The Dual Challenge of Inflation and Unemployment: Assessing Policy Trade-Offs and Their Socio-Economic Impacts on Sierra Leone

Abstract

This study explored the dual challenge of inflation and unemployment in Sierra Leone between 2015 and 2024, with emphasis on policy trade-offs and socio-economic outcomes. Anchored in classical, Keynesian, and structuralist theories, the research employed a qualitative approach, relying on secondary data from the World Bank, IMF, African Development Bank, Bank of Sierra Leone, Statistics Sierra Leone, and relevant policy documents. The analysis was interpretive, seeking to uncover patterns, meanings, and contextual linkages between macroeconomic instability, structural weaknesses, and policy responses. Findings revealed that inflation was persistently driven by exchange rate volatility, food and energy price shocks, and supply-side constraints, while unemployment remained high due to weak industrialisation, a narrow private sector base, and demographic pressures. Expansionary fiscal policies often exacerbated inflation without creating sufficient jobs, whereas monetary tightening constrained demand but proved ineffective due to shallow financial systems and limited policy transmission. At the regional level, Sierra Leone’s macroeconomic challenges reflected broader West African trends, where inflation consistently surpassed the ECOWAS convergence benchmark of 5% and unemployment rates of 8 - 10% posed a serious concern. Comparative evidence from Ghana, Nigeria, and Côte d’Ivoire showed convergence in structural drivers but divergence in policy choices, exposing the absence of a coherent regional framework. The study concluded that qualitative evidence points to the need for integrated fiscal and monetary coordination, structural reforms in agriculture and energy, and skills development. It further argued that regional cooperation through ECOWAS is critical for addressing the intertwined challenges of inflation and unemployment in fragile economies like Sierra Leone.