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Sierra Leone News: Electricity outages limit profits

Businesses lose the equivalent of 11% of total sales through electricity outages – more than double the losses elsewhere in Sub-Saharan Africa, according to the World Bank.
In its maiden edition of the Sierra Leone Economic Outlook (SLEU), it notes that though low and unreliable energy supply affects firms across Sierra Leone, “it is particularly damaging for Freetown, as it impedes the ability of the capital to sustain competitive large-scale production.”
Low and unreliable electricity provision limits the productivity of competitive firms across the country. In a World Bank survey of Sierra Leone’s businesses, 27% of large businesses identified electricity as their largest constraint to growth. This was second only to corruption (34%).
“These figures considerably understate the problem, because the larger and more productive firms that really need reliable energy supply simply do not set up in Sierra Leone. Sierra Leone’s installed electricity capacity is astonishingly low relative to neighboring countries,” the report said.
This, the report noted, is as a result of poor connectivity and power, with too few firms in the city, and that those firms that manage to survive in the city lack sufficient scale and specialization, which means that the jobs they provide are not very productive.
“Businesses in the city are predominantly small in size and offer low-value local services, such as informal retail and repairs. Only one firm out of 50 gets more than a tenth of its revenues from exporting, compared to one firm in 12 in the other major cities of Sub-Saharan Africa.”
As Freetown has grown, Sierra Leone has actually deindustrialized, as manufacturing is now only 2% of national GDP, down from 10% in 1994.
Moreover, it says that even if it is relatively dense with people, the city is not dense with economic activity, as only 4% of land within 5km of Freetown’s central business district is currently under commercial or industrial use, compared to 24% in other African cities.
Instead of generating central clusters of activity, the city is expanding rapidly through urban sprawl. As Freetown has grown rapidly, increasing pressure has been put on existing transport systems.
On transport links, the report drew the attention of the limited, poorly-maintained roads and the uncontrolled expansion of private and informal public transport, which is said to have resulted in high levels of congestion and high emissions in the city. At peak hours, average traffic speeds in some central areas of the city reach just 3km per hour – lower than a walking pace.
External transport links from the city are also poor, creating a bottleneck for investment across the country. Freetown’s transport and trade logistics are a key reason why Sierra Leone is ranked 115th out of 137 countries in terms of transport infrastructure, and 162nd out of 190 countries in ease of international trade.
Privatizing the operations of Freetown’s port has resulted in significant progress being made towards the goal of making Freetown a trans-shipment hub for the region. However, Lungi airport is still poorly connected to the city, and roads to and from Freetown are a significant barrier to regional connectivity.
The ECOWAS Trans–West Africa Coastal Highway is 80% completed, and much of the remaining sections are in Sierra Leone connecting to the capital. Recent estimates suggest that if Sierra Leone’s road infrastruc­ture could be improved to the levels of Mauritius, the country’s annual growth in GDP per capita could rise by almost a percentage point.
By Zainab Iyamide Joaque
Monday June 25, 2018.

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