You may have heard that there is a proposal to increase Sierra Leone’s minimum wage from Le 500,000 per month to Le 1,750,000 per month starting January 1, 2019; but how should you think about this? We wondered the same and thought what better way than to put Sierra Leone’s minimum wage against other countries in Africa. We chose neighboring country Guinea and fellow West Africa countries Ghana and Nigeria. Ghana and Nigeria have enjoyed some economic growth so we wanted to see if a case could be made for higher wages equals better economic performance. Lastly we chose Rwanda, the poster child for how a country can recover from war and thrive; and South Africa; well you know why South Africa.
What we found is that surprisingly Sierra Leone’s current minimum wage is actually high in comparison to the other countries. Once we were able to find the minimum wage for each country we used google’s currency translation tool to obtain a rough idea of what the other countries’ minimum wage would be where it in leones. We were shocked that Rwanda’s minimum wage appears to be so low. Same for South Africa. We were also quite surprised at Ghana and Nigeria’s minimum wage. Perhaps that is why in Nigeria there is a current push to raise the minimum wage.
But looking at the minimum wages alone does not tell the whole story. So we looked at inflation which is an indicator of how price increases means lower purchasing power. Using inflation data as of September 2018 from Trading Economics, it is easy to see that while Sierra Leone has a relatively decent minimum wage in comparison to these other countries, our current inflation is also very high! That quickly became the takeaway from all this. In fact, our inflation rate is highest compared to the other African countries that we looked at. In the proposal for the minimum wage increase and review, it is mentioned that “minimum wage is not only being low, but incomparable to living standards” in Sierra Leone. Consider Rwanda’s inflation rate for which in their case is actually deflation; meaning that there is more supply of good than there is spending which causes prices to be actually lower. Also not an ideal situation but consider neighboring Guinea and Ghana’s inflation rate as well. Much lower than Sierra Leone’s. As this infographic shows, Sierra Leone’s current minimum wage needs to be reviewed.
Did anything about this infographic surprise you? Let us know below!