World Bank approves $40 Million to boost Sierra Leone’s SMEs

The government of Sierra Leone today received another major grant support from the World Bank’s International Development Association (IDA),  to boost investments in the country’s Small and Medium Sized Enterprises (SMEs) involved in the non-mining productive sectors.

Sierra Leone’s economy must be diversified to enable sustainable growth and the creation of much needed jobs for the millions of people languishing in poverty.

The $40 million approved today by the World Bank Board of Executive will also fund the government’s Economic Diversification Project which is aimed at strengthening the business enabling environment by promoting reforms to help new business start-ups, facilitate strategic public investments to improve competitiveness and private investments, support existing SMEs and entrepreneurs, and build the capacity of public institutions and private sector operators.

If implemented and managed effectively, the Economic Diversification Project will help transform Sierra Leone’s economy from decline to a dynamic and vibrant engine of growth and prosperity.

According to the World Bank’s announcement today, SMEs are currently facing challenges to growth in Sierra Leone, including: low access to information, poor infrastructure, limited access to finance, and weak capacity to scale up businesses.

These constraints the World Bank says, disproportionately impact women entrepreneurs, and the project hopes to address them through public goods investment, SMEs and start-up acceleration, and early-stage financing.

“Harnessing Sierra Leone’s potential to meet the growing demand for jobs and sustainable and equitable growth will largely depend on its ability to diversify the economy. There is a critical need to boost the competitiveness of growth sectors such as manufacturing and services to create jobs and generate labour income as a sustainable pathway for inclusive growth,” said Gayle Martin, World Bank Country Manager for Sierra Leone.

“Promoting economic diversification to reallocate resources from low- to high-productivity sectors can boost growth in GDP per ca pita and reduce poverty,” Gayle Martin said.

According to the World Bank, the project is consistent with the Government’s Medium-Term National Development Plan (2019-2023) and its strategic objective to prioritise private sector-led growth for job creation, poverty reduction and economic diversification.

The World Bank also says that the project is aligned with its Africa Region Strategy, and the World Bank’s focus on Maximising Finance for Development (MFD) and Jobs and Economic Transformation (JET IDA 2019), and consistent with the priorities for sustainable growth and poverty reduction as outlined in the Systematic Country Diagnostic (SCD, 2018).

The project is a key part of the World Bank’s support to the Government of Sierra Leone, as articulated in the most recent Country Partnership Framework (FY21-FY26), which prioritises support to Economic Diversification and Competitiveness with Resilience.

In its announcement, the World Bank indicated that “given the context in which the project will begin implementation, many of the initial project activities will directly support the government’s immediate efforts to address the economic impacts of the COVID-19 pandemic, in particular its impact on SMEs in hard-hit sectors, such as tourism.

“The project will contribute significantly to the COVID-19 recovery phase, with its focus on increasing diversification, strengthening resilience of economic sectors outside of mining and de-risking the country to make it more attractive to investments.”

What remains to be seen, is whether the government has the technical capability and expertise to successfully deliver this transformation project. Will the funding go where it is rendered?