WASHINGTON, July 30, 2020 ¡ª ľ¹ÏÓ°Ôº Board of Executive Directors approved a $40 million grant from the International Development Association (IDA) to support investment and growth of Small and Medium Enterprises (SMEs) in non-mining productive sectors.
The Sierra Leone Economic Diversification Project will help strengthen the business enabling environment by promoting reforms to facilitate business entry and operation, facilitate strategic public investments to improve competitiveness and private investments, support SMEs and entrepreneurs, and build the capacity of public institutions and private sector operators.
Currently, SMEs are 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 disproportionately impact women entrepreneurs, and the project hopes to address them through public goods investment, SME 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 labor 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 capita and reduce poverty.¡±
The project is consistent with the Government¡¯s Medium-Term National Development Plan (2019-2023) and its strategic objective to prioritize private sector-led growth for job creation, poverty reduction and economic diversification. The project is also aligned with the World Bank Group Africa Region Strategy, and the World Bank¡¯s focus on Maximizing 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 prioritizes support to Economic Diversification and Competitiveness with Resilience.
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.
