PRONUNCIACIÓN Y ORTOGRAFÍA ➜ El sonido /k/

The economy influences health through resource availability but also by affecting all of the other drivers discussed above. It also affects poverty, which is of course a key factor in understanding changing household access and health seeking. It is therefore worth understanding the economic context of the period, although isolating influences on health is beyond the scope of this study. The context also affects health financing sustainability going forward.

Sierra Leone has experienced sharp real growth over the past five years, averaging 8.7% per annum from 2010 to 2014. Despite recent double digit growth and the per capita income rising from US$ 450 in 2010 to around US$ 800 in 2013, Sierra Leone remains a low-income country with a declining per capita income in 2014. As Figure 71 shows, economic growth rose to 20% in 2013 before dropped sharply to -3.3% in 2014. This sharp fall was a result of the Ebola outbreak and the drop in international mineral prices, especially iron ore.93 _{Moreover, these twin shocks are} estimated to have reduced economic growth by even greater degrees in 2015.

Economic activity is projected to rebound in 2016 as the Ebola epidemic is overcome. However, this will be limited as the mineral and mining sector in Sierra Leone has serious production

constraints.94 _{Iron ore mines have been closed (as low international prices make production} unprofitable) and all other mining exports have declined due to slowing international demand and prices (diamonds, bauxite and rutile being the other main mineral exports).

Figure 71: Economic growth (nominal GDP US$ millions and real growth rate)

Source: IMF

The sector has a wider impact on the economy and raises particular difficulties for government revenues (thus compounding the problems caused by the Ebola epidemic). Tax revenues have declined directly through falling mining royalties (which are based on export values), and some mining companies are also struggling to pay income taxes. Indeed, the tax-to-GDP ratio – as shown in Figure 72 – had been rising from 9% in 2010 to 11% in 2012 but returned to 9% by 2014. Estimates for 2015 shown the ratio to remain at around 9% of GDP.95 _{The rate of domestic tax} collection in Sierra Leone is low compared to other low-income countries, which averaged 12% of GDP in 2011.96

The GoSL’s fiscal situation has therefore been constrained through declining revenues from mining and increased expenditures due to the Ebola crisis. The weak economic performance has added pressure to the fiscal deficit in 2014 – which was previously improving prior to the twin shocks – and this is expected to widen further in 2015 and 2016.

This macroeconomic environment is expected to be further complicated by rising inflation, which had been brought down to single digit levels but will continue over the next few years. In sum, the GoSL has a challenging fiscal position to contend with. Fiscal space will be tight and much

required tax reforms are being undertaken to mobilise domestic tax revenues for the rebuilding of

94 _{Mining information comes from meeting with Bank of Sierra Leone, and IMF Article IV text.} 95 _{IMF Article IV Nov 2015.}

the economy.97 _{However, these systemic changes may take many years to bring in the increased}

incomes required.

Figure 72: Macroeconomic indicators as proportion of GDP

Source: IMF

Health will be seen as a budget priority throughout the near and medium term due to strong political support in Sierra Leone. There are short-term measures being put in place at present to help fund this, including a specific tax for health that is being proposed in the 2016 Finance Act. This is currently being read in Parliament and states that ‘A national health insurance levy shall be

imposed at a rate of 0.5% on the value of all contracts relating to the supply of goods and services

in support of the Free Health Care Programme’.98 _{How much revenue this will bring to the health}

sector and how it will be spent is discussed below in the fiscal space analysis.

9.4.1

Poverty trends

Sierra Leone’s most recent Poverty Profile (published in 2013) is based on the SLIHS surveys conducted in 2003/04 and 2011. In 2011, households were classified as below the poverty line if they reported adult equivalent consumption below SLL 1,625,568 per year, and in 2003/04 below SLL 750,326 – reflecting the monetary value of a minimum set of food and non-food items to fulfil basic needs. Overall, it is suggested that the incidence of poverty and inequality fell over the period, largely as a result of increasing poverty in the Western Area and growth in urban areas outside Freetown. Rural poverty rates were still much higher than urban rates, and falling more slowly (SSL, 2013). Key descriptive measures of 2011 including of poverty incidence and inequality are presented in Table 40 below.

97 _{From meeting with National Revenue Authority.} 98 _{No 38 of the Finance Act 2016.}

Table 40: Poverty profile indicators in 2011 by district Poverty headcount (%) Gini coefficient Rural households (%) Net primary enrolment by district (%) Agriculture as main livelihood (%) Bo 50.7 0.33 55.1 77.6 49.4 Bombali 57.9 0.42 67.7 70 60.5 Bonthe 51.4 0.3 78.6 70 73.9 Kailahun 60.9 0.25 87.5 67.9 89.4 Kambia 53.9 0.23 77.5 52 78.4 Kenema 61.6 0.28 59.1 60.5 46.5 Koinadugu 54.3 0.28 91 55.5 84.2 Kono 61.3 0.27 66.8 57.3 29.3 Moyamba 70.8 0.25 92.2 64.3 70.7 Port Loko 59.9 0.29 89 57.5 80.5 Pujehun 54.1 0.4 87.1 60.7 79.3 Tonkolili 76.4 0.21 84.2 60.3 76.4 Western Area (Urban) 20.7 0.27 0 83.3 2.6 Western Area (Rural) 57.1 0.28 54.1 66.1 26.2 Source: SSL (2013)

The proportion of households living below the poverty line was highest in Tonkolili and Moyamba, and lowest in Western Area Urban. Beyond these three districts, poverty incidence ranged

between 50% and 62%. Inequality was highest in Bombali and Pujehun, and lowest in Tonkolili. The most rural districts were Moyamba and Koinadugu. The lowest education levels were in Koinadugu and Kambia, with the highest in Western Area Urban and Bo. Agriculture is the most significant source of income in Kailahun, and the least in the urban and rural Western Areas.

9.5

Summary

Ebola has clearly had a major impact on health outcomes, although this is masked in our evaluation by the fact that the main data sources analysed for health outcomes predate Ebola, unlike the qualitative tools that do capture part of the Ebola and post-Ebola story. Social determinants of health are all an important part of the picture too, though in general they have improved only slowly over the period and so are not likely to be major explanatory factors behind any health improvements seen. External investments have played a part, especially support to infrastructure and the major disease programmes such as malaria and vaccination. There have been some improvements in poverty rates and the overall economy, although subject to recent shocks. In addition to these areas there are no doubt other important influences, such as national road-building programmes that may have increased access to health care, for example. All these are part of the contribution story.