subject: The Future of Business-Trade and Aid in Sierra Leone [print this page] Author: Syl Juxon Smith Author: Syl Juxon Smith
Both citizenry and the media focus on the past conflict, poverty and the behaviour of politicians and the governmental machinery in the handling of debt, aid, poverty and service of infrastructural assets influenced the way Sierra Leone is discussed externally, reinforcing perceptions of a country of numerous problems affecting investors confidence doing business in the country. Sierra Leone was and still appears to be seen as a risky country with little understanding of its diversity and internal dynamics to do business. The Income Electric (energy provider from Nigeria) saga with the government has buttressed this view in many minds which must not be taken lightly or brushed under the political carpet. Image or character of a country is dented and affected more so by perceptions garner from a single event which can take a long time to control, repair or recover from. If you are branded a thief or corrupt will be a stigma making it very difficult to find genuine partners anywhere both local and international to work with period. But despite the presence of these obvious problems, the country deserves to be seen as a country of opportunities. Business leaders, and mostly investors in and out of Africa, feel this growing sense of confidence in the future of Sierra Leone, but playing the wait and see strategy in the unfolding scenarios pertaining to the new governments ability and capacity to handle situations both seen and unforeseen is the main issue at present. As the saying goes, all hands on deck! Yes but what part of the deck? Business has a crucial educator role within every community and society as well as more broadly to challenge misconceptions about business investment in Africa through stories that convey the diversity and opportunities of the continent. Trade and business has the potential to be a powerful engine for Sierra Leones development. So a failure to be more dynamic in approach, develop a home grown business and trade blueprint using vibrant, experienced and rhetoric individuals with proven capacity would be foolish, unacceptable and suicidal to the success of any government generally. Businessmen investing across the continent recognise the importance of a successful and ambitious outcome to local trade economy, for Africa and its people, and for business. Government as an urgent priority has to reinvigorate its efforts to achieve a positive solution to its economic blueprint by empowering local indigenous businessmen and businesses where ever they maybe and not relying on outside players or investments. According to the World Bank in 2006 2/3 of African countries made at least one reform, and Tanzania and Ghana rank among the top 10 reformers. While Africa in the last two years was the slowest reforming region in the world, this year it is the third fastest, after Eastern Europe and the OECD high-income countries. South Africa and Mauritius are among the worlds top 30 places in terms of ease of doing business. In Cte dIvoire registering property took 397 days in 2005. Reforms eliminated a requirement to obtain the urban ministers consent to transfer property. Now it takes 32 days. Burkina Faso cut the procedures for starting a business from 12 to 8 and the time from 45 days to 34. Madagascar reduced the minimum capital for start-ups from 10 million francs to 2 million. Tanzania introduced electronic data interchange and risk-based inspections at customs. The time to clear imports fell by 12 days. Gambia, Nigeria and Tanzania reduced delays in the courts. Growth figures have also been encouraging. According to the Africa Economic Outlook 2007/8, Africa grew by 5.5 per cent in 2006 well above the long-term trend and for the fourth consecutive year. In 2007 the report estimates that average real GDP growth rate for the continent will be 5.9 per cent. ECOWAS and the MRU must support through special funding and technical support to build regional capacity to trade including support for trade facilitation and customs reform which will improve greatly both GDP and GNP. The reduction of tariff and non-tariff barriers to trade between ECOWAS countries as part of the much needed effort by African governments to stimulate intra-African trade is much overdue. This must include to improved regional infrastructure and enhanced customs administration facilitating ICT digital technology platforms to replace old methodology with new strategy to enhance productivity and services including security. Government must continue its effort as on going to improve the business climate and to tackle the barriers to, and reduce the costs and consequence of doing business in Sierra Leone. As highlighted by the World Banks Doing Business Reports, the Commission for Africa and others, all successful economies are those that have made progress in reforming their investment climates: overcoming onerous bureaucratic requirements; making financial markets work effectively to enable access to capital; tackling sometimes counter-productive regulation; strengthening insecure property rights; and ensuring effective contract enforcement as part of an effective legal system. Such reforms are particularly important for helping smaller businesses to move into the formal sector and grow. President Ernest B Koroma must look at setting up a special fast track business court to deal with all business cases especially internationally owned enterprises that may need fast track approach and solutions to their problems. This will greatly help improve the image of the country globally which will help attract more positive investors and not fly by night businessmen.
I am optimistic about the prospects for Sierra Leone. Recent economic trend and growth has at least in part reflected improved governance and investment climates. Burkina Faso, Mali and Niger are competing for the top rank in West Africa. Mauritius has set a goal of reaching the top 10 on the ease of doing business by 2009. African nations still impose the most regulatory obstacles on entrepreneurs. In Sao Tom and Principe it takes an estimated 192 days to start a business, in the DRC, 155. In Zimbabwe the cost of starting a business is equivalent to 1,443 per cent of income per capita, in Sierra Leone it is 835 per cent. According to the UN trade and development body, Africas share of FDI remains low (under 2 per cent of global FDI inflows) and has been on a downward trend for three decades. One study shows that around 45 per cent of African private wealth is held outside Africa. On infrastructure, efforts must continue to tackle infrastructure weaknesses, enhance donor co-ordination, promote infrastructure in national policy planning, mobilize additional funds and tackle issues such as project preparation capacity. Concerted action now needs to be taken, as highlighted by the Commission for Africa, to meet the costs of the infrastructure gap in Africa equivalent to around an extra US$20 billion a year, including US$10 billion a year in extra external financing. Unreliable infrastructure often represents one of the main costs to business operating in Africa. The evidence shows that investing in infrastructure is good for growth and enables poor people to access market opportunities, as well as health and education services. It is important that Sierra Leone establishes mechanisms through which business and civil society can engage in constructive dialogue.Good governance is the foundation of economic growth and poverty reduction. The international community is already supporting and encouraging the efforts of the government to strengthen governance standards and to fight corruption. Sierra Leone has made substantial improvements on the dimensions of governance, including accountability, political stability, government effectiveness and rule of law". However, much remains to be done to embed good governance and transparency and to tackle widespread corruption. Corruption is not a phenomenon that is confined to Africa but many African countries rate poorly in international surveys and the perceived prevalence of corruption in many African countries is a significant barrier to investment and development. Moreover, because of its lack of resources and resilience, corruption in Africa will tend to have a disproportionate impact upon governance systems and the life chances of ordinary people and small businesses. Business must play its full part in tackling corruption and must take an uncompromising stance of zero tolerance to bribe giving and other stimulants like tax evasion, non payment of energy bills including telephones etc.
Privatisation is good in certain instances to support and improve on basic infrastructure to serve its populace. How we approach this issue is what should be carefully considered and looked at seriously. Sierra Leone must first of all set itself and agenda and details of priorities within the business sector. First of all what do the country hope to achieve by privatising and what is the time factor involve in achieving its objectives. By having a good deal in privatisation can bring good results in improving standards of both the infrastructures as well as the local technical manpower skills taken into consideration all of the factors which can be geared towards maximising general benefits rather than only economic profits which at the end dividend yield cannot be sufficient to compensate or train a good local manpower base work force for continuity. Creating an enabling business environment locally is not a short-term project after the devastating war and decay but can be given a fast track approach. In standard banking conditions to obtain a loan, the longer term the loan is spread over the smaller the monthly repayments. The interest is determined by day, monthly or yearly payment plan so should be the monitoring of results from various economic and business sectors within the country on a daily, weekly, monthly and yearly strategic plan in its present situation like the stock exchange market. Government must have absolute control and transparency on all Extractive Industries Initiative and contracts directly like Botswana, Angola and South Africa. There are sufficient incentives for the implementation of such good governance initiatives if proper strategy and a new integrity code are fully adopted for the welfare and benefits of the country present and future generations.Let Sierra Leone turn its curse into blessings by starting on a positive footing of leaving politics to the politicians and business to the businessmen. Accepting a political appointment and doing business at the same time is a conflict of interest which will not auguring well for the bureaucratic machinery. We must lift ourselves from our own bootstraps. For more than four decades, we have relied and depended on foreign aid to survive. Now, we have reached our menopause stage. If we set our priorities, we can raise the needed capital we need by our skills and assiduity. A country like India has reduced its number of bilateral donors and now its trying to avoid the foreign aid dependency syndrome. We do not have to go to the Betton Woods Institutions for loans to develop our countries. Our population of 6 million is not a liability but rather an asset to us. Sierra Leones heavy reliance on foreign aid makes implementing development plans more vulnerable to factors outside its control. Instead of parliament debating to approve loan agreements and salary increases, it must rather use its precious time to debate how to practically empower the people to raise income in their respective environment, fast tracking privatisation and minerals bills, education and labour issues, telecoms and energy concerns which are important aspect pertaining to growth and stability. This should be the present priority and agenda prescription for all to collaborate in sync with the presidents laudable ambition for the country. Sierra Leoneans must see themselves as one people with one destiny. The country belongs to us all. A false prophet prophesies the doom of a town he also is part of. Another great historian and writer Arnold Toynbee said some twenty-seven civilizations had risen upon the face of the earth. Almost all of them descended into the junk heaps of destruction. The decline and fall of these civilizations, according to Toynbee, was not caused by external invasions but internal decay. If we fail to live together as one people, a future historian would say that a great nation called Sierra Leone died because its people lacked the soul and the commitment to live together, be compassionate, tolerant and love for one another.About the Author:
Member: ASIS & WABA
Commercial Industrial Business Security Consult (Africa)
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