By Marcus Bangura
Sierra Leone is currently grappling with a severe economic crisis, which has become increasingly alarming; as it has left a profound impact on daily lives of its citizens. The past six years has been rough and tough for one to make ends meet but resilience and ingenuity Sierra Leoneans had learned the arts of living. They have survived the test of time with enormous challenges and the economic crisis is engendered combined of a complex and difficult environment, making it increasingly challenging for Sierra Leone to achieve economic stability and growth.
The economic crisis in Sierra Leone is affected by the following interrelated factors:
Currency Depreciation: The value of the Sierra Leonean Leone has been declining, which affects the purchasing power of citizens and increases the cost of imports. This depreciation also impacts businesses that rely on imported goods and materials.
Debt Burden: Sierra Leone is grappling with a significant national debt, which limits the government’s ability to invest in critical infrastructure and social services. Servicing this debt takes up a large portion of the national budget. The irony of it all is, the government is servicing debt, and at the same time taking more debts from within and outside the country.
Impact External Shocks: The economy has been hit by external shocks government claimed, pointing ugly fingers on COVID 19 pandemic and the ongoing Ukraine/Russia war . According to Government the aforementioned crisis have disrupted the supply chains and increase cost of imported goods like fuel and rice among others.
Political Instability: Ongoing political tensions and governance issues are exacerbating the economic situation. Lack of effective leadership and policy implementation hinders economic recovery and growth.
Global Economic Conditions: External factors, such as fluctuations in global commodity prices and economic downturns in major trading partners, also play a role in the country’s economic challenges.
Impact of External Shocks: The economy has been hit hard by external shocks, including the COVID-19 pandemic and the ongoing conflict in Ukraine, which have disrupted supply chains and increased import costs. Efforts to address these issues include focusing on macroeconomic stability, enhancing agricultural productivity, and leveraging both public and private investments to strengthen agricultural value chains.
Apart from the aforementioned factors, which the government often lay claims about for the downturn of the economy, the economic crisis has left immediate impacts on its citizens quite severely:
Rising Cost of Living: Prices for basic goods and services have increased significantly, making it difficult for many families to afford necessities like food, healthcare, and education. It is no gain saying that the rising cost of living in Sierra Leone crucially affects citizens’ financial well-being and the expenses required to maintain a certain standard of living and necessities, like housing, food, transportation, and healthcare. The rising cost of living has significantly impacted individuals and families in various ways, Vis-à-vis budget constraints, quality of life, salary expectation, geographic variation, inflation impact, policy and social support. As economists will say, in the increase of prices of basic goods and services, people may need to allocate more of their income to cover essential expenses. It can lead to tighter budgets and less disposable income for other needs or savings. This in turn affects quality of life, since, higher cost of living can reduce the overall quality of life. For instance, if housing costs are exorbitant, individuals may settle for smaller or less desirable accommodations. Similarly, expensive healthcare or education can limit access to essential services. Inflation is super high in Sierra Leone and when the prices of goods and services rise faster than wages, it becomes challenging for people to maintain their lifestyle without adjusting their spending habits for those who are privilege to be employed. Those who are not fortunate to have jobs languish in despair.
Unemployment: The economic downturn has led to job losses and reduced opportunities for employment, particularly affecting young people and those in vulnerable sectors. With lack of employment opportunities, salary expectation a pittance, the cost of basic social amenities outrageous and varies across the country, the cost of living is fluid with madness. A high-paying job in an expensive city like Freetown, Bo, Makeni , Kono and Port Loko might not provide the same standard of living as a moderate-paying job in a more affordable area. As a result, people don’t have choice to consider where to live or work. Job opportunities are scarce, and many businesses are struggling from going afloat. This has led to higher unemployment rates, particularly among young people and those in vulnerable sectors.
Inflation: The country is experiencing high inflation rates, which are driving up the cost of living. Basic goods and services are becoming more expensive, making it difficult for many citizens to afford necessities.
Healthcare Strain: With limited resources, the healthcare system is under pressure, leading to shortages of medical supplies and reduced access to quality care.
Education Challenges: Free Quality Education though, many families are struggling to support their families in education, feeding and healthcare, which in turn affects children’s education and future prospects.
Increased Poverty: The overall economic hardship has pushed more people into poverty, exacerbating social inequalities and leading to increased reliance on aid and support services.
Currency Depreciation: The value of the Sierra Leonean Leone has been declining, which affects the purchasing power of citizens and increases the cost of imports. This depreciation also impacts businesses that rely on imported goods and materials.
Impact of External Shocks: The economy has been hit hard by external shocks, including the COVID-19 pandemic and the ongoing conflict in Ukraine, which have disrupted supply chains and increased import costs3.
Efforts to address these issues include focusing on macroeconomic stability, enhancing agricultural productivity, and leveraging both public and private investments to strengthen agricultural value chains21.
Political Instability: Ongoing political tensions and governance issues are exacerbating the economic situation. Lack of effective leadership and policy implementation hinders economic recovery and growth.
Global Economic Conditions: External factors, such as fluctuations in global commodity prices and economic downturns in major trading partners, also play a role in the country’s economic challenges.
Impact of External Shocks: The economy has been hit hard by external shocks, including the COVID-19 pandemic and the ongoing conflict in Ukraine, which have disrupted supply chains and increased import costs3.
Efforts to address these issues include focusing on macroeconomic stability, enhancing agricultural productivity, and leveraging both public and private investments to strengthen agricultural value chains21.
The immediate impacts of Sierra Leone’s economic crisis on its citizens are quite severe:
Rising Cost of Living: Prices for basic goods and services have increased significantly, making it difficult for many families to afford necessities like food, healthcare, and education. It is no gain saying that the rising cost of living in Sierra Leone crucially affects citizens’ financial well-being and the expenses required to maintain a certain standard of living and necessities, like housing, food, transportation, and healthcare. The rising cost of living has significantly impacted individuals and families in various ways, Vis-à-vis budget constraints, quality of life, salary expectation, geographic variation, inflation impact, policy and social support. As economists will say, in the increase of prices of basic goods and services, people may need to allocate more of their income to cover essential expenses. It can lead to tighter budgets and less disposable income for other needs or savings. This in turn affects quality of life, since, higher cost of living can reduce the overall quality of life. For instance, if housing costs are exorbitant, individuals may settle for smaller or less desirable accommodations. Similarly, expensive healthcare or education can limit access to essential services. Inflation is super high in Sierra Leone and when the prices of goods and services rise faster than wages, it becomes challenging for people to maintain their lifestyle without adjusting their spending habits for those who are privilege to be employed. Those who are not fortunate to have jobs languish in despair.
Unemployment: The economic downturn has led to job losses and reduced opportunities for employment, particularly affecting young people and those in vulnerable sectors. With lack of employment opportunities, salary expectation a pittance, the cost of basic social amenities outrageous and varies across the country, the cost of living is fluid with madness. A high-paying job in an expensive city like Freetown, Bo, Makeni , Kono and Port Loko might not provide the same standard of living as a moderate-paying job in a more affordable area. As a result, people don’t have choice to consider where to live or work. Job opportunities are scarce, and many businesses are struggling from going afloat. This has led to higher unemployment rates, particularly among young people and those in vulnerable sectors.
Inflation: The country is experiencing high inflation rates, which are driving up the cost of living. Basic goods and services are becoming more expensive, making it difficult for many citizens to afford necessities.
Healthcare Strain: With limited resources, the healthcare system is under pressure, leading to shortages of medical supplies and reduced access to quality care.
Education Challenges: Free Quality Education though, many families are struggling to support their families in education, feeding and healthcare, which in turn affects children’s education and future prospects.
Increased Poverty: The overall economic hardship has pushed more people into poverty, exacerbating social inequalities and leading to increased reliance on aid and support services.
Moreover, it should be known that the economic crisis is affecting small businesses in the country but many are finding ways to adapt and survive: Financial Strain: With rising costs and reduced consumer spending, small businesses are experiencing financial strain. Many are struggling to maintain cash flow and meet operational expenses.
Access to Credit: Access to affordable credit remains a major hurdle. High-interest rates and stringent lending criteria make it difficult for small businesses to secure the financing they need to sustain operations and invest in growth.
Supply Chain Disruptions: Supply chain issues, exacerbated by global events, have led to shortages and increased costs of raw materials and goods. Small businesses are particularly vulnerable to these disruptions due to their limited bargaining power.
Innovation and Adaptation: Despite these challenges, many small businesses are innovating to stay afloat. This includes adopting digital tools, shifting to online sales, and finding creative ways to reach customers.
Community Support: Local communities are playing a crucial role in supporting small businesses. Initiatives to buy local and support neighborhood businesses are helping some small enterprises stay afloat.
Government and NGO Assistance: Various government programs and non-governmental organizations are providing support through grants, training, and resources to help small businesses navigate the crisis.
Networking and Collaboration: Small businesses are increasingly collaborating with each other to share resources, knowledge, and support. This collective approach helps them tackle common challenges more effectively.
While the road ahead is tough, the resilience and ingenuity of small business owners are key to overcoming these obstacles. Are there any specific small business sectors you’re curious about?
