining output is revived by that time, this bill may claim as much as 45 to 50 percent of the country's projected export earnings. This points to the urgency of investments in the Bumbuna hydropower scheme and to the intensification of oil exploration efforts (already begun with a pilot project in 1980). - 76 -

5.74 The Bumbuna hydropower project will only be able to replace 60 to 70 percent of thermal generation. Most of the thermal plants in the western system will remain operational to firm up hydroelectric generation and to undertake peaking duty during the rainy season. The diesel generators in the mining areas will also remain operational, at least until the early 1990s. Some demand management policies will therefore be needed to increase the efficiency of energy use and to generate foreign exchange savings, particularly before the mid-1980s.

(a) Pricing Primary Energy Resources

5.75 The retail prices of petroleum products in Sierra Leone are comparable with those in Western Europe and other parts of West Africa. This policy of economic pricing should continue (tables 5.11 and 5.12). The government has been pursuing consumer protection only on kerosene. This is socially justified because kerosene is used exclusively by lower income groups.

Table 5.13: PETROLEUM PRODUCTS: EX-REFINERY; PUMP PRICES AND EXCISE DUTIES

(1) (2) (3) Ex-Refinery Price Excise Duty Pump-Price SLc/IG 1/ USc/G US$/G SLc/IG USc/G

Premium Motor Spirit 212.6 168.8 36.0 300.0 238.3 Regular Motor Spirit 208.6 165.6 36.0 294.0 233.3 Kerosene 123.5 98.8 10.0 171.0 135.8 Gas Oil 101.1 80.2 37.0 166.0 131.7 Fuel Oil 69.6 55.3 37.0 2/ 114.0 3/ 90.5

1/ Imperial gallon = 1.20 U.S. gallon. 2! Central Government, SLEC, Road Transport Corporation are exempt from taxes. 3/ SLEC purchasing price.

5.76 There seems to be a hidden subsidy, however, on gas oil--a subsidy that needs to be studied further and corrected; gas oil is the largest component in the throughput structure and is used primarily by the mining sector. The retail prices of gas oil are considerably less than international prices, because of the low cost of production in the domestic market: the cost structure of the Sierra Leone refinery has been geared towards producing gas oil at the cheapest possible prices. Although the refinery was designed to operate on Middle East crude oil, it later switched to Nigerian oil because it seems to have higher productivity of gas oil and lower productivity in gasoline. The ex-refinery gasoline prices, therefore, are noticeably higher than - 77 -

international prices while the reverse is true for gas oil. Given the structure of domestic demand, this adjustment may be reasonable. But the Nigerian crude oil is more than US$7 higher abroad (c.i.f.) than Arabian crude oil.

5.77 Whether the mining sector, in its use of primary energy resource, should be cross-subsidized by the gasoline and fuel oil users is an important policy question that needs further research. Since the public sector-- the central government and the public corporations--is the largest consumer of gasoline and fuel oil and since the government is suffering from both a tight budgetary condition and from a scarcity of foreign exchange resources, any subsidy from government to the mining sector seems unwarranted. A switch from Nigerian to Middle Eastern crude oil should save US$12-15 million. Another alternative would be to increase the excise tax on gas oil. This would neutralize the subsidy to some extent but would save no foreign exchange.

Table 5.14: PRICE COMPARISONS OF PETROLEUM PRODUCTS (March-April 1980)

(US,/gallon)

Ex-Refinery Prices Retail Prices Sierra Ivory Sierra Western Leone Senegal Coast Leone Mali Mauritania Europe

1. Gasoline

Premium 168.8 103.9 - 238.3 288.9 273.0 230 1/-318 2/ Regular 165.6 104.3 112.3 233.3 280.0 258.3 225 1/-314 2/

2. Kerosene 98.0 112.0 60.6 135.8 195.5 165.6 -

3. Gas oil 80.2 98.7 110.1 131.7 204.4 215.6 133 -!/-266 4/

4. Fuel Oil 55.3 66.7 53.9 90.5 115.5 - 116 5/_ 1 6 9 2/

Memo Items:

Indirect taxes as percent of retail price (gasoline) 12.3 12.0 37.5

1/ Ireland. 2/ Denmark. 3/ Italy 4/ U.K. 5/ Spain. - 78 -

(b) Pricing Electricity

5.78 Fuel oil prices increased about 55 percent between July 1977 and March 1980, but electricity tariffs stayed the same. This led to a further deterioration in the already weak financial performance of the Sierra Leone Electricity Corporation.

Table 5.15: INCREASES IN RETAIL PRICES OF PETROLEUM PRODUCTS

(SLi per imperial gallon)

July February May August January March 1977 1979 1979 1979 198 1980

Premium Motor Spirit 151.0 156.0 171.0 195.0 225.0 300.0 Regular Motor Spirit 147.0 152.0 167.0 190.0 220.0 294.0 Kerosene 100.0 105.0 110.0 120.0 132.0 171.0 Gas Oil 103.0 108.0 110.0 120.0 130.0 166.0 Fuel Oil (Ex-Refinery) 44.6 49.6 49.6 54.6 57.6 63.6

5.79 As explained above, the nonresidential demand for electricity accounts for about 70 percent of total electricity supply after allowing for system losses. Nonresidential consumers consist primarily of commerce and trade, the banking system, touristic facilities, a small industrial sector (outside mining), and the public entities. The residentia' consumers belong to upper income groups and have energy consumption patterns similar to those in the industrialized nations. The electricity subsidy or income transfers from government--through the SLEC--to the most affluent segment of the society is not only unwarranted but also conflicts with any policy energy conservation. The SLEC should be allowed, therefore, to adjust its electricity tariffs according to the cost of production.

Table 5.16: ELECTRICITY TARIFF SCHEDULE (Effective since January 1977)

SLU/kWh US4/kWh

Tariff 1: Residential Consumer 10.5 10.0 Tariff 2: Non-Residential (up to 15 kWh) 12.5 11.9 Tariff 3: Non-Residential (more than 15 kWh - low tension) 10.5 10.0 Tariff 4: Non-Residential (more than 15 kWh - high tension) 8.5 8.1 Tariff 5: Street Lighting 11.0 10.4 Tariff 6: Temporary Supply 14.0 13.3 - 79 -

5.80 The electricity tariff structure is based on declining unit prices for larger consumers, which encourages energy use and discourages energy conservation. In addition, nonresidential consumers (mining, commerce, and industry) are being cross-subsidized by residential consumers, which seems to be unwarranted in the light of the skewed income distribution in favor of mining and commerce. The tariff structure needs to be reviewed and changed to allow for some degree of progressivity and to discourage waste in energy use.

5.81 That economic conditions have steadily worsened in Sierra Leone and that many critical development issues still have to be addressed point to the urgency of all these policy matters. But more is needed than making the right policy decisions. Most important is the commitmient by the government to social and economic development--and to what it takes to foster that development. Given the right policy decisions it will also be important to strengthen the institutions to increase the country's ability to implement policies and development programs. Without that ability Sierra Leone's future development will be severely constrained.

- 80 -

A N N E X E S

- 81 -

ANNEX A

SIERRA LEONE

RECENT ECONOMIC PROGRAMS

- 82 -

RECENT ECONOMIC PROGRAMS

1. Short-Term Economic Stabilization

1. Faced with increasing difficulties with respect to balance of payments, servicing of external debt and acceleration in the domestic inflation rate, the Government of Sierra Leone entered into a one-year standby arrangement with the IMF in November 1979 to be supported by Fund resources in an amount equivalent to SDR 17 million in the second and third credit tranches. The stabilization program included measures relating to public expenditure and monetary policies, limitations on new external debt, new revenue measures and adjustments in producers' prices. Although there were slippages in the area of government expenditures, both in recurrent as well as development budgets, the overall economic performance under the stabilization program was quite satisfactory. The Government of Sierra Leone made serious efforts to improve the revenue performance of the public sector as well as the term structure of its external debt outstanding. Consequently, between November 1979 and November 1980 Sierra Leone was able to purchase the full amount of the standby facility (for details of this program, see Chapter I, main text).

2. Medium-Term Economic Program

2. By the end of the standby period, the Sierra Leone Government requested further IMF support for a medium-term economic program, primarily to stimulate growth and continue to reduce internal and external imbalances. In March 1981 the Government and the Fund reached agreement on an extended arrangement for a three-year period in the amoun. of SDR 186 million, equivalent to 400 percent of Sierra Leone's quota. The main objective of the EFF agreement is to support Sierra Leone's medium-term development program and to ease the attendant balance of payments constraint until major new public investment projects, mostly in the productive sectors, come on stream around the mid-1980s. The program, other than use of Fund resources, also enables Sierra Leone to receive debt relief from the creditor member countries of the Paris Club in calendar year 1981.

3. The following are the macro-economic objectives and the major policy instruments of the medium-term economic program:

(a) Macro-economic Objectives and Targets

4. The medium-term program is designed to inaugurate a period of more soundly-based and sustained economic growth. The GDP growth rate is targeted to rise from about 1 percent in the current year (1980/81) to about 3 percent by the end of the three-year period (1983/84), implying a modest improvement in per capita real income level. - 83 -

5. Total domestic investment is projected to rise to about 15 percent of GDP in 1982/83 and 1983/84 from 13 percent in the current fiscal year.

6. The balance of payments performance is expected to improve markedly in 1984/85, soon after the end of the program period when export earnings from new investment projects are expected to increase sharply. Although some deterioration in the current account balance seems to be inevitable during the program period, the overall balance of payments deficit is projected to decline gradually from its presently estimated level of 6.6 percent of GDP to about 3.7 percent of GDP in 1983/84.

7. The external debt service ratio, which is estimated at 30 percent of export earnings in 1980/81 is targeted to fall to an average of about 25 percent between 1980/81 and 1985/86.

8. The overall budgetary deficit is projected to rise to a peak of 10.7 percent of GDP in 1982/83 as a result of increased development expenditures by the public sector to be financed mostly by external borrowing on concessional terms. The budgetary deficit as a percentage of GDP is expected to decline in 1983/84 as economic growth gains momentum. Domestic financing of the budget provided by the banking system is targeted to decline sharply in relation to GDP, releasing a larger share of total bank credit to meet the credit needs of the private sector.

9. The domestic inflation rate is expected to decline from about 18 percent in the current year to about 10 percent in 1983/84.

(b) Major Policy Instruments

(i) Investment Policies

10. In order to stimulate growth and improve the welfare of the broad masses of its population, the Sierra Leone Government in 1980 initiated the preparation of a Second National Development Plan. The development strategy for the plan period and the public investment program for the first three years of this period (1981/82 through 1982/83) have recently been completed.

11. The public sector, excluding parastatal enterprises, would undertake about 65% of the total fixed domestic investment projected for the first three-year period. The sectoral priorities of the public investments are on agriculture (24 percent), electricity and water (24 percent), and transportation (26 percent). Of total public investments, 46 percent are new projects for which foreign financing is either secured or currently being negotiated. The remaining 54 percent are ongoing projects with firm foreign financing. Nearly 80 percent of the total public investments will be financed with external assistance on concessionary terms. This percentage may go even higher since the lack of domestic resources for counterpart funding will be one of the major constraints of deve]bpment financing, especially in the early years of the plan period. - 84 -

12. The government's investment policy is to concentrate mostly on agriculture and basic infrastructure and encourage private investment in profitable enterprises. Investments by parastatal bodies and private enterprises are expected to be largely in the fields of mining, manufacturing, construction and housing. A new Development of Industries Act has recently been drafted to provide investment incentives to both domestic and foreign private investors.

(ii) Pricing Policies

13. The pricing policies of parastatal enterprises will be based on the principle of economic pricing, except in special cases where the government may decide for social policy or other reasons to subsidize a particular activity. In these exceptional cases, the aim will be to gradually substitute explicit for implicit budgetary subsidies. In this context: (a) an increase in electricity tariffs was to be put into effect before mid-March 1981, although this measure has not yet been implemented; (b) with regard to oil products, the current policy of passing on increases in crude oil prices to consumers will continue; and (c) the agricultural pricing policies will be designed to maintain producers incomes at remunerative levels and offer adequate price incentives to expand production in the rice subsector. Sierra Leone aims to make substantial progress toward self-sufficiency in rice by the end of the program period. In the tree crop subsector, the government will endeavor to insulate producer prices from the impact of changes in world prices and allow gradual increases in producer prices as and when world market conditions permit. Future stabilization of producer prices of agricultural export crops will, in principle, be accomplished through variations in the operational profits and losses of the marketing board. Export taxes on tree crops and agricultural products will not be reduced in 1980/81. However, the government will review the situation before the start of each budgetary year throughout the program period with a view to gradually reducing the export tax rate on agricultural exports and substituting more appropriate forms of taxation.

(iii) Fiscal Policies

14. Medium-term fiscal policy will aim at limiting the size of the overall budgetary deficit to magnitudes which can be financed by net official capital receipts, while reducing the government's recourse to bank credit as a percent of GDP. It is expected that between 1981/82 and 1983/84 the overall budgetary deficit will average about Le 190 million or about 9.6 percent of GDP. During this period total revenues are expected to increase fairly regularly about 13 percent in each year while the growth of total expenditures will be more rapid--about 27 percent per year--in the first two years of the period but will decrease significantly--to about 9 percent--in the final year. Revenues will average about 16 percent of GDP and total expenditures about 26 percent of GDP over the three-year period. - 85 -

15. On the revenue side, the government will implement a phased reform of the tax system over the program period. The objective will be to broaden the tax base, to improve the built-in revenue elasticity, to give better signals to the economy, and to improve resource allocation. The government is currently initiating a series of studies in preparation for future fiscal action. These cover (a) the feasibility of a sales tax; (b) appropriate nominal and effective levels of protection; (c) the feasibility of extending urban property taxation; and (d) a redrafting of the income tax. In January 1981 a number of tax revenues were introduced as part of the medium-term economic program. These included (a) increases in excise taxes; (b) a new development levy on various public institutions and hotels; (c) introduction of 8 percent import duty on crude oil as well as 10 percent on rice and some other imports; (d) some adjustments on income tax; and (e) other miscellaneous tax measures. These measures are expected to yield an incremental tax revenue of about Le 17.8 million (1.4 percent of estimated GNP) in FY 81.

16. On the expenditure side, the government wishes to continue enforcing and improving various institutional expenditure control measures introduced during the stabilization program period. These include: (a) the centralization of control over the formerly self-accounting ministries through the new "Expenditure Control Unit"; (b) the imposition of quarterly cash ceilings; and (c) operation of a Central Procurement Unit. An additional measure being considered is the posting of financial advisers in the major spending ministries to assist in strengthening of financial control. On public salaries and employment, the aim will be to develop a long-term incomes policy so as to avoid the periodic ad hoc large and unbudgeted salary increases which had occurred in the past and restrict public hirings only to essential posts.

17. A new emphasis of fiscal policy over the medium term will be to generally improve financial relationships between the central government and the parastatal enterprises. As a policy principle, government subsidies to non-financial public enterprises (NPE) or government subsidies to final consumers through NPEs (via their tariff policies) will be avoided. Also, measures will be taken to resolve the outstanding debt obligations between the central government and NPEs that have, in the past, contributed to strained financial relations and weak financial performance of NPEs.

(iv) Money and Credit Policies

18. Monetary and credit policies will be an integral part of efforts to strengthen demand management policies and implement supply-oriented policies in the medium term. The central bank (Bank of Sierra Leone) will control the rate of overall credit expansion so as to maintain monetary stability and to reduce the domestically-generated demand pressures. To achieve supply- oriented objectives over the medium term, selective credit policies will be implemented. In this context the required liquidity ratio of the commercial banks will be redefined to encourage certain types of productive credit. Also, the institution of preferential rediscounting facilities in respect of the marketing of crops and the marketing of the non-traditional exports will be activated. - 86 -

19. Over the next three years, the government will follow a more flexible interest rate policy than it has followed in the past by changing the level and the structure of interest rates in response to changing conditions.

20. On the institutional side, the National Development Bank will be revitalized, the Agricultural Cooperative Development Bank will be strengthened, and pilot rural credit schemes will be introduced.

(v) External Sector Policies

21. Substantial improvements in foreign exchange earnings resulting from new productive investments are not expected until shortly after the program period. The government will therefore aim at containing the current account deficit of the balance of payments at levels which can be financed by capital inflows and official balance of payments assistance. The overall balance of payments deficit projected at Le 101 million, or about 7 percent of GDP in 1980/81, will be reduced to an average of about 4 percent of GDP over 1981/82 through 1982/84.

22. The government will make efforts to maximize the surrender of foreign exchange receipts. In connection with the marketing of diamonds, the 5 percent discount granted to exporters will be eliminated except in the case of the largest exporter. The marketing arrangements f-or diamonds following the start of kimberlite production will be designed to maximize the foreign exchange receipts from this activity. The government will strengthen its efforts to ensure that existing foreign exchange surrender regulations are enforced in all cases.

23. The existing import licensing system will gradually be liberalized.

24. Foreign exchange reserves and foreign exchange obligations will be centralized in the Bank of Sierra Leone in the early part of 1981. In connection with this operation, firm priorities will be established for the allocation of available foreign exchange to (a) debt service, (b) government payments, (c) certain necessary invisible transactions, and (d) essential imports. All other foreign payments will be settled on first-in first-out basis. The external arrears outstanding will be reduced significantly as soon as additional foreign exchange becomes available.

25. The contracting or guaranteeing by the government of new external borrowing on non-concessional terms in the maturity ranges 1 to 5 and 1 to 12 years will be controlled within the limits designed to ensure the maintenance of an appropriate debt service profile. 1/

1/ Since end-April L981 there have been some problems related to the implementation of the EFF program in the areas of the public investments, money and credit policies and external sector policies which are currently under discussion with the IMF.

- 87 - ANNEX B

SIERRA LEONE

HEALTH SECTOR SURVEY

1980

- 88 - Annex B

CONTENTS

Page No.

I. HEALTH STATUS OF THE POPULATION ...... 84

A. Demography ...... 84 B. Disease Pattern ...... 85 C. Use and Coverage of Health Facilities ...... 87

II. HEALTH SERVICES AND DELIVERY SYSTEM . . 91

A. Health Services ...... 91 B. Family Planning ...... 95 C. Water Supply and Excreta Disposal Services ...... 97 D. Drug Supply System ...... 97

III. HEALTH PERSONNEL AND TRAINING ...... 100

A. Personnel ...... 100 B. Training ...... 100

IV. HEALTH POLICY ...... 106

V. HEALTH BUDGET AND FINANCING ...... 109

A. Budget ...... 109 B. External Assistance ...... 109

VI. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS ...... 112

BIBLIOGRAPHY...... 118

- 89 -

I. HEALTH STATUS OF THE POPULATION

A. Demography

1. The 1980 World Development Report indicates that the population of Sierra Leone grew at a rate of 2.5% during 1970-78--an increase over the 1960-70 rate of 2.2%. The total population is estimated at 3 million in 1980 and is projected to double in size by the year 2000. About 41% of the population is under age 15 and 5% is over age 64.

2. Sierra leone has an area of 71,740km2. In 1960 13% of the total population of Sierra Leone lived in the urban areas; it is now estimated that 25% of the total population currently lives in urban areas. This indicates a marked urbanization trend. During 1970-80 urban population grew at a rate of 5.6%. Population densities vary considerably throughout the country from 75 to 1470 persons per square mile.

Birth Rate

3. The crude birth rate in 1978 was 46 per thousand--a very slight improvement over the 1960 rate of 47 per thousand. The total fertility rate is estimated at 6.1.

Mortality

4. Life expectancy at birth is 46 years according to the 1980 WDR; other recent (1980) estimates cite life expectancy figures as low as 34.4 years. The greater Freetown area has life expectancy rates significantly higher than the rural areas.

5. As children age, their chances of survival improve dramatically, i.e., the younger the infant or child the more vulnerable he or she is. By the time children are 5 years old, they can expect to live until age 52; and at age 25 the expected age of death is over 60 years. The infant mortality rate is estimated at 136 per thousand for the period 1974-1979. Estimates vary quite widely with regard to the crude death rate. WDR's figure of 19 per thousand is the most optimistic, other recent estimates being as high as 28 deaths per thousand population. It should be noted that it is very difficult to arrive at an accurate estimate of the crude death rate as it is known that many deaths--especially in the rural areas-- go unreported.

6. Mortality in Sierra Leone has been shown to be correlated with the following factors: age (mortality rates inversely correlated with age group up to about the age of 12); sex (males have a higher mortality rate - 90 -

than females at all ages with a narrowing during the child-bearing years); residence (rural residence is associated with much higher rates than urban residence); nutrition (see section on nutrition); education (a recent study shows that child mortality significantly decreases by 50% if the mother has a secondary or higher level of education). This list is not exclusive. Other socio-economic factors such as income and social status also undoubtedly contribute to levels of mortality.

7. Another possible correlation, i.e., proximity to health facilities, was investigated and revealed a very weak correlation. This indicates that current health facilities might have little impact on mortality rates--or perhaps most facilities are currently located in urban areas where the mortality rate is already lower.

B. Disease Pattern

8. Major communicable diseases include malaria, tuberculosis, leprosy, whooping cough, measles and tetanus. Respiratory diseases, skin ulcers, helminithic infections, anaemia, schistosomiasis and diarrhea also constitute serious health problems.

9. Some of the leading causes of death in children aged 1-4 in the Western area for 1975-76 were measles: 21.2%, enteritis and other diarrheal disease: 13.6%, avitaminoses and other nutritional deficiencies: 9.4% malaria: 4.3%, anaemia: 9.2%. The statistics for 1969-75 show that about 24% of all registered deaths in the Western area occurred during the first year of life.

Malaria

10. Malaria is holo-endemic throughout the country except in Freetown. A 1978 USAID report states that one third of all children aged 3-59 months in Sierra Leone had evidence of malaria parasitism. A significantly lower rate in Freetown (4%) highlights that in addition to mosquitoes being easier to control, prevention and treatment with antimalarial drugs are more readily available in Freetown. This also explains the difference between the urban (20.6%) and rural (36.2%) malaria parasite rates. Malaria contributes significantly to anaemia and generalized debilitation which in turn reduces resistance to other infections and diarrheal diseases.

Intestinal Parasites

11. Intestinal parasites revealed the following:

(a) Hookworm. Freetown and the urban areas show consequently lower incidences of hookworm infestation (0.7% and 2.1%) than do the rural areas (6.9%). The Eastern Province also shows a very low incidence (2.4%). - 91 -

(b) Ascaris lumbriocoides. Ascaris infestation is much more common in Sierra Leone than is hookworm. The most interesting finding is the high prevalence rate seen in Freetown (25.4%). The Southern Province also has a high incidence (23.7%).

(c) Trichuris tricharia. The incidence of Trichuris is uniformly low throughout the country. However, once again Freetown has the highest prevalence rate (7.2%).

Nutritional Diseases

12. The main nutritional diseases found in Sierra Leone are protein calorie malnutrition (PCM) in children, anaemia in children (present in 58.1% of children aged 6-59 months throughout Sierra Leone) and anaemia in pregnant women (diagnosed in 30.8% of pregnant women tested from throughout the country, with an additional 29.2% cited as having borderline anaemia).

13. Anaemia in children may lead to cellular and subcellular abnorm- ality, subnormal mental performance and growth retardation and is positively correlated with undernutrition (dietary deficiency in iron and/or folic acid). Other causes are malaria and intestinal parasitism and recurrent infections.

14. Anaemia during pregnancy is associated with an increased risk of maternal and fetal morbidity and mortality. A decreasing concentration of haemoglobin in the mother's blood consequently decreases the volume of oxygen her blood delivers to the fetus and to her own body organs. Reduced oxygen supply increases risk of premature delivery, low birthweight, placental hypertrophy and reduced estriol excretion.

15. A National Nutrition Survey was conducted in 1978. The survey looked at the height, weight, and hemoglobin of children 0-5 years and their mothers. The survey also looked at eating patterns and other family/ household characteristics. The analysis of the information gathered during this survey suggests the following conclusions:

16. One fourth of all children 0-5 years of age are chronically undernourished (chronic protein-calorie malnutrition). The rates were similar by province ranging from 23.7% to 25.8%. A number of factors were found to be significantly correlated with the prevalence of chronic undernutrition, such as: use of river water vs. tap or well water; mother's inability to speak English; household head being a farmer; mother spending comparatively less at the market. These correlations suggest that factors related to poverty and ignorance contribute to chronic undernutrition in children. This conclusion is further substantiated by the fact that only 2.1% of those children belonging to a "Special Group" of relatively high socio-economic status families were found to be chronically undernourished. - 92 -

17. Families frequently consumed vegetable protein, animal protein, dark green leafy vegetables and fruits but these foods were not often given to younger children. These foods, for example, were given to only 33% of children aged 6-11 months when they were available (eaten by the family). This suggests that at least part of the problem of undernutrition stems from maldistribution of available foods within the family group. The survey did not investigate the quantity of various foods available to families.

C. Use and Coverage of Health Facilities

Hospitals

18. There are a total of 45 hospitals in Sierra Leone; 26 in the government sector, 6 owned by missions, 4 in the industrial sector (mining) and 9 "privately owned". These hospitals contain an estimated 3,720 beds. Of this total, 2,500 are in government hospitals, 520 in mission hospitals and approximately 710 in mining and private hospitals combined. Government and private hospitals are concentrated in urban areas. The mining hospitals service employees and families of mining companies. The mission hospitals are generally in more rural settings.

Number and Distribution of Hospital Beds

19. Information concerning the numbers and distribution of hospital beds is limited, inconsistent, and somewhat outdated. In 1975 the Central Planning Unit reported a total of 2,431 hospital beds in the government sector for 1973. Of this total, 683 were in special hospitals including those for leprosy, chest, mental and prison patients. (Most of these specialty beds are in the Western area.) The remaining 1,748 beds were reported distributed as follows:

Pop.* Beds per Area No. of Beds (in 000) 1000 Pop.

Sierra Leone 1,748 2,591 0.67 Western Area 700 205 3.42 All Provinces 1,048 2,386 0.44 Northern Province 378 1,080 0.35 Southern Province 360 649 0.55 Eastern Province 310 657 0.47

* Pre-1974 census estimates.

20. In 1979 the Medical Statistical Unit of the Ministry of Health gathered hospital bed information for all sectors and classified them either urban or rural. Their figures revealed that 75% of all government hospital beds are located in areas classified as urban. This is somewhat offset by the fact that the vast majority of industrial (mining) sector and mission - 93 -

hospitals are concentrated in the rural areas. The overall distribution percentages are 53% (2,090) urban and 47% (1,888) rural out of a total of 3,878 beds in all sectors. The population distribution is estimated at approximately 15% urban and 85% rural.

Urban/Rural Distribution of Patient Beds

Sector Total Urban Rural

Government 2,500 1,900 575

Mission 540 25 515

Industrial 708 -- 708

Private 230 140 90

Combined 3,978 2,090 1,888

General Medical Statistical Information -- Medical Statistical Unit, Ministry of Health, 1979.

Health Centers

21. There are 40 Health Centers in the country. Thirty of these are operated by the government, 8 by missions and 2 are private. Health Centers are considered the most important instrument in the rural health care scheme. Theoretically they are to be staffed with one medical officer, 1-2 dispensers, a nurse, a midwife and public health inspector. Currently, every Health Center, with a few exceptions, is staffed with a dispenser and a midwife. All Health Centers have an outpatient clinic and a small maternity wing with labour and delivery rooms. MCH clinics are a function of almost all Health Centers.

Dispensaries and Treatment Centers

22. Dispensaries differ from health centers basically in that dispensaries do not have a maternity ward nor are MCH services usually provided. However, in many cases mobile MCH clinics are held periodically at dispensaries. Treatment centers are an outgrowth oE the autonomous "Endemic Disease Control Unit." These centers were established to provide followup care by EDCU Assistants. These centers are generally considered to be less sophisticated because of the level of training of EDCU assistants. - 94 -

Distribution of Health Facilities

23. For a clearer picture of the distribution and access of health facilities among the population, the table on the following page shows the population served per health institution. This data clearly illustrates the marked bias towards the Western area where health institutions serve a substantially smaller population and are significantly more easily accessible than in the rural areas. According to a 1980 UNICEF Country Profile, Government statistics indicate that only about 20% of the population outside of Freetown has access to some health facility--leaving some 80% of the population outside of Freetown virtually without health services. UNICEF also reported that the Government health facilities are often under- staffed and not well supplied.

24. During a 1980 visit to Sierra Leone a World Bank consultant found most of the facilities visited to be orderly, generally clean and for the most part in reasonable repair. The personnel in attendance were likewise professional in demeanor and knowledgeable yet friendly and quite candid concerning their impressions of the health care system and how it should be improved.

Use

25. No organized data was available which indicates the utilization rates for the various health facilities. The impression one derives from visiting the facilities and from the limited estimates available is that utilization is moderate to low. For example, a dispensary visited averaged about 175-200 new patient and follow-up visits per month. There was a dispenser and a SECHN assigned to the clinic. A small study done by a mission group showed that 80% of the population in a rural area prefers to use traditioyal remedies and/or self diagnosis and treatment when they are sick. The reasons for this are not clear; however, undoubtedly the lack of adequate drugs contributes. - 95 -

AVERAGE POPULATION SERVED BY HEALTH INSTITUTIONS

PROVINCES & | HEALTH TREATMENT ONE HEALTH DISTRICTS HOSPITALS CENTERS DISPENSARIES CENTERS UNIT

WESTERN AREA 33,742 31,146 57,843 404,960 12,270

SOUTHERN PROVINCE [ 89,021 47,935 103,858 32,797 13,848

Bo 109,864 73,243 219,728 31,390 16,902 Bonthe 45,299 45,299 90,598 45,299 12,943 Moyamba 99,850 32,283 66,666 49,925 13,313 Pujehun 113,123 56,562 113,123 18,854 11,312

EASTERN PROVINCE 71,462 185,802 232,252 27,324 16,589

Kenema 55,706 185,802 139,266 23,211 14,660 Kailahun 48,287 64,382 96,574 12,072 7,726 Kono 114,333 228,665 96,574 76,222 38,111

NORTHERN PROVINCE 86,784 86,784 47,008 66,364 16,839

Bombali 51,156 86,784 28,420 255,781 17,052 Kambia 166,339 83,170 33,268 55,446 15,122 Koinadugu 117,310 59,103 44,328 35,462 13,639 Port Loko 76,257 152,514 152,514 61,005 23,464 Tonkolili 110,369 36,790 55,184 73,579 14,716

SIERRA LEONE 68,561 70,119 75,250 43,454 15,350

EXCEPT WESTERN AREA 81,223 86,463 78,834 38,291 15,954

General Medical Statistical Information - Medical Statistical Unit, Ministry of Health, 1979 - 96 -

II. HEALTH SERVICES AND DELIVERY SYSTEM

1. Health services in Sierra Leone can be viewed as the product of four different systems: (1) the government's, primarily the National Health Service, (2) the non-governmental organizations (NGOs), primarily the various Christian missionary programs but including other private voluntary organizations, (3) the private practice of "allopathic" or "scientific" medicine and (4) the private practice of indigenous or traditional medicine.

2. The four systems developed distinct from one another and remain so today. However, in recent years there has been considerable cooperation among them. For example, community health nurses are being trained in missionary hospitals, the Ministry of Health has a training program for traditional birth attendants (TBAs), the Ministry of Health supplies vaccines and in turn utilizes NGO clinics as part of its Expanded Programme of Immunization. Finally, two of the three "Primary Health Care" projects implemented within the past two years are administered through NGO hospitals.

A. Health Services

Government: The Ministry of Health

3. The organizational structure of the Ministry of Health is outlined on the following page. As the chart indicates the system is highly centralized. Virtually all planning, supply, maintenance and personnel decisions and functions are in the hands of the central administration in Freetown. This, in principle, gives the central authorities considerable ability to coordinate various health-related programs on a national scale. However, in practice, it places enormous pressures on the central administration. The central office is over-burdened with all administrative matters of even the lowest level, leaving them with little time to deal with the larger questions of policy, planning and strategy.

4. Basic Structure: Health services per se are provided primarily through a system of hospitals, health centers (dispensaries with maternity and MCH facilities) and dispensaries. The national referral level of hospitals are all located in the Freetown area. The remainder of the facilities are divided on a provincial basis under the nominal jurisdiction of the Principal Medical Officer (PMO) in each province. Because of the centralization of functions, however, the PMO appears to have little autonomy or authority over the operations of the system within his province. Because of the centralization of functions, however, the PMO appears to have little autonomy or authority over the operations of the system within his province. His function is to provide professional supervision to the auxiliary staff in the district and chiefdom facilities. Provincial hospitals are administered by the respective hospitals' medical superintendents. These hospitals function independently of the PMO. Considerable dissatisfac- tion with the inefficiency of this highly centralized administrative scheme was expressed at all levels--national, provincial and local. ORGANIZATIONAL CHART OF MINISTRY OF HEALTH, REPUBLIC OF SIERRA LEONE

IMINISTER |IMEDICAL &,DENTAL I I I 1COUNCILI |DEPUTY MINISTER | NURSES BOARD1

_I L ! - , t-4 MIDWIVES BOARD I IPERMANENT SECRETARY rI CH IEFMEDICAL OFFICER I-- H VITAL STATISTICS I II L - I, COUNCIL

DEPUTY SECRETARY| DEPUTY CHIEF MCH ADVISORY MEDICAL OFFICER COUNCIL

HEALTH EDUCATION & NUTRITION COUNCILj

EPIDEMIOLOGICAL SERVICES COMMITTEE

1 n'71A V7%hH'f n X H z

H.M.O. HE zHH HELTH|P.MO. EALT|1PM.Oz H 0 En -~~~~0H 0 P HE- z F4 0 F-4~~~~~~~UH H-

p-4 4: H r~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~H~~~~~~~~~~±EJE- E-A~ ~ ~ ~ AE PRVIC PRVNEPOIC

P.M.O. HEALTH P.M.O. HEALTH P'.M.O. HEATH P.M.O. HEALTH WESTERN NORTHERN SOUTHHERN EASTERN AREA PROVINCE PRVNE PRVINCE - 98 -

5. Endemic Disease Control Unit: In addition to this "primary system" the government also operates the Endemic Disease Control Unit (EDCU) which in principle extends to cover the entire country. The EDCU operates a series of mobile teams which are responsible for controlling the major communicable diseases through surveillance, immunization and treatment. The EDCU also operates its own rural clinics known as "Treatment Centers." These centers function much as dispensary. However, they are operated by "less highly qualified" personnel. The EDCU is highly regarded. Its reputation dates back to the 1950's and 60's during which time it was accredited with the successful control of yaws and trypanosomiasis and later the eradication of smallpox. During recent years it has been given major responsibility for the implementation of the Expanded Programme for Immunization in Sierra Leone.

6. It is interesting to note that the EDCU which enjoys an enviable reputation for results, also enjoys relatively clear objectives, considerable autonomy in pursuing them and the means for measuring their attainment.

7. Maternal and Child Health Services: The basic Maternal and Child Health (MCH) services are provided through a network of MCH clinics. There are approximately 30 MCH clinics operating as part of health centers and another 20 attached to government hospitals. In addition, the Government in cooperation with Catholic Relief Service (CRS) operates 10 mobile units. These units operate clinics on a monthly basis in 9 districts and the Western Area.

8. MCH services provided through these static and mobile clinics include pre- and post-natal care; referral of "high risk" pregnancies and the more severely ill, growth monitoring, nutrition education and supplementation and diagnosis and treatment of common illnesses.

9. Little is known concerning the effective coverage of MCH services in Sierra Leone. An apparently subjective impression widely stated is that at least 703 of all newborn deliveries are conducted by "Traditional Birth Attendants" (TBAs).25 As such, they are effectively outside the realm of the government's (or the NGO's) system. The Catholic Relief Service's Annual Public Summary of Activities 1979 states that the Government's Food and Nutrition Programme, administered through MCH clinics, benefits 40,000, or 9% of the 440,000 "under-fives" in the country. It is unlikely therefore that coverage by MCH clinics exceeds 25-30 percent. Furthermore, data from the National Expanded Programme for Immuni- zation reveals that approximately 70% of all immunizations provided through the MCH facilities in 1975 were given in the Western Area which represents only about 12% of the total population.24 This would indicate that not only is the coverage low but it is also extremely maldistributed, favoring the Western Area.

10. Statistical Monitoring of the Health Sector: The Medical Statistical Unit within the Ministry of Health is responsible for gathering and analyzing data relative to the health sector. The unit currently has two professional statisticians (one of whom has just recently joined), four statistical - 99 -

assistants-in-training, an executive officer and 12 clerks. In principle, the unit published three documents each year, Directory of Medical Units, Statistics of Health Care Services and Analysis of the Causes of Mortality. Although considerable information has been processed, these documents have not been completed and published for the past several years. This is due to a shortage of personnel and budgetary constraints. Information which is available unbound relates to (1) numbers, categories and locations of health personnel and facilities, (2) morbidity and mortality.7 The former appears to be relatively reliable and useful in establishing a picture of the overall health infrastructure. The latter data related to morbidity and mortality must be viewed as considerably less reliable. As mentioned earlier, this data is based upon "vital registry" coverage which is limited almost exclusively to the Western Area. Even for this population it consists only of reported events. These are thought to constitute no more than about 60 percent of the total.

11. A number of valid sample survey studies looking at various aspects of morbidity and mortality have been done in recent years. The results of these studies contrast sharply with the official information based upon the vital registry reporting system. The immediate and undeniable conclusion can only be that the present monitoring system is providing erroneous information. If there is to be any valid rationale behind policy and planning decisions this situation must be dealt with immediately.

Other Health Services

12. Non-Governmental Organizations (NGOs): Missionary organizations are very active and contribute significantly to the health care sector in Sierra Leone. They operate 6 hospitals, 8 health centers and 25 clinics or dispensaries.7 In addition they are active in training health personnel. Two nursing schools and a midwifery training program are under the jurisdiction of mission hospitals. During the past few years, mission hospitals have begun to play a leading role in the community or primary health care movement.

13. In addition to missionary organizations a number of international private voluntary organizations support and operate health-related projects in Sierra Leone. These include: CARE, Peace Corps, CRS (Catholic Relief Services), and others.

14. Private "Allopathic" Medicine: Mining companies and a few other companies operate their own hospitals and clinics to serve their employees. Each of the larger communities, especially Freetown, has a sizeable, but unknown, number of doctors and licensed dispensers engaged in the private "fee-for-service" practice of medicine. It is common knowledge that fees- for-service are also charged within the National Health Service hospitals and clinics on an informal sliding scale basis.

15. Indigenous Medicine: Traditional Birth Attendants (TBAs) continue to attend the vast majority of obstetrical deliveries in Sierra Leone. TBAs are older highly respected women who are usually leaders in - 100 - the Women's Secret Society or Bandu Bush. In addition to midwifery they also attend the sick infants and frequently participate in the ritual of so-called "female circumcision." Since 1974 the MCH division has been conducting 3-week training courses for TBAs.

16. Little is available concerning the practice of indigenous medicine other than by TBAs. However, Dr. T. K. Korgho, in a paper presentedl to the Medical and Dental Association in 1978, provided some insights. He described a system of beliefs that involved a combination of traditional regional religions, witchcraft and sorcerers. Traditional medicine is highly interwoven into these beliefs. No estimates of the numbers of practitioners are available.

B. Family Planning

17. As previously stated, the crude birth rate is 46 per thousand and the fertility rate is 6.1. During 1970-78 the country's population growth rate is estimated by the World Development Report at 2.5%. Maternal mortality and morbidity are known to be high although not even approximate figures are available.

18. The total female population is estimated to be about 1,765,000. The female population aged 15-49 is 794,000. Six percent of this age group is reported to be using contraception of which only 1% uses modern contraception, the remaining 5% reporting to traditional methods, rhythm, withdrawal, abstinence and other folk methods.

Incentive

19. The majority of women in Sierra Leone are very much aware of the health benefits, for both mother and child, that an increase in the duration of birth intervals promotes. Several studies show that many women, especially in the rural areas, do, in fact, practice contraception (in the form of abstinence) following delivery to protect the child and mother's health.

20. These are the obvious values upon which a family planning/child spacing in Sierra Leone should be based. Lowering the strikingly high rates of infant and maternal deaths in Sierra Leone should be a priority of the very first order. There is considerable evidence that child spacing through the use of contraception will contribute significantly in lowering these rates. The fact that many Sierra Leonean women are currently practicing contraception for these very reasons is encouraging; and it is reasonable to predict that many would be receptive to using modern contraception methods if services were made available to them. - 101 -

Government's views regarding family planning

21. The Government has stated that it considers its rate of natural increase to be satisfactory. Although it believes that overall economic and social development will contribute most effectively to the solution of associated problems, it is giving careful attention to means of expansion of family health services and to the most appropriate means of including family planning guidance within them. The Government- has stated that while it is entirely up to the individual, family planning services should be made available to those who choose to utilize them. It has, to this effect, allowed the Family Planning Association to provide services. Contraceptives are also available through commercial pharmacies and to some extent through Government hospitals. However, at present, the Government still gives highest priority among matters of population concern to the reduction of high levels of morbidity and mortality and the improvement of the spatial distribution of the population.

Facilities

22. As mentioned above, a Family Planning Association operates in Freetown. A U.S. House Committee Report dated 1976 reported that the Sierra Leone FPA's 30 field workers averaged 20 new acceptors each per month in the cities but only 10 per month in rural areas where the majority of the population lives. Much of the FPA's efforts were directed at treating a high degree of infertility among the women of Sierra Leone--a condition which creates considerable marital discord.

23. A principal constraint to family planning appears to be unavaila- bility of funds. Although in its 1975-80 Five-Year 'Plan, the Government pledged financial support (about $18,000) to the Association in Freetown, the Minister of Finance later on said that no money was available. Instead, the FPA receives support from the International Planned Parenthood Federation and CARE. FPA expenditures for 1975 were estimated at $230,000 with a 1976 budget of $178,000.

24. Quite recently, however, the Ministry of Health took a positive step with regard to family planning. After two and a half years of delay a "Fertility Advisory Services" clinic was inaugurated at the Lumley Health Center near Freetown in February 1980. This clinic, the first of its kind in Sierra Leone, will provide family planning services to the surrounding catchment area. More importantly, it will be used as a training center in MCH and family planning for all categories of health personnel.

25. The President of the Sierra Leone FPA in 1976, Dr. June Holst-Roness, cited two important objectives to improve family planning services. Firstly, she deemed it necessary to educate political leaders to the need for family planning to diminish the official resistance it continues to encounter. (Many feel the country needs to expand its work force in order to develop the nation to its fullest potential as quickly as possible and that family planning would counter this effort.) Secondly, she stated that only through an integrated family planning/MCH approach could population planning effectively be brought to Sierra Leone. - 102 -

C. Water Supply and Excreta Disposal Services

Access to Safe Water Supply

26. A 1978 WHO report on water supply and sanitation indicated that in the largest city, Freetown, over 75 percent of the population has access to a public water system, but this is only about 10 percent of the entire population. Other urban water systems supply another 12 percent of the population.

27. No national statistics are available on water supply in the rural area. In general, during the rainy season rain water is used for drinking while surface water from simple wells, streams or springs is used in the dry season. Recent surveys from non-governmental organizations of the Koinadugu district in the north and Moyamba district in ths south estimated that only 3 percent and 2.5 percent, respectively, of the population living in settlements of less than 1,000 persons had access to improved water supplies--still another health disadvantage of rural living.

Population Served by Excreta Disposal Services

28. The WHO report :eferred to above indicates that sanitary sewage service is confinea to a limited area of Freetown. Approximately 15 percent of the Freetown population is served by septic tanks, and 34 percent by pit latrines.

29. Outside Freetown there are no urban sewage disposal systems; even in remote villages pit latrines are used, but there are no reliable national estimates on the quantity or quality of these latrines.

D. Drug Supply System

30. The government has a policy of providing medications through government facilities, free of charge. This is said to be a policy with major political implications and consequently not easily changed.

31. The system for procuring and distributing these drugs is, like the rest of the Government's health system, highly centralized. The Chief Pharmacist provides the Central Purchasing Unit, in the Ministry of Finance, with a requisition on a yearly basis. This requisition, in theory, represents a composite estimate of the drug requirements for all of the Government's medical facilities for the coming year. This requisition, after review and revision by the Ministry of Finance, is transformed into a purchase order which is forwarded to the Government's contract purchasing agent in Holland. The required drugs are purchased directly from the major European pharmaceutical houses by the purchasing agent on behalf of the Government. The drugs are shipped to the Central Medical Stores in New England (just outside of Freetown) where they are stored. The authorized medical stores personnel distribute the drugs directly into - 103 -

the hands of representatives from the individual medical facilities throughout the entire country upon receipt of an authorized requisition. Each facility is responsible for transporting its own supply. The distributions are made more or less on a quarterly basis. In other words, every three months the heads of all the approximately 300 medical facilities prepare requisitions, have them countersigned by either the PMO or the Medical Superintendent of the Provincial Hospital, proceed to Freetown, procure the drugs and transport them back to their respective facilities.

32. There are two major problems inherent in this system. Firstly, the demand for "free" drugs is virtually limitless. It is, therefore, virtually impossible to fill it. In spite of the fact that approximately 40 percent of the health budget is spent on drugs, the Government currently supplies only a fraction of what is demanded. The usual figure given is about 25%. And that is 25% of the current demand. That demand would clearly increase if the supply of "free" drugs were to increase as evidenced by the fact that numerous private pharmacies do a thriving business in both large and small communities alike. In fact, a major personnel problem for the Government is the "defection" of dispensers into the private sector. Currently the requisitions from the smaller government establishments are filled every three months on the 25% basis from the Central Medical Stores. This supply lasts, in general, less than four weeks. The remainder of the time drug requirements are met to some unknown degree through commercial sources. The Government personnel generally have their own commercially acquired supplies which are available upon payment. Likewise, the numerous private pharmacies of varying size, dispersed throughout the country, contribute very substantially in meeting the total demand.

33. No estimate is available concerning what percentage of the total drugs consumed are supplied by government health facilities. However, judging from (1) the large number of commercial pharmacies, (2) the number of private dispensaries (80 out of a total of 133 in Sierra Leone) and, (3) the estimates of 25% for supplying government facilities' requests, one can only conclude that the percentage supplied by the Government must be certainly less than 10%. In a survey of 669 people in 1975,23 the participants were asked "what was the first action taken when ill?" Only 17% even visited a clinic or hospital. The remaining 83% bought "modern" or traditional medicines or remedies or they did nothing. This survey was done in several villages, all of which were less than 8 kms. from a major hospital.

34. This indicates that perhaps some drugs are consumed needlessly. Perhaps if an education program were initiated at the community level by hospitals and health centers to emphasize the advantages of preventive as opposed to curative health measures, as well as to enlist the confidence of the population they are serving, this situation might be rectified somewhat.

35. The other major problem inherent in the Government's drug supply system is the inefficient manner in which they are distributed. In - 104 -

principle, three hundred individuals representing three hundred separate facilities must travel four times a year from, and back to, all corners of the country to collect and transport a four-week supply of drugs. Even the establishment of provincial level medical stores would result in considerable savings in transport costs, not to mention the savings in working time on the part of dispensers, nurses and doctors.

Clearly the entire policy and resulting system of purcWasing, supplying and distributing drugs is in need of complete review. - 105 -

III. HEALTH PERSONNEL AND TRAINING

A. Personnel

1. The information available concerning numbers and distribution of professional personnel is also sparse and inconsistent. The most recent data from the Medical Statistical Office is given as estimates and is currently being revised. Nonetheless, what is available substantiates the impression of a heavy concentration of facilities in and around Freetown.

Area Doctors Nurses Dispensarx PH Insp.

Western Area 66 (62%) 317 (62%) 54 (39%) 28 (34%)

Provinces 41 (38%) 190 (38%) 88 (61%) 55 (66%)

Sierra Leone 107 (100%) 507 (100%) 142 (100%7) 83 (100%)

Combined 1974 Pop. Personnel (000)

Western Area 465 (55%) 316 (11%)

Provinces 374 (45%) 2,419 (89%)

Sierra Leone 839 (100%) 2,735 (100%)

B. Training

2. The training programs and facilities for health personnel are given considerable attention and appear to be adequate in comparison to other African countries. For example, the ratio of nursing/midwifery personnel to population of 1:2590 for Sierra Leone compares favorably to many of the neighboring states such as Upper Volta, 1:3980, and Guinea, 1:3880, but worse than some, such as Liberia, 1:1660, and Benin, 1:2370. All of the major categories of health personnel employed in Sierra Leone are trained in the country (see below) with the exceptions of doctors and advanced public health personnel.

3. The establishment-of a university health center has been under debate for a number of years.. The plan was quite ambitious and included a 500-bed teaching hospital which would train both medical and paramedical personnel. WHO had plans to provide fellowships to support this program. However, the idea has been shelved for the time being because sufficient funds are not available. - 106 -

Integrated Medical Education and Training Program (IMETP)

4. In lieu of a medical school, the Government accepted the recommendations of the Sierra Leone Education 1 Report. This report, released in 1974, called for the creation of a 3-part training program (IMETP). It has as its aim to integrate and redirect the entire health care delivery system towards the "community health" or "primary care" concept. Progress in implementing two of the three elements of the program has occurred slowly but steadily over the past six years. The Government's training program consists of the following three parts:

a) A Department of Community Health was established in 1978 on the campus of Fourah Bay College, University of Sierra Leone, in Freetown. The department is attached to the Faculty of Social Studies. The specific purpose of the Department of Community Health is to organize and support research and education in the field of community health in order to improve the planning and evaluation of health care services in Sierra Leone.

b) A "Para-medical" School at Bo is currently under construction. The new principal has arrived. The remainder of the staff is being actively recruited. The training of the first class is scheduled to begin towards the end of 1980. The course is 3 years and will be assigned primarily to rural Health Centers. They will be known as "medical assistants."

c) The Institute of Health Sciences has yet to be created. The exact function of, and the jurisdiction over such an institute are apparently still under debate. In general it is to operate as a "coordinating body for the planning, operation, and integration of health and medical education, training and service in Sierra Leone." This institute, if properly formulated and given authority commensurate with the above- mentioned responsibilities, could be an extremely valuable tool for improving the health status of the country.

Currently Functioning Training Programs

5. Health personnel training programs currently functioning in Sierra Leone are discussed below by category of personnel.

State Registered Nurses (SRN)

6. The National School of Nursing in Freetown trains nursing sisters according to international standards. This as a 3-year program which includes basic bio-medical sciences, all nursing skills and practical training in all fields of nursing. - 107 -

State Enrolled Community Health Nurses (SECHN)

7. This is a new nomenclature which replaces "State Enrolled Nurses." A new curriculum includes considerable emphasis on community and primary care. The course is two years. Training programs are located at the National School of Nursing, Military Hospital (Freetown), Nixon Memorial Hospital (Mission Hospital, Eastern Province) and Serabu Hospital (Mission Hospital, Southern Province).

State Certified Midwives (SCM)

8. This is the designation for nurse-midwives in Sierra Leone. SCM students are selected from among the SRN's and SECHN's applying for admission. The course is one year for SRN's and 18 months for SECHN's. There are two training programs, one at Princess ChriLstian Maternity Hospital in Freetown and one at Nixon Memorial Hospil:al, Southern Province.

Dispensers

9. Dispensers are trained at Connaught Hospital for 12 months. Students applying for this course must be SRN's with at least 3 years of hospital practice. The course is oriented towards acute clinical medicine. It is not clear what will become of this program once the medical assistants training school at Bo is fully operational.

Public Health Inspectors (PHI's)

10. PHI's follow a 3-year course which is standardized for West Africa under the auspices of the Royal Society of HeaLlth. This qualifies the student upon completion to sit the "Diploma of the Royal society of Health." The course is given at the School of Hygiene, Freetown. The facilities and number of personnel are grossly inadequate. The program is in jeopardy of losing its accreditation as a consequence.

Maternal and Child Health Aides (MCH Aides)

11. MCH Aides are trained at Bo, Kenema and Makeni Provincial Hospitals. Much of the training is practical. Midwifery is included. The graduates are used in MCH programs at health centers and district and provincial hospitals. The course lasts 18 months. The students must be literate women. This course replaces a previous course for illiterate TBA's called the Village Maternity Assistants Training Program. - 108 -

Endemic Disease Control Unit Assistants

12. Training for EDCU Assistants is primarily on-the-job by more experienced EDCU personnel. There are two didactic courses of 3 months each with 18 months of on-the-job training in between. EDCU assistants provide vaccination, spraying and health education on a mobile basis. The EDCU also operates 73 "treatment centers" (small dispensaries) throughout the provinces.

EDCU Inspectors

13. A few selected EDCU assistants are sent each year to follow the course at the School of Hygiene leading to the "Diploma of the Royal Society of Health." Upon completion these men are utilized as supervisors for EDCU teams.

Traditional Birth Attendant (TBA) Training Program

14. Since 1974 the MCH Division has been conducting courses for TBAs. The basic course lasts 3 weeks. The emphasis is on prenatal care, cleanliness during parturition and early recognition and referral of high-risk pregnancies. The course is given at the district level on a rotating basis. Each district has had at least one course. Over 500 TBAs have been trained. The total number of TBAs practicing in the country is not known.

15. No objective evaluation of the effect of the program on maternal or infant morbidity and mortality has been attempted. However, an observational study of TBAs in Sierra Leone was done by a WHO consultant in 1979.25 This study revealed some subjective evidence of reduced neonatal tetanus in communities where "trained" TBAs were practicing. This impression was supported by the observation of increased "cleanliness" during delivery on the part of trained TBAs as opposed to those without training. Unfortunately, this study also revealed the almost complete absence of any follow-up supervision and support for TBAs trained in the program.

In-Service Training

16. No formalized in-service training programs appear to exist except in the case of the EDCU.

Quality of Training

17. No attempt was made to objectively evaluate the quality of any of these training programs. However, from discussions with many persons directly involved and from reviewing the curriculum outlines, the impression drawn is that the quality is reasonably good. What does appear to be lacking is a systematic approach for deciding what to teach based - 109 -

upon what the health needs of the country are. There is not indication that the various programs, with the exception of those for EDCU techni- cians and TBAs have defined the specific tasks for which the students are being trained. SUMMARY OF HEALTH PERSONNEL TRAINING PROGRAMMES

Location Duration Function Number/Yr

SRN National School of Nursing 3 years Hospital and supervisory 20-25 (Freetown) nursing (plus 8-10 from outside)

SECHN National School of Nursing 2 years Recently reoriented 40-45 Military Hospital towards "community health Nixon Memorial Hospital nursing" Segbwema Hospital

SCM Princess Christian SRN + 1 year Obstetrical Care 30-40 Nixon Memorial SECHN + 1-1/2 yrs

Dispensers Connaught Hospital SRN + 1-1/2 years Clinical Practice 20-25 C

Public Health School of Hygiene 3 years Public Health & Sanitation 15 Inspectors (Freetown)

MCH Aides Bo, Kenema and Makeni 18 months MCH Care 35-40 Provincial Hospitals

EDCU Provincial Hospitals 3 mon. didactic Vaccination, Vector Control, not Assistants 18 mon. practical Clinical Medicine available 3 mon. didactic

EDCU School of Hygiene EDCU Assistant Endemic disease control, 15 Inspectors (Freetown) + 3 years supervision

Traditional Provincial Hospitals 3 weeks Obstetrical care, MCH not Birth available Attendants (TBAs) - ll -

IV. HEALTH POLICY

National 5-Year Development Plan (1974/75 - 1978/79)

1. A new National Health Plan is currently being prepared by the planning officer in the Ministry of Health and is not yet ready for review. The most recent statement of policy available is found in the health csmponent of the National Five-Year Development Plan, 1974/75 under the heading "Development Strategy Including Sectoral Priorities, Objectives and Policies."l5 The first paragraph of that section states, "the health strategy (goal) adopted by the Government is to raise the level of health of all people by providing a network of sound health facilities capable of reducing diseases, protecting life, increasing productivity and ultimately promoting well being in the shortest possible

2. The main objectives outlined to attain this strategy (goal) are:

a) "Combat major communicable diseases stuch as malaria, tuberculosis, leprosy, whooping cough, measles and tetanus."

b) Reduction in maternal and infant mortality by strengthening and extension of maternal child and school health services."

c) "Expansion of medical and health care facilities in order to reach a greater percentage of the population."

d) "(Develop a program for) health education."

e) "Provision of qualified staff to service the facilities."

f) "(Development of an efficiently operating system for gathering and analyzing vital and) health statistics."

g) "(Setting up of a National Health Laboratory to improve) laboratory services."

3. The targets to be met during the 5-year period (1974/75 - 1979/80) are listed below:

a) "Establish one health unit . . . in every chiefdom in the country (there are 148 chiefdoms)."

b) "Set up a University Centre of Health Sciences which will train both medical and para-medical personnel."

c) "Increase in the general bed/population ratio from 0.8 per 1000 population to 1.0 per 1000 in 1978." - 112 -

d) "The number of beds in Kissy Mental Hospital and Lakka Chest and Infectious Diseases Hospital will be increased from 351 in 1972 to 561 by the end of 1978."

e) "Expand MCH services . . . so that there will be one MCH aide per 4000 - 6000 population in the provinces.

More Recent Health Policy Decisions

4. In addition to these strategies (goals), objectives and targets established as part of the 1974/75 five-year plan, the Government has implicitly made three other major policy decisions related to health. In 1978 the Primary Health Care Project was inaugurated in Bombali District. The major policy decision implied in this project is the shifting of a substantial degree of authority and responsibility to local health development committees at both the chiefdom and district levels. In the Annual Public Investment Program (1979/1980)2 it is stated, "the project will later be extended to other areas" which indicates substantial government su-port for this project. The extension of the Primary Health Care Program, however, does not appear to have general support from either the MOH or the health staff. The view is widely held that a low technology approach to health care would menace development of professional medicine, threaten the quality of health care and, consequently, would probably not be accepted by the population.

5. The community orientation could reduce dependence upon the central govenment's revenues. This would be particularly important in the area of pharmaceuticals for Sierra Leone. Approximately half of the total requested for this year's Ministry of Health operating budget is earmarked for drugs; while at the same time only about one quarter of the requisitioned drugs are purportedly supplied to rural health centers and dispensaries. Under such conditions alternatives to the current drug distribution system should be considered. Subsidized drug purchase schemes are part of the primary health care projects. Expansion of this concept along the lines currently being implemented in other West African countries might be considered.

6. The second major policy decision concerns rural clean water supplies. The Water Supply Division of the Ministry of Energy and Power has made preliminary agreements with UNDP and EEC to undertake rural water supply feasibility studies. These studies imply an intention on the part of the government to develop a nationwide clean village water supply project. Such a project could have a major beneficial effect on health status.1 3

7. The third policy decision is to forego the creation of a medical school for the time being. This apparently was, and remains, a very controversial issue. However, for the time being such an undertaking was considered simply too expensive to be seriously pursued. - 113 -

8. The 1980 UNICEF Country Profile for Sierra Leone reports that in the health sector the Government is currently emplhasizing development of its rural health infrastructure including construction of new health units, training of appropriate staff and expanding its child immunization capacity. The Government also wishes to increase its emphasis on planning, monitoring and evaluation.

Family Planning

9. The question of population growth and subs,equently family planning remains a topic of considerable controversy and debate. Much of the problem is the result of conflicting estimates of population qrowth rates. The figure referred to most frequently is 2.5% per annum. This figure is based upon reported data from Western Area health facilities. However, several sample surveys including two analyses of the 1975 census put this figure at about 1.8%.10ll9 The discrepancy is due primarily to variations in the crude death rate estimations, especially infant mortality rates. The entire question of fertility, infant mortality, population growth rates and their interdependence needs further investigation. A clear understanding of these relationships is central to any effort to improve health conditions in Sierra Leone.

10. Currently, the Government has stated that it feels no need to curb its current population growth rate. It does recognize, however, that family planning used for child spacing purposes couldi improve maternal and infant mortality rates, but has made no more of a commitment than to state that family planning services should be made available to those who desire them.

Need for Policy Making/Planning Mechanism

11. Finally, perhaps the most important observation concerning health policy is that there appears to be no mechanism for making it. The consensus of opinion both within the Government and outside is that a planning and policy making body with the health sector is badly needed. Major decisions are frequently forced to be made on an ad hoc basis without benefit of necessary information nor consensus. This often results in duplication, waste and omission by oversight. At the same time it should also be noted that a prerequisite to sound planning and policy making is reliable data. Sample survey techniques allow for the collection of this data even without a fully reliable reporting mechanism within the health service system itself. The medical statistics unit must be upgraded if the Ministry is to have this capacity plus other necessary competencies required to monitor health status and evaluate the health sector activities. - 114 -

V. HEALTH BUDGET AND FINANCING

A. Budget

1. A detailed analysis of the economic picture in Sierra Leone including the health sector can be found in the main body of this report. It will suffice here to simply point out some of the aggregate expenditures for health and some possible ramifications.

2. The allocation of public expenditure to the health sector from 1973 to 1978 is shown on the following table:

Recurrent As % of Capital As % of Total As % of Fiscal Health Total Health Total Health Total Year Expen- Recurrent Expen- Public Expen-. Public diture Public diture Capital diture Expenditure Expenditure Expenditure

1973/74 6,007 7.1 136 1.7 6,143 6.7

1974/75 6,167 5.7 290 1.2 6,457 4.9

1975/76 7,776 6.9 716 1.8 8,492 5.6

1976/77 9,087 6.8 705 2.0 9,802 5.8

1977/78 12,991 7.7 2,152 5.9 15,143 7.5

Country Profile, WHO Office, Freetown, Sierra Leone, 1980

3. In fiscal 1975/76 the Government spent nearly Le 7.8 million for recurrent health costs, or approximately Le 2.8 per capita. At the same time (1976) a household survey revealed that the out-of-pocket expenditures averaged Le 6.5 per capita for the country and Le 6.25 for the rural population.13 These figures would tend to support the notion that the population at all socio-economic levels is willing and able to contribute significantly to health care, directly. This concept is further substantiated by the reports from the Primary Health Care Projects where labor and material are locally supplied and several significant drugs are being sold at subsidized prices.2 In light of these facts, and others, the policy of "free" health care by the government's system, especially pharmaceuticals, needs closer scrutiny and possible revision.

B. External Assistance

4. The health sector receives cooperative support from the various international, bilateral and private voluntary sources including WHO, UNDP, UNICEF, UNFPA, EED, CIDA, USAID, ODM, Peace Corps, Catholic Relief Services, CARE and others. Numerous projects related to fertility services, - 115 -

medical equipment repair, well construction, Lassa fever research, malaria control, health center construction, drug supplies, etc., are underway or currently being developed. Among these many projects, the ones listed below warrant describing in detail. They appear to have the greatest potential for measurably improving the health status of the population.

Integrated Medical Education and Training Program (I:METP)

5. This project, mentioned earlier, appears to have significant policy implications. The 3-part project is strongly oriented towards the concept of "community medicine." The Departmenit of Community Medicine is providing an academic structure for the implementation of studies relating health services to health status. The Medical Assistants School at Bo will provide locally trained quality personne:L to operate such a community oriented system. The third element in thie project, the "Institute of Health Sciences",could provide a vitaLly needed function. If properly constituted and mandated, it could become the planning, policy making and evaluation body for the entire health sector. These functions are currently performed on an ad-hoc uncoordinated basis. This institute could improve this situation dramatically.

Primary Care Projects

6. Three "primary care" projects are currently underway in Sierra Leone. The largest is located in Bombali District, Northern Province and is operated through the National Health Service Scheme with the cooperation of WHO and UNICEF.20 Two other "primary care" projects are being developed and supported by Serabu and Nixon Memorial Hospitals.2 2 The importance of these projects lies in the fact that they rely upon communities themselves. Active involvement of villagers including policy making, labor and financial support is the key element of these "self-help", "community-based" programs. Outside health personnel must act through the community, chiefdom and/or district level "Health Development Committees." Such a policy puts responsibility for maintaining and improving health status where it is effective with communities and individuals themselves. Evaluation of these projects has been satisfactory to the extent that further extension is underway.

Village Water Supply

7. At the present time approximately 75% of the urban population is estimated to have access to a public water supply system. However, that 80% of the popula ion living in rural areas draws its water mainly from surface sources.' Several relatively small scale rural water projects are currently in progress. Assistance is being provided mainly by private voluntary organizations (Peace Corps, CRS, CARE). A much larger effort is planned by the Ministry of Energy and Power to coincide - 116 - with the United Nations Water Resources Decade (1981-1990). UNDP, UNICEF and EEC are cooperating in the studies and initial pilot program. This project calls for the establishment of a "Small Village Water Supply Unit" within the Ministry of Energy and Power. This unit is beginning operations in 1980 in Bombali District, Northern Province. This initial operation is part of an "Integrated Rural Development Program" under the auspices of the Ministries of Health and Social Welfare.

8. Following this initial phase, the Ministry of Energy and Power plans to expand this project to include the entire country by 1990. Considerable external assistance will be required tor planning, equipment and supplies.

The Expanded Program for Immunization (EPI)

9. Neonatal tetanus, measles, and tuberculosis, especially are major contributors to the high mortality rates in Sierra Leone. Polio, diptheria and whooping cough are also significant health problems. The EPI program working primarily through the EDCU and the MCH Division is expanding the vaccination capacity of the health sector.2 4 Pregnant women and children under two years of age are the primary focus.

10. The project will provide support in the areas of planning, training, cold chain equipment, supplies, vehicles and operating costs. - 117 -

VI. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS

1. The following is, in summary, the status of the health system in Sierra Leone:

(a) Centralized with little peripheral delegation of authority or responsibility;

(b) Curative medicine oriented with 40-50% of the budget used for pharmaceutical purchases and the majority of all expenditures directed towards hospital services;

(c) Strongly urban biased, especially toward the Freetown area, with the bulk of the facilities and personnel concentrated in the few urban centers. Over half of the government physicians and nurses, for example, are located in Freetown;

(d) Oriented towards the concept of trying to "provide health" to people as opposed to assisting and guiding the population in utilizing their own resources as effectively as possible. This ig in spite of the fa,ct that the public spends almost 4 times as much money per capita out-of-pocket for medical/health care as the goverrmaent does with all of its programs combined. There appears to be little awareness of this fact and consequently little effort devoted to guiding the individuals in the most efficient, effective use of this money;

(e) Having a minimal (if any) measurable impact upon the health status of the population, according to recent studies comparing health facilities to infant: mortality rates. And these true infant mortality rates, representing the most sensitive indicator of overall health status available, are among the highest in the world;

(f) Pursued with virtually no reliable feedback mechanism. As a consequence, policy makers have no rational foundation upon which to base allocations of their resources; supervisors have no rational basis for evaluating and rewarding the work of their administrative subordinates; and the individuals up and down the 'Line are without the benefits derived from seeing that their efforts have resulted in improving the health of the populations in their areas, a powerful motivating force.

2. Much of what is pointed out here is already well appreciated by any number of people within the health sector in Sierra Leone. Changing the system, however, requires more than simply being aware of the problem. It requires persuasive facts, plus political and economic power to back - 118 -

them up. The role of the bilateral and multilateral donors is to cooperate in providing these facts and power to the health sector so that the appropriate changes can be brought about. Some changes are, as pointed out, already underway.

Recommendations

3. The following appear to be appropriate means of attempting to deal with these problems over the years to come.

4. Health Statistics. A proper health statistics unit, oriented to management decision making, properly staffed, capable of conducting independent data collection surveys and the subsequent independent analysis, and reporting, is a key requirement. Techniques for gathering and interpreting this kind of information are currently available within Sierra Leone itself. It is, therefore, quite feasible to develop a unit with such capabilities. Without this unit the health sector will continue to operate "blind" of the effect, or lack of effect, it is having. Such a condition should be viewed as intolerable and remedied immediately.

5. Policy and Planning. The machinery for establishing coherent and meaningful policy and plans pursuant to the improvement of the health of the population is not apparent. Many of the deficiencies pointed out in this report seem to be the result of a system that has simply evolved without benefit of a periodic detached review and reorganization. This, in turn, is undoubtedly in large measure due to the nearly total absence of any valid information.

6. The "Integrated Medical Education and Training Program" calls for the creation of an "Institute of Health Sciences" as one of three components of the overall project. The Institute was conceived to be a "coordinating body for planning, operation and integration of health and medical education, training and service in Sierra Leone."

7. This Institute should be created and given the authority to assimilate and interpret all relevant information and to create policy and outcome goals for the entire health sector. The Institute should have a small permanent staff consisting of trained health planners, administra- tors and clerical staff. If such professional personnel are not available, arrangements should be made for training them at appropriate institutions.

8. Financing Health Services. Although there is likewise little data available on the subject of overall expenditures on health care, what is available indicates that the percentage expended through the Government's system is relatively small compared to that which is expended out-of-pocket.12 This situation needs investigation and clari- fication. - 119 -

9. To the extent that it is true, this information indicates that the Government system meets no more than a small fraction of the public's demand for health care, with the majority being met through the private "system." If this is, in fact, the case, then the Government should consider augmenting its own capacity to provide services by introducing a partial payment scheme.

10. Administration and Management. It is clear to all concerned that the administrative system as it stands is too highly centralized for efficient operation. Decentralization, however, requires delegation of centralized authority. That is seldom easily accomplished. Nonetheless it is essential if the required reorientation of the system towards prevention, promotion, and community responsibility is to occur. Policies, technical guidance and financial support s;hould come from the center. However, the specific utilization of those resources must be left to the Provincial District, Chiefdom and finally the community levels.

11. Training. Competency-based training (CBT) curricula should be developed and utilized in all health sector training programs. CBT refers to the systematic development of training courses according to a five-step process:

- 'Needs" assessment - Task analysis - Performance objectives - Learning activities - Evaluation of performance

12. This curriculum development process and subsequent training system is highly effective in assuring that training is appropriate to the job to be filled. This approach is being initiated at the new Para- Medical School in Bo. The same process should be applied to the curricula in other training programs.

13. Student selection should be based in part upon the recommendations of the communities in which the graduates will be posted. Community participation in the selection process tends to assure mutual compatibility between communities and health workers.

Drugs

14. The Government's policy of dispersing "free drugs" should be revised. The specific recommendation for a comprehensive drug policy for the country are clearly beyond the scope of this report. However, the following general recommendations are offered:

(a) An independent analysis of the drug procuremdnt, distribution and utilization system should be made;

(b) A National Formulary should be prepared. The inclusion of drugs should be based upon a rational weighting of (i) effectiveness against the diseases/conditions endemic to Sierra Leone, (ii) cost, (iii) alternative choices, (iv) stability of compounds, and (v) availability, etc.; - 120 -

(c) A subsidized drug purchase scheme, similar to the "Propharmacie" system in the Cameroons, should be developed and introduced for the rural areas. Under this scheme the Government provides basic drugs to community-operated pharmacies at a subsidized wholesale rate. The drugs are then sold to the public at a pre-determined price which is 10-15 percent above the wholesale rate. The markup pays for the "manager" and transportation costs.

(d) The distribution of drugs should be decentralized to at least the provincial level. The allotments for the provinces could be dispatched by truck on a quarterly basis and held in the "provincial medical store." This would eliminate the need for someone from each peripheral health facility to travel back and forth to Freetown for drugs every three months.

Water

15. Approximately 80% of the population of Sierra Leone draw their water from surface sources.13 Much of this water is contaminated by human pathogens and as such contributes to the high levels of illness, especially gastrointestinal diseases in infants. Dehydration as a compli- cation of gastroenteritis is the leading "immediate cause of death" worldwide. Although the breakdown data is not available, it undoubtedly contributes very heavily to the high infant mortality rates in Sierra Leone as well. The provision of protected and well maintained sub- surface water sources will improve this situation.

16. Preliminary plans for a two-part village water supply scheme have been made. These plans outline a country-wide program to be carried out in large measure over the next ten years to coincide with the UN Decade for Water 1981-1990. The necessary studies and detailed plans should be made as soon as possible so that the actual project can be implemented during 1981.

Population and Family Planning

17. Sierra Leone is apparently satisfied with the current rate of growth of population. However, 80% of women questioned in principle favored the concept of increasing the interval between births in order to protect the health of the infant and/or the mother.4 This principle is put into practice widely through abstinence following delivery. It is well established that increased birth intervals are indeed associated with increased infant survivorship. - 121 -

18. These facts together should become the basis for the establishment of a National Family Planning Policy. This policy should encourage increased availability of contraceptive advice and services as an effective means of lowering the infant and miaternal death rates. The effect of such a program on the population growth rate will depend on the future fertilit% needs and aspirations of the population. These, in turn, will be largely determined by levels of socioeconmmic development.

Primary Health Care

19. As defined jointly by WHO and UNICEF, "Primary Health Care is essentially health care made universally accessible to individuals and families in the community by means acceptable to them, through full participation and at a cost that the community and country can afford. It forms an integral part both of the country's health system of which it is the nucle s and of the overall social and economic development of the community."

20. As such, PHC can be viewed as an "umbrella" concept which encompasses all of the other concepts recommended explicitly or by implication in this report including:

(a) Self-reliance;

(b) Decentralized authority and responsibility;

(d) Equitable distribution of public resources;

(e) Community participation in planning and implementation;

(f) Recognition, training and support of "traditional" practitioners and birth attendants; and

(g) Evaluation focused on the relationship between process and health status outcomes, on a community-wide basis.

21. Some of the PHC concepts have already beern incorporated in part into the Sierra Leone System including most notably the training of State Enrolled Community Health Nurses (SECHN) towards community education and involvement. In addition, three pilot PHC programs have been in operation since 1979. The experience from the initial steps backed by a wealth of experience around the world with larger scale PHC programs substantiates sufficiently the validity of this approach to improving the health of the population in Sierra Leone. - 122 -

22. The final recommendation of this report is, therefore, that the Government of Sierra Leone should adopt the principle of Primary Health Care as a matter of its most basic official policy. - 123 -

BIBLIOGRAPHY

1. Country Profile, Republic of Sierra Leone, WHO Office, Freetown, S.L., 1980.

2. Development Estimates 1979/80, Government of Sierra Leone, 1979.

3. Dow, T. E., "Family Planning Policy for Tropical Africa" (unpublished manuscript), 1978.

4. Dow, T. E., Jr., and Benjamin, E., Demographic Trends and Implications, pp. 440-446. In: Caldwell, J. C., Editor. Zopulation Growth and Socio-economic Change in West Africa. New York/London, Columbia University Press for the Population Council, 1975.

5. Fertility Advisory Services, Project Request for UNFPA (unpublished document submitted to UNFPA by the Ministry of Health, Sierra Leone), 1976.

6. Givatkin, D. R., Wilcox, J. R., and Wray, J. D., Can Health and Nutrition Interventions Make a Difference?, Overseas Development Council, Monograph Series, 1980.

7. Horton, S. A., Unpublished Documents, Medical Statistics Unit, Ministry of Health, 1980.

8. Illich, I., Medical Nemesis, London Calder and :Boyar, 1975.

9. Kandeh, H. B. S., Infant and Child Mortality Survey in Bo District of Sierra Leone (First Report), the Rockefeller Fd., 1975.

10. Kandeh, H. B. S., and Dow, T. E. Jr., Correlates of Infant Mortality in the Chiefdoms of Sierra Leone, presented at the National Seminar on Population, Employment and Development Planning in Sierra Leone, Freetown, May, 1980.

11. Kargbo, T. K., Witchcraft and Allied Beliefs in Sierra Leone and Their Socio-medical Significance, presented Sierra Leone Medical and Dental Association Annual Conference, November, 1978.

12. King, R. P., and Byerlee, D., Income Distribution, Consumption Patterns and Consumption Linkages in Rural Sierra Leone, Departments of Agricultural Economics, Njala College and Michigan state University (USA), 1977.

13. Kireh, P. E., Sierra Leone, A Review and Analysis of the Water Supply and Sanitation Sector, Consultant's Report to the Ministry of Power and Energy, 1978. - 124 -

14. McKeowin, T., "The Determinants of Health," Human Nature, p. 60, April, 1978.

15. National Development Plan, Government of Sierra Leone, 1974/75.

16. National Nutrition Survey Report, Ministry of Health, 1978.

17. Nickson, R. A., The Allocation of Health Resources in Sierra Leone, Central Planning Unit, Ministry of Development and Economic Planning, January, 1975.

18. Nugroho, G., A Community Development Approach to Raising Health Standards in Central Java, Indonesia in Health by the People, WHO, 1975.

19. Okoye, S. C., Mortality Levels, and Differentials in Sierra Leone; An Analysis of the Mortality Data from the 1974 Population Census of Sierra Leone, Central Statistics Office, Freetown, S. L., February 1980.

20. Primary Health Care, Report of the International Conference on Primary Health Care, Alma-Ata, USSR, G-12, September 1978, WHO, Geneva, 1978.

21. Primary Health Care Project Report, PHC Office, Old Lumsar Road, Makeni, S. L., 1979.

22. Ross, D., Health by the People in Sierra Leone, Oxford Medical School Gazette, Volume 30, 2, 1978.

23. Ross, D. A., The Serabu Hospital Village Health Project, Contact, 49, February, 1979.

24. Sierra Leone National Expanded Programme of Immunization, Ministry of Health, 1979.

25. West, K. M., Traditional Birth Attendant Case Study for Sierra Leone, WHO Consultant's Report, 1979.

26. Williams, B., The Traditional Birth Attendant, Training and Utilization, Government of Sierra Leone, 1979. - 125 - ANNEX C

SIERRA LEONE

MACRO-MODEL

Proj ections

- 126 -

Table Cl: AGRICULTURAL PRODUCTION

('000 Tons)

Second Plan Period FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 Actual Eseimate ------…Projected------

Export Crops

1. Coffee 12.0 11.0 12.0 11.0 12.0 13.0 13.0 13.0 14.0 14.0 15.0 15.0

2. Cocoa 7.2 10.5 10.0 10.0 10.0 11.0 11.0 11.0 12.0 12.0 12.0 13.0

3. Palm Kernels 13.6 12.8 15.0 17.0 17.0 17.0 18.0 18.0 18.0 18.0 19.0 19.0

4. Palm Products 14.6 21.0 22.0 23.0 24.0 25.0 26.0 27.0 28.0 28.0 29.0 30.0

Subsistence Ag.

5. Rice 309 312 316 323 332 342 353 359 365 369 375 379

Source: SLPMB and IBRD, WAP

Table C2: MINERAL PRODUCTION

('000 Tons)

Second Plan Period FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 Actual Estimate ------…------Projected------

Diamonds-/ 818 721 684 650 617 586 796 787 765 750 715 700

1. DIMINCO 193 171 190 185 175 150 120 120 100 100 50 50

2. Alluvial 625 550 494 465 442 436 436 427 425 410 405 390

3. Kimberlite ------240 240 240 240 260 260

Bauxite

4. Mokanji 718 725 725 725 725 725 1000 1000 1000 1000 1000 1000

5. Port Loko ------700 1000 1000 1000 1000

Rutile

6. Gbangbma 7 32 60 80 80 100 100 50 - - - -

7. Lanti ------50 100 100 100 100

Source: DIMINCO, SIEROMCO, SIERRA RUTILE

I/In '000 carats. - 127 -

Table C3: EXPORT PROJECTIONS

(In millions of Leones)

(1980 Constant Prices)

Second Plan Period FY79 FY80 FY91 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 Actual Estimate ------Proected------

Exports

Diamonds 138.0 121.7 115.5 109.7 104.1 101.3 134.3 132.8 129.1 126.6 120.7 118.3

Bauxite 7.2 11.4 11.4 11.4 11.4 11.4 15.8 15.8 15.8 15.8 15.8 15.8

Rutile 1.6 3.0 13.5 18.8 18.8 22.6 20.3 20.3 22.6 22.6 22.6 22.6

Coffee 42.7 39.3 42.8 39.3 42.8 46.4 46.4 46.4 49.9 49.9 53.5 53.5

Cocoa 22.0 32.0 30.5 30.5 30.5 33.6 33.6 33.6 36.6 36.6 36.6 36.6

Palm Kernels 5.8 5.5 6.4 7.3 7.3 7.3 7.7 7.7 7.7 7.7 8.2 8.2

Processed Palm Kernels 7.2 10.3 10.8 11.2 11.8 12.3 12.7 13.2 13.7 13.7 14.2 14.2

Other Goods 8.5 10.7 10.9 11.1 11.3 11.5 11.7 11.9 12.1 12.3 12.5 12.7

Total Goods 232.6 233.9 241.8 239.3 239.2 235.2 282.5 281.7 287.5 285.2 284.1 281.8

NFS 6.0 7.0 7.3 7.3 7.4 7.5 8.5 8.5 8.6 13.6 16.9 22.6

Total Goods 6 NFS 238.6 240.9 249.1 246.6 246.6 242.7 291.0 290.2 296.1 298.8 301.1 304.4

Source: Based On Tables Cl and C2. - 128 -

Table C4: GDP PROJECTIONS WITH STRATEGY AND POLICY CiANGES

(In millions of Leones)

(1980 Constant Prices)

Second Plan Period FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 Actual EstimaTte ------…-----Projected- -- …------

GDP 960.3 974.7 1002.2 1015.5 1039.3 1070.4 1151.1 1214.6 1241.3 1302.0 1354.2 1437.2

Agriculture 342.0 352.4 361.3 365.6 377.0 391.0 407.4 426.1 438.6 454.3 471.5 494.2

Export Crops 68.4 77.4 82.8 81.0 83.2 89.6 93.4 96.4 97.1 97.1 101.2 101.2

Other 273.6 275.0 278.5 284.6 293.8 301.4 316.0 329.7 341.5 357.2 370.3 392.0

Industry 203.7 196.9 201.6 202.2 198.0 205.9 238.5 244.5 252.2 253.7 265.6 276.2

Mining 118.2 108.8 110.9 110.5 105.0 106.9 134.6 133.4 132.3 130.3 125.8 125.2

Other 85.5 88.1 90.7 95.7 93.0 99.0 103.9 109.0 119.9 129.4 133.8 151.0

Services 414.6 425.4 439.8 447.7 464.3 473.5 504.2 544.0 550.4 588.0 626.2 666.8

Memo Items:

Population (Mil) 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.2 4.3 4.4 Per capita GDP (Le) 291.0 286.7 286.3 282.0 280.9 281.7 295.2 302.6 302.8 310.0 315.9 326.6

Source: IBRD Staff Estimates - 129 -

Table CS: IMPORT PROJECTIONS

(In millions of Leones)

(1980 Constant Prices)

Second Plan Period FY79 FY80 FY81 FY82 FYg3 FY84 FY85 FY86 FY87 FY88 FY89 FY90 (Actual) (Estimate) ------Projected------

Imports

Food 74.2 46.2 47.3 48.7 49.7 50.7 51.7 52.7 53.7 54.7 55.7 56.7

Other Consumer Goods 28.0 24.6 22.0 20.0 15.0 13.0 13.0 13.0 13.0 13.0 14.0 14.0

Petroleum 70.0 71.0 73.2 75.4 76.9 78.4 81.6 84.9 70.8 68.0 65.0 65.0

Intermediary Goods 92.3 69.6 70.6 72.6 73.5 75.7 81.4 84.6 88.0 91.5 95.2 99.0

Capital Goods 94.9 96.6 88.8 108.1 110.7 114.0 139.2 146.4 149.5 151.2 161.6 169.3

Total Goods 359.4 308.0 301.9 324.8 325.8 331.8 366.9 381.6 375.0 378.4 391.5 404.0

NFS 39.8 31.3 30.2 32.5 32.5 33.5 34.0 36.0 36.5 37.0 38.0 40.0

Total GNFS 399.2 339.3 332.1 357.3 358.3 365.3 400.9 417.6 411.5 415.4 429.5 444.0

Memo Items:

Essential Imports/Total - 82 percent.

Assumptions: 1. Food imports increase 2X per year

2. Demand for primary energy resources increases by 2% until FY85; 4% between FY85-87 and declines gradually as Bumbuna hydropower project comes on stream.

3. Capital goods imports increase as a function of investments.

4. Intermediary goods imports increase as a function of GDP (Import elasticity - 1). - 130 -

Table C6: EXPORT PRICE INDEX

FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90

Price Projections Exports Weight

Diamonds .55 100.0 115.0 132.3 152.1 179.4 201.1 231.3 265.0 304.7 350.4 403.0 463.4

Bauxite .05 100.0 112.5 122.9 133.8 146.0 159.3 173.5 185.6 197.3 209.7 222.9 236.9

Coffee .16 100.0 94.8 86.8 86.8 87.8 98.3 113.9 125.1 135.1 145,9 157.5 170.1

Cocoa .14 100.0 88.7 86.4 93.4 99.8 106.6 114.0 111.7 109.8 107.8 106.0 104.2 Rutile ) .10 100.0 112.6 122.6 132.0 143.7 154.5 165.2 175.2 185.7 196.9 208.6 221.2 Other

1.00

Weighted Totals

FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90

Exports

Diamonds 55.0 63.2 72.8 83.6 96.2 110.6 127.2 145.8 167.5 192.7 221.6 254.8

Bauxite 5.0 5.6 6.3 6.7 7.3 8.0 8.8 9.3 9.9 10.5 11.1 11.8

Coffee 16.0 15.1 13.9 13.9 14.0 15.8 18.2 20.0 21.6 23.3 25.2 27.2

Cocoa 14.0 12.1 12.1 20.6 13,9 14.9 16.0 16.4 15.3 15.1 14.6 9.9

Rutile ) ) 10.0 11.2 12.3 13.2 14.3 15.5 16.5 17.5 18.6 19.7 20.9 22.1 Other

Export Price Index

1979 - 100 100.0 107.2 117.4 138.0 145.3 164.8 136.7 209.0 232.9 261.3 293.6 325.8

1980 - 100 100.0 109.5 128.7 135.9 153.7 174.2 195.0 217.3 243.8 273.9 303.9

Source: IBRD - 131 -

Table C7: IMPORT PRICE INDEX

Price Projections

Weight FY7C FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90

Food 15.0 100.0 132.9 162.2 187.9 206.5 226.9 248.9 265.5 283.3 302.3 322.6 344.2

Other Consumer Goods 8.0 100.0 112.5 122.6 133.0 143.7 154.5 165.2 175.2 185.7 196.9 208.6 221.2

Petroleum 20.0 100.0 165.0 185.4 207.3 230.0 255.3 283.5 310.1 339.2 371.1 406.0 444.2

Intermediary Goods 30.0 100.0 112.5 122.6 133.0 143.7 154.5 165.2 175.2 185.7 196.9 208.6 221.2

Capital Goods 27.0 100.0 112.5 122.6 133.0 143.7 154.5 165.2 175.2 185.7 196.9 208.6 221.2

Weighted Totals

FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90

Food 15.0 100.0 19.9 24.3 28.2 31.0 34.0 37.3 39.8 42.5 45.3 48.4 51.6

Petroleum 20.0 100.0 33.0 41.5 41.5 56.0 51.1 56.7 62.0 67.8 74.2 81.2 88.8

Other 65.0 100.0 73.1 79.7 86.5 93.4 100.4 107.4 113.8 120.7 127.9 135.6 143.8

FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90

Weighted Average 100.0 126.0 145.5 156.2 170.4 185.5 201.4 215.6 231.0 247.4 265.2 284.2

(1980 - 100) 100.0 115.5 124.0 135.2 147.2 159.8 171.1 183.3 196.6 210.5 225.6

Source: IBRD

Assumptions: 1. Rice price index is used as a proxy for food price projections.

2. Petroleum price forecasts are IBRD Commodities Division (Nov. 2, 1980).

3. Other Components: International Inflation Index, IBRD Commodities Division (Nov. 2, 1980). - 132 -

Table CB: BALANCE OF PAYMENTS PROJECTIONS WITH STRATEGY AND POLTCY CHANGES

(In millions of Leones)

(Current Prices)

Second Plan Period FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 Actual Estimate - …- …----- …-P r o j e c t e d------

Trade Balance -83.5 -75.0 -83.8 -94.8 -76.6 -126.9 -94.0 -103.6 -62.7 -48.6 -46.0 -55.0

Exports (fob) 213.5 233.9 264.8 307.9 325.1 361.5 492.1 549.3 624.7 695.3 778.1 856.4

Imports (fob) -297.0 -308.0 -348.6 -402.7 -440.5 -488.4 -566.1 -652.9 -687.4 -743.9 -824.1 -911.4

Resource Balance -109.3 -98.4 -110.7 -125.6 -149.1 -164.7 -11'3.7 -148.6 -110.9 -88.7 -79.7 -76.8

Exports, NFS 220.2 240.9 272.8 317.4 335.1 373.0 506.9 565.9 643.4 728.0 824.4 924.9

Imports, NFS -329.5 -339.3 -383.5 -443.0 -484.4 -537.7 -640.6 -714.5 -754.2 -816.7 -904.1 -1001.7

Total Services (net) -65.4 -68.8 -70.0 -71.5 -72.0 -73.5 -75.0 -76.5 -77.0 -78.0 -79.0 -80.0

Transfers 26.4 28.0 30.0 31.5 33.0 34.0 36.0 37.5 38.0 40.0 41.0 42.0

Current Account Balance -122.5 -115.8 -123.8 -134.8 -115.6 -166.4 -133.0 -142.0 -101.7 -86.6 -84.0 -93.0

Long Term Capital 57.5 99.9 39.5 88.9 114.4 138.3 146.9 128.1 121.5 138.5 156.1 172.5

Official Capital 38.5 89.9 24.5 58.9 74.4 88.3 101.9 83.1 86.5 108.5 126.1 142.5

Drawings 86.9 155.7 72.2 93.8 103.6 114.6 122.6 125.0 129.4 154.2 174.9 194.2

Repayments -48.4 -65.8 -47.7 -34.9 -29.2 -26.3 -20.7 -41.9 -42.9 -45.7 -48.8 -51.7

Private Capital 19.0 10.0 15.0 30.0 40.0 50.0 45.0 45.0 35.0 30.0 30.0 30.0

Short Term Capital 9.0 7.0 5.0 7.0 7.0 7.0 7.5 8.0 d.0 8.0 8.0 8.0

Trust Fund 8.3 13.4 2.0 2.0 ------

Allocation of SDR 4.0 4.4 4.4 -

Errors 6. 0missions -21.8 -9.0 - - -

Overall Balance -65.5 -41.8 -72.9 -36.9 5.8 -21.1 21.5 -5.9 27.8 59.9 80.1 87.5

Memo Items: Term of Trade

Export Price Index 100.0 107.2 117.4 138.0 145.3 164.8 186.7 209.0 232.9 261.3 293.6 325.8

Import Price Index 100.0 126.0 145.5 156.2 170.4 185.5 201.4 215.6 231.0 247.4 265.2 284.2

Term of Trade 100.0 85.1 80.7 88.3 85.3 88.8 92.7 96.9 100.8 105.6 110.7 114.6

Source: IBRD Staff Estimates - 133 -

Table C9: SUPPLY AND USES OF RESOURCESW1TH STRATEGYAND POLICY CHANGES

(In millions of Leones)

(1980 Constant Prices) Second Plan Period FY79 FYBo FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 (Actual) (Estimate)

GDP,mp 1056.3 1072.2 1102.4 1127.2 1153.6 1188.1 1289.2 1355.8 1384.1 1458.2 1516.7 1581.0

Imports, NFS 399.3 339.3 332.1 357.3 358.3 365.3 400.9 417.6 411.5 415.4 429.5 444.0

Total Resources 1455.6 1411.5 1434.5 1484.5 1511.9 1553.4 1690.1 1773.4 1795.6 1883.7 1946.2 2021.0

Fixed Investments 158.3 161.0 143.0 180.3 184.5 190.0 232.0 244.0 249.0 251.9 269.5 282.2

Consumption 1058.7 1009.6 1042.4 1057.6 1080.8 1120.7 1167.1 1239.2 1250.5 1333.0 1375.7 1438.4

Exports, NFS 238.6 240.9 249.1 246.6 246.6 242.7 291.0 290.2 296.1 298.8 301.0 304.4

Memo Items:

Indirect tax/GDP (2) 10.0 10.0 10.0 11.0 11.0 11.0 12.0 12.0 12.0 10.5 11.0 10.0

Investment/GDP (X) 15.0 15.0 13.0 16.0 16.0 16.0 18.0 18.0 18.0 18.0 18.0 18.0

Imports, Goods &'NFS/GDP (M) 37.8 31.6 30.1 31.7 31.0 31.0 31.0 31.0 29.7 28.8 28.6 28.3

Domestic Savings -2.4 62.6 60.0 69.6 72.8 67.4 122.1 116.6 133.6 125.2 141.0 142.5

Domestic Savings/I (X) -1.5 38.9 42.0 38.6 39.5 35.5 52.6 47.8 53.7 49.7 52.3 50.5

Domestic Savings Gap -160.7 -98.4 -83.0 -110.7 -111.7 -122.6 -109.0 -127.4 -115.4 -126.7 -128.5 -139.7

Source: IBRD Staff Estimates - 134 -

Table C10: MACRO-ECONOMIC PROJECTIONS SHORT RUN' (FY81-83)

(Le Millions at i98C Cons:'dint Prices)

Growth Rates

FY79 FY80 FY81 FE82 - FY83 FY81 FY82 FY83 (F-.80-83) (Acttual) (Estimate) ------Projected------Average

GDP fc 960.3 974,7 1002.2 1015.5 1039.9 2.8 1.3 2.4 2.1

- Agriculture 342.0 352.4 ^61.3 365.6 377.0 2.5 1.2 3.1 2.2

- Industry 203.7 196.9 201.6 202.2 198.0 2.4 0.3 -2.2 0.2

- Services 414.6 425.4 439.8 447.7 464.3 3.4 1.8 3.7 3.0

GDP mp 1056.3 1072.7 1102.4 1127.2 1153.6 2.8 2.2 2.3 2.4

Exports, NFS 238.6 240.9 249.1 246.6 246.6 3.4 -1.1 - 0.8

Imports, NFS 399.3 339.3 332.1 357.3 358.3 -2.2 7.5 2.8 1.8

Fixed Investments 158.3 161.0 143.0 180.3 184.5 -11.2 26.1 2.3 4.6

Consumption 1058.7 1009.6 1042.4 1057.6 1080.8 3.2 1.5 2.2 2.3

Trade Balance - -83.5 -75.0 -83.8 -94.8 -76.6

Current Account Balance - -122.5 -115.8 -123.8 -134.8 -115.6

I/GDP mp 15.0 15.0 13.0 16.0 16.0

M, NFS/GDP mp 37.8 31.6 30.1 31.7 31.0

Source: IBRD Staff Estimates

-/ At current prices - 135 -

Table Cll: MACRO-ECONOMIC PROJECTIONS MEDIUM RUN: THE SECOND PLAN PERIOD (FY81-86)

(Le Millions at 1980 Constant Prices)

Without P6licy Changes With Policy Changes (FY81-86) (FY81-86) FY81 FY86 Average Growth FY81 FY86 Average Growth Rates Rates

GDP fc 1002.2 1161.5 3.0 1002.2 1214.6 4.0 - Agriculture 361.3 404.6 2.2 361.3 426.1 3.4 - Industry 201.6 238.9 3.5 201.6 244.5 4.0 - Services 439.8 518.0 3.3 439.8 544.0 4.4

GDP mp 1102.4 1300.9 3.4 1102.4 1355.8 4.3

Exports, NFS 249.1 281.7 2.5 249.1 290.2 3.1

Imports, NFS 332.1 455.3 6.5 332.1 417.6 4.7

Fixed Investments 143.0 195.1 6.4 143.0 244.0 11.3

Consumption 1042.4 1279.4 4.2 1042.4 1239.2 3.5

Trade Balance -/ -83.8 -167.6 -83.8 -103.6

Current Account Balance -/ -123.8 -206.6 -123.8 -142.0

I/GDP mp 13.0 15.0 13.0 17.0

M,NFS/GDP mp 30.1 35.0 30.1 30.8

1/ At current prices. - 136 -

Table C12: MACRO-ECONOMIC PROJECTIONS LONG RUN (FY80-90)

(Le Millions at 1980 Constant Prices)

Without Strategy & Policy Changes With Strategy & Policy Changes FY80 FY85 FY90 FY8O-85 FY85-90 FY85 FY90 FY80-85 FY85-90 Estimate -- Growth Rates-- -- Growth Rates--

GDP mp 1072.7 1260.5 1425.2 3.3 2.5t 1289.2 1581.0 3.8 4.2

Exports, NFS 240.9 282.0 270.3 3.2 -1.0 291.0 304.4 3.8 1.0

Imports, NFS 339.3 441.0 498.9 5.5 2.5 400.9 444.0 3.4 2.1

Fixed Investments 161.0 189.0 213.7 3.3 2.5 232.0 282.2 7.6 4.0

Consumption 1009.6 1230.0 1440.1 4.0 3.2 1167.1 1438.4 3.0 4.3

Trade Balance -/ -75.0 -164.5 -213.0 -94.0 -55.0

Current Account Balance - -115.8 -203.5 -251.0 -133.0 -93.0

I/GDP mp 15.0 15.0 15.0 16.0 18.0

M, NFS/GDP mp 31.6 35.0 35.0 31.0 28.3

Source: IBRD Staff Estimates

-/ At current prices. - 137 -

Table C13: BUDGETARY OPERATIONS SECOND PLAN PERIOD (FY82 - FY86)

(In million. of Leonea) (At corrent pricea.

____-----Second Plan Period------Total Total FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY81-85 FY82-86

Revenue 197.2 229.6 256.4 299.3 351.9 430.0 517.0 588.3 687.7 796.9 942.0 1567.2 1854.6

Additional Taxation 17.8 22.8 26.5 31.7 39.3 47.8 22.2 30.2 39.3 51.9 138.1 168.1

Recurrent Expenditure 193.0 246.2 2/ 263.4 289.7 318.6 350.5 403.0 463.5 533.0 613.0 705.0 1468.4 1625.2

Of vhich: Intereat Pa.yment V/ 12.3 10.9 9.5 7.6 6.1 4.8 11.9 13.5 15.3 17.0 19.0 Other 180.7 235.3 253.9 282.1 312.5 345.7 391.1 450.0 517.7 536.0 686.0

Budgetary Savings 4.2 1.2 15.8 36.1 65.0 118.8 161.8 125.4 154.7 183.9 237.0 236.9 397.5

Capital Expenditure 138.0 81.1 117.3 129.5 143.3 153.2 180.9 184.9 220.3 249.9 277.4 624.4 724.2

Of which: Developuent Ecp. 48.2 81.1 117.3 129.5 143.3 153.2 180.9 184.9 220.3 249.9 277.4 Other 83.8 ------

Budgetary Deficit/Surplus -133.8 -79.9 -101.5 -93.4 -78.3 -34.4 -19.1 -59.5 -65.6 -66.0 -40.4 -387.5 -326.7

Finnocing

1. External Borrowing (net) 48.2 24.5 58.9 74.4 88.3 101.9 83.1 86.5 105.8 126.1 142.5 348.0 406.6

Drawings 114.0 72.2 93.8 103.6 114.6 122.6 125.0 129.4 154.2 174.9 194.2 506.8 553.6 Arorti.ation -65.8 -47.7 -34.9 -29.2 -26.3 -20.7 -41.9 -42.9 -45.7 -48.8 -51.7 -158.8 -153.0

2. Other 85.6 55.4 42.6 19.0 -10.0 -67.5 -64.0 39.5 -75.0

Mewo Itesa:

1. Tax Ratio with Additional Taxation 17.2 18.8 19.0 19.0 19.0 19.0 19.0 19.0 19.0 19.0 19.0 19.0 19.0

2. Budgetary Savings After Debt Anorti-ation -61.6 46.5 -19.1 6.9 38.7 98.1 119.9 82.5 109.0 135.1 185.3 78.1 244.5

Source: IBRD Staff Eatitaree

1/ Interest payent on external debt.

2/ Includes salary increse. of October 1980. - 138 - ANNEX D

SIERRA LEONE

SOCIAL AND ECONOMIC STATIS1'ICS

Annex D - 139 -

CONTENT S

Table No.:

1. National Accounts and Production

Dl.l Gross Domestic Product 1968/69-1978/79 (Current Prices) D1.2 Gross Domestic Product 1968/69-1978/79 (Constant Prices) D1.3 Supply and Uses of Resources 1968/69-1978/79 (Current Prices) D1.4 Supply and Uses of Resources 1968/69-1978/79 (Constant Prices) D1.5 Mineral Production (1968/69-1979/80) D1.6 Production of Major Cash Crops (1968/69-1979/80) D1.7 Production and Imports of Rice (1961-1980) D1.8 Production of Manufacturing Estab-lishments (1968-1978) Dl.9 Production Targets of the Ongoing Agricultural Projects and Achievements

2. Balance of Payments and External Debt

D2.1 Summary Balance of Payments (1968-1979) D2.2 Balance of Payments (1968-1979) D2.3 Value of Exports by Major Commodities (1968-1979) D2.4 Export Volume and Unit Value of Major Export Commodities (1968-1979) D2.4.1 Terms of Trade D2.5 Export Crop Operations of Sierra Leone Produce Marketing Board (1970/71-1979i/80) D2.6 Value of Imports by Major Commodlties (1962-1974) D2.7 Direction of Foreign Trade D2.8 Total External Debt Outstanding as of June 30, 1979 D2.9.1 Total Public Debt Service Payments (Fiscal Year Basis) D2.9.2 Public Debt Service Payments (Calendar Year Basis)

3. Public Finance

D3.1 Central Government Operations (1968/69-1979/80) D3.2 Central Government Revenue (1968/69-1979/80) D3.3 Functional Classifications of Cu-rrent Expenditure (1968/69-1979/80) D3.4 Sectoral Breakdown of Development Expenditure (1974/75-1979/80) D3.5 Operations of Public Corporations D3.6 Outstanding Government Debt - 140 -

Table No.:

4. Money and Credit

D4.1 Monetary Survey (1970-79) D4.2 Summary Accounts of Bank of Sierra Leone (1970-1979) D4.3 Summary Accounts of Commercial Banks (1970-1979) D4.4 Commercial Banks' Liquidity Ratio D4.5 Distribution of Commercial Bank Loans and Advances by Major Sectors (1970-1979) D4.6 Structure of Interest Rates D4.7 Credit Guarantee Scheme - Distribution of Loans and Advances

5. Prices

D5.1 Wholesale Price Index D5.2 Consumer Price Index for Freetown D5.3 Selected Sub-Indexes of Consumer Price Index for Freetown D5.4 Consumer Price Index for Mining Areas (1969-1979) D5.5 Producer and Export Prices of the Principal Export Crops (1968/69-1979/80) D5.6 Wholesale and Consumer Prices of Rice D5.6.1 Retail Price of Rice in Freetown D5.6.2 Retail Price of Rice in Mining Areas D5.7 Retail Price of Palm Oil in Freetown D5.7.1 Retail Price of Palm Oil in Mining Areas D5.8 Ex-Refinery Prices of Petroleum Products D5.9 Pump Prices of Petroleum Products D5.10 Financial Crop Budgets per Hectare

6. Population and Employment

D6.1 Population (1963-1978) D6.2 Regional Population Growth (1963-1974) D6.3 Labor Force and Employment Estimates 1974 D6.4 Labor Force by Major Industry Group (1963-1974) D6.5 Employment by Industry Sector and Employment Status 1963 D6.6 Employment by Industry Sector and Employment Status 1974 D6.7 Public Sector Employment D6.8 Employment in Establishments with Six or More Workers D6.8.1 UNIDO Industrial Review D6.9 New Entrants to the Labor Market D6.10 Demographic and Economic Characteristics of Rural Households D6.11 Acreage of Fields by Tenure Pattern - 141 -

Table No.:

7. Wages and Salaries

D7.1 Civil Service Salaries D7.2 Wage Data D7.3 ILO Study - Functional Distribut:Lon of Income D7.4 Distribution of Consumption Expenditures in Freetown D7.5 Earnings Trends in Major Sectors D7.6 Union Membership Table Dl.l: CDP BY SECTORAL ORIGIN (AT FACTOR COST) 1968/69-1978/79

(In millions of Leones, at current prices)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/174 197 4/75 1975/76 1976/77 1977/78 1978/79

281.7 300.0 1. Agriculture, Forestry, Fishing 90.2 89.9 34.5 97.4 107.5 129.9 185.1 213.0 263.9 67.9 71.9 112.4 2. Mining and Quarrying 45.4 63.5 55.3 53.5 62.8 78.3 76.8 60.4 40.0 45.0 3. Manufacturing and Handcrafts 16.8 18.4 20.4 20.7 21.3 25.9 30.0 31.2 34.0 5.7 5.4 5.8 4. Electricity, Water Supply 2.4 2.8 2.4 2.5 1.5 -1.0 0.2 4.7 24.7 29.6 5. Construction 8.7 11.8 13.1 12.0 11.3 15.9 15.7 17.1 22.1 101.1 106.6 6. Trade and Tourism 42.5 48.1 42.5 43.2 49.0 60.3 75.4 68.4 91.6 70.7 80.4 109.9 7. Transport and Communications 27.9 34.1 35.3 35.9 38.3 47.9 57.9 65.5 58.8 66.0 8. Finance, Insurance, Real Estate 20.1 23.9 26.4 27.7 29.4 33.5 39.4 47.3 51.8 15.0 19.2 18.1 9. Other Services 8.2 8.6 8.7 8.9 9.5 11.9 13.3 17.2 -7.2 -10.8 Less: Imputed Service Charges -2.7 -2.9 -3.3 -4.8 -4.4 -6.2 -8.2 -8.3 -6.6 50.6 52.3 10. Government Services 17.9 19.5 19.8 21.5 25.8 28.3 32.6 39.8 48.9 2.2 2.3 11. Non-Profit Services to Hlouseholds 1.2 1.3 1.4 1.4 1.5 1.6 1.8 2.0 2.2 728.8 835.4 GDP (at factor cost) 278.1 319.0 316.5 319.9 353.5 425.8 521.0 558.6 667.2 77.0 85.9 96.6 12. Indirect Taxes - Subsidies 32.8 34.3 32.1 35.3 39.5 52.0 51.7 54.9 744.2 814.7 932.0 GDP (at market prices) 310.9 353.3 348.6 355.8 393.3 477.8 572.7 613.5 -11.2 -17.0 -17.0 13. Net Factor Income from Abroad -8.1 -6.6 -3.4 -7.6 -5.8 -6.6 -6.8 -9.8 733.0 797. 7 915.0 GNP (at market prices) 302.8 346.7 345.2 348.2 387.5 471.2 565.9 603.7

Source: Central Statistical Office. Table Dl.2: GDP BY SECTORAL ORIGIN (AT FACTOR COST) 1968/69-1978/79

(In millions of Leones, at 1972/73 prices)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

123.5 126.0 122.0 1. Agriculture, Forestry, Fishing 104.1 104.2 106.6 105.5 107.5 106.6 111.3 117.4 42.3 26.4 33.3 2. Mining and Quarrying 58.7 71.8 67.9 62.9 62.8 58.6 61.6 50.1 25.3 26.5 26.3 3. Manufacturing and Handicrafts 18.5 19.0 18.9 20.1 21.3 22.9 25.0 26.0 1.6 1.6 1.7 4. Electricity and Water Supply 1.0 1.2 1.3 1.5 1.5 1.5 1.6 1.6 13.2 14.1 15.5 5. Construction 9.8 12.1 13.2 12.1 11.3 13.9 12.4 12.5

45.0 46.8 53.3 54.9 l 6. Trade and Tourism 35.0 43.1 46.6 46.9 49.0 52.6 51.3 40.7 40.2 42.6 47.9 F- 7. Transport and Communication 29.5 31.6 34.9 36.1 38.3 41.9 43.3 33.0 34.8 35.1 8. Finance, Insuirance, Real Estate 23.4 26.1 27.1 28.0 29.5 31.2 33.5 33.2 13.5 14.0 12.6 9. Other Services 7.4 8.2 8.6 9.1 9.5 10.1 10.8 12.6 -6.6 -5.4 -3.7 -3.8 -5.0 Less: Imputed Service Charges -3.1 -3.4 -3.5 -5.0 -4.4 -5.6 30.5 33.1 40.7 42.1 39.6 10. Government Services 18.0 20.0 20.8 21.5 25.8 28.3 1.7 1.6 1.7 1.9 11. Non-Profit Services to Households 1.2 1.3 1.4 1.4 1.5 1.6 1.6 378.3 379.2 386.4 GDP (at factor cost) 303.5 335.2 243.8 340.1 353.5 363.6 376.3 368.6 45.1 40.0 38.5 38.7 39.0 12. Indirect Taxes - Subsidies 37.0 40.2 41.9 41.5 39.8 45.5 416.8 417.9 425.4 CDP (at market prices) 340.5 375.4 385.7 381.6 393.3 409.1 421.4 408.6 -6.8 -10.4 -10.6 -13.0 -14.0 13. Net Factor Income from Abroad -9.2 -6.1 -3.7 -8.1 -5.2 -6.6 398.2 406.2 404.9 411.4 GNP (at market prices) 331.3 369.3 382.0 373.5 353.5 402.5 414.6

Memo Items: 152.1 178.6 194 9 219.1 GDP Deflator (mp) 91.3 94.1 90.4 93.2 100.0 116.8 135.9 16.4 10.4 19.0 9.1 12.4 Percentage Charge - 3.1 -3.9 3.1 7.3 16.8

Source: 1970/71 to 1978/79 Central Statistical Office. 1968/69 to 1970/71 Staff Adjustments. Table DI.3: SUPPLY AND USES OF RESOURCES (1968/69-1978/79)

(In millions of Leones)

(At current prices)

1968169 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

GDP (at market prices) 310.9 353.3 348.6 355.8 393.3 477.8 572.7 613.5 744.2 814.7 932.0 Imports cfGoods and Non-Factor Services 96.0 109.8 110.9 131.0 139.5 189.2 211.7 191.5 212.0 241.5 321.4

Supply of Resources 406.9 463.1 459.5 486.8 532.8 667.0 784.4 805.0 956.2 1,0562

Consumption 266.4 306.9 311.0 345.3 372.7 465.8 540.1 589.7 715.7 748.8 891.2 Public 37.4 41.6 48.0 52.7 57.5 68.0 85.6 85.4 111.7 134.8 166.0 Private 229.0 265.3 263.0 292.6 315.2 397.8 454.5 504.0 604.0 614.1 725.2

Gross Fixed Capital Formation 42.0 56.3 47.4 42.7 44.2 56.6 76.0 76.8 86.9 110.4 136.0 I Public 7.6 10.7 10.9 12.5 13.7 18.7 23.2 35.0 29.3 20.6 41.0 F' Private 34.4 45.6 36.5 30.2 30.5 37.9 52.8 41.8 57.6 89.8 95.0 4

Charge in Stocks 3.7 2.3 5.2 -1.2 2.0 19.1 14.1 -3.8 -2.8 -2.5 6.0 l

Exports of Goods and Non-Factor Services 94.8 99.8 96.9 100.0 113.9 125.5 154.2 142.6 156.4 199.4 220.2

Uses of Resources 406.9 463.1 459.5 486.8 532.8 667.0 784.4 805.0 956.2 1.056.2 1.253.4

Memo Items:

Domestic Savings 44.5 46.4 37.6 10.5 20.6 12.0 32.6 24.1 28.5 65.9 40.8 National Savings 36.4 39.8 34.2 2.9 14.8 5.4 25.8 14.3 17.3 48.9 23.8

Average Domestic Savings Rate 14.3 13.1 10.8 3.0 5.2 2.5 5.8 3.9 3.8 8.0 4.4 Fixed Capital Formation as a Percent of GDP 13.5 15.9 13.6 12.0 11.4 11.8 13.3 12.5 11.7 13.6 15.0 Table D1.4: SUPPLY AND USES OF RESOURCES, (1968/69-1978/79)

(In millions of Leones)

(At constant 1972/73 Priceb)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

GDP (at market prices) 340.5 375.4 385.7 381.6 393.3 409.1 421.4 408.6 416.8 417.9 425.4 140.3 160.6 Imports of Goods and Non-Factor Services 142.0 160.8 146.5 160.0 139.5 173.4 155.7 122.2 132.8 586.0 Supply of Resources 482.5 536.2 532.2 541.6 532.8 582.5 577.1 530.8 549.6 558.2

384.2 406.8 Consumption 291.8 326.1 344.0 370.5 372.7 398.8 397.4 387.7 400.7 75.9 Public 41.5 44.2 53.1 56.6 57.5 58.6 63.0 56.3 62.5 69.1 330.9 Private 250.3 281.9 290.9 313.9 315.2 340.2 334.4 331.4 338.2 315.1

68.2 Gross Fixed Capital Formation 62.1 82.4 62.6 52.1 44.2 51.8 56.3 49.0 54.5 64.1 Public 11.2 15.7 14.4 15.3 13.7 17.1 17.0 22.3 18.2 12.0 20.6 52.1 47.6 l Private 50.9 66. 7 48.2 36.8 30.5 34.7 39.3 26.7 36.3 3.0 - Change in Stocks 5.4 3.4 6.3 -1.5 2.0 17.5 10.4 - 2.4 -1.8 - 1.4

111.3 108.0 l Exports of Goods and Non-Factor Services 123.2 124.3 118.7 120.5 113.9 114.4 113.0 96.5 96.2

Uses of Resources 482.5 536.2 532.2 541.6 532.8 582.5 577.1 530.8 549.6 558.2 586.0

Memo Items Gross Domestic Savings 48.7 49.3 41.7 11.1 20.6 10.3 24.0 20.9 16.1 33.7 18.6 Gross National Savings 39.5 43.2 38.0 3.0 14.8 3.7 17.2 10.5 5.5 20.7 4.6 Table DI.5: SIERRA LEONE - MINERAL PRODUCTION. 1968/69-1978/79

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79

1) Diamonds (thousands of carats) 1742 1991 2000 1858 1563 1516 1689 1394 910 763 834

DTHINCO Quantity (thousands of carats) 745 916 960 941 877 868 769 619 438 380 212 Value (mtllions of leones) (24.7) (30.3) (34.9) (35.1) (36.7) (35.5) (29.8) (35.2) (47.6)

Alluvial mining scheme 1/ 997 1075 1040 917 686 648 920 775 472 383 622 Gems Quantity (thousand- of carats) 320 280 262 266 375 263 209 191 270 Value (millions of leones) (23.1) (20.9) (24.4) (29.8) (29.2) (27.4) (30.7) (65.9) (70.5) Industrial Quantity (thousands of carats) 720 637 424 382 545 249 263 192 352 Value (millions of leones) (2.6) (2.4) (1.7) (1.9) (2.1) (1.4) (2.3) (2.1) (4.8)

2) Iron ore (thousands of tons) 2427 2298 2383 2510 2374 2131 1830 408 ------

3) Bauxite (thousands of tons) 431 441 508 602 658 687 672 721 660 730 723

4) Rutile (thousands of tons) 19 36 28 12 ------__ __

Memo Items Diminco's share in total output (t) 42.8 46.0 48.0 50.6 56.1 57.3 45.5 44.4 48.0 49.8 25.4

1/ Purchases by the Government Diamond office.

Source: Data pravided by the Sierra Leonean authorities. - 147 -

Table D1.6: SIERRA LEONE - PRODUCTION OF MAJOR CASH CROPS - PURCHASES BY THE SIERRA LEONE PRODUCE. MARKETING BOARD, 1968/69 - 1978/79

(in thousands of tons)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 Es timate

Palm Kernels 52.2 57.2 51.4 49.9 47.4 53.2 51.0 43.5 30.2 32.6 27.4 40.0

Coffee 8.1 5.9 8.3 7.2 11.8 3.1 7.3 4.4 10.0 4.4 13.3 9.5

Cocoa 4.0 4.1 4.9 7.3 6.6 7.6 5.4 6.0 6.4 6.6 7.2 12.0

Ginger 0.4 0.5 0.2 0.4 0.4 0.3 0.3 0.3 0.5 0.7 0.9 0.4

Sources: Bank of Sierra Leone, Economic Trends; and SLPMB. - 148 -

Table Dl.7: SIERRA LEONE - PRODUCTION AND IMPORTS OF RICE

(In thousand tons)

Milled Year Paddy Rice 1/ Total Population Per Capita Production Production Imports Supply ('000) Cons. (kg.)

1961 264.0 150.3 4.2 154.5 1,383.0 77.9 1962 270.0 154.1 27.3 181.4 2,033.0 89.2 1963 315.0 179.4 21.0 200.4 2,084.0 96.2 1964 331.0 188.5 0.5 189.0 2,136.0 88.4 1965 373.0 212.4 12.9 225.3 2,189.0 102.9 1966 399.0 227.2 35.1 262.3 2,244.0 116.9 1967 434.0 247.2 24.2 271.4 2,300.0 118.0 1968 468.0 266.5 17.2 283.7 2,358.0 120.3 1969 426.0 242.6 12.6 255.2 2,417.0 105.5 1970 507.0 288.7 44.8 333.5 2,477.0 134.6 1971 458.0 260.8 27.5 288.3 2,539.0 113.5 1972 500.0 284.8 5.2 290.0 2,603.0 111.4 1973 477.0 271.7 43.7 315.4 2,668.0 118.2 1974 473.0 269.4 45.0 314.4 2,735.0 115.0 1975 479.0 272.8 - 272.8 2,803.0 97.3 1976 490.0 279.1 - 279.1 2,873.0 97.1 1977 512.0 291.6 14.0 305.6 2,945.0 103.8 1978 539.0 306.9 - - 3,019.0 - 1979 545.0 310.2 71.0 2/ 381.2 3,094.0 123.2 1980 550.0 3/ 313.6 71.0 3/ 384.6 3,171.0 121.3

Source: GOPA Study, Sierra Leone, 1977, FAO, Rice Development Project, and Ministry of Agriculture and Forestry

1/ 15% for seed and wastage and 67% milling rate.

2/ Total imports (91,000 tons) minus carry over stocks (20,000).

3/ Total imports (51,000 tons) plus carry over stocks (20,000). Table D1.8: SIERRA LEONE - PRODUCTION OF MANUFACTURING ESTABILISHMENTS, 1968-1978

(During the period. in units indicated)

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978

Cigarettes (million sticks) 804 -/ 903 - 490 732 828 1,116 1,873 1,841 1,849 1,316 1,649

Beer and stout (000 imperial gallons) 1,155 - 1,344 - 1,261 1,303 1,409 1,850 2,005 2,273 3,311 2,451 2,420

Spirit (000 imperial gallons) - - 44 22 12 14 18 19 18 31 46

Acetylene (000 cubic feet) 1,046 1,014 971 828 778 906 901 648 578 630 787

Oxygen (000 cubic feet) 2,304 2,514 2,517 2,088 1,883 2,254 2,191 1,117 1,501 1,716 1,970

Carbon dioxide (000 lbs.) 149 194 246 193 172 242 204 176 182 300 434 I

Plastic footwear (000 pairs) 730 664 549 522 601 622 442 603 535 292 271 F' .1: Nails (cwt.) 13,015 13,200 12,055 11,484 13,466 11,059 6,554 11,279 10,788 10,191 11,440

Umbrellas (dozens) 27 52 30 _ -_ - - - - -

Paint (000 imperial gallons) 86 95 92 92 92 121 91 84 88 71 72

Matches (gross boxes) 60,020 69,100 50,750 51,750 50,000 75,925 40,685 18,605 21,520 38,820 47,170

Confectionery (000 lbs.) - 417 2,252 2,339 2,925 3,120 2,700 2,899 3,036 3,453 3,820

Motor spirit (million imperial gallons) - 13 13 iZ 13 e 13 12 12 12 12

Gas, diesel and fuel oils (Million imperial gallons) - 47 47 49 54 28 35 29 31 23 37

Kerosene (million imperial gallons) - 8 9 9 10 6 11 8 11 11 7

Salt (000 lbs.) - _ _ 11,272 17,745 16,246 15,011 6,852 6,630 13,454 11,488

Source: Bank of Sierra Leone, Economic Trends.

1/ pounds

2/ beer; stout and spirits - 150 -

Table D1.9: SIERRA LEONE. PRODUCTION TARGETS OF THE ONGOING* AGRICULTURAL PROJECTS AND ACHIEVEMENTS

Country Target Achievement Total Project Time Period (Acres) (Acres) (Acres) (1) (2) (3) (4) (5)

I. Rice

Swamp Rice EA-1 1972-75 6,000 7,137 78,000 ha. (190,000 acres)

Swamp Rice EA-2 1976-78 4,200 5,316

Upland Rice EA-2 " 36,000 - 260,000 ha. (600,000 acres)

Swamp Rice NA-1 1976-80 6,000 6,873

Upland Rice NA-1 " 25,750 10,565

Swamp Rice Koin-l 1978-82 6,000 1,346

Upland Rice Koin-1 " 10,000 700 Torma-Bum 1979-86 12,000 4,500

Boliland and River Rain Crash Rice 1980-81 68,000

II. Cocoa

EA-1 1972-75 750 770 40,000 ha.

EA-2 1976-78 1,000 1,580 (96,000 acres)

III. Oil Palm

Estate EA-1 1972-75 510 532 50,000 ha.

Outgrowers EA-2 1976-78 1,600 1,833 (120,000 acres)

IV. Ground Nuts

NA-1 1976-80 10,500 3,193

Koin-l 1978-82 3,000 400

V. Livestock

NA-1 1976-80 31/ 11/ 1/1 Koin-l 1978-82 10- 5-

I/ FxDerimental ranches and mixed farms.

* Production targets of the new Agricultural projects are as follows:

Coffee EA-3 6,720 Cocoa 4,320 Oil Palm 720

Rice NA-2 28,800 Groundnuts ' 12,000 Table D2.1: SIEREA LEONE - SUmmAIy BALANCE OF PAYMENTS, 1968-1979

(in millions of Leones)

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1978/79 1979/80 pre IIm. Estim. Proj.

Exports of Goods. NFS 77.2 87.6 84.3 79.4 97.8 111.8 131.2 123.3 132.9 170.2 200.1 241.5 220.2 236.9

Imports of Goods. NPS 67.2 -89.7 -87.5 -85.9 -94.2 -125.7 -185.7 -163.9 -179.8 -203.7 -286.9 -319.4 329.5 -339.3

Resource Balance 10.0 2.9 -3.2 -6.5 3.6 -13.9 -54.5 -40.6 -46.9 -33.5 -86.8 -77.9 -109.3 -102.4 investment Incom -8.2 -6.2 -6.7 -7.6 -5.7 -6.5 -6.8 -9.8 -11.2 -17.0 -40.8 -41.0 -41.0 -43.0

Workers' Remittances ______

Other Factor Payments (Net) -6.5 -8.6 -8.4 -7.8 -7.8 -8.6 -9.3 -16.5 -16.7 -16.6 -5.2 -2.0 1.5 -1.5

Unrequired Transfers 3.0 3.5- 4.2 4.9 2.5 5.3 18.8 9.4 11.9 23.3 20.7 30.0 26.4 28.0

- Private (1.2) (1.0) (1.5) (1.9) (0.3) (0.8) (1.6) (2.2) (5.7) (5.4) (8.1) (10.0) (17.9) (13.0)

- public (1.8) (2.5) (2.7) (3.0) (2.2) (4.5) (17.2) (7.2) (6.2) (17.9) (12.6) (20.0) (13.5) (15.0)

Current Account Balance -1.7 -8.4 .14.1 -17.0 -7.4 -23.7 -51.8 -57.5 -62.9 -43.8 -112.1 -90.9 -122.5 -118.9 tong-Term Capjtal (Net) 12.7 15.5 16.3 11.1 17.3 16.8 40.1 33.3 274 25 52. 53.9 57.5 60.2

Official Capital (Net) 5.5 1.9 1.9 3.0 4.8 11.2 22.9 16.9 18.1 18.5 28.7 38.9 38.5 48.2 Draweings (19.4) (32.9) (35.2) (35.8) (42.6) (74.0) (90.4) (86.9) (114.0) Repayments (8.2) (10.0) (18.3) (-17.7) (-24.1) (-45.3) (-51.5) (-48.4) (-65.8)

Private Capital (Net) 7.2 13.6 14.4 8.1 12.5 5.6 17.7 16.4 9.3 8.0 23.5 15.0 19.0 12.0 Of Which: Direct Investment 5.8 13.5 9.6 4.3 3.0 (3.3) (8.8) (9.0) (9.4) (5.5) (19.8) (8.0) (12.0) (.)

Short-Term Capital (Net) 2.2 7.9 7.3 4.8 8.0 IZ.1 8.0 9.0 7.0

Trust Fund ______3.4 10.8 10.7 8.3 13.4

Allocati.n of SDRs __ __ 2.1 2.2 2.3 ______4.0 4.0 4.0

Errors and Omissions 0.3 2.0 -1.0 1.4 -2.0 14.2 5.0 -2.2 3.8 0.6 -18.0 -31.0 -21.8 -9.7

Overall Balance 11.3 9v1 2.3 1.8 0.2 7 -6_7 -25.8 -26.9 -5.3 -55.0 -45.3 -65.5 -44.0

Accumulation of Arrears ______5.1 8.0 15.9 30.4 43.2 47.8 13.0

Debt Relief ______19.0 __ 9.5 9.4

Reserves and Related Items (Increase -) -11.3 9.1 -2.3 1.8 -10.2 -7.3 6.7 20.7 18.9 -10.6 5.6 2.1 8.2 21.6

Monetary Authorities -9.7 -7.8 -1.7 -0.9 -6.2 -7.8 5.7 22.4 22.7 -7.1 10.3 1.4 4.8 ... Liabilities (increase +) -9.7 -7.8 -1.7 -0.9 -6.2 ._ 7.8 4.3 24.1 -0.5 11.0 13.2 -3.3 Use of Fund Credit (24.9) (6.9) (-3.1) (0.9) (-4.8) () Other Liabilittes (0.8) (-7.4) (14.1) (12.3) (1.5) (---) Assets (Tncrease -) J7.8 -2.1 18.1 -1.4 -6.6 -0.7 -11.8 8.1 SDRs (0.8) (2.2) (1.5) (0.3) (-0.2) ) ( Reserve Position In the Fund (--) (--) (--) () (--) (---) Foreign Exchange and Other Claims (-7.8) (-8.5) (18.9) (-2.2) (-8.8) (-2.2) (-12.1) (8.3) (.) Cosmmercial banks (Net) -1.6 -1.3 -0.6 2.2 -4.0 0.5 1.0 1.1 -3.8 -3.5 -4.7 0.7 3.4

Memo Iteme

Average Exchange Rates (Le per USS) .829 .799 .816 .855 .902 1.107 1.146 1.050 1.050

Source: Data provided by7the Sierra Leonean authorities. Table D2.2: SIERRA LEONE. BALAN4CEoF PawnENs, 1968-1979/80 (in millions of leones)

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1978/79 1979/80 Prelim'. Estie. Proj.

Goode. Services, and transfers (.et) -4.7 -11.9 -19.3 -21.4 -7.4 -23.7 -51.8 -57.5 -62.9 -43.8 -112.1 -09 -122.5 -118.9

Trade Balance (net) 10.7 5.5 - 1.6 - 3-7 6.5 - 7.2 -45.8 -31.5 -36.4 -21.5 -65.3 -53.9 -83.5 81- Exports. f.o.b. 77.2 87.6 84.3 79.4 90.7 105.3 122.1 116.6 126.7 163.6 193.8 234.5 213.5 229.9 leports, f.o.b. -66.5 -82.1 -85.9 -83.1 -84.2 -112.5 -167.9 -148.1 -163.1 -185.1 -259.1 -288.4 -297.0 -308.0

Service bal an.e (net) -15.4 .417.4 -17.7 -17.7 -16. -21.8 -24.8 -35.4 -3. -45.6 -67.5 -67.0 - 65.4 - 68.8 Freight and insurance - -1.8 -0.2 - 0.9 -8.6 -11.5 -17.0 -15.0 -15.8 -17.6 -26.7 -32.0 -33.1 - 34.3 other transportation 0.0 --- 7.1 6.5 9.1 6.7 6.2 6.6 6.3 7.0 6.7 7.0 Travel -0.7 .0.8 1.4 - 1. -1.4 -I1.7 - 0.8 - 0.8 - 0.9 - 1.0 - 1.1 1.0 0.5 3.0 Investment Incom~e -8.2 -6.2 -6.7 -7.6 -5.7 -6.5 -6.8 -9.8 -11.2 -17.0 -40.8 -41.0 -41.0 - 43.0 Other gover.ment -0.8 -0.8a 2.1 -1.5 -2.2 -1.3 -1.7 -5.5 - 0.3 - 2.1 3.0 4.0 3.5 3.5 Other services -5.7 -7.8 -7.3 -6.3 -5.6 7 .3 -7.6 -11.0 -16.4 -14.5 - 8.2 - 6.0 -2.0 - 5.0

Unrequited transfers (net) 3.0 3.5 4.2 4.9 2.5 5.3 18.8 9.4 11.9 23.3 20.7 30.0 26.4 28.0 Private 1.2 1.0 1.5 1.9 03 0.8 1.6 2.2 5.7 5.4 81 1. 291. C.overn,snt 1.8 2.5 2.7 3.0 2.2 4.5 17.2 7.2 6.2 17.9 12.6 20.0 13.5 15.0

Long-tems Capital (net) 12.7 15.5 16.3 Il.! 17.3 16.8 40.1 33.3 27.4 26.5 52.2 53.9 57.5 60.2

Official capital (net) 5.5 1.9 1.9 3.0 4.8 11.2 22.4 16.9 18.1 18.5 28.7 38.9 38.5 48.2 Drawings (19A) (32.9) (35.2) (3.8 42.6) (74.0) (C9_0.4) 86.9) (114.0) Repaymsent s (8.2) (lO.0) (18.3) (-17.7) (-24.1) (-45.3) (-51.5) (-48.4) (-65.8)

Private capital (net) 7.2 13.6 14.4 8.1 12.5 5.6 17.7 16.4 9.3 8.0 23.5 15.0 19.0 12.0 Uln Of w,hich- Direct invests,ent 5.8 13.5 9.6 4.3 3.0 (3.3) ( .8) (9.0) (9.4) (5.5) (19.8) (8.0) (12.0) (...)

Short-ters capital (net) 2.2 7.9 7.3 4.8 8.0 12.1 8.0 9.0 7.0

rust Fund - - -- 3.4 10.8 10.7 8.3 13.4

Allocation of SDRe -- 2.1 2.2 2.3 - -- -- 4.0 4.0 4.0

Errors and omissions 0.3 2.0 -1.0 1.4 -2.0 14.2 5.0 - 2.2 3.8 0.6 -18.0 -31.0 -21.8 -9.7

Oerall balance 11.3 9.1 2.3 -1.8 10.2 7.3 -6.7 -25.8 -26.9 -5.3 -55.0 -45.3 -65.5 -44.0

ccumul.ation of arrears ------5.1 8.0 15.9 30.4 43.2 47.8 13.0

Debt relief 19.0 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~9.59.4

eserves and related Items, -11.3 - 9.1 -2.3 1.8 -10.2 - 7.3 6.7 20.7 1_8.-9 -10.6 5.6 2.1 8.2 21.6 (increase -) Mlonetary sasthorities -9.7 - 7.8 -1.7 -0.6 -6.2 - 7.8 5.7 22.4 22.7 - 7.1 10.3 1.4 4.8.. Liabilities (increase i-) 7.8 4.3 24.1 - 0.5 11.0 13.2 -3.3 Use of fund credit ~~~~~~ ~~~~~~~~~~~~(24.9)( 6.9) (-3.1) (0.9) (-4.8) (.) other liabilities ~~~~~~ ~~~~~~~~~~~~~~(-0.8)(-7.4) (14.1) (12.3) (1.5) (.) Assets (increase -)-7.8 -2.1 18.1 -1.4 -6.6 -0.7 -11.8 8.1.. SORa (0.8) (2.2) (1.5) (0.3) (-0.2) (.) Reserve position In the

Foreign exchange and other claims (-7.8) (-8.5) (18.9) (-2.2) (-8.8) (-2.2) (-12.1) (8.3) (.)

Coomercial banks (net) -1.6 -1.3 0, 2.2 -4.0 0.5 1.0 1.1 -3.-8 -3.5_ -4.7_ 0.7_ 3.4 ...

Sources: Data provided by the Sierra Leonean authorities. Table D2.3: SIERRA LEONE - VALUE OF EXPORTS (F.0.B.) BY MAJOR COMMODITIES. 1968-79/80

(in millions of LeOnes)

Ets. LEroj. 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1979/80

Minerals 59.3 74.1 64.9 65.2 70.2 79.2 91.2 84.2 73.3 72.8 125.4 143.6 136.1

Diamonds 46.9 61.8 50.9 50.0 56.7 64.6 74.6 67.3 73.8 64.9 117.8 131.3 121.7 Alluvial (24.7) (35.1) (27.4) (26.1) (22.2) (30.3) (32.8) (22.9) (41.9) (33.6) (74.9) (87.2) (80.0) Other (22.3) (26.8) (23.5) (23.9) (34.5) (34.3) (41.8) (44.4) (31.9) (31.3) (42.9) (44.1) (41.7)

Iron Ore 10.5 9.9 10.5 11.4 10.2 11.1 12.5 13.2 Bauxite 1.5 1.3 1.5 2.5 3.3 3.5 4.1 3.7 4.5 7.9 7.6 10.8 11.4 Rutile 0.4 1.0 1.9 1.2 1.5 3.0

Agricultural commoditles 15.5 12.3 15.6 13.1 19.3 24.5 27.9 28.8 24.8 78.3 52.8 84.8 84.8

Palm kernels 8.5 5.4 7.0 5.9 3.9 5.2 7.7 4.6 3.3 1.4 0.9 5.7 5.5 Coffee 3.1 3.0 4.3 3.5 8.7 9.9 2.8 7.1 7.2 50.5 19.1 37.8 33.6 Cocoa 2.3 2.8 3.3 2.7 3.3 5.1 7.3 8.8 7.7 18.9 22.8 31.8 33.7 Piassava 0.9 0.4 0.5 0.5 0.5 0.4 0.9 0.7 0.6 0.7 1.1 0.7 0.7 1 Cinger 0n3 0.5 0.4 0.3 0.2 0.3 0.3 0.2 0.6 1.1 1.3 1.8 1.0 tn Processed palm kernels 4.3 4.5 5.4 5.7 7.6 7.0 10.3 W Kola nuts 0.2 0.2 0.1 0.2 0.3 0.5 0.2 0.4

Other exporta 0.9 0.8 2.6 3.8 2.4 3.1 4.4 2.5 4.6 1.4 6.6 3.9 5.0

Total domestic exports 75.7 87.2 83.2 82.1 89.5 103.7 119.0 113.0 107.7 152.5 184.8 232.3 225.9

Re-exports 5.0 4.0 2.9 1.3 2.1 2.3 4.1 3.7 4.5 4.5 7.3 2.2 4.0

Total exports 79.7 90.1 84.6 83.4 91.6 106.0 123.1 116.7 112.2 157.0 192.1 234.5 229.9

Source: Bank of Sierra, D1141NCO, the Government Diamond Office. These data are derived from different sources and are not always consistent with figures in the balance of pay-n.ts. Table D2.4: EXPORT VOLUME AND UNIT VALUE OF MAJOR EXPORT COMMODITIES, 1968-1979

1Est. Est. 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1979/80

Volume

1. Minerals

(In thoIjands of Catafe)

Diamonds 1,522 1,936 2,048 1,934 1,841 1,397 1,575 1,626 1,075 719 798 848 721 Alluvial (864) (1,103) (1,049) (1,072) (870) (572) (704) (1,040) (605) (350) (464) (655) (550) Other (658) (833) (999) (862) (971) (825) (871) (646) (470) (369) (334) (193) (171)

(In thousands of Tans)

Iron Ore 2,517 2,337 2,259 2,565 2,283 2,357 2,030 1,429 - - - - _ Bauxite 415 447 436 552 682 628 729 610 542 748 690 718 725 Rutile 11 28 44 16 ------7 32

2. Agricultural Commodities

Palm Kernels 52.8 52.2 57.2 51.0 51.0 37.0 23.4 28.4 17.7 5.1 3.3 13.6 12.8 Coffee 4.1 6.1 5.9 4.0 14.0 12.0 3.1 7.3 4.6 7.4 5.4 13.4 8.5 Cocoa 3.4 4.0 4.1 5.0 7.0 8.0 5.8 6.2 5.6 5.4 7.1 9.1 10.5 Palm kernel products ------_ - 19.5 17.0 21.2 14.6 21.0 4I-,

Unit Values

1. Minerals

(In Leones per Carat)

Diamonds 30.8 31.9 24.9 25.8 30.9 45.9 47.4 39.9 68.7 90.3 147.6 154.8 168.8 Alluvial (28.6) (31.8) (23.5) (24.3) (25.5) (53.0) (37.7) (35.5) (69.3) (95.9) (161.4) (133.2) (145.5) Other (33.9) (32.2) (26.1) (27.7) (35.5) (41.6) (59.4) (42.7) (67.8) (84.8) (128.4) (228.6) (243.7)

(In Leones per Ton)

Iron Ore 4.2 4.2 4.6 4.5 4.5 4.7 6.1 9.2 - - - - - Bauxite 3.6 2.9 3.4 4.5 4.8 5.6 5.6 5.9 8.4 10.6 11.0 15.1 15.8 Rutile 36.4 35.7 43.2 75.0 ------_ 216.0 226.0

2. Agricultural Commodities

Palm Kernels 161.0 103.4 122.3 115.9 83.8 134.0 328.3 160.5 186.6 272.7 282.2 423.3 426.0 Coffee 756.1 491.9 728.8 848.8 585.8 830.3 902.5 980.4 1,565.0 6,822.0 3,537.1 2,819.6 3,948.0 Cocoa 676.5 700.0 808.9 571.2 498.7 951.1 1,256.2 1,412.2 1,368.0 3,500.0 3,214.2 3,490.2 3,211.0 Palm Kernels Products -_ ------275.2 334.8 358.5 483.0 492.0

Sources: Bank of Sierra Leone, Economic Trends, data supplied by DIMINCO, the Government Diamond Office, the SLPMB, and staff estimates. - 155 -

Table D2.4.1: TERMS OF TRADE (1971-1979) (1977 - 100)

1979 1971 1972 1973 1974 1975 1976 1977 1978 EstiMate'

I. Import prices 1/ 34.0 36.8 57.5 60.7 69.2 87.6 100.0 101.5 128.5

II. Export prices 24.5 25.4 29.2 42.6 37.6 59.2 100.0 124.3 130.1

Terms of trade (II/I) 72.0 69.0 50.8 70.2 54.3 67.6 100.0 122.5 101.3

Memo Item

Terms of Trade (1971-100) 2/ 100.0 95.8 70.0 97.5 75.4 93.9 138.9 170.1 140.7

Source: IMF & Bank of Sierra Leone.

1/ Derived from export unit value indices for major countries exporting to Sierra Leone.

2/ Simple arithmetic conversion of the (1977-100) index. Table D2.5. SIERRA LEONE. EXPORT CROP OPERA1ION1S OF nIlESIERRA LEONE PRODSUCE MARKCETING BOARD, 1970,71-19791/0

1970/ 71 1971/172 1972/73 197 3/ 74 1914175 1975176 1976/77 19717/78 1979,79 1979180

It. Average prod..cer price 65.00 65.00 65.00 100.00 146.00 137.20 117.00 134.00 162.50 Z04.00 2. B.yI.g ag-Warn cmiaaion" 13.00 13.00 13.90 13.90 21.50 20.77 21.28 21.22 27.50 31.UO 3. Export duty (Per ton) 12.00 9.00 8.40 22.99 27.67 13.52 21.24 21.83 44.21 47.00 4. Other charge. 24.45 26.20 23.20 23.12 23.52 25.52 27. 52 48.62 48.62 49.00 Ad.fniatr.tl-e chrgen 16.00 17.00 17.00 15.00 15.00 17.00 17.80 28.87 28.87 28.87 PoPrt ... g 4.50 4.50 1.50 1.50 1.80 1.80 --- 9.40 9.40 9.40 Harbor d... 0.45 0.45 0.45 0.51 0.61 0.61 3.61 2.41 2.41 2.41 8R.4 f-nlght 3.50 4.25 4.25 6.11 6.11 6.11 6.11 7.94 7.94 8.32 5. Average ..ott - bre.kev- price (I Ethough 4) 114.45 113.20 110.50 160.01 218.69 197.04 187.04 225.67 287.83 331.00 6. Aver.ge export price. f.o.b. 120.00 90.00 84.00 229.88 276.68 135.15 212.21 218.27 442.10 470.00 7. profit per to. (6-5) 5.55 -23.20 -26.50 69.87 57.A9 -61.89 26.17 7.40 159.27 139.00 B. Sale. (I. to.a) 53,342.00 5l,950.00 43.811.00 30.352.00 21.475.00 25,812.00 127873.60 6,200.95 10.1)00.00 70,000.00 9. Tradi.g su.rplus or deficit (Jn mIllions of le..e.. .30 -1.7 -1.16 2.13 1.25 -1.60 0.34 0.05 1.6 2.8 C o f K .e

I1. A-er.ge prod ..er price 313.60 313.60 313.60 448.00 560.00 716.80 1,496.80 1,612.80 1,747.70 2,01b.00 2. Buytng ageete os lntn 19.50 19.50 21.40 34.20 34.20 35.76 70.00 76.63 78.11 66.00 3. Enport duty (per ton) 140.80 97.11 208.32 261.73 343.65 579.64 1,867.40 1,611.61 5(0.00 1,359.75 4. Other harge. 28.95 29.95 28.70 29.82 30.77 33.50 39.71 58.91 59.88 54.01 Ad.lnlatrati-e ch-rge 16.00 11.00 17.00 15.00 15.00 17.00 17.80 28.87 28.87 24.00 porterage ~~~~~ ~~~~~~5.505.91) 4.25 4.25 5.10 5.10 --- 9.40 9.40 8.00 Harbor due- 0.45 0.45 0.45 0.51 0.61 0.61 6.41 6.61 6.61 6.61 Road freight 7.00 7.00 7.00 10.00 10.06 10.79 15.00 14.03 15.00 15.40 5. Average -ot, - br-ake-c prICe (I th-ogh 4) 502.85 460.16 572.02 7 7 3.75 968.b2 1.365.70 3,473.51 3.359.95 27385.69 3,495.76 6. Average export price. f..6b. 640.00 513.21 754.00 842.96 859.13 1,449.10 4,668.49 4,029.02 3.150.00 3,885.00 L 7, Profit per tom (6-5) 137.15 53.05 171.98 69.21 109.49 83.40 1,194.98 669.07 764.30 186.24 0 8. Sale. (In tons.) 6,285.00 11,741.00 10,389.00 7,228.00 6,366.00 5.565.00 6,244.66 8,480.98 12,000.00 9.5001.00 9. Trading no-pl.. or deficit 0 (Inmilin of leones) 0.86 0.62 1.79 0.50 -0.70 0.46 7.46 5.67 9.17 3.7

C 0 0 0 8

1. Aver.ge prod.4er price 313.60 313.60 313.60 475.60 672.00 672.00 1,209.60 1,568.00 2,128.00 2,128.00 2. B.ying agent.' ti..i..s 19.50 19.50 19.50 33.20 39.65 39.65 56.16 69.84 91.24 74.00 3. Export duty (per toe) 100.80 38.70 88.91 382.57 562.33 524.33 1,199.14 1,394.80 896.10 1,212.75 4. Other oharge. 28.95 29.95 28.70 29.57 30.47 33.70 34.20 58.91 58.91 54.01 AdmlnItr.tive charge. 16.00 12.00 17.00 15.00 15.00 17.00 12.79 28.87 78.87 24.00 Porter.ge 5.50 5.50 4.25 4.00 4.80 4.80 --- 9.40 9.40 8.00 Harbor due. 0.45 0.45 0.45 0.51 0.61 0.61 5.41 6.61 6.61 6.61 goad freight 7.00 7.00 7.00 10.06 10.06 10.79 16.00 14.03 15.00 15.40 5. Average -tot - break..e. pric- (I through 4) 462.85 401.75 450.71 870.94 1.304,45 1,269.18 2,499.10 3.091,55 3,174.25 3,267.75 6. Average export price, f..hb. 560.00 387.00 523.00 999.16 1,405.83 1,310.83 2,984.49 3,486.98 3,584.36 3,465.00 7. Profit per ton (6-5) 97.15 -14.75 72.29 128.22 101.38 41.65 485.39 395.43 410.11 197.25 8. Sale. (in ton...) 5,003.00 6,316.00 6,319.00 7,585.00 5,395.00 6,008.00 6,379.06 6,515.87 7,160.99 7,500.00 9. Trading surplus or deficit (in million. of Ieone. 0.49 -0.09 0.46 0.97 0.55 0.25 3.09 2.58 2.94 1.5 Mou Ite..

Average effective rate of ta...tlon 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 - produce.r price as 7.of enport prite 54.2 72.2 7 7.4 43.5 52.8 101.5 55.1 61.5 36.8 43.4 Coffee - Average effietlct rote of tamatiom 22.0 18.9 28.0 31.1 40.0 40.0 40.0 40.0 15.9 35.0 - Producr price 7. of as enport price 49.0 61.1 42.2 53.1 65.0 49.5 32.1 40.1 55.5 51.9 Cocoa - Average eff-l-ci rate of taxation 18.0 10.0 17.0 38.3 40.0 40.0 40.1 40.0 75.0 35.0 Prod-cr - price as 7. of export price 56.0 81.0 60.0 42.6 47.8 51,3 40.5 45.0 59.4 61.4

Source: Sierra L.-n Produce Ilrketing Board. Table D2.6: VALUE OF IMPORTS (c.i.f.) BY MAJOR COMMODITIES, 1968-1979

(in millions of Leones)

Jan. -June SITC Classification 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Foodstuffs 13.3 15.3 20.4 18.2 16.7 30.6 41.9 26.8 31.0 35.8 48.4 19.5

Beverages and Tobacco 2.1 2.8 2.8 3.6 3.2 4.5 4.8 5.7 7.6 9.3 9.7 2.8

Raw Materials 1.1 1.0 0.8 1.0 0.8 1.6 3.7 2.8 2.0 3.5 2.9 1.9

Mineral Fuels and Lubricants 6.0 5.8 4.6 6.9 7.3 7.5 21.6 20.2 12.4 29.2 35.0 33.7

Animal and Vegetable Oils 0.7 0.8 1.1 0.9 1.3 1.2 1.4 1.2 1.6 2.7 4.5 2.4

Chemicals 5.4 5.6 6.1 6.8 6.7 9.1 12.0 12.3 14.0 16.0 23.2 12.4

Manufactured Products Classified by Materials 22.1 27.6 26.0 24.0 25.2 34.4 45.9 47.6 51.5 51.0 72.4 36.6

Machinery and Transport Equipment 16.5 22.2 25.0 22.7 23.3 25.0 38.6 34.2 33.2 38.0 70.5 45.0

Miscellaneous Manufactured Articles 7.5 10.9 8.8 8.7 9.3 11.5 16.0 15.3 16.3 19.3 23.2 11.3

Other 1.1 1.1 1.3 1.5 1.6 1.7 1.8 1.6 1.7 1.4 1.0 0.6

TOTAL 75.5 93.0 96.9 94.3 95.4 127.2 187.7 167.8 171.3 206.2 290.8 166.2

Source: Bank of Sierra Leone and Customs. - 158 -

Table D2.7: SIERRA LEONE - DIRECTION OF FOREIGN TRADE, 1973-77

(In per cent)

1973 1974 1975 1976 1977

Export 100.0 100.0 100.0 100.0 100.0

United Kingdom 67.4 61.3 56.1 60.0 49.2 Netherlands 6.1 14.9 16.8 11.9 19.4 United States 5.7 5.6 7.6 7.4 19.4 Germany 4.9 4.0 2.3 2.3 0.7 Canada 2.7 1.8 1.9 1.0 2.1 Japan 4.6 4.7 6.0 0.1 -- Other 8.6 7.7 9.3 17.3 9.2

Imports 100.0 100.0 100.0 100.0 100.0

United Kingdom 22.2 21.3 25.1 19.5 17.6 Nigeria 3.6 8.0 7.1 12.6 23.8 United States 8.9 9.0 7.2 8.1 8.7 Japan 9.4 9.6 6.2 7.6 6.8 France 7.9 5.2 4.6 6.9 4.7 Germany 8.0 6.7 7.5 7.5 5.8 Other 40.0 40.2 42.3 37.8 32.6

Source: Bank of Sierra Leone. - 159 -

Table D2.8: SIERRA LEONE. EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISBURSED AS OF JUNE 30, 1979

DEBT PAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS)

D E B T O U T S T A N D I N G I N A R R E A R S TYPE OF CREDITOR ------…------CREDITOR COUNTRY DISBURSED UNDISBURSED TOTAL PRINCIPAL INTEREST

Suppliers Credits Belgium 5,023 - 5,023 502 16 France 3,937 - 3,937 579 85 Germany, Fed.Rep. of 2,993 - 2,993 246 22 Hongkong 75 - 75 - Italy 8,072 - 8,072 776 478 Japan 430 - 430 - Netherlands 14,646 2 14,648 1,553 286 Norway 8,307 - 8,307 - - Poland 77 - 77 77 3 Switzerland 22,490 14,616 37,106 - - United Kingdom 32,514 11,361 43,875 372 31 USSR 2,008 - 2,008 - - Total Suppliers Credits 100,572 25,979 126,551 4,105 921

Financial Institutions Italy 3,501 - 3,501 - Nigeria 599 - 599 - Switzerland 16,996 - 16,996 - - United Kingdom 9,670 - 9,670 1,371 942 Total Financial Institutions 30,766 - 30,766 1.371 942

ultilateral Loans African Dev. Bank 7,993 3,873 11,866 50 36 African Dev. Fund 4,454 2,582 7,036 - - Badea/Abeda - 5,000 5,000 - IBRD 11,363 3,302 14,665 - - IDA 25,897 5,587 31,484 - - IMF Trust Fund 13,378 - 13,378 - - OPEC Special Fund 2,050 1,600 3,650 - - SArA (SP AR Fund AF) 3,600 - 3,600 - - otal Multilateral Loans 68,735 21,944 90,679 50 36

ilateral Loans Belgium 400 - 400 - China, P.R. of 22,533 - 22,533 - Denmark 419 3,347 3,766 - - France 3,814 - 3,814 155 136 Germany, Fed. Rep. of 39,216 821 40,037 686 367 Italy 1,250 - 1,250 178 80 Netherlands 5,856 - 5,856 1,619 203 United Kingdom 1,096 - 1,096 252 71 United States 2,894 14 2,908 - - Total Bilateral Loans 77,478 4,182 81,660 2,890 857 r ------_… … TOTAL EXTERNAL PUBLIC DEBT 277,551 52,105 329,656 8,416 2,756

NOTES (1) Only debts with an original or extended maturity of over one year are included in this table. (2) Debt outstanding includes principal in arrears but excludes interest in arrears. - 160 -

Table D2.9.1: SIERRA LEONE - TOTAL PUBLIC DEBT, SERVICE PAYMENTS (Fiscal Year Basis)

(In Thousands of US Dollars)

YEAsR DEBT OUTSTANDING AT TRANSACTIONS DURING PERIOD ___ BEFINNING OF PERIOD DISBURSED INLCUDING SERVICE PAYMENTS- ONLY UNDISBURSED COMMITMENTS DISBURSEMENTS PRINCIPAL INTEREST TOTAL ______-__ _(1) (2) (3) (4) (5) (6) (7)

1969 63,504 72,810 4,788 6,058 6,875 1,833 8,708 1970 61,581 69,766 23,909 7,576 9,710 2,277 11,987 1971 59,440 83,897 7,523 11,502 6,144 2,204 8,348 1972 68,474 89,949 16,423 14,035 8,057 2,643 10,700 1973 72,789 96,662 25,507 21,720 9,184 3,677 12,861 1974 90,325 118,329 42,099 48,086 10,514 3,959 14,473 1975 135,698 157,803 47,535 29,697 11,180 4,355 15,535 1976 145,546 183,986 15,646 28,137 15,618 5,179 20,797 1977 157,835 182,705 55,316 33,248 12,399 4,813 17,212 1978 192,800 240,580 101,206 73,199 31,667 7,900 39,567 1979-1 242,002 306,759 36,842 54,942 16,368 4,451 20,819 1979-2 277,551 329,656

1/ *********>** THE FOLLOWING FIGURES ARE PROJECrED **************

1979/80 277,551 329,656 33,075 58,968 53,568 11,707 65,275 1980/81 274,593 300,776 - 8,694 48,122 10,414 58,536 1981/82 235,170 252,657 - 7,034 33,225 8,983 42,208 1982/83 208,991 219,443 - 5,215 27,844 7,175 35,019 1983/84 186,368 191,602 - 2,724 25,008 5,884 30,892 1984/85 164,089 166,599 - 1,091 19,671 4,673 24,344 1985/86 145,514 146,933 - 799 17,108 3,893 21,001 1986/87 129,211 129,832 - 444 15,214 3,270 18,484 1987/88 114,441 114,619 - 177 13,492 2,694 16,186 1988/89 101,131 101,131 - - 10,636 2,193 12,829 1989/90 90,496 90,496 - - 8,705 1,864 10,569 1990/91 81,793 81,793 - - 8,663 1,589 10,252

_ _ _ i______1/ Projection~s are based on co~mnitmeiits made until September 30, 1979. - 161 -

Table D2.9.2: SIERRA LEONE - PUBLIC DEBT SERVICE" PAYMENT (Calendar Year Pasis)

(In Thousands of US Dollars)

YEAR DEBT OUTSTANDING AT ------TRANSACTIONS DURING PERIOD------BEGINNING OF PERIOD T U PRO DISBURSED INLCUDING ------SERVICE PAYMENTS------ONLY UNDISBURSED COMMITMENTS DISBURSEMENTS PRINCIPAL INTEREST TOTAL (1) (2) (3) (4) (5) (6) (7)

'1969 63,504 72,810 4,788 6,058 6,875 1,833 8,708 1970 61,581 69,766 23,909 7,576 9,710 2,277 11,987 1971 59,440 83,897 7,523 11,502 6,144 2,204 8,348 1972 68,474 89,949 16,423 14,035 8,057 2,643 10,700 1973 72,789 96,662 25,507 21,720 9,184 3,677 12,861 1974 90,325 118,329 42,099 48,086 10,514 3,959 14,473 1975 135,698 157,803 47,535 29,697 11,180 4,355 15,535 1976 145,546 183,986 15,646 28,137 15,618 5,179 20,797 1977 157,835 182,705 55,316 33,248 12,399 4,813 17,212 1978 192,800 240,580 101,206 73,199 31,667 7,900 39,567 1979 242,002 306,759

*********** THE FOLLOWING FIGURES ARE PROJECTE-;/*********

1979 242,002 306,759 67,513 74,011 41,226 10,382 51,608 1980 269,793 328,217 - 33,835 57,395 10,860 68,255 1981 246,237 270,827 - 9,113 37,636 9,809 47,445 1982 217,717 233,195 - 7,349 28,892 7,958 36,850 1983 196,178 204,307 - 3,847 24,806 6,643 31,449 1984 175,224 179,507 - 2,034 23,431 5,324 28,755 1985 153,831 156,079 - 1,429 17,939 4,341 22,280 1986 137,320 138,141 - 636 15,435 3,654 19,089 1987 122,526 122,710 - 184 14,795 3,051 17,846 1988 107,920 107,920 - - 12,876 2,488 15,364 1989 95,045 95,045 - - 8,533 2,022 10,555 1990 86,516 86,516 - - 8,585 1,741 10,326

* This column shows the amount of arithmetic imbalance in the amount outstanding including undisbursed fron one year to the next. The most common causes of imbalances are changes in exchange rates and transfer of debts from one category toanother in the table.

1/ Projections are based on commitments made up to September 30, 1979. Table D3.1: SIERRA LEONE - CENTRAL GOVERNMENT OPERATIONS, 1968/69-1979/80

(in millions of Leones)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 Estimate

Revenue 51.2 56.8 59.1 59.5 64.6 91.7 97.0 95.4 118.3 160.7 172.8 196.3

Current Expenditure 34.4 41.6 48.0 51.1 57.5 68.0 85.6 89.3 116.6 134.8 166.0 183.0

Budgetary Savings 13.8 15.2 11.1 8.4 7.1 23.7 11.4 6.1 1.7 25.9 6.8 13.3

Development Expenditure 7.6 10.7 10.9 12.5 13.7 18.7 23.2 35.0 29.3 20.6 41.6 48.3

Extra-Budgetary Expenditure __ __ 0.6 __ 3.9 26.1 48.2 23.2 23.5 85.5 79.2 84.8

Overall Surplus or Deficit (-) 6.2 4.5 -0.8 -4.1 -10.5 -21.1 -60.0 -52.1 -51.1 -80.2 -114.0 -119.8 F H

Financing -6.2 -4.5 0.8 4.1 10.5 21.1 60.0 52.1 51.1 80.2 14.0 119.8

External (Net) 2.1 -0.4 -1.1 1.6 0.8 13.0 33.3 18.0 14.7 40.6 36.2 __ Drawings 7.6 5.0 3.7 6.3 7.7 22.9 41.9 33.9 28.2 57.4 73.0 __ Amortization -5.5 -5.4 -4.8 -5.2 -6.9 -9.9 -8.6 -15.9 -13.5 -16.8 -36.8 __

Dumestic (Net) -3.0 -0.5 2.2 2.6 11.2 7.9 26.7 34.1 36.6 39.6 77.8 __ Banking System 3.2 26.0 33.4 32.0 36.8 67.0 57.2 Monetary Authority 3.7 25.0 21.5 18.8 23.5 68.2 __ Commercial Banks -0.5 1.0 11.9 13.2 13.3 -1.2 __

Other -5.3 -3.6 -0.3 -0.1 -1.5 4.7 0.7 0.7 4.4 2.8 10.8 __

Revenues include minimal amounts of income grants (Table ). Current expenditures exclude repayment of loans. Extra-budgetary expenditures are calculated residually.

Source: Data provided by the Sierra Leone authorities, and staff adjustments. Table D3.2: SIERRA LEONE CENTRAL GOVERNO4ENrREVENUE, 1968/69-1979/80

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 Estimate Budsget

I. Taxes on Net Income and Profits 12.5 13.5 18.1 13.4 16.0 30.0 30.8 24.2 23.6 35.5 41.8 31.7 1.1 Corporate I/ 10.3 11.1 14.3 10.2 12.2 25.9 25.8 18.1 17.1 26.4 30.7 21.7 DIKINCO (3.0) (2.6) (2.2) -) (-) (15.8) (13.9) (9.9) (4.9) (10.9) (14.9) Other Companies - () (-) (10.1) (11.9) (8.2) (12.2) (15.5) (15.8) (.) 1.2 Individuals 2.2 2.4 3.8 3.2 3.8 4.1 5.0 6.3 6.5 9.1 11.1 10.0

3. Employers' Payroll Taxes -- --- 0.3 0.3 0.7 0.8 0.8 0.9 0.8 0.5

5. Taxes on Goods and Services 4.4 9.4 9 .3 12.0 12.6 13.4 13.8 16.2 19.5 25.7 27.8 27.2 5.2 Selective Excises on Goods 4.74 9.4 9.3 10.3 10 .7 11 .4 11 .8 14-.4 1-7.4 23.0 25._3 23.4 5.4 Selective Excises on Services --- - 0.1 0.3 0.2 0.1 0.1 0.1 0.2 0.1 0.1 5.5 Taxes on Use of Goods or Property 1.6 1.6 1.8 1.9 1.7 2.0 2.5 2.4 3.7 5.5.1 Business licenses (0.3) (0.5) (0.9) (1.1) (1.0) (1.0) (1.4) (1.1) (2.2) 5.5.2 M4otorVJehicle Traxes (0.8) (0.5) (0.9) (0.8) (0.7) (1.0) (1.1) (1.3) (1.5) 5.5.3 Other (0.5) (0.6) (-) () (-)-- )(-)--

6. Taxes on international Transactions 29.6 2 7.3 23.0 25. 7 28.1 38.9 38.2 38.7 62.2 81.8 84.5 81.9 6.1 import Duties 25. 3 2 2 .7 19.2 21.8 23.2 30.3 30.0 29.4 40.3 55.9 65.7 61.5 Custmos Duties (21.7) (23.1) (30.1) (29.6) (29.2) (36.8) (48.0) (50.0) (46.4) Other Charges (0.1) (0.1) (0.1) (0.4) (0.2) (3.5) (7.9) (15.7) (15.1) 6 .2 Export Duties 4.3 4.6 3.8 3.9 4.9 8.7 8.2 9.3 21.6 25.6 18.4 20.0 Diamonds (1.2) (1.3) (2.2) (2.3) (2.7) (.) (2.0) coffee (1.4) (0.3) (3.2) (11.7) (12.8) (.) (8.4) Coooa (0.3) (2.5) (3.2) (6.5) (8.7) (.) (8.4) Other (5.8) (4.1) (0.7) (1.1) (1.4) (.)(1.2) 6.6 Tax of Foreign Travel ------0.1 0.3 0.3 0.4 0.4

7. Other Taxes ------0.2 2.3 3.3 1.8 3.5 4.2 Stamp Duties -- 0.1- 0.1 0.1 0.1 Provincial Revenues -- 0.1 2.2 3.2 1.7 3.4 4.1 a%

8. Non-Tax Revenue 2/ 4.5 6.4 7.4 8.0 7.1 8.4 12.2 12.5 7.2 12.6 9.5 12.8 8.2 Property Income 3.3 4.1 3.7 6.8 6.2 2.9 5.0 2.2 2.8 8.2.1 Non-Financial Public Enterp rises and Financial Instit utionsT (1.8) (3.7) (3.2) (6.2) (5.4) (2.1) (4.3) (1.5) (2.0) of Which: DIMTNCO 2.6 3.5 1.7 0.7 0.5.. Bank of Sierra Leone - 0.4 2.0 4.0 0.5 3.1 0.5 0.5 8.2.2 other (1.5) (0.4) (0.5) (0.6) (0.8) (0.8) (0.7) (0.6) (0.8) 8.3 Administrative Fees, Oharges and Sales- 2.0 2.0 2.0 4.0 5.3 3.4 6.7 6.3 8.9 8.4 Fines and Forfeits 0.2 0.2 0.2 0.2 0.2 0.2 0.2 .0.2i 0.2 8.6 Other 2.3 0.6 '2.5 1.3 0.8 0.7 0.7 0.9. 0.9 Total Tax Revenue 46.6 50.L 50.4 31.1 31.0. 82.5 83.8. 82.4 109.4. 145./ 158.4 6.

Total Revenues 51.1 56.6 57.8 59.1 64.1 90.9 96.0 94.9 116.6 158.3 167.9 158.3

Grants (Development Revenues) 0.1 0.2 0.3 0.4 0.5 0.8 1.0 0.5 1.7 2.4 4._9 6.1

Total Revenues and Grants 51.2 56.8 59.1 59.5 64.6 91.7 f 97.0 95.4 118,3 160.7 172.8 164.4

Memo Items:.

Total Taxes/CDP (f.c.) 16.8 15.7 15.9 15.9 16.1 19.4 16.1 14.8 16.4 19.9 18 9 17.2 Total Taxes/GNP (m.p.) 15.4 14.5 14.6 14.7 14.7 17.5 14.8 13.6 14.9 18.3 17.2 15.6

-/ Preliminary

I/ Includes mining companies and alluvial contract mining taxes. 2t includes small capital receipts. 3,' Includes Post Office sod TeIecosnunications receipt net of expenditures. 4/ Excludes transfers of revaluation profirs.

inurce: -Annual Estimates of Revenue and Expenditure; and the Ministry of Finance. Table D3.3: SIERRA LEONE - FUNCrIONAL ClASSIFICATION OF CURRENT EXPENDITIIRF. 1968/69-1979/80

(ip milltons of leones)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 Estimate Budget

1. General Public Services -- -- 13.7 16.9 16.5 25.0 18.9 33.1 35.3 49.2 50.8 26.6 28.5 1.1 General Administration ------8.6 10.9 10.0 14.3 9.9 17.1 17.0 22.3 1.3 Public Order and Safety 2.2 2.5 3.6 5.1 6.0 6.5 10.6 9.1 15.9 18.3 22.6

2. Defense 2.3 2.9 3.3 2.7 4.0 4.1 5.8 5.9 6.5 10.8 16.3 12.0

30.6 28.9 3. Education 7.4 8.7 9.7 11.4 13.5 15.4 17.9 17.3 23.8 24.6 3.1 General Administration 2.4 2.9 3.2 3.6 3.0 4.2 3.9 4.2 3.7 3.2 Schools 5.9 7.2 8.5 9.2 9.3 13.9 14.0 19.6 18.0 3.2.1 Primary (2.9) (3.8) (4.5) (4.8) (4.6) (7.7) (7.4) (11.3) (10.7) 3.2.2 Secondary (3.0) (3.4) (4.0) (4.3) (4.7) (6.2) (6.6) (8.3) (7.3) 6.3 3.3 Universities and Colleges 2.6 2.8 3.2 4.5 4.5 5.1 6.0 6.1 3.4 Technical and Vocational 0.5 0.6 0.5 0.6 0.5 0.5 0.6 0.7 0.8

4. Health 2.8 3.2 4.0 4.3 5.5 6.0 7.2 7.4 9.1 9.8 14.8 14.6

4.5 5. Social Security and Welfare 1.6 1.8 1.6 2.0 2.5 2.4 2.7 3.0 2.9 4.6 4.7 5.1 General Administration 0.2 0.3 0.1 0.6 0.5 0.3 0.4 0.7 0.5 F 5.2 Pensions 1.8 2.2 2.3 2.1 2.5 2.6 4.2 4.0 4.0

3.1 2.8 6. Housing and Communitv Amenities ------0.4 0.5 0.6 1.4 1.8 1.7 2.3

3.7 7. Other Co mnlty and Social Services 0.9 0.9 1.0 1.2 1.8 1.1 1.5 1.7 1.7 2.6 2.2

19.3 22.5 27.9 8 Ecnomic Services -- -- __ 8.8 9.2 13.8 10.4 15.8 16.8 5.2 8.1 General Administration 1.0 1.5 1.7 1.0 1.0 1.5 2.0 2.0 2.1 2.3 4.3 8.2 Agriculture 1.1 1.9 1.8 2.4 2.6 3.2 4.3 4.7 4.6 6.3 7.1 8.6 0.8 1.2 8.3 Mining __ -- -- 0.5 0.5 0.5 0.5 0.7 0.7 1.2 2.1 8.4 Electricity ------0.2 1.3 1.2 1.2 1.8 8.5 Roads 2.5 3.3 3.8 2.7 3.0 5.2 1.0 4.7 5.5 6.9 8.5 9.2 8.7 Other Transportation and Communications 1/ 3.7 3.5 4.0 1.9 1.7 2.6 1.3 1.3 1.2 0.3 0.2 8.8 Other Economic Services 0.3 0.4 0.6 1.1 1.1 1.5 1.1 1.6 1.6

9. Unallocable and other Purposes 11.9 11.4 13.5 4.5 3.6 8.1 10.6 14.6 16.1 25.5 21.6 26.2 9.1 Public Debt (Interest and Comsissions) 2/ 3.6 2.4 3.5 5.7 12.1 10.6 19.5 13.2 18.0 9.2 Transfers to Local Authorities 0.9 1.0 0.9 1.5 0.2 0.2 0.2 0.2 0.3 7.9 9.4 Other Purposes -- 0.1 3.8 3.4 2.3 5.3 5.8 8.5

TOTAL 37.4 41.6 48.0 49.0 57.4 68.0 85.6 85.4 111.7 134.8 166.0 171.4 3/

1/ Includes Post and Telecommunications (net). 2/ As shown in Estismtes of Expenditure for each year. / Total as provided in the original budget estimate.

Sources: Annuial Estimates of Revenue and expenditure; and the Ministry of Finance. - 165 -

Table D3.4: SIERRA LEON'E - SECTORAL BREAKDOWN OF DEVELOPMENT EXPENDITURES

(in millions of Leones at current: prices)

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 Revised ------Actuals------Estimate Budget

1. Economic Services 19.3 25.8 23.7 8.5 21.7 41.5

Agriculture 6.4 6.2 8.8 2.6 6.8 20.6 Transport and Communications 7.6 8.3 4.0 2.1 8.6 8.2 Energy 4.2 5.7 9.3 1.0 5.0 7.9 Trade and Industry - - 0.1 - 0.3 3.8 Tourism and Cultural Affairs 1.0-2 4.9 1.0 0.5 Mining - - 0.4 - 0.5 0.5

2. Social Services 2.5 4.3 3.4 3.6 6.3 14.9

Education 1.9 1.5 2.1 3.0 4.3 9.7 Social Welfare & Rural Dev't 0.2 2.0 0.7 - 0.9 0.5 Health 0.3 0.7 0.5 0.6 0.4 4.0 Housing County Planning - 0.1 0.1 - 0.6 0.7 1/ ~~~~~~~~~~~~~~~~~~~~2/2 3. General Services- 1.4 4.9 2.2 8.5 13.0-/ 74.6-

TOTAL 23.2 35.0 29.3 20.6 41.0 131.0

1/ Adjusted for Defense expenditures which are recurrent in nature. 2/ Includes OAU related expenditures of Le3.3 in 1978/79 and Le64 million in 1979/80.

Source: Ministry of Development and Economic Planning. - 166 -

Table D3.5: SIERRA LEONE: OPERATIONS OF PUBLIC CORPORATIONS, 1975/76-1978/79

(In thousands of leones)

1975/76 1976/77 1977/78 1978/79

SL Ports Authority 1/ Operating receipts 4,591 4,143 2,760 9,101 Operating expenditures ...... 9,596 Of which: taxes 2/ ...... -- Operating surplus/deficit(-) ...... - 495

SL Petroleum Refining Company 3/ Operating receipts 26,019 32,962 36,859 50,083 Operating expenditures ...... Of which: taxes 2/ 440 1,374 2,627 1,335 Operating surplus ...... Gross capital formation 519 58 53 203

DIMINCO 1/ Operating receipts 36,406 29,828 39,622 46,164 Operating expenditures 31,858 25,791 34,809 39,246 Of which: taxes 2/ 9,854 4,935 10,938 14,923 Operating surplus 4,548 3,997 4,813 6,918 Gross capital formation 1,558 811 2,602 2,780

SL External Telecommunications 4/ Operating receipts 1,327 2,074 1,834 2,111 Operating expenditures 1,229 1,220 1,018 1,079 Of which: taxes 2/ 50 455 397 600 Operating surplus 47 397 419 433

SL Electricity Corporation 5/ Operating receipts 9,487 9,763 11,171 12,207 Of which: subsidy 70 478 521 798 Operating expenditures 9,676 9,623 10,485 12,125 Operating surplus/deficit (-) - 189 140 686 82 Gross capital formation -- 1,644 -- 11,709

Guma Valley Water Company 6/ Operating receipts 1,615 1,749 1,873 Operating expenditures 1,368 1,347 1,517 ... Operating surplus 247 402 356 ... Gross capital formation 107 249 109 ...

SL Producer Marketing Board Operating receipts Operating Expenditures Operating surplus/deficit - 850 11,351 6,732 13,710 7/ Gross capital formation I - 4

1/ Fiscal year ends June. 2/ Company tax, (diamond industry profits tax for DIMINCO). 3/ Fiscal year ends December. T/ Fiscal year ends March. 5/ Fiscal year ends March.' Figures for 1978/79 are estimates. 6/ Fiscal year ends October. 7/ Pr-eliminary

Sources: IMF & Bank of Sierra Leone - 167 -

Table D3.6: SIERRA LEONE. OUTSTANDING GOVERNMENT DEBT, 1974-79

(in millions of Leones)

Dec. 30 1974 1975 1976 1977 1978 1979 1979

External Debt1/ 70.7 118.0 156.2 173.6 217.9 277.9 ...

International Development Institutions 4.9 12.6 36.8 40.2 44.2 61.7 ... Foreign Governments 35.3 43.9 59.8 62.3 75.4 72.8 ... Market Issues 3.4 3.1 1.9 - -- -- Suppliers' Credits 27.1) 57.7 70.2 97.6 142.6 ... Private Loans ) 58.4 -- 0.9 0.7 0.8

Internal Debt 44.5 69.1 107.4 142.6 194.2 291.8 341.7

Bonds in Circulation 17.3 28.2 36.5 44.3 86.6 93.0 93.0 Bonds Outstanding (25.5) (37.5) (47.5) (53.3) (97.2) (99.5) (99.9) Sinking Fund Holdings (-8.2) (-9.3) (-11.0) (-9.0) (-10.6) (-6.5) (-6.9) Treasury Bill Issue 19.7 26.0 32.1 41.8 57.5 59.1 59.1

Monetary Authorities: Ways and Means Advances 4.0 8.7 3.1 10,4 14.4 101.5 152.2 Other Advances2/ 0.1 2.8 33.1 41,.8 31.2 33.8 32.9

Commercial Banks: Loans and Advances -- -- 0.3 0.7 2.1 2.0 2.1

Post Office Savings: Bank 0.4 0.4 0.4 0.4 0.4 0.4 0.4 SLPMB 3.0 3.0 2.0 3.2 2.0 2.0 2.0 TOTAL 115.2 187.1 263.6 316.2 412.1 569.7

1/ Includes obligations contracted directly by the Ministries of Agriculture and Works. 2/ Includes Treasury holdings of SDRs and use of Fund credit net of Fund deposits with the Bank of Sierra Leone.

Sources: Bank of Sierra Leone and IMF (internal debt); IBRD (external debt). Table D4.1: SIERRA LEONE - MO7ETARY SURVEY, 1970 - 1979

(In millions of Leones)

1970 1971 1972 1973 1974 1975 J 976 __ 3j77 _ 1978 1979

Dec. Dec. Dec. Dec. Dec. June Dec. June Dec. Mar. Jone Sept. Dec. Mar June Sept. Dec. Mar. June Sept. Dec.

Foreign anset. (net) 27.2 25.8 35.9 43.27 36.54 28.08 13.75 16.01 -4.92 0.28 14.25 3.48 2.28 18.98 12.82 1.77 -14.12 -8.70 -3.60 -21.71 -26.93

Central Bank 28.7 29.5 35.7 43.48 37.79 28.05 13.85 13.19 -8.55 -5.76 8.19 -5.73 4.87 2.92 1.92 -10.31 -26.02 -19.47 -11.13 -31.06 -38.12 Com,ercial Bank. -1.5 -3.7 0.2 -0.21 -1.25 0.03 -0.10 2.82 3.63 6.04 6.06 9.21 7.15 16.06 10.90 12.08 11.90 10.77 7.53 9.35 11.19

D-eetic Credit 21.8 27.8 31.1 43.68 65.79 82.40 98.46 116.72 151.83 156.21 150.19 158.31 169.80 175.73 201.42 221.91 253.36 278.86 287.02 320.74 327.69

Cli.ae on Covernaent (net) 2.5 8.0 9.4 15.07- 23.00 43.30 56.67 76.67 107.27 111.99 108.65 110.12 119.71 121.08 145.49 159.91 182.38 203.51 212.44 239.53 252.46

Central Bank 2.53 7.26 29.13 37.99 50.64 76.49 80.04 69.46 74.26 82.30 90.90 93.07 106.22 132.44 153.14 161.17 183.54 198.65 Co-erctal Banks 12.54 15.74 14.17 18.68 26.03 30.78 31.95 39.19 35.86 37.41 30.18 52.42 53.69 49.94 50.37 51.27 55.99 53.81

Clal.s on PriVate Sector 19.4 19.9 21.8 28.20 39.73 37.60 41.14 38.77 43.72 43.46 40.51 47.29 46.79 49.71 51.04 56.82 64.91 71.32 70.96 77.92 71.00

Clain, on OffItcal Entitles 0.41 3.06 1.50 0.65 1.28 0.84 0.76 1.03 0.90 3.30 4.94 4.89 5.18 6.07 4.03 3.62 3.29 4.23

Money plus Quasu-eney 42.5 47.9 56.0 71.27 84.55 87.61 91.60 99.49 11.93 120.83 125.55 125.96 136.22 161.76 166.60 172.40 179.29 195.18 213.82 218.05 214.53

Money 28.2 32.3 38.4 48.28 54.86 58.21 60.28 64.00 72.10 78.88 78.07 74.98 84.45 106.44 100.86 99.67 107.43 121.20 127.91 122.00 127.50

C.rrency outsade Banks 18.9 20.9 24.7 29.72 31.39 36.07 36.54 39.19 40.78 48.89 46.67 45.96 51.72 65.58 57.02 55.40 63.46 69.29 72.04 65.43 72.46 Demand Deposits 9.4 11.4 13.7 17.21 21.66 20.34 21.66 24.07 30.33 29.47 30.73 28.66 31.94 39.38 43.49 43.05 42.71 50.98 55.53 54.76 54.63 Private Sector Depoults 1.35 1.81 1.80 2.08 0.74 0.99 0.52 0.67 0.36 0.79 1.48 0.35 1.22 1.26 0.93 0.34 1.81 0.41

Quaai-ney 14.3 15.6 17.6 22.99 29.69 29.40 31.32 35.49 39.83 41.95 47.48 50.98 51.77 55.32 65.74 72.73 71.86 73.98 85.91 96.05 87.03

Other IIemt (net 6.4 1// 5.8 11.0 15.68 17.78 22.87 20.61 33.24 34.98 35.66 38.89 35.83 35.86 32.95 47.64 51.28 59.95 74.98 69.60 80.98 86.23

Inclodem counterpart funda, capital accounts and other net liabilities. Source: Bank of Sierra Leone. Table D4.2: SUMMIARY ACCOUJNTS OF THE BANK OF SIERRA LEONE, 1970-79

(in millions of le-nes)

1970 1971 1972 19731 1974 1975 7 - 1976 1977 T 1978 1979 Dec. Deec. Dec Dec. . June De June De,. Mar. June Sept. Dec. Mar. June Sept. 1 Dec. Mar. June Sept. Dec.

Foreign Assets 28.71 29.49-35.66 44.57 46.71 34.18 27.75 38.96 29.42 27.23 38.58 37.091 36.04 45.92 44.22 3b.69 36.72 38.51 3b.12 30.00 48.49

xtecrnal Reservs and 24.25 22.81S26.80 33.57 42.09 29.56 23.19 34.47 25.43 23.68 35.71 34.73 34.26 44.62 43.73 36.31 36.42 36.36 35.40 29. 77 48 .49 Reserve Position in the Fund 4.00 4.07 4.08' 5.07 _- _ _ _ - _ - _ - _ -_ _ SDR Holdings 0.40 2.61 4.78 5.93 4.62 4.62 4.56 4.4S. 3.99 3.55 2.87 2.36 1.78 1.30 0.49 0.38 0.30 2.15 0.72 01.21 -

Foreign Liabilities - - - 1.09 8.92 6.131 13.90 25.77 37.97 32.99 30.39 42.82 40.91 43.00 42.30 47.00 62.74 57.98 47.25 61.06 86.61

Claims on Covernment 1.98 3.58, 2.87| 8.76 12.03 29.58 38.06 55.39 81.46 82.61 72.68 79.25 88.03 95.66 1109.88 112.51 139.08 63.24 198.10 212.39 234.38

Ways and Means Advances 4.25 4.25 3.51 2.08 7.46 8.93 10.71 3.09 10.44 10.44 14.37 14.37 14.37 14.37 14.37 14.78 14.78 14.78 104.78 126.19 152.19 oldings of Governme-t Securities 2.01 3.62 3.66 5.44 2.45 18.10 24.63 19.19 33.96 35.49 20.39 22.31 20.76 38.61 64.27 55.87 62.99 63.71 59.57 52.72 49.33 Other Advances - I - - - - - 6.99 8.98 8.98 13.98 18.98 23.98 15.43 3.97 14.76 32.49 51.67 2.18 1.70 1.31 SDR Allocations held by the Treasury -| - - 6.54 j.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 9 94 6.54 6.54 6.54 6.54 10.85 10.85 10.85 10.85 Use of Fund credit 1/ -4.06 -4.07|-4.08 -5.07 4.50 5.55 5.71 21.77 30.60 30.22 30.30 39.20 37.50 36.84 36.45 33.18 34.49 32.27 11.59 29.47 35.29 Less IMF Deposits -0.22 -0.22 -0.22 -0.23 -8.92 -9.54 -9.56 -2.19 -9.06 -9.06 -9.06 -22.15 -18.52 -Il.13 -15.72 -12.26 -12.21 10.04 -10.87 -8.74 -14.59

Governmnt Deposits 4.55 1.90 1.54 6.23 4.77 0.45 0.07 4.75 4.97 2.57 3.22 4.991 5.73 4.7b 16.81 6.29 6.64 1O.I0 16.93 28.85 35.73

Claims on Private Sector - - - - 4.69 1.60 1.60 1.93 0.33 0.33 0.33 0.33 0.33 1.56 1.99 2.201 2.31 2.44 2.48 2.60 2.99

Reserve Money 22.65124.63 28.43135.11 39.41 42.43 42.67 44.34 49.59 55.50 58.17 42.40 57.73 77.05 73.38 80.29 93.84 15.59 133.39 134.40 103.91

Currency outside Banks 18.86 20.94 24.66 29.72 31.39 36.07 36.54 39.19 40.78 48.89 146.67 45.96 51.72 65.58 57.02 55.40 63.46 69.29 72.()4 65.43 72.46 C.rnc- - U.r:a Bns .0 i1.86 1.60. !n~cohi.56i1.73 ! 43 135 1=76 4.277 2.14 i 2.04 1.95 2.15 3.81 2.68 3.82 4.59 4.84 4.6() 4.59 6.52

Bakvrse Deposits 2.111 1.771 1.35 2.31 4.78 3.21 2.81 2.55 4.55 3.95 8.79 4.13 3.07 6.18 13.31 19.85 24.53 40.53 56.41 62.576 64.52 Private Sector Deposits 0.8 0.32 0.86 1.35 1.81 1.80 2.08 0.74 0.99 0.52 0.67 0.36 0.79 1.48 0.35 1.22 1.26 0.93 0.34 1.81 0.41

Counterpart Funds 0.07 0.19 0.39 0.08 0.04 0.04 0.()4 0.03 0.03 0.02 0.02 0.02 0.03 0.451 1.37 1.51 1.51 9 1.22

2 Capital Accounts - - - 10.49 11.11 11.12 11.86 11.87|1 .47 12.50 12.52 13.63 17.09 l3,781 13.77 14.32 314.7 1 8.72 | 38.7,, 19.48 19.53

Other Stenos (net) | 3.421 6.321 8.18| (3 33 -o 82 1 5.19 -1.13 | 9.521 6.186 |6S.59b659 1 7.28 | 2.81 | 292.91 4.10 8,4618. 469 1.99 | -0.19 1- 4147

_~ ~~~______l1 ~~ 11i L l | l L _

Source'. KIF, international Finan,cial Statistics, and data pro-ided ly the Sierr,a leo-en auLhoritits

1/ Includes reserve position in the Fo,nd. Table D4.3: SUMMARYACCOUNTS OF TIE COlIMERCIAL BANKS, 1970-79

(in millions of Leones)

1970 1971 1972 1973 1974 1975 1976 1977 1978 _ __ 1979 Dec. Dec. Dec. Dec. Dec. June Dec. June Dec. Mar. June Sept1. Dec. Mar. June Sept.j Dec. Mar. June Sept. Dec.

Foreign Assets 0.06 0.73 0.35 2.08 3.55 2.94 2.40 2.94 4.17 6.14 7.33 9.22 8.06 16.59 10.90 12.23 12.17 12.19 7.84 13.85 11.41

Foreign Liabilities 1.61 4.44 0.10 2.29 4.80 2.91 2.50 | 0.12 0.54 0.10 1.27 0.01 0.91 0.53 -- 0.15 0.27 1.42 0.31 4.50 0.22

Reserves 3.4] 3.37 2.91 4.04 6.21 4.56 4.05 4.41 7.83 6.09 10.83 6.08 5.22 9.99 16.01 23.67 29.12 45.37 61.01 67.16 71.04

Currenicy In Hand 1.30 1.60 1.56 1.73 1.43 1.35 1.24 1.86 3.27 2.14 2.04 1.95 ! 2.15 3.81 2.68 3.82 4.59 4.84 4.6(1 4.59 6.52 Deposits at Central Bank 2.11 1.77 1.35 2.31 4.78 3.21 2.81 2.55 4.56 3.95 8.79 4.13 3.07 6.18 13.33 19.85 24.53 40.53 56.41 62.57 64.52

Claims on Governmsent 5.43 6.56 8.31 12.86 16.23 14.70 19.17 26.47 31.36 33.10 39.59 36.66 38.11 31,69 53.46 58.13 50.62 52.38 51.81 56.89 54.26

Treasury Bills 5.43 6.56 8.16 10.31 15.81 13.20 14.73 19.55 24.81 26.57 35.10 32.06 33.56 27.26 | 49.02 53.70 48.65 50.45 49.08 51.98 49.83 Loans and Advances ------__ -- 0.18 0.12 0.09 0.06 0.62 _------0.03 -- -_ __ __ Goverrtnent Securities __ __ 0.15 2.55 0.42 1.50 4.44 6.74 6.43 b.44 4.43 4.58 4.55 4.43 4.44 4.43 1.94 1.93 2.73 4.91 4.43

Government Deposits 0.39 0.24 0.28 0.32 0.49 0.53 0.49 0.44 0.58 1.15 0.40 0.80 U.70 1.51 1.04 4.44 0.68 2.01 0.54 0.90 0.45

Claims on Private Sector 19.29 19.60 21.65 28.20 35.04 36.00 39.54 36.84 43.39 43.13 40.18 46.96 46.46 48.15 49.05 54.62 62.60 168.88 68.48 75.32 68.01

Bills 0.55 0.49 0.62 0.44 1.32 1.45 1.68 1.35 1.47 0.73 0.51 1.21 0.73 0.71 1.26 2.17 1.9f 1.45 3.83 3.04 2.69 7 9 Loans and Advances 18.74 19.11 21.03 27.76 33.73 34.55 37.86 35.49 41.92 42.40 39.67 43.75 45.73 47.44 j47. 52.45 60.64 67.43 64.65 72.28 65.32

Claims on Official Entities 0.05 0.26 0.09 0.41 3.06 1.50 0.65 1.28 0.84 0.76 1.03 0.90 3.30 4.94 4.89 5.18 6.07 4.03 3.62 3.29 4.23

Loans and Advances ------0.41 1.47 1.21 0.56 0.69 0.66 0.58 0.85 0.72 3.12 4.76 4.71 5.00 5.89 3.85 3.44 3.11 4.05 Investments in Other Securities j ------|-__ 1.59 0.29 0.09 0.59 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18

Demand Deposits 8.98 11.04 12.90 17.21 21.66 20.34 21.66 24.07 30.33 i29.47 30.73 28.66 31.94 39.38 43.49 43.05 42.71 f50.98 55.53 54.76 54.63 Time and Savings Deposits 14.34 15.55 17.60 22.99 i 29.69 29.40 31.32 35.49 39.83 41.95 47,48 50,98 51,77 55,32 6574 72.73 71.86 !7398 85.91 |9605 87.03 Capital Accounts ------3.65 4.45 4.95 4.95 5.41 5,42 5.43 5.84 5.84 7.26 7.67 7.71 8.49 8.49 9.27 9.28 9.28 10.06

Items|2.92-0.74 2.43 |1,11 3,00 1.57 |4,89 |6.41 110.87 11.12 13.24 13.53 8.57 6.9 33 24.97 36.57 |45.19 41.19 51.02 56.56

rsIMF, Te _ ol a ia Sai___ s nd_____ the Ln____ _authoriti ______. ______--__

Sources IMF, International Financial Statistics, and data provided by the Slerra Leonean authoritias Table 04.4: SIERRA LEONE - COMMBERCIAL. BANKS' LIQUIDITY RATIlO, DECE-MBER 1975-1979

197 5 _ 1976 1977 1978 1979 Dc D a.eunc.epTT Dec. Ma. JnISp.Mr Jue gept .jjec. Nt

-- ~~~~~~~~~~~~~~~~(In_millionsof_leones)

Cash plus Liquid A~ssets 20.46 16.48 2 5.31 30.09 r34.10 I33.39 46.44 I39.35 39.51 137.9-6 66.29 79.54 (79.73 997. 27 113.92 122.18 123.56 Cash Reserves (4.05)j (5.54) (4.41) (4.61) (7.82)1 (6.09) (1.3i60) (5.22)1 (9.99) (16.01) (23.67), (29.12) (5.37) (61.01 )I (67.165) (71.04) Cashin liand 1.24 I 1.65 1.86 1.73 3.27 2.14 2.04 1.95 j .5 38 .8 3.82145 .4 .0 .9 6.5 De:posits in Central B1 nk 2.81 3.89 2.55 2.88 4.55 3.95 8.79 4.13 3.07 6.18 5131.33 19.85 24 .53 40.53 56.41 62.57 64.52 Liquid Assets (16.41) (10.94) (20.90)' (25.48) (26.28) 1(27.30) (35.61) (33.27) 1(34.:29) (27.'97) (5.28) (55.87) (50.61)1 (51.90)j (52.91) (55.02) (52.52) Treasury hills 14.73 10.18 19.55 24.40 24.81 26.57 35.10 32.06 33. 56 27.26 49.02 53.70 48.65 501.45 490 51 .98 49.83 Bills discounted 1.68 0.76 1.35 1.08 1.47 i07 3 05 1.21 0.73 o.71 1.26 2.17 1.96 1.4~5 3.8 1 .3.04 2 .69 Total Comsercial Bank Deposits I 29 26 9.56.6I7.1 14 82 71 37 9.0 192 115.78 114.57 j124.96 141.4'4 I15O.P1 14-1.66

I ~~~~~~~~~~~~~~~~~(inper c~entof totaildqposi ts) Liquidity Ratio (Actual) 38.6 31.3 42_6 ._k -. _ 46.7 59.3 49.4 47.2 40.01 60~.7 68.7 659.1 77.8 8(1.5 ' 8-1.0 87.2 Cash Reserve Ratio 7.6 I10.5 7.4 7.1 11.1 8.5 13.8 7.6 6.2 10.5 14.7 I20.4 25.4 36 .3 _43.1 445 50.1 Of which: a . 12 52 37 65 1. Ratio of Deposit in Central Bak 5.3 7.4 4.3 4.4 6.5 5 1 2 52 I37 b5 122 17.1 21.4 I32.4 I 39.9 41.5 45.5 Liquid Assets Ratio of which: 31.0 20.8 35.1 39.1 37.5 38.2 45.5 41.8 41.0 29.5 40.0 48.3 44.2 41.5 3 7.4 36.5 37.1 Treasury Bill Ratio 27.8 19.3 3 2.9 37.4 35.4 3 7.23 44.9 40.3 i38.3 28.8 44.9 46.4 4 2 .3 40.4 34.7 3,. 5 3 5 .2 ReouirelI Linuiditv Ratio 30.0 I313.1 313.1 30.0 30.13 I ICL lIL 300 3313300 (31 n 31 n3 0 III1 3(113M Excess Liquidity Ratio 8.6 1.3 I12.616.2 _8_ 167 29.4 19.4 17.2 101 ;0.3; . 96 47.85'5 ~ .

(In millionls -of leones)

Excess Liquidity Asount 0.67 7.5 10.6 13.13 11.9 23.0 15.5 2 44 .8 45.4 59.7 71.'4 76.9 1 81.0

------.-

I/ Thie required liquidity ratio ',as raised to 40 per teart effective O)ctob,er 1, 1979. S5o. re: Bank of Sierra Leone. Table D4.5: SIERRA LEONE - DTSTRT8n'TON OF C(1MMERCIAI. IANK l()AN9 AND ADVANCES By MAJOR SECIOMS. 1970-79

(In percent)

1970 197] 1972 1973 1974 1975 1976 1977 1978 1979 Dec. Dee. Dec Dec Dec Dec. Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. Dec. r. n St. D.

Cormerce 74.7 75.1 72.5 69.0 67.4 55.7 65.8 55.8 56,1 5J.S 52.5 51.5 51.S 54.6 57.8 52.9 54.3 53.6 52.3 49.6 45.0 4 5.1

Construction 3.3 3.6 1.6 4.0 4.1 4.9 4.7 4.6 5.3 5.6 6.3 5.0 4.4 2.9 3.0 2.7 2.8 3.4 2.8 4.5 4.4 4.7

Manufacturing 9.1 5.2 6.6 5.0 6.7 4.5 4.8 4.9 5.3 4.2 6.1 5.9 9.0 1.7 6.5 5.5 6.6 4.7 5.8 6.3 6.1 4.7

Agriculture o.7 0.9 0.9 1.- 1.0 1.8 1.1 1.3 1.9 1.6 1.9 1.6 1.8 2.6 3.1 1.6 3.7 3.4 7.1 3.9 5.6 10.6

Mining 1.8 2.7 2.8 4.0 2.0 3.0 2.8 3.7 3.7 4.1 3.9 5.6 4.2 2.9 1.9 4.9 3.2 33.0 4.6 4.9 4.9 5.2

Other 10.2 12.5 15.6 16.6 18.8 30.1 20.6 29.7 27.5 30.7 29.3 30.4 29.0 31 3 27.7 32.4 29.4 31.9 27.4 30.8 34.0 Z9.7 100.0o 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 10O.0 100.0 100.00 100.0 100.0 100.0 100.0 100.0 100.0

______-._____-______- - - ______- - ______

I/ Tncluding local authortties, pubItc uttlity bodies, other financial institutions. and miscellaneous.

Source: Bank of Sierra Leone - 173 -

Table D4.6: SIERRA LEONE - STRUCI'URE OF INTEREST RATES, 1975-80

(In Percent per Annum)

December December August September May-/ 1975 1976 1979 1979 1980

Lending Rates

Treasury bill rate 5.5 5.5 5.5 8.0 Discount rate 6.0 8.0 8.0 10.0 Commercial banks' lending and overdraft rate 9.0-13.0 11.0-15.0 11.0-16.0 11.0-16.0

Deposit Rates (Time with Commercial Banks)

Up to one month ...... 6.5) 1-3 months 5.5 6.5 7.0) 8.0 10.0 3-6 months 6.0 7.5 7.5)

6-9 months 6.5 8.0 8.0) 9.5 9-12 months 7.0 8.5 8.5)

12-18 months 8.0 9.0 9.0) 10.5 12.5 18-24 months 8.0 9.5 9.5)

Savings deposits 5.5 7.0 7.0 8.0

Post office savings deposits 7.0 8.0

1/ Preliminary.

Source: Bank of Sierra Leone. Table D4.7: SIERRA LEONE - CREDIT GUARANTEE SCHEME - DISTRIBUTION OF LOANS AND ADVANCES, 1974/75-1978/79

1974/75 1975/76 1976/77 1977/78 1978/79 . ~~~~~~~~~~~~~~~~AmountinAmuti Amount in Amount in Amount in Amount in Amount in Number of thousands Number of thousands Number of thousands Number of thousands Number of thousands guarantees of Leones guarantees of Leones guarantees of Leones guarantees of Leones Guarantees Leones

Trade 171 664.8 69 320.5 42 142.0 24 104.3 21 76.0

Agriculture 12 67.4 21 100.9 7 31.9 11 93.7 1 4.0

Industry 5 18.2 5 27.5 6 23.3 1 1.5 1 1.0

Transport 12 53.1 9 69.0 4 30.0 3 34.0 2 34.0

Services 3 3.5 2 2.0 2 5.0 -- __ 1 1.0 Total 203 807.0 106 519.9 61 232.2 39 233.5 26 116.0

Source: Bank of Sierra Leone - 175 -

1/ Table D5.1: SIERRA LEONE - WHOLESALE PRICE INDEX (1970 = 100)

All % Food Liquor & Fuel, Power, Light Commodities Change Articles Tobacco & Lubricants Manufacturers (100.0) (20.2) (18.4) (7.2) (54.2)

1973 148.0 26.2 147.2 112.5 127.3 1974 186.6 26.1 205.7 123.4 174.3 1975 217.9 16.8 239.7 140.4 2198.9 238.6 1976 263.2 20.8 262.5 162.0 227.3 302.6 1977 304.0 15.5 285.0 201.0 284.5 350.3 1978 337.2 10.9 297.2 242.1 339.2 837.4 1979 445.8 32.2 350.7 338.8 339.2 531.7

1978 I. 329.8 293.3 216.4 289.9 383.9 II. 338.1 294.9 250.5 289.9 386.9 III. 339.8 300.1 250.7 289.9 388.1 IV. 341.3 300.8 250.7 289.9 390.6

1979 I. 405.8 334.6 323.8 289.9 475.6 II. 412.1 346.6 323.8 289.9 482.7 III. 474.1 376.1 344.7 388.5 567.8 IV. 491.1 350.4 362.8 388.5 600.8

1/ This index has recently been prepared by the Bank of Sierra Leone and is still at experimental stage.

Source: Bank of Sierra Leone. - 176 -

Table D5.2: CONSUMER PRICE INDEX FOR FREETOWN, 1968-1979

(1961 = 100)

Food All Items and Drink Housing Clothing Miscellaneous OWei&ht)f (100.) _hange (58.8) (22.8) (7.4) (11.0)

1968 116.7 - 109.4 130.5 115.0 125.6 1969 120.3 3.1 114.8 132.9 120.1 122.7 1970 128.5 6.8 129.4 134.4 121.8 117.4 1971 126.3 -1.7 124.5 136.6 122.5 119.2 1972 133.4 5.6 135.3 140.2 122.5 119.1 1973 140.8 5.5 147.5 141.1 122.5 120.5 1974 161.1 14.4 174.9 149.4 128.2 135.9 1975 193.2 19.9 215.5 177.3 137.6 151.2 1976 226.4 17.2 252.8 202.3 171.7 176.7 1977 245.3 8.3 271.3 215.5 205.4 195.8 1978 272.0 10.9 293.6 240.3 278.4 214.2 1979 329.8 21.2 362.7 256.3 397.2 242.9

1977 I. 231.5 252.0 213.1 199.0 185.4 II. 239.5 264.6 214.7 202.0 185.7 III. 254.3 285.2 215.4 206.8 201.5 IV. 255.8 283.4 218.8 213.6 210.9

1978 I. 259.5 282.7 229.3 259.3 197.9 II. 267.0 289.8 263.9 263.2 207.9 III. 271.3 288.6 243.0 273.2 229.1 IV. 290.2 313.2 251.8 317.9 221.9

1979 I. 294.3 311.5 254.9 366.3 226.3 II. 327.0 358.9 252.7 383.5 252.2 III. 345.9 386.1 257.1 415.9 246.8

Source: Central Statistical Office. - 177 -

Table D5.3: SIERRA LEONE. SELECTED SUB-INDEXES OF CONSUMER PRICE INDEX FOR FREETOWN (1961 = 100)

Rice Fuel and Cereal % and % % ______Products Cane Liht Change Rent h_Cage Transportation

1968 129.5 121.7 140.2 117.0 1969 137.6 6.3 121.7 - 144.1 2.4 107.0 1970 155.9 13.3 123.5 1.5 145.6 1.0 78.0 1971 134.2 -13.9 128.8 4.3 146.1 0.3 78.0 1972 151.9 13.2 128.1 -0.1 146.2 - 78.0 1973 158.4 4.3 129.4 1.0 147.1 0.6 78.0 1974 236.4 49.2 144.5 11.7 148.1 0.7 79.6 1975 276.6 17.0 159.3 10.2 179.4 21.1 83.3 1976 294.4 6.4 189.4 18.9 191.4 6.7 93.0 1977 310.3 5.4 213.2 12.6 193.2 0.9 94.3 1978 338.9 9.2 243.2 14.1 199.4 3.2 94.3 1979 466.8 37.7 264.4 8.7 200.3 0.4 101.2

1977 I. 283.8 213.1 192.9 94.3 II. 301.0 213.6 193.3 94.3 III. 326.3 214.4 193.3 94.3 IV. 330.2 213.0 193.3 94.3

1978 I. 276.6 215.8 199.4 94.3 II. 342.0 234.5 199.4 94.3 III. 334.8 255.8 199.4 94.3 IV. 402.5 266.9 199.4 94.3

1979 I. 371.1 270.4 199.4 96.9 II. 490.8 255.3 199.4 102.0 III. 535.2 260.8 201.2 102.5 IV. 470.2 271.4 201.2 103.4

Source: Central Statistical Office. - 178 -

Table D5,4: SIERRA LEONE. CONSUMER PRICE INDEX FOR MINING AREAS, 1969-79 1961 - 100

Food All % and (Rice % _ Items Change Drinks and Cereals)l/ Change Housing Clothing Miscellaneous

1969 123.8 - 128.5 124.6 93.2 124.6 1970 128.9 7.1 140.2 148.7 126.9 100.8 123.3 1971 125.1 -3.0 133.2 141.8 -4.6 122.7 101.8 124.5 1972 127.0 1.5 137.1 140.1 -1.2 121.0 101.9 125.8 1973 133.1 4.9 151.0 154.8 10.5 174.7 102.3 126.2 1974 152.9 20,0 188.2 207.5 34.0 141.9 133.6 137.9 1975 178.2 11.4 213.4 222.7 7.3 162.5 147.6 143.0 1976 134.1 8.9 230.9 215.5 -3.2 186.4 152.5 154.6 1977 204.8 5.5 248.9 221.3 5.4 211.6 184.5 158.1 1978 228.1 11.4 273.1 207.9 -6.1 226.2 230.6 169.6 1979 262.1 14.9 304.9 249.0 19.8 246.6 280.2 202.8

I 199.3 245.3 220.0 212.4 170.0 153.5 II 202.8 247.7 229.9 205.3 183.4 156.4 III 208.0 253.2 242.1 212.9 189.4 159.5 IV 208.9 249.3 193.0 215.8 195.0 163.1 1978 1 221.3 270.7 182.5 223.3 217.1 159.3 II 226.0 269.9 201.3 230.5 227.6 167.3 III 228.6 271.7 217.2 224.1 238.2 169.2 1979 IV 236.6 280.5 230.1 226.8 239.6 182.6

I 247.2 289.8 247.2 230.8 262.5 190.0 II 260.8 301.5 258.9 242.7 280.6 204.3 III 267.6 311.8 265.3 256.2 283.8 206.0 IV 272.7 316.3 223.8 256.6 293.9 220.7

1/ Sub-index of "Food and Drinks". From first quarter, 1970 to second quarter, 1976 figures reflect both Lunsar/Marampa and Yengema/Tongo Field. From third quarter, 1976, onwards they reflect only Yengema/ Tongo field.

Source: Central Statistical Office. - 179 -

Table D5.5: PRODUCER AND EXPORT PRICES OF THE PRINCIPAL EXPORT CROPS, 1968/69-1979/80

(In Leones per Ton)

Producer Prices _ Average Export Prices Palm Kernels Coffee Cocoa Ginger Palm Kernels Coffee Cocoa

1968/69 65.00 313.60 302.40 1969/70 65.00 313.60 302.40 224.00 1970/71 65.00 313.60 313.60 224.00 120.00 640.00 560.00 1971/72 65.00 313.60 313.60 224.00 90.00 513. ,87.00 1972/73 65.00 313.60 313.60 224.00 1973 246.00 August 71.00 336.00 358.40 246.00 December 80.00 403.20 425.60 246.00 123.00 830.30 951.10 1974 March 100.00 448.00 448.00 246.00 September 100.00 560.00 582.40 246.00 October 146.00 560.00 672.00 246.00 328.30 902.50 1,256.20 1975 February 146.00 560.00 672.00 672.00 160.50 980.40 1,412.20 1976 February 120.00 716.80 672.00 672.00 August 100.00 716.80 672.00 672.00 October 100.00 716.80 1,209.00 672.00 186.60 1,565.00 1,368.00 1977 February 100.00 1,324.00 1,209.00 672.00 March 100.00 1,612.80 1,265.00 1,008.00 May 134.00 1,612.80 1,265.00 1,008.00 October 134.00 1,612.80 1,568.00 1,008.00 272.70 6,822.00 3,500.00 1978 November 134.00 1,612.80 2,128.00 1,008.00 282.20 3,537.00 3,214.20 1979 January 134.00 1,747.20 2,128.00 1,232.00 October 204.00 1,747.20 2,128.00 1,232.00 December 204.00 1,921.92 2,128.00 1,232.00 423.30 2,819.60 3,490.20 1980 March 204.00 1,852.03 2,128.00 804.40 426.00 3,948.00 3,211.00

Source: Sierra Leone Produce Marketing Board and Bank of Sierra Leone. - 180 -

Table D5.6: SIERRA LEONE - WHOLESALE AND CONSUMER PRICES OF RICE

(In Leones per Ton)

Average Producer's Prices Year World Average Average Market Import Wholesale Milled Consumer Price Price Price Husk Equivalent Price 2/

1961 92.6 102.2 66.6 103.4 - 1962 93.6 92.7 62.9 97.6 172.6 1963 95.3 94.8 59.2 91.9 150.6 1964 100.9 177.6 59.2 91.9 173.4 1965 103.6 104.3 53.2 91.9 202.6 1966 120.4 103.7 120.6 53.2 91.9 191.2 1967 148.8 104.5 130.9 74.0 114.9 193.6 1968 126.0 153.4 159.6 74.0 114.9 196.4 1969 100.0 124.8 152.6 74.0 114.9 213.1 1970 86.8 116.7 159.6 74.0 114.9 251.4 1971 129.0(*) 109.6 159.6 88.1 136.7 202.7 1972 197.1 136.6 159.6 85.1 132.1 239.6 1973 350.0 144.8 201.6 85.1 132.1 232.1 1974 542.0 392.4 387.9 118.9 183.8 931.1 1975 363.1 - - 185.0 287.1 401.2 1976 254.5 - - 165.0 250.1 448.0 1977 272.2 261.5 185.0 287.1 450.0 1978 367.5 219.0 366.0 1979 331.3 331.0 430.0 253.1 418.0 1980 I/ 464.0 350.0 (490.0) (253.1) (418.0) 460.0 1981 1/ 510.8 -

1/ Provisional. 2/ Official price set bv Ministrv of Trade and Industry.

Source: Ministry of Agriculture and Forestry, SLPM, Bank of Sierra Leone, Central Statistlcal Office. - 181 -

Table D5.6.1: SIERRA LEONE - RETAIL PRICE OF RICE IN FREETOWN

(in SL cents per cup)

City Market Fisher Street Market Bombay Street Market Average

2/ 1978

I. 11.0 10.0 9.0 10.0 II. 17.0 17.0 1.6.0 17.0 III. 10.0 10.0 10.0 10.0 IV. 13.0 13.0 13.0 13.0

1979

I. 15.0 14.0 13.0 14.0 II. 25.0 25.0 23.0 24.0 III. 16.0 16.0 1l6.0 16.0 IV. 15.0 15.0 1L5.0 15.0

1/ A cup equals 10 ounces 2/ Provisional.

Source: Central Statistical Office. - 182 -

Table D5.6.2: SIERRA LEONE - RETAIL PRICE OF RICE IN MINING AREAS

1/ (in SL cents per cup)

Yengema Gaya Motema New Sembehun Ind. Market Kpandebu Average

1978

I. 13.0 14.0 13.5 13.0 13.0 13.5 11.5 II. 16.5 14.0 19.0 16.5 15.0 16.0 14.0 III. 20.5 19.0 22.0 19.0 16.5 16.0 16.0 IV. 24.0 22.0 22.0 22.0 21.- 20.0 19.0

1979

I. 28.0 28.0 28.0 28.0 26.0 18.0 22.0 II. 31.5 31.5 35.0 28.0 26.5 18.5 24.5 III. 31.5 29.5 26.0 26.0 30.5 23.0 24.0 IV. 16.5 16.5 16.5 17.5 16.5 17.0 14.5

Source: Central Statistical Office

1/ A cup equals 10 ounces - 183 -

Table D5.7: SIERRA LEONE - RETAIL PRICE OF PALM OIL IN FREETOWN

1/ (In SL cents per pint)

Period City Market Fisher Street Market Bombay Street Market Av^re;

1978

I. 50.0 50.0 50.0 50.0 II. 30.0 30.0 30.0 30.0 III. 33.5 33.5 33.5 33.5 IV. 41.5 41.5 41.5 41.5

1979

I. 43.5 43.5 43.5 43.5 II. 36.5 36.5 34.5 36.0 III. 36.5 36.5 36.5 36.5 IV. 41.5 41.5 41.5 41.5

1/ A pint equals 12.5 ounces.

Source: Central Statistical Office. - 184 -

Table D5.7.1: SIERRA LEONE - RETAIL PRICE OF PALM OIL IN MINING AREAS

1/ (In SL cents per pint)

Yengema Gaya Motema New Sembehun Ind. Market Kpandebu Average

1978

I. 63.5 60.0 60.0 63.5 56.5 56.5 52.5 II. 36.5 36.5 35.0 35.0 35.0 35.0 31.5 III. 40.0 41.5 41.5 45.0 33.5 33.5 34.5 IV. 53.3 50.0 50.0 50.0 40.0 40.0 41.5

1979

I. 50.0 50.0 50.0 50.0 43.5 40.0 47.0 II. 43.5 43.5 43.5 43.5 43.5 43.5 43.5 III. 40.0 40.0 40.0 40.0 45.0 45.0 41.5 IV. 40.0 40.0 40.0 40.0 45.0 45.0 41.5

1/ A pint equals 12.5 ounces.

Source: Central Statistical Office. - 185 -

Table D5.8: SIERRA LEONE - EX-REFINERY PRICES OF PETROLEUM PRODUCTS

(SLt/Imperia' Gallon)

July 1, 1977 February 19, 1979 J May 4, 1979 August 1979 January 3, 1980 March 1, 1980

Premium Motor Spirit 93.6 98.6 113.6 137.6 157.6 212.6

Regular Motor Spirit 91.6 96.6 111.6 134.6 154.6 208.6

Kerosene 70.5 75.5 80.5 90.5 94.5 123.5

Gas Oil 54.1 59.1 61.1 71.1 77.1 101.1

Fuel Oil (SLEC) 44.6 49.6 49.6 54.6 57.6 69.6

Source: Sierra Leone Petroleum Refinery.

Table D5.9: SIERRA LEONE - PUMP PRICES OF PETROLEUM PRODUCTS

(SLt/Imperial Gallon)

July 1, 1977 February 19, 1979 May 4, 1979 August 1979 January 3, 1980 March 1980

Premium Motors 151.0(*) 156.0 171.0 195.0 225.0 300.0

Regular Motors 147.0 152.0 167.0 190.0 220.0 294.0

Kerosene 100.0 105.0 110.0 120.0 132.0 171.0

Gas Oil 103.0 108.0 110.0 120.0 130.0 166.0

Fuel Oil (No pump price) _ - - - - -

Source: Sierra Leone Petroleum Refinery.

(*) Includes the excise duties. Table D5.10: FINANCIAL CROP BUDGETS PER HECTARE (in 1980 constant Leonea)

Coffee Cocoa Swamp Upland Nev New Swamp Rice Upland Rice Groundnuts Grounnuts Maize Cftrus Rehabilitation Plantings Rehabilitation Plantings 1980 1890 1980 1990 1990 1980 1990 1980 1990 1990 1980 1990 1990 1680 1990 1990

Yield tons/ha 1.0 3.0 0.6 1.5 2.0 0.6 1.5 1.5 2.5 25.0 .28 .48 .75 .28 .5 .07 Price Le/tonl/ 280.0 431.0 280.0 431.0 415.0 330.0 415.0 240.0 355.0 100.0 2,007 1,811 1,811 1,056 1,056 2,007

Gross Value of Production 280.0 1,293.0 168.0 646.5 830.0 198.0 622.5 360.0 887.5 2,500.0 562 863 1,358 595 528 739

Costs of Production Seed - 10.0 - 10.0 18.0 - 20.0 - 3.0 ------Fertilizers - 85.0 - 63.0 45.0 - 35.0 - 72.0 _ - 89.6 89.6 _ - 134.4 Pesticides - 5.0 _ 5.0 5.0 - 5.0 - 5.0 - - 6.0 5.9 _ 126.8 93.6 Bags 15.0 25.0 10.0 12.0 15.0 10.0 10.0 15 15.0 150.0 - - - - - Tools 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5 5.0 - - 2.0 2.0 _- - Hired Labor - 15.0 ------30.0 30.0 - 4.5 4.0 15.0 Interest - 20.0 - 15.0 17.0 - 15.0 - - 15.0 - 4.0

TOTAL 20.0 165.0 15.0 110.0 105.0 15.0 90.0 20 115.0 - 30.0 131.6 102.5 8.5 155.1 259.3

Net Value of Production 260.0 1,128.0 153.0 536.5 725.0 183.0 532.5 340 772.5 2,350.0 532.0 737.4 1,255.7 586.5 372.9 479.9 0

Family Labor Mandays (150) (370) (100) (150) (175) (125) (185) (160) (190) (170) (35.0) (42.0) (67.0) (24.0) 44.0 73.0

Cost of Family Labor 2/ (at Le 1.50/manday)- 225.0 405.0 150.0 225.0 262.5 187.5 277.5 240.0 285.0 255.0

Net Profit (Loss) After Costing Family Labor 35.0 723.0 3.0 311.5 462.5 (4.5) 255.0 100.0 487.5 2,095.0

Return Per Manday of Family labor 1.7 4.2 1.5 3.6 4.1 1.5 2.5 2.1 4.1 13.8 15.2 17.6 18.7 24.4 8.5 6.6

1/ Prtces are based on IBRD projections and existing local prices, details in W.P.C. 10. 2/ Assoming that the opportunity cost of family labor is equal to the market wage rate. - 187 -

Table D6.1: SIERRA LEONE - POPULATION, 1963-78

('000)

Annual 1963 1974 Growth 1978 (Projected) Census Census Rate Total Urban Rural

Southern Province 533.3 588.8 0.9 610.3 53.0 557.3

Eastern Province 526.0 739.4 3.2 851.8 170.4 681.4

Northern Province 883.2 1,033.8 1.5 1,113.9 89.1 1,024.8

Western Area 178.3 293.7 4.7 355.4 330.5 24.9

Sierra Leone Total 2,120.8 2,655.7 2.1 2,931.4 643.0 2,288.4

Source: Central Statistical Office and staff estimates. - 188 -

Table D6.2: SIERRA LEONE - REGIONAL POPULATION GROWTH (1963-1974)

Administration Area 1/ Implied Average 1963 1974 % Urban Annual (1974) Growth Rate

Sierra Leone (Total) 2,120,873 2,655,745 21.2 1.94

Bo District 204,728 213,889 18.4 0.32

Bonthe District 72,680 79,984 0.0 0.82

Moyamba District 165,240 186,942 2.9 1.06

Pujehun District 83,924 101,214 0.0 1.62

Sherbro Urban District 6,763 6,804 94.1 0.05

Kailahum District 143,476 173,825 8.1 1.65

Kenema District 220,500 257,355 12.2 1.33

Kono District 162,050 308,238 32.3 5.65

Bombali District 195,926 231,588 11.1 1.44

Kambia District 135,637 154,305 3.7 1.11

Koinadugu District 123,766 152,016 5.2 1.77

Port Loko District 244,189 290,685 11.1 1.50

Tonkolili District 183,677 205,220 5.0 0.95

Western Area 178,317 293,680 93.0 4.36

1/ A cup equals 10 ounces. 2/ Provisional.

Source: Central Statistical Office. - 189 -

Table D6.3: SIERRA LEONE - LABOR FORCE AND EMPLOY1MENT ESTIMATES 1974

('000)

Freetown Sierra Leone M F T M F T

Total Population 146 130 276 1,359 1,376 2,735

Population 12 Years and Over 100 82 182 864 883 1,747

Labor Forcel/ 80 28 108 770 568 1,338

% of Total Population 54.7 40.0 47.8 56.6 41.5 48.9

Modern Private Sector 29 7 36 66 9 75 ( < 6 Employees)

Government 16 4 20 56 10 66

Agriculture 3 2 5-/ 562 475 1,010

Informal Sector 27 15 42 95 78 173

Registered Unemployed 5 - 5- 40 1 41

Memo Item

Working Age ( > 12 < 65) Population 1974

Working Age Population 1,747,000 - Working 1,009,000 - Not Working 138,000 - Housewives 500,000 - Students 98,000 Economically Active Population 1,338,000 (Labor Force)l/

1/ Including two-thirds of housewives between ages 12 and 45 in rural areas. 2/ Mission estimates.

Source: Census data and mission estimates. - 190 -

Table D6.4: SIERRA LEONE - LABOR FORCE BY MAJOR INDUSTRY GROUP, 1963-74

( '000)

1963 1970 1974

Working Population 1,080 1,231 1,338

Agriculture, hunting and fishingl' 884 982 1,010

Mining and quarrying 44 47 46

Manufacturing 40 48 52

Construction 15 22 26

Electricity, water and sanitary services 2 3 4

Commerce 51 69 81

Transport, storage and communication 15 23 28

Public administration 29 37 62

Other 29

1/ Including two-thirds of housewives between ages 12 and 45 in rural areas.

Source: Ministry of Development and Economic Planning, Central Planning Unit and mission estimates. Table D6.5: EMPLOYNENT BY INDUSTRY SECTOR AND EMPLOYMENT STATUS, 1963

Private Unpaid Wage Self- Household Government Employee Employer Employed Worker Total

Agriculture, Forestry, Fisheries 1,755 3,761 810 290,367 405,363 702,056

Mining and Quarrying 443 25,917 815 17,001 3,473 47,649

Manufacturing 2,195 5,659 282 28,070 4,991 41,197

Construction 6,755 5,789 117 2,965 549 16,175

Electricity, Gas, Water 1,843 295 6 80 22 2,246

Wholesale/Retail 682 7,162 365 39,002 5,914 53,125

Transport, Storage and Communications 6,056 7,740 113 1,649 612 16,170

Services 16,727 8,507 116 2,772 482 28,604

Not Adequately Described 53 417 4 398 53 925

TOTAL 36509 65,247 2,628 382,304 421,459 908,147

Source: Census 1963. Table D6.6: EMPLOYMENT BY INDUSTRY SECTOR AND EMPLOYMENT STATUS, 1974

Unpaid Government Government Total Private Self- Household Not Administration Business Government Employee Employer Employed Workers Specified Total

Agriculture, Forestry, Fisheries 4,187 244 4,431 11,240 2,199 340,455 338,478 2,961 699,764

Mining and Quarrying 108 4,393 4,501 6,957 121 7,875 835 28 20,317

Manufacturing 948 741 1,689 9,082 149 31,448 2,696 406 45,470

Electricity, Gas, Water 336 1,538 1,868 160 3 57 3 4 2,095

Construction 8,239 63 8,302 4,526 47 4,014 304 64 17,257

Wholesale/Retail 359 1,032 1,391 10,732 145 68,237 10,349 510 91,364

Transport Storage and Communications 1,210 6,556 7,766 11,930 65 4,248 1,007 323 25,339

Finance, Insurance and Real Estate 151 435 586 1,002 4 66 6 5 1,669

Public Administration 19,279 147 19,426 418 1 54 26 93 20,018

Education 8,503 18 8,521 2,713 8 106 24 77 11,449

Other Services 5,810 133 5,943 13,899 45 4,724 1,591 361 26,563

Unspecified Industries 1,286 90 1,376 2,654 9 1,125 430 42,973 48,567

TOTAL 50,410 15,390 65,800 75,313 2,796 462,409 355,749 47,805 1,009,872

Source: Provisional Census Data 1974. - 193 -

Table D6.7: PUBLIC SECTOR EMPLOYMENT

1963 1974 Sector Public Total % Public E'ublic Total % Public

Agriculture, Fishing, etc. 1,755 702,056 0.2 4,431 699,764 0.5 (4.8%)I/ (77.37.)2/ (0.7%) 1/ (69.3Z)2/

Mining 443 47,649 0.9 4,501 20,317 22.2 (1.2%) (5.22%) (6.87,) (2.0%)

Manufacturing 2,195 41,197 5.3 1,689 45,470 3.7 (6.0%) (4.5%) (2.6%) (4.5%)

Construction 6,755 16,175 41.8 8,302 17,257 48.1 (18.5%) (1.87.) (12.67) (1.7%)

Utilities 1,843 2,246 82.1 1,368 2,095 89.2 (5.0%) (0.3%) (2,9%) (0.2%)

Commerce 682 53,125 1.3 1,391 91,364 1.5 (1.9%) (5.87.) (2.1%) (9.17.)

Transport 6,056 16,170 37.5 7,766 25,339 30.6 (16.6%) (1.8%) (11.8%) (2.5%)

Services 16,727 28,604 58.5 34,476 59,699 57.7 (45.8%) (3.27.) (52.4%) (5.9%)

Others Not Specified 53 925 5.7 1,376 48,567 2.8 (0,2%) (0.1%) (2.17) (4,87)

Total 36,509 908,147 4.0 65,800 1,009,872 6.5 (100.0%) (100.0%) (100.0%) (100.0%)

1/ Percent of total public employment. 2/ Percent of total employment.

Source: Census of population: 1963 and 1974. -194

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Table D6.8.1: UNIDO INDUSTRIAL REVIEW 1/

Industrial Units Employment Industry Group No. % No. %

1. Food, Beverage & Tobacco 59 33 3012 27

2. Repair & Service Workshops 32 18 2721 25

3. Chemicals and Petroleum Products 16 9 592 5

4. Building Materials Industry 16 9 1037 10

5. Paper, Paper Products & Printing 16 9 1017 9

6. Wood, Wood Products and Furniture 13 7 1462 13

7. Plastic, Footwear, Foam and Packages 12 7 419 4

8. Light Engineering Products 5 3 378 3

9. Textile Products 3 1 209 2

10. Miscellaneous 8 4 180 2

Total 180 100 11027 100

Source: S. Shafquat Ali, "Industrial Review of Sierra Leone," UNDP/UNIDO Project DP/SIL/78/002 (Freetwon, 1979)

1/ Establishments are only included if they, "... use fixed assets of the value of LelOO,000 or more or employ 20 or more workers where machinery is run by motive power.' A universe of 180 establishments satisfying these criteria was established, however, only 21 firms consented to participate in the survey. Employment estimates are based on extrapo- lating from these 21 observations, an admittedly suspect procedure. - 196 -

Table D6.9: SIERRA LEONE - NEW ENTRANTS TO THE LABOR MARKET WITH AT LEAST COMPLETED PRIMARY EDUCATION

Completed primary education 2,500

1-3 secondary education 3,500

Vocational training 500

4-5 years of secondary education 7,000

4-0 levels 200

Teachers 500

University level 150

TOTAL 14,350

Source: Mission estimates based on statistics compiled by the Ministry of Education. - 197 -

Table D6.10: DEMOGRAPHIC AND ECONOMIC CHARACTERISTICS OF RURAL HOUSEHOLDS GROUPED BY REGION

Mean Per Capita Average Number of Consumption Household Region Households Expenditure Size

1. Scarcies 10 108.62 8.3

2. Southern Coast 33 149.15 6.9

3. Northern Plains 21 105.10 8.0

4. Riverain Grasslands 24 158.45 4.8

5. Bolilands 34 72.17 9.4

6. Moa Basin 31 114.87 5.4

7. Northern Plateau 21 100.06 6.9

8. Southern Plains 29 119.71 6.4

All Regions 203 116.28 6.9

Source: Robert P. King and Dunstasn Byerlee, "Income Distribution, Consump- tion Patterns and Consumption Linkages in Rural Sierra Leone", African Rural Economy Paper No. 16 (Michigan State University, 1977) p. 17. - 198 -

Table D6.11: ACREAGE OF FIELDS BY TENURE PATTERN EXPRESSED AS PERCENTAGE OF TOTAL ACREAGE IN EACH PROVINCE 1970/71 -

Tenure Southern Eastern Northern Western Sierra Pattern Province Province Province Province Area Leone

Purchased 0.34 0.03 0.87 3.17 0.42 Acquired by Rented 4.48 0.50 4.48 20.08 3.16 Payment of Loaned 4.63 0.13 1.92 0.30 1.92 Fee Pledge 0.05 0.18 0.20 - 1.08 Leased (private sector) 0.53 - 0.02 0.17 0.14

Squatter - 0.64 0.16 28.03 0.48 Acquired by From Friend 7.01 4.88 5.19 0.07 5.51 Special From Chief 5.27 3.11 4.78 1.72 4.24 Permission From Government - 0.02 - - 0.01

Chiefdom membership 1.54 4.32 0.71 1.50 4.54 Acquired by Bequeated by Membership Relative 22.52 31.38 34.68 11.88 30.11 Family membership 18.69 35.03 7.86 6.06 21.20

TOTAL 65.06 80.22 61.23 72.98 72.81 OTHERS 2/ 34.94 19.78 38.77 27.02 27.19

100.00 100.00 100.00 100.00 100.00

1/ Agricultural Statistical Survey of Sierra Leone 1970/71 Central Statistics Office, Freetown

2/ These include forest reserves, protected forests, towns, roads, airstrips, government residential reservations, etc.

Source: Njala University College, Land Tenure Systems in Sierra Leone (Njala, 1980), p.35. Table D7.1: CIVIL SERVICE SALARIES

(In Leones per annum)

1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80

Permanent Secretary 4,700 4,700 4,700 4,818 4,818 5,550 5,550 5,550 6,383 6,383 (100)1/ (102) (96) (93) (82) (78) (67) (60) (64) (51)

Deputy Secretary 4,300 4,300 4,408 4,408 4,408 5,290 5,290 5,290 5,290 6,084 (100) (102) ( 99) ( 93) ( 82) ( 70) ( 70) ( 62) (58 ) ( 53)

Administrative Officers 1,368 1,368 1,368 1.436 1,436 1,795 1,795 1,795 1,795 2,154 (100) (102) ( 96) ( 96) ( 84) ( 87) ( 74) ( 67) ( 62) ( 59)

Technical & Executive Officers 1,272 1,272 1,336 1,336 1,336 1,670 1,670 1,670 1,670 2,004 (100) (102) (101) ( 96) ( 84) ( 87) ( 74) ( 68) ( 62) ( 59)

Clerical 336: 336 336 378 378 378 504 504 504 630 (100) (102) ( 96) (103) ( 94) ( 75) (85) ( 76) ( 72) ( 70)

Unqualified Clerical 288 288 288 324 324 324 432 432 432 540 (100) (102) ( 96) (103) ( 90) ( 75) ( 85) ( 76) ( 71) ( 70)

Cleaners 228 228 228 237 237 237 360 360 360 540 (100) (100) ( 97) (103) ( 90) ( 73) ( 90) ( 80) ( 73) ( 88

Messengers 216 216 216 243 243 243 360 360 360 540 (100) (100) (102) (94) (103) (90) ( 73) (95) (84) ( 79) (93)

Index number of civil service salaries by grade deflated by Freetown CPI.

Source: Sierra Leone Government, Estimates of Revenue and Expenditure. - 200 -

Table D7.2: WAGE DATA 1/

Occupation/Skill Wage/Earnings Category (Leones)

I. Chamber of Conmerce Data (1979)

1. Agriculture Skilled 1.89/day Unskilled 1.64/day

2. Mining (Formal) Skilled 1.82/day Unskilled 1.55/day

3. Construction Skilled 1.78/day Unskilled 1.43/day

4. Transportation Skilled 2.05/day Unskilled 1.70/day

5. Utilities Skilled 2.05/day Unskilled 1.55/day

II. Collective Bargining Agreements (1979-80)

6. Construction Artisan 1st Class 1.98/day Clerk Typist 2.07/day Driver 1.78/day Labourer 1.43/day Messenger (Illiterate) 1.43/day

7. Transportation Artisan 1st Class 2.25/day Clerk Typist 2.10/day Driver 2.05/day Labourer 1.70/day Messenger (Illiterate) 1.70/day

8. Hotel Workers Artisan 1st Class 90/month Copy Typist 60/month Driver 60/month Labourer 46/month Messenger 46/month

III. Public Sector and Others

9. Public Construction Minimum 2.01/day

10. Messenger 45/month

11. Public Sector Minimum 1.10/day

12. EEC IADP Unskilled Labor Minimum 1.85/day

1/ All data refer to the announced minimum wage of a given occupation/skill category. Actual remunerations may differ. - 201 -

Table D7.3: ILO STUDY - FUNCTIONAL DISTRIBUTION OF INCOME: DISAGGREGATED GROUPS

Per --Percentage-- -Cumulative %O - Number Income capita Numbers Income Numbers Income ('000) (m Le) (le)

Farmers I 48 8 171 7.3 1.5 7.3 1.5 Hawkers 45 10 300 6.9 1.9 14.2 3.4 Farmers II 93 37 300 14.2 6.9 28.4 10.3 Unskilled 40 17 425 6.1 3.2 34.5 13.5 Non-Agricultural 90 47 522 13.7 8.8 48.2 22.3 Vendors 40 21 530 6.1 3.9 54.3 26.2 Artisans 35 20 566 5.3 3.7 59.6 29.0 Farmers III 70 43 619 10.7 8.1 70.3 38.0 Semi-Skilled 27 17 630 4.:l 3.2 74.4 41.2 Farmers IV 45 39 869 6.9 7.3 81.3 48.5 Skilled 19 17 895 2.9 3.2 84.2 51.7 Farmers V 51 58 1,131 7.B 10.8 92.0 62.5 Farmers VI 13 21 1,585 2.0 3.8 93.9 66.3 Clerical 15 35 2,333 2.3 5.2 96.3 71.5 Retailers 14 58 4,143 2.1 12.1 98.4 83.6 Professional/Managerial 6 39 6,500 0.9 7.2 99.3 90.8 Entrepreneurs 5 49 9,800 0.8 9.1 100.0 100.0

TOTAL 656 536

Source: JASPA Employment Advisory Mission, Ensuring Equitable Growth (ILO, Addig Ababa, 1978), p. 291. - 202 -

Table D7.4: THE DISTRIBUTION OF CONSUMPTION EXPENDITURES IN FREETOWN (1976)

Household Expenditures Cummulative Cummulative % Class (Le/month) % Households Consumption Expenditures

0 - 9.99 0.9 0.1 10.00 - 19.99 5.8 0.8 20.00 - 29.99 10.5 1.9 30.00 - 39.99 17.9 4.4 40.00 - 59.99 36.1 13.0 60.00 - 79.99 53.3 24.3 80.00 - 99.99 66.4 35.4 100.00 - 149.99 80.1 50.2 150.00 - 199.99 88.3 63.1 200.00 - 299.99 95.0 77.9 300.00 - 399.99 97.6 86.2 400.00 - 499.99 98.8 91.2 500.00 100.0 100.0

Source: Dr. N.K. Chakravanti, Preliminary Report Sierra Leone Consumer Expenditure Study, (Central Statistical Office, 1980), p. 83. - 203 -

Table D7.5: EARNINGS TRENDS IN MAJOR SECTORS

------Real Earnings Per Week------Year Manufacturing Mining Construction Transport

1966 8.50 8.42 8.52 7.80 1967 8.42 8.51 8.73 7.12 1968 7.81 7.62 5.81 8.73 1969 8.43 7.34 5.61 9.44 1970 8.32 8.67 7.51 7.94 1971 8.42 8.77 7.42 10.15 1972 7.91 8.70 7.13 10.25 1973 11.12 8.71 6.15 8.78 1974 8.06 7.82 5.47 7.88 1975 7.52 7.01 4.76 8.30 1976 6.93 6.62 4.67 8.30 1977 6.82 6.33 4.79 8.03

Source: ILO, Yearbook of Labor Statistics

(N.B. While in the field the mission was not able to ascertan the primary source of these data. Caution should accordingly be exercised in relying on these estimates). - 204 -

Table D7.6: UNION MEMBERSHIP (1978) ______-______I______Union Dues Paying Membership …------_------__----

Electricity Employees 1,200

Clerical, Mercantile & Government Workers 3,000

National Seamen 1,200

Municipal & Local Government 2,000

Motor Drivers 600

Railway Workers 200

Construction 1,5O)

Plantation & Forestry 298

Maritime & Waterfront 1,200

Hotel, Food, Tobacco 1,520

Transport 1,000

Mine Workers 2,000

Dock Workers 2,400

Teachers 4,000

Printing Workers 100

Utility Workers 300

Skilled & Manual Workers 500

General Workers 800

Total 23,828 Source:------Sierra------Leone-----Labour------Congress-----_

Source: Sierra Leone Labour Congress - 205 -

ANNEX E

SELECTED REFERENCES

1. ALI, S.S., "Industrial Review of Sierra Leone," 1979. UNDP/UNIDO Project DP/SIL/78/002. Freetown, Sierra Leone.

2. JASPA, Employment Advisory Mission, Ensuring Equitable Growth, 1978. ILO, Addis Ababa.

3. KING, R.P. and D. BYERLEE, Income Distribution, Consumption Patterns and Consumption Linkages in Rural Sierra Leone, 1977. Michigan State University, East Lansing, Michigan.

4. LEVI, John, African Agriculture, Economic Action and Reaction, 1976. Slough, England, Commonwealth Agricultural Bureaux.

5. LIEDHOLM, C. and E. CHUTA, The Economics of Rural and Urban Small-Scale Industries in Sierra Leone, 1976. Michigan State University, Michigan.

6. LISK, F. and R. van der HOEVEN, "Measurement and Interpretation of Poverty in Sierra Leone," The International Labour Review, 1979. Vol. 118, No. 6.

7. OKOYE, C.S., "Migration in Sierra Leone," 1978. World Bank, Washington, D.C.

8. SPENCER, Dunstan and Derek BYERLEE, Technical Change, Labor Use and Small Farmer Development: Evidence from Sierra Leone, 1976. Michigan State University, M4ichigan.

9. TURAY, H., Land Tenure Systems in Sierra Leone, 1980. Njala University College, Njala, Sierra Leone.