Sierra Leone’s Ebola economic conundrum: inflation
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While traders at the markets in Freetown struggle to do business, statisticians are puzzled about inflation and how Sierra Leone is managing to avoid sky-rocketing prices despite the Ebola outbreak. Inflation measured in October on a yearly basis is not expected to exceed 8.5 per cent, according to the government statistics agency, with a rise of less than two per cent since Ebola was confirmed in the country.
“There's no business,” says Mohamed Fofana, who sells beans at Freetown’s Bombay market. “Everything is going helter skelter, before Ebola you could sell a bag [of beans] a day, but now you can't sell one in two weeks, three weeks,” he adds.
Fofana is one of many traders at the bustling market who is finding economic conditions challenging in the face of Ebola. He imports his beans from the Malian capital Bamako transported via Guinea.
Some of Bombay’s market sellers recount prices for their stock increasing, others describe falling prices. What they all have in common is a lack of sales.
Fatmata Kamara, who is surrounded by sacks of rice, the country’s staple foodstuff, says “business is very stiff” because of what she calls the “sick”. She claims she is selling her goods at cost and not making any profit at the moment.
In a country hit by more than 1,000 deaths, under a state of emergency and quarantines imposed on provinces which are heavily reliant on agriculture, it might be expected that the rate of inflation would be higher.
Although food prices have been hardest hit by the epidemic, inflation has remained relatively stable and not breached 10 per cent, as it has in previous years.
Inflation has risen from 6.5 per cent in May, when the World Health Organisation confirmed the first Ebola deaths in Sierra Leone, to 8.1 per cent in September, according to Statistics Sierra Leone. The figure for October is not expected to breach 8.5 per cent.
“Ebola met us in a very good footing,” says Samuel Turay, Principal Statisician at Statistics Sierra Leone. He outlines several reasons for the stability in price increases of the 400 items he analyses every month.
The action of the World Food Programme has helped to cushion the price of staple foodstuffs such as rice, Turay says. Some goods, such as vegetables have dropped in price because of a prolonged rainy season. Fuel prices have also remained stable because of government intervention.
Upward pressure on prices, particularly on food, include the fall in value of the Sierra Leonean pound which has made imports more expensive, a reduction in shipping and the effect checkpoints have had on the time it takes to get goods to market.
Turay warns that all these competing factors could have a negative impact on inflation in the future, although overall inflation for 2014 could still be less than the previous year.
The World Bank has previously said that it is concerned about the economic impact of Ebola on the affected countries, citing a possible $32.6bn loss to economic growth in an analysis considering both best and worst case scenarios.
John Panzer, a co-author of the World Bank study told RFI in October that they had noted inflation in the three countries but that reports on price increase were “mixed”.
“In Liberia, in the capital, where the transport system and the import systems remain functioning quite well we have seen an increase in the price of rice for example, which is the main staple. It is significant, it’s between 10 and 15 per cent,” says Panzer.
“But it’s not as dramatic as some other price increases that are reported from some specific remote areas in these countries,” he adds.
Sierra Leone’s economy, according to Turay, seemed well-placed to weather Ebola’s economic storm. But this could change as efforts continue to contain the outbreak, and down the line, once outside intervention is reduced. “We’ve not seen the exact impact of Ebola yet,” he says.