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Sierra Leone’s Macroeconomic Situation Remains Challenging Despite Bold Policy Measures

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Unlocking the bottlenecks to robust and sustained real growth through economic diversification and addressing pre-existing macroeconomic weaknesses will be crucial for building a resilient economy that promotes inclusive growth and reduces poverty, according to the new World Bank Sierra Leone Economic Update (SLEU) launched today in Freetown. The country’s macroeconomic situation remains challenging despite the bold and courageous policy measures taken by the new government.

Growth is still low (3.7 percent), inflation and exchange rate depreciation are high (16.8 and 11.8 percent, respectively), the fiscal and current deficits are high (6.6 and 13.8 percent, respectively), and increasing debt has resulted in the country being downgraded from moderate to high risk of debt distress. However, the medium-term outlook is promising, with growth expected to reach 5.2 percent by 2021, driven primarily by supply side factors, including favorable agricultural output, uptick in mining activities and strong performance of the services sector, the report notes. Key risks to the growth outlook include a deterioration in Sierra Leone’s terms of trade; lower than anticipated FDI inflows and the effects on the exchange rate and prices; fiscal slippages including adverse debt dynamics; and financial sector weaknesses.

The SLEU is an annual publication that reports on and analyzes recent economic developments, reviews regional and global contexts and analyzes the implications for the country, and presents the medium-term outlook and prospects for the economy. The 2019 Update focuses on promoting inclusive growth and poverty reduction, namely ‘Financial Inclusion for Economic Growth and Development’. The target audience for the SLEU includes policy makers, business leaders, development partners and analysts interested in Sierra Leone’s economy.

“There is an urgent need for Sierra Leone to develop a comprehensive strategy for deepening the financial sector and this is required to ensure poverty reduction, job creation, investment and growth in the country,” said Gayle Martin, World Bank Country Manager for Sierra Leone. “Whether Sierra Leone can promote sustained inclusive growth and reduce poverty depends on whether it can modify the structure of the economy to generate more and better-paid manufacturing and service jobs. That could be accomplished by facilitating creation by the private sector of formal manufacturing and services activities and increasing the productivity of the informal sector.”

The special topic of the 2019 Update focuses on deepening the financial sector for inclusive economic growth and development. The report notes that usage of the financial system is low in Sierra Leone with only about 5 percent of adults using formal savings products and about 54 percent saving money within the past year. Access to finance for enterprises is a significant barrier to growth of the private sector with 40 percent of firms indicating lack of credit as their biggest constraint. Only 11 percent of Sierra Leoneans have mobile money accounts compared to 20.8 percent in Liberia, 38.9 in Ghana and 72.9 percent in Kenya.

“The government plays a key role in developing the financial sector through promoting resilience and stability. One of the key functions that needs to be established is an effective supervision and regulatory regime for financial institutions to address market failures like anti-competitive behavior, market misconduct, information asymmetries, and systemic instability, which can negatively impact financial sector development, economic growth, and shared prosperity,” said Youssouf Kiendrebeogo, World Bank Senior Economist and one of the authors of the SLEU.

To address existing macroeconomic weaknesses and enhance economic growth, the Sierra Leone government should maintain the fiscal consolidation path, improve debt policy and management and intensify efforts to clear the large stock of arrears.

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World Bank Supports Maldives to Improve Secondary Education

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The World Bank’s Board of Executive Directors today approved a $9 million project to improve the performance of the education system, schools, and teaching and learning outcomes at the secondary education level in Maldives.

Maldives has achieved almost universal enrolment at early childhood, primary and lower secondary education levels, but low net enrolment and high gender disparity are the major challenges at the higher secondary level. Learning outcomes are moderate, with clear geographical disparities  among atolls, and between islands within atolls. The average scores for English, Mathematics and Dhivehi for Grade 4 and Grade 7 students ranged between 50 to 60 percent.

“The COVID 19 pandemic has had a profound impact on the Maldives’ general education system, forcing the extended closure of primary and secondary schools across the entire country,” said Faris. H. Hadad-Zervos, the World Bank Country Director for Maldives, Nepal, and Sri Lanka. “The project will broaden educational opportunities for the youth and advance the country’s equitable economic and human development.”

The new Maldives Atoll Education Development Project will support the Government in improving the quality of secondary education in subjects of strategic importance for economic development such as English language, mathematics, science, and skills education. Improved learning outcomes at secondary education level in these strategic subjects will help more students qualify for higher secondary education. Schools will be encouraged to adopt environment-friendly behaviors like saving energy and reducing waste. Support will be provided to atoll schools to expand their ICT equipment and technology while also improving the skills of teachers to address the needs of students with learning challenges. Skills of school principals, management officials, and teachers will also be improved through targeted programs.

“The Maldivian government is implementing a comprehensive curriculum reform initiative and is focusing on improving learning outcomes equitably across Atolls and islands,” said Harsha Aturupane World Bank Lead Economist and Task Team Leader. “Building on these positive steps, Maldives needs to strengthen the quality of general education with a special focus on teacher performance in the outer atolls, and the quality assurance of schools in the islands with small student populations” added Karthika Radhakrishnan-Nair, World Bank Education Specialist and Co-Task Team Leader of the project.

The Maldives Atoll Education Development Project will be implemented by the Ministry of Education. The total financing is $10 million, which is comprised of a $4.5 million grant and a $4.5 million credit from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries, and a contribution of US$1 million of counterpart funds from the Government of Maldives.

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Financing to Support Liberia’s Reforms for Promoting Inclusive Economic Growth

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The World Bank Board has approved the third and last in a programmatic series of three Inclusive Development Policy Operations (IGDPO) designed to support key reforms that are critical to enabling inclusive growth. The financing, amounting to $55 million ($47.50 million International Development Association (IDA) concessional credit and $7.50 million IDA grant), will be disbursed as budget support. These reforms will remove distortions in key economic sectors, strengthen public-sector transparency, and promote economic and social inclusion.

The reforms supported in this programmatic series are aligned with the government’s objectives for improving access to quality agriculture seeds, clean and cheaper electricity, financial inclusion, access to social safety nets, and to other public services, especially for the poorest households, including refugees and refugee hosting communities.

We commend the Government of Liberia for successfully completing this programmatic reform series. The benefits of the reforms implemented are already becoming visible and include among others, the reduction in electricity tariffs and the cost of importing quality-verified solar products which will benefit many households in Liberia,” said Khwima Nthara, World Bank Liberia Country Manager.

This IGDPO builds upon the gains made under the first and second operations of this program approved in 2020 and 2021. The reforms supported by this operation will strengthen the regulatory environment to incentivize private-sector participation in the agriculture seed supply chain, through seed development, multiplication and certification. The actions supported under this operation will contribute to reducing commercial losses and strengthening Liberia Electricity Corporation’s (LEC) financial sustainability, as well as increasing access to solar energy. The previous operation supported the reduction of electricity tariff for poor households from US$0.385/kWh to US$0.22/kWh in May 2021, while this new operation further reduced the tariffs to US$0.15/kWh.

Numerous regulatory challenges that hindered the growth of digital financial services (DFS) have since been addressed by the Central Bank of Liberia (CBL), with active support from this budget support program along other World Bank Group  programs, resulting in Liberia’s National Financial Inclusion Strategy (NFIS) objective of increasing access to formal financial services to 50 percent by 2024 already being exceeded in 2021,” said Mamadou Ndione, World Bank Senior Economist and Task Team Leader of the IGDPO program.

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Tech News

How shipping can contribute to a more sustainable future

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This year’s theme – ‘New technologies for greener shipping’ – promotes innovation and solutions that support a transition in the sector. Maritime transport represents more than 80 per cent of global trade, UN Secretary-General António Guterres said in his message for the Day.

Meanwhile, the war in Ukraine –and the Black Sea Grain Initiative – have highlighted the vital role shipping plays in feeding the world.

Curb shipping emissions

“As shipping continues to connect humanity, it must play an essential part in achieving the Sustainable Development Goals (SDGs) and building a fair and prosperous future for people and planet,” he said.

The UN chief stressed that the maritime sector “must accelerate its voyage to decarbonization.” Emissions from shipping are projected to grow considerably unless there is concerted global action, he warned.

“Governments and private companies need to work together to harness innovative technologies such as digitalization and automation and foster a just transition that includes developing countries and promotes renewable energy and alternative fuels,” he said.

“The vessels to be deployed in this decade will determine whether the shipping sector achieves net zero emissions by 2050. Smarter and greener zero emission ships must become the default choice and commercially available for all by 2030.”

Concern for seafarers

The celebrations on World Maritime Day provide a platform to showcase inclusive maritime innovation, research and development, and the demonstration and deployment of new technologies.

This year’s theme opens up a larger conversation about where shipping is headed, and how digitalization and automation can support the sector, said Kitack Lim, Secretary-General of the International Maritime Organization (IMO).

“But technological solutions for cleaner, safer and more sustainable shipping must also benefit people,” he stressed. “In this regard, the impact on seafarers and other marine personnel, including the need for training, must be considered.”

The theme also entails support for developing nations, particularly small island developing states (SIDS) and least developed countries (LDCs).

Saving lives at sea

In related developments, the World Meteorological Organization (WMO) is using the Day to underscore the importance of marine meteorology to ensure safety at sea.

WMO has released a new publication and video showcasing how it works with partners, including national meteorological services and IMO, in providing forecasts and early warnings to save lives.

The growing impacts of climate change and more extreme weather are making marine meteorological services more critical than ever before, according to the UN agency.

“This has been underlined yet again by a recent succession of tropical cyclones in the Atlantic and Northwest Pacific, which have led to hazardous shipping conditions. Forecasts and warnings are essential to protect vessels, their cargo and sailors,” it said.

WMO is committed to the International Convention for Safety of Life at Sea, known as the SOLAS convention, through the broadcast of meteorological maritime safety information as part of the IMO Global Maritime Distress and Safety System (GMDSS).

The SOLAS convention is generally regarded as the most important of all international treaties concerning the safety of merchant ships.

It was first adopted in 1914, in response to the Titanic disaster.

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