Freetown, SIERRA LEONE – The services sector in Sierra Leone experienced moderate growth in 2022, expanding by an estimated 3.3 percent, according to the latest Sierra Leone Economic Update published by the World Bank. This marks a 0.4 percentage point increase from the previous year, driven by steady growth in communications and public administration.
The report indicates that the services sector made a slightly more significant contribution to overall economic growth than the industrial sector. Prior to the pandemic, the services sector had outperformed the broader economy, but it faced a contraction of 5.5 percent in 2020 due to COVID-19 restrictions. However, it rebounded with robust growth of 2.9 percent in 2021 and sustained this growth into 2022.
A closer look at services subsectors reveals that wholesale and retail trade slowed to 2.1 percent in 2022, compared to 2.3 percent in 2021. Meanwhile, the transport sector grew by 4.3 percent, up from 4.0 percent the previous year. The communication sector, which mainly comprises telecom services, saw notable growth at 6 percent, an increase of 0.1 percentage points from the previous year.
The report attributes the growth in the communication sector to the lasting impact of the COVID-19 pandemic, which accelerated work-from-home practices and the continued use of digital and online work processes, including e-commerce and delivery services. Moreover, the management and delivery of network, digital, and data bandwidth services have evolved following the unbundling of the government-owned Sierra Leone Cable (SALCAB) public administration.
In recent years, the Sierra Leone government has expanded the National Fiber Optic Backbone Project and enhanced bandwidth connections in primary and secondary cities. The public administration sector grew by 1.4 percent, up from 0.8 percent in 2021, partly due to the significantly larger fiscal deficit incurred in 2022.
On the demand side, household consumption was impacted by high and widespread inflation, which eroded purchasing power. Private consumption fell by 2 percent in 2022, following a surge of 37 percent in 2021, which contributed to the overall GDP growth for 2022. High inflation, currency depreciation, economic uncertainty, and financial market constraints reduced the availability and uptake of credit, hampering disposable incomes and demand.
In contrast, government consumption was a significant driver of growth in 2022, growing by 14 percent compared to 2021. This was attributed to higher spending on goods and services, investment projects, and contingencies. The report suggests that the government’s role in supporting the economy was instrumental during the challenging economic conditions.
The services sector’s growth demonstrates its resilience, particularly in the face of economic uncertainties and the lasting effects of the pandemic. This growth is expected to have positive implications for Sierra Leone’s economic development. ZIJ/30/10/2023