Building resilience: The role of business membership organisations in future-proofing Sierra Leone’s economy

David Batholomew: Sierra Leone Telegraph: 13 March 2023:

Economic fragility is a reality for many nations as they work to rebuild their economies post COVID-19 and find their progress undermined by the Russia–Ukraine conflict and its impact on inflation, energy prices and supply chains. In this context, there is an opportunity for Sierra Leonean Business Membership Organisations (BMOs) to redirect the strategies they used to guide their members through the pandemic, and help the country develop the economic resilience to survive future shocks.

BMOs across the globe were at the forefront of helping their members weather the COVID-19 pandemic. In a global survey, conducted post-pandemic by the ILO, BMOs in Africa overwhelmingly reported they had increased advocacy initiatives, engaged more actively with the government and the media, increased social media engagement and partnered more effectively with other business organisations.

In Sierra Leone this collaborative drive resulted in the Business Coalition on COVID (BCCOVID), where several of the nation’s BMOs came together to work with the media, government, international organisations, other private sector groups and CSOs to support businesses through the crisis. They shared important health and safety information with their members, and their survey on the impact of COVID-19 on MSMEs was published widely in the Sierra Leonean media and fed into government decision making.

Coordinated private sector advocacy also played a role in the 2021 Finance Act, where a coalition of 10 BMOs representing tourism, manufacturing, agriculture, professional services, energy, communications, import, mining, general merchandise, clearing and forwarding, printing and indigenous businesses, worked with Invest Salone to put forward recommendations for income tax, duty, and goods and services tax.

Thirteen of these recommendations were incorporated. They included a provision to relieve start-ups of paying income tax in their first year and a withholding tax exemption for companies employing the services of highly skilled international experts. Because the tourism sector had been severely damaged by COVID-19, the Finance Act included a provision to relieve tourism firms from income tax for the next two years.

The Bill also reflected private sector inputs in several other amendments such as setting corporate income tax at 15% for manufacturers and factories outside the Western Area; reducing the capital gains tax rate from 30% to 25%; and reducing tax on retained earnings from 30% to 10%.

Post-pandemic, there have been other positive examples of how BMOs that formulate evidence-based advocacy and engage government in constructive dialogue, can continue to play a central role in emerging business ecosystems.

A recent example of this was how the Commercial Agricultural Producers and Processors Association (CAPPA) highlighted areas of concern during the drafting of the Customary Land Rights Act 2022 and the National Land Commission Act 2022.

On behalf of its members, CAPPA delivered a coordinated response, supported by other private sector representatives and Invest Salone, to successfully bring about a review of the legislation. As a consequence, the Customary Land Rights Act was amended to increase both the hectarage and the length of land leases available to investors. The requirement for 100% of landowners to approve the sale was also reduced, making investment in agribusiness in Sierra Leone much more attractive.

Despite these examples of how BMOs have helped prioritise and design reforms that both strengthen the private sector and help generate equitable economic growth, collective action within the private sector can still be an uphill struggle.

One reason for this is that businesses typically want to join an association where members have similar needs and interests. In Sierra Leone, where many firms operate in sectors with limited competition, and there are relatively few sector-specific BMOs, individual businesses often advocate for their needs and interests through their personal business networks.

But this approach is unsustainable in Sierra Leone’s political economy. There are many operational and systemic constraints which all local firms and investors face when doing business. These include unreliable electricity supply, corruption, regulatory barriers to trade, skills shortages and access to finance. Change in these areas will only happen with a collective business voice.

The individualist approach also disadvantages SMEs who do not have the contacts or influence to advocate directly to government, like the large firms do. If a country is to enjoy inclusive growth – it is vital that all sections of the private sector have a voice in shaping the business environment.

In the Executive’s Handbook of Trade and Business Associations, Charles S. Mack, past president of the US political action committee – BIPAC, says that business associations develop ‘when the collective needs of their members outweigh competitive conditions’. The pandemic was an extreme example of collective needs, but the lessons of collective action and collaboration still hold true.

Business competitors in Sierra Leone who can work together to further their mutual interests will reap the rewards of strong, effective and sustainable BMOs that will contribute to the economic resilience of the country.

About the author

David Batholomew works with Invest Salone, the UK-government funded private sector development initiative. He is responsible for researching and analysing policy and regulatory opportunities and constraints, to unlock exports and investment in Sierra Leone. He also supports Invest Salone’s reform-oriented activities and public–private dialogue.

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