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New Private Sector Development Strategy Revealed as Poverty in Sierra Leone is Predicted to Continue into 2018

The Sierra Leone Telegraph Editorial Team
2 April 2009

Alas, after much procrastination and dithering by the government, President Koroma has finally announced his much awaited ‘Private Sector Strategy’, though to the disappointment of the business community who were expecting to hear less rhetoric and sound bites. The domestic business community and the Foreign Direct Investors have waited for over 18 months for the launch of this Strategy. They turned out in large numbers to witness the President’s announcement at the Bintumani Hotel on the 26th March 2009. 

In the context of the most brutal global economic decline since the 1930s, the business community in Sierra Leone have a right to expect a clearly defined programme of measures and actions, with budgetary commitments aimed at stimulating and promoting private sector growth, as the engine of economic prosperity.   

At the end of the launch of the Strategy, the business community in Sierra Leone was left struggling to unpick the President’s speech with a fine tooth comb in search of substance. Unfortunately, they were disappointed to find a lacklustre speech that reminded everyone of their responsibilities and obligations, with no clear programme aimed at stimulating the growth of the Private Sector.    

The President gave no indication as to the nature, types and levels of practical and financial support that businesses will receive from the government in the next twelve months, in order to kick start the economy. They can be forgiven in thinking that the country is indeed being run like nobody’s business.

It is ironic that the President never once in his speech referred to the current global economic downturn, its impact on the business community and the measures his government is putting place to ameliorate the effects, both in the short and long-term. This would have shown good leadership.

The government needs to provide access to affordable finance; a pool of skilled, educated and trained workforce; suitable industrial premises, managed workshops and business incubators; reliable energy and water supplies; good roads and telecommunication networks, that will stimulate the economic growth needed to uplift the people from poverty.  

A ‘Private Sector Development Strategy’ that does not provide detailed analysis as to the types of support industry will receive, is a Strategy that plans to fail. Yet the President is constantly reminding ministers that ‘failure is not an option.’  

The President was also at pains to inform the delegates at the event, that "even maintenance of a respectable 6.5% a year growth rate would mean that by 2018, Sierra Leone’s GDP will reach $350 per capita, meaning that the majority of Sierra Leoneans will still live on less than $1 a day. Therefore, to reduce poverty significantly and improve the lives of the majority of Sierra Leoneans we need to achieve an annual growth rate of 10% or more.”

But what specific policy measures and actions were proposed by the President in his speech, in order to ensure that the economy grows by an annual 10 percentage points? 

Some may no doubt agree with the President when he said that, “Private Sector Development is a fundamental principle underlying economic growth.” But the ‘Agenda for Change’ that he has been championing since taking office in 2007 will not deliver economic growth nor reduce poverty, without a concerted effort to promote indigenous private sector led growth.

The President mentioned that “The pursuit of broad-based economic growth that cuts across productive sectors, adds value to our resources and enables our entrepreneurs to compete in international trade is the most viable and the primary route out of poverty for Sierra Leoneans. Only through substantially increased private sector investments can we attain such diversified growth that widens opportunities for more Sierra Leoneans, and with that will come more productive jobs in a growing formal sector and higher incomes for the self-employed.”

But this needs to be backed up with real policy initiatives and instruments that will provide long term and sustained economic stimulus for private sector growth. Of course Mr. President, no one could be naïve in thinking that achieving sustained growth rates in excess of 10% a year is easy. But the role of government is not just about leadership, but more importantly, to intervene when there is serious ‘market failure’. 

Clearly the market has failed in Sierra Leone. Government intervention in the market to stimulate business investment is now more than ever required. Cutting the time it takes to start a business and red tape is fine, but not many indigenous entrepreneurs will embark on a new venture or expand their existing businesses if the cost of doing so is too high.

In some cases, sadly, indigenous businesses are ‘crowded out’ of the market place by foreign business entrepreneurs, using anti-competition methods. This cannot be good for the economy.  The unregulated promotion of a “free market economy”, which ironically President Siaka Stevens himself would have found embarrassing to embark upon, is now hurting the economy and the people.

To quote the Minister of Information and Communication (Mr. I.B. Kargbo; AWOKO NEWS 1st April 2009); “Had it not been the free market economy and liberal economic policy instituted by government to encourage meaningful investment, there couldn’t have been in operation over seven mobile phone companies in the country, with only 5 million people as compared to places like Congo which can boast of only 3 mobile companies to serve over 60 million people.” But at what price one has to enquire?

As the global economic downturn worsens and the G20 meets to discuss and find solutions that will stem the current melt down, both Obama and Brown of the USA and UK respectively, are now shying away from the naked abuse of the principles of free market economics.

At the conclusion of their deliberations today, the G20 have announced new ‘Special Drawing Rights’ (SDRs) to the sum of $650 Billion, for governments of developing nations to pursue market intervention policies to address ‘market failure’ and stimulate the global economy. Will President Koroma ensure that the people of Sierra Leone benefit from this newly announced SDR, in support of his Private Sector Development Strategy?

Government can provide ‘seed corn’ investment funds targeting the manufacturing and agro - based processing sectors that will create meaningful jobs. It can also intervene in the industrial and commercial property market, by providing access to the availability of land and buildings for industrial production, as a priority for stimulating Private Sector led growth.

The business community in Sierra Leone will argue that government does not create wealth. What they will say also, is that this government is rather good at raising taxes and increasing public sector borrowing only to sustain itself in power.

The business community needs to see a credible and financially viable Plan of Action. They desperately need HELP in starting new businesses that will last and create employment opportunities. They also need HELP in expanding their existing business ventures to create the 10% increase in GDP that is so desperately needed, in order to raise the standard of living beyond the average daily earnings of $1. 

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Editor - Abdul R Thomas