$75 Million Grant to Support Reforms and Mitigate Pandemic Impact in Sierra Leone

WASHINGTON  — The World Bank Board today approved an International Development Association (IDA)* grant of $75 million to improve natural resources governance, enhance inclusiveness and promote sustainability of development financing. This Development Policy Operation (DPO) is the first in a series of three operations focusing on Inclusive and Sustainable Growth Financing, aimed at supporting the government’s efforts to build the foundations for a robust, inclusive, and sustainable economic recovery from the pandemic.

“The World Bank continues to be an active partner in supporting Sierra Leone’s recovery from severe shocks in the aftermath of the Ebola Virus Disease, and the current COVID-19 pandemic,” said Abdu Muwonge, World Bank Country Manager for Sierra Leone. “We stand ready to further support the Government of Sierra Leone to transform the economy, make it resilient to shocks while improving the well-being of the Sierra Leonean people.”

Sierra Leone faces major economic and social challenges, including substantial gender gaps, that lead to low human development outcomes. The country’s growth potential has been constrained by limited spillovers from the mining sector, and poor access by the population to financial services, natural resources (such as, land and minerals), and high-quality education.

The reforms supported by this DPO address some of the most critical structural impediments to raising potential output and improving resource allocation in key sectors of the economy and are well-anchored in Sierra Leone’s Medium-term National Development Plan (MTNDP, 2018–2023). This DPO supports the Government’s efforts to build the foundations for a robust and inclusive economic recovery from the pandemic and promote sustainable development financing of the Budget. In the short term, the operation will help the government close the country’s large financing gap, as it emerges from the pandemic. It supports policy reforms under three pillars: improving natural resources governance through land and mining reforms; enhancing inclusion through reforms to support women’s economic participation, access to quality education and financial inclusion; and ensures sustainable development financing through measures to improve fiscal sustainability and debt transparency and management.

This DPO will address poor governance of the mining and land sectors, limited access to financial services, limited job creation, and the quality of education. As the COVID-19 shock has eroded the country’s fiscal position, this DPO proposes reforms that will help minimize the immediate tradeoff between supporting the economy and maintaining fiscal sustainability. It aims to improve fiscal and debt sustainability and address weaknesses in the public procurement process. By addressing regulatory issues in the land and mining sectors, this DPO is expected to help mitigate climate risks through progressive afforestation of mining sites, protection of forest reserves, improved environmental standards and community involvement in managing the environment.

“This Operation builds on previous development policy engagement in Sierra Leone, while also introducing new elements. It has a direct connection with the previous DPO series (“Productivity and Transparency Support Grant” over the period 2017-2020) and continues two policy reforms –the mineral and mines and lands reforms – whose implementation was delayed by the COVID-19 pandemic,” said Kemoh Mansaray, Senior Economist and Task Team Leader. The financing by this DPO closes a critical fiscal gap essential for maintaining macroeconomic stability during the pandemic.