ECONOMIC OVERVIEW AND FINANCIAL SECTOR DEVELOPMENT Hon. Jacob Jusu Saffa, Minister of Finance Dr Ibrahim Stevens, Deputy Governor, Bank of Sierra Leone Hon. Priscilla Schwarz, Attorney-General and Minister of Justice Christopher John Forster, President, Sierra Leone Chamber of Commerce, Industry and Agriculture (SLCCIA) June 2019 UK – SL Trade and Investment Conference

GDP Population GDP growth GDP per capita Currency GDP Population Leone USD 3.8 billion 7.6 million GDP growth Exchange rate GDP per capita USD1 = SLL8,800 5.5% (proj. 2019) USD 500

Economic Growth Targets Current SL Economy Lower Middle Income Potential Output Upper Middle Income US$29bn Economic Growth Targets US$19bn US$8bn US$3.8bn

GDP During 2018, real GDP growth increased 3.5 percent. In 2019, real GDP is projected to grow by 5.1 percent, following the commencement of iron ore production. Over the medium term, the GDP is expected to average close to 5.0 percent, which is above the Sub-Saharan African average growth rate.

Inflation After peaking at 19.3 percent (September 2018), inflation moderated to 17.5 percent in March 2019, which is below the end year target of 18 percent. Inflation is projected to fall to 14 percent by end December 2019, and return to single digits in the medium-term.

Exchange rate The exchange rate has been relatively stable since October 2018. Expected increases in exports and domestic food production supported by prudent monetary and fiscal policies will contribute to the stability of the exchange rate in the medium term.

International reserves The international reserves of the BSL stood at USD471.8mn at end March 2019, sufficient to cover three months of imports.

Monetary policy stance Monetary policy transmission has improved significantly, with the overnight rate in the interbank market anchored within the policy corridor. The BSL will continue to maintain monetary policy stance that delivers the medium term inflation objective of single digit.

Financial sector landscape 14 Commercial Banks 10 subsidiaries of foreign banks 4 Local Banks (Govt. major shareholder in 2) 2 Discount Houses 30 Microfinance Inst. 26 Credit-Only 4 Deposit Taking 63 Exchange Bureaux 17 Community Banks 11 Insurance Companies 1 Finance Leasing Company 2 Mobile Money Network Operators 59 Financial Services Associations (FSAs) 1 Apex Bank Nascent Stock Exchange Couple of Cooperatives Societies

Selected financial soundness indicators 2012 2013 2014 2015 2016 2017 2018 Capital adequacy Ratio (CAR) 27.7 30.1 30.2 34.0 30.7 34.2 38.4 NPLs Ratio to total Loans 14.7 22.4 33.4 31.7 22.7 14.6 13.0 Return On Assets (ROA) 3.4 2.1 2.7 3.2 2.9 5.3 6.0 Return On Equity (ROE) 16.1 9.9 14.9 18.3 22.3 25.6 28.6 Return of net loans to total deposits 33.9 32.4 27.8 24.4 19.2 26.1 Liquidity Ratio 40.7 72.5 78.9 83.3 85.5 66.9 69.2 FC deposit to total deposits 40.8 38.5 26.5 32.0 38.9 37.1 36.4 The banking system is stable, well capitalized, profitable and liquid. Total assets and deposits of the banking system at the end of 2018 stood at Le8.5 trillion and Le6.1 trillion respectively.

Financial sector reforms Amendment of the Bank of Sierra Leone Act and Banking Act 2011. Amendment of the Borrowers and Lenders Act. Introduction of a Deposit Protection Fund, supported by the US Treasury Department. Implementation of a robust Anti Money Laundering / Combating Finance of Terrorism (AML/CFT) standards. Introduction of the National Payments Switch. Digitizing the Credit Reference Bureau including introduction of a Unique Identifier in the banking system Implementation of a national Strategy for financial inclusion: Regulatory sandbox has been operationalize. Currently, there are 4 projects in the sandbox, selected in the first edition of the Fintech challenge The second edition of the Fintech challenge was launched in March 2019 Financial inclusion rate 20% Mobile penetration 70%