Sierra Leone has moved 18 places to 150th position in the 2021 Index of Economic Freedom, an annual guide published by The Heritage Foundation, Washington’s No. 1 think tank.
The country was at 168th in last year’s rankings. The 2021 Index of Economic Freedom is the product of intense collaboration with people and organizations around the world.
According to the report, Sierra Leone’s economic freedom score is 51.7, making its economy the 150th freest in the 2021 Index. Its overall score has increased by 3.7 points, primarily because of an improvement in fiscal health.
Sierra Leone is ranked 34th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the Sub-Saharan Africa regional and world averages of 55.7 and 61.6 respectively.
The authors further indicated that, the economy of Sierra Leone escaped from the repressed category this year, making it back into the “mostly unfree ranks.” “As one of the world’s most impoverished and least developed countries, Sierra Leone must overcome daunting challenges to expand economic freedom. The most pressing areas for action are judicial effectiveness, financial freedom, government integrity, and labor freedom, all while continuing to improve fiscal health.”
Measuring 2020 rankings as against the 2021 figures indicated that the country improved its regional rank from 43 to 34 and the overall score from 48.0 to 51.7. Change in overall score in the Index from 2020 to 2021 positioned Sierra Leone among four other Sub-Saharan Africa countries (Rep. Congo, Benin, Eritrea, Togo) as top economic freedom gainers in 2021.
The country on the rule of law ranking reportedly showed that on property rights it moved from 40.7 to 42.3%, judicial effectiveness (from 39.4 to 45.7) and on government integrity (21.8 to 30.5%). Sierra Leone, however did not meet the regional averages for government integrity which is 30.9% but improved on the property rights and judicial effectiveness regional averages of 40.3 and 36.7% respectively.
On government size ranking, the score on tax burden slips down (from 87.5 to 86.7%), the government spending score increased from 83.5 to 85.9% and its fiscal health increased from (9.8 to 39.7 percent). Sierra Leone, surpasses the regional averages of (76.4 and 81.6) for tax burden and government spending but is still below the target of 68.1 for fiscal health.
The country’s regulatory efficiency was also ranked. The score for business freedom dropped from (50.1 to 49.6), labor freedom increased (from 29.7 to 30.1) and monetary freedom also saw a slight increase to 65.1 from 64.2 percent. The regional averages for all (52.2, 56.0 and 72.3) was not met by the country.
Lastly on open markets, Sierra Leone surpassed the regional averages for both trade freedom and investment freedom, but couldn’t meet the threshold for financial freedom.
Scores for trade freedom dropped (from 69.4 to 64.6), investment freedom and financial freedom scores were maintained at (60.0 and 20.0). according to the methodology, the 20 score on Financial Freedom indicates that there is heavy government interference. The central bank is not independent, and its supervision of financial institutions is repressive. Foreign financial institutions are discouraged or highly constrained.
ZIJ/14/04/2021