The Sierra Leone government aims to maximise the potential of the country's vast natural resources, in particular agriculture, through the establishment of small industrial operations

One of the primary objectives for the Sierra Leone government is to turn the fragile national economy around. Sierra Leone is a country rich in resources, with substantial agricultural, fishery and mineral reserves that offers significant potential for investment. Most economic activity has been disrupted in recent years, however, as a result of the civil war.

Presently, the agricultural sector employs about two thirds of the working population, with subsistence farming dominating. The mining of diamonds, bauxite and titanium ore traditionally provided the major source of hard currency, although production was again affected by the war. The manufacturing sector consists mainly of the processing of raw materials and light industrial production for the domestic market.

The economy is slowly starting to recover after the tumultuous events of the last decade. Real GDP is on the rise once more – 3.8 per cent in 2000 and 5.4 per cent in 2001 – following a cumulative decline of 25 per cent during 1997-99, that dragged most people way below the poverty line.

The government is targeting a growth rate of 6.5 per cent for 2003, similar to the 6.3 per cent achieved in 2002 on the back of further recovery of the agricultural sector, an increase in reconstruction and investment activities and the continued rebound in the services sector. Increasing consumer and investor confidence, greater freedom of movement of people and goods, resettlement and rehabilitation activities, greater agricultural output, a massive increase in power supply, the donor-financed expansion of imports, plus strong growth of domestic commerce, have all contributed to the quickening pace of economic recovery.

Attracting foreign and private investment is now one of the top priorities for President Kabbah’s government, to assist in the re-building of the nation. Crucially, success depends on the ability of those in power to restore the image of the country on the world stage. Many would-be foreign investors have been discouraged by the negative publicity of the last decade, while others are not even aware that the war is in fact over.

Yet huge strides have been taken since the cessation of hostilities. The international community has helped in the reconstruction process with both financial aid and technical support to upgrade the physical infrastructure and to develop the nation’s skills base. Sierra Leone has witnessed significant improvements to its road network and other transport facilities and communications systems in the last year, as well as the re-integration of its people from a post-conflict scenario.

‘‘Political will to confront corruption’ Momodu Koroma

It is a positive story that needs to be told. Minister of Foreign Affairs, Momodu Koroma, believes that the time is right to set the record straight. He thinks that the country urgently needs friends, especially Britain, to continue this upward development. “The first priority is image building,” he says. “The image of the country has been battered not only by several years of bad governance but also by a terrible war.”

The government has been busy introducing new legislation to improve the enabling environment for business. There is an anti-corruption act, for example, which includes specific measures to raise awareness among ordinary people to combat corruption and sets out a policy for public procurement. The establishment of the National Revenue Authority to manage customs duties and income tax is another step forward, alongside other institutional reforms that prevent people in the public service from interfering with government money.

As a result of the Diamond Export Certification Programme, the value of diamonds exported through official channels rose by 59 per cent in 2002 to about £26 million. There are efforts to reduce red tape that has strangled private sector activity in the past. A new investment code also sets out a string of favourable tax advantages for setting up business in Sierra Leone.

Mr Koroma says there is a new political will to confront difficult issues such as corruption and bureaucracy, which have held the country back in the past. In order to create much-needed jobs, Sierra Leone has to attract new companies and investors to its shores. This is especially true if the country is to help ex-combatants re-integrate into society and defuse troubles at a later stage.

Privatisation and liberalisation are also important policy objectives to create a level playing field for business. Priority sectors for investment include agriculture, mining and tourism, although all sectors of the economy are open. Persuading tourists to return to the country is another big challenge. The Minister says tourism is one simple way to alter the perceptions of the British public and other people towards Sierra Leone. Freetown, as the only major city in west Africa to combine both beaches and mountains, is one of the main attractions. The presence of British soldiers in the country is a driving factor for tourists from the UK. “I think a lot of the soldiers that came here enjoyed the tourist potential – some of them are coming back to Sierra Leone.”

‘‘We want to encourage investors’ Kadi Sesay

The government is going out of its way to accommodate new investors. Minister of Trade and Industry, Dr Kadi Sesay, says that foreign investors can own 100 per cent of their business and benefit from a clutch of financial incentives like tax holidays and duty free imports on equipment. There is unlimited export potential through trade pacts with both the EU and the US. Sierra Leone is eager to maximise the return on its vast natural resources, especially agriculture, through the establishment of small industrial operations.

Certain agricultural activities, such as rice cultivation, are eligible for a tax holiday of up to 10 years. All machinery and processing equipment can be brought into the country free of charge. “We want to encourage investors to locate industries in Sierra Leone for processing. We have a lot of coffee and cocoa and we intend to start exporting ginger once again. We will also export fruits which we grow right through the year, as well as palm oil and other edible oils. We want to encourage the cultivators and processors of these items.”

It is still early days but the signs are optimistic. There is an upturn in interest from the international business community, with trade missions from the UK and elsewhere targeting Freetown once more. Having resolved the conflict in the country, Sierra Leone has gone a long way in dealing with many investors’ concerns. A recent statement by visiting officials from the International Monetary Fund (IMF) supports the government’s steps to breathe life into the economy. Edouardo Aninat, Deputy Managing Director of the IMF’s executive board, believes the country is heading in the right direction. “Increasing confidence has helped to reinforce the economic recovery,” he says. “Real GDP growth has accelerated while inflation has
been contained.”

The social situation of the country remains a major hurdle, though, despite improvements to the macroeconomic situation. Unemployment remains high, especially among the youth and ex-combatants. Nearly half the population is below the age of 15.
“The pace of reform of the civil service and the restructuring or privatisation of public enterprises needs to advance in order to strengthen competitiveness and to improve the efficiency of public service delivery,” says Mr Aninat. Measures to improve governance and the legal and judicial systems are also important to improve the climate for private investment.”