Address by His Excellency the President Dr. Ernest Bai Koroma
at the Annual Dinner of the Sierra Leone Chamber of Commerce, Industry and Agriculture
1 March 2013

 

I am highly honoured to once again be among the proprietors and managers of the major businesses in our beloved country.
Let me also applaud my colleague, The President of the Chamber of Commerce Industry and Agriculture, Mrs Strasser King for her fine address, and for diligently serving as the first woman President of the Chamber.

You have blazed a trail that others must follow.

Distinguished Ladies and Gentlemen, you need no reminding that as a man who spent over twenty years in the private sector, I know the challenges facing the sector; and more than that, I know the potentials. I know that when we meet the challenges head on, and move on with zeal to realize our potentials, the private sector will be the greatest catalyst for the transformation of our beloved country.

I have heard many addresses by Presidents of the Chamber, they have all been great statements on the challenges facing the private sector and the country in general. But we, as business people, as Sierra Leoneans, as citizens of this great republic, have been always quiet about what the private sector is doing to move the country forward. Government cannot meet your challenges alone; government cannot do everything. I said in my inaugural address that I will do more, we will do more, but all needs to do more to move the country forward.

My government has done a lot to move the private sector forward. We are building roads to ease movement of goods and persons, we are streamlining the tax system, we are meeting the energy challenges with a zeal never before experienced in the history of our land, we have removed many barriers to business, earning accolades in the process, and improving our rankings in the Doing Business Index. We have just won the MCC compact, an award worth hundreds of millions of dollars granted by the American people to countries that are investing in their people and adhering to the ideals of democracy and the free enterprise system that underpins democracy. We have designed and started implementation of policies ranging from the Local Content Policy to the creation of Export Zones, the Credit Reference Bureau and fast track commercial courts.

Our actions have unleashed transformations and opportunities for the private sector never before seen in our land. I will do more to expand the opportunities, but the movers and shakers of the private sector must themselves do more to bring home the fruits of these transformation. We designed the local content policy because we do not want the new investments to create enclave economies with little ties to the aspirations of our people. Come on, grab the opportunities for growth, be part of the movement for linking up our people to the wealth of our resources, our potentials for greatness, and the Agenda for Prosperity.

Distinguished Ladies and Gentlemen, we note with satisfaction your acknowledgement of the banking reforms pushed forward by the Government. Last year, you raised the issue of a free fall in the exchange rate, high inflation and interest rates that affected private sector development. We are pleased that the macroeconomic environment has improved and a conducive environment now established for doing business in Sierra Leone.
I have supported the Bank of Sierra Leone to improve on its regulatory framework to ensure that the financial sector is vibrant and sound enough to promote private sector activities that boost economic growth and employment.

On Mineral Reforms, we will establish a Transformational Development Fund (TDF) to sterilize surplus revenues and finance implementation of projects/programs under the "Agenda for Prosperity" as well as save for future generations.

We note the matters raised by Chamber in relation to two constraining factors to growth and private sector development in Sierra Leone namely: (1) Access to affordable capital particularly by SMEs, and (2) High Interest Rates on Loans and Advances. I would like to respond to them as follows:-
Access to Affordable Capital.

As you may be aware, the financial sector in Sierra Leone is dominated by commercial banks whose business model requires them to use depositor's funds to transact in money market products, which are sometimes expensive. Long-term investment capital, however, which is less expensive, is supplied through the stock exchange or capital market where specialised financial institutions such as Development/Investment Bankers etc. interact with prospective investors for the supply of long-term capital resources.

As part of its Financial Sector Development Programme (FSDP) implementation strategy, the Bank of Sierra Leone (BSL) has partnered with various stakeholders, mainly in the private sector, to promote the proper functioning of an already established Stock Exchange, a key pillar in the FSDP. Progress in this area may have been stalled owing to various factors ranging from delays in the enactment of the legal instruments (the SEC bill, the Securities bill etc.); the slow pace of privatization of certain government enterprises etc. Once these difficulties are surmounted, we hope to see a jump in activity in the stock exchange from which investors, particularly SMEs, would benefit. I am therefore urging local enterprises to list their companies in the stock exchange to encourage other local/foreign investors to do likewise.

Meanwhile, the Bank of Sierra Leone, under its Inclusive Access to Finance strategy, is collaborating with Development Partners and various stakeholders in government to channel affordable credit through the establishment of an institution for the provision of medium to long term financing of projects/enterprises. Microfinance schemes also provide similar services to the rural communities. Rural savings mobilization is supported through the establishment and licensing of rural community banks, deposit taking micro credit institutions and Financial Services Association (FSAs). Donor sponsored credit lines are also made available to a select group of financial institutions for the benefit of SMEs.

Distinguished Ladies and Gentlemen, following the liberalization of the financial sector in 1998, banks are free to set interest rates on their products in the various transactions in a competitive market environment. In most cases, banks are inclined to benchmark interest rates on government treasury securities, particularly the 91day treasury bills, in their lending operations. As government borrows to invest in infrastructure development and other activities, rates on T-bills tend to rise which is mirrored correspondingly in the banks' lending rates. However, the recent boost to government revenue due to new revenue sources, particularly from the mining sector, has contributed to the declining trends in interest rates on government papers as government's appetite for new borrowing recedes and, in some cases, outstanding debts are redeemed. The way forward therefore is introduction of medium to long term bonds which will assist Government to raise funds for development programs while reducing pressure on interest rate on short term financial instruments. To the extent this trend is sustained over the coming years, the likelihood of low lending rates remains in high prospect.
Another source of cost to banks which tends to be reflected in their lending rates is the provisioning that is currently being made for the huge Non Performing Loans (NPL) accumulated over the period prior to the establishment of the Credit Reference Bureau. This coupled with and the operational costs incurred by banks due to structural difficulties experienced by the country on the road to development, constitute some of the explanations put forward by banks for them to remain operationally viable.

Distinguished Ladies and Gentlemen, we also note the concerns raised about the energy situation. When we had an emergency power situation in 2007 we procured 15mw because that was as much as network could take. After much investment we have a network that can distribute up to 40mw. We also have a new network in Makeni, with Lungi, Lunsar and Kono to soon be completed. To improve network to 125mw capacity we have closed a $70 million deal with credible private sector partners and work will commence soon. We have 26mw in Western Area and have contracted a further 120mw via IPP to be delivered incrementally over the next few years. We will continue to attract private capital generation and transmission as we roll out unbundling and restructuring of electricity sector which is in the early stages of implementation. The current crisis is the result of a mechanical failure at Bumbuna substantially reducing generation output. Thermal generation by NPA to substitute is also commercially constrained by high fuel costs which have increased by about 90% on global markets since tariff was set in 2008. Notwithstanding the challenges of 2013 the future of electricity in Sierra Leone is bright. You can see the light at the end of the current dark tunnel as we begin to effect repairs to Bumbuna and develop up to 5 new hydro plants and large scale thermal plants.

We also note the matters raised in relation to taxes and clearing of goods. We have introduced a number of reforms to ease doing business in our country, and these reforms are being acknowledged in our improvements in the ease of doing business rankings.
We have been steadily reducing the clearance time for goods at the quay, but there are remaining challenges. These include the inadequate skills level of clearing agents, and lack of commitments by other stakeholders. To resolve these issues and monitor operations at the Quay, a Committee of key stakeholders, the Port Users Consultative Committee (PUCC) was formed.

We are doing more, but you must also do more, that is the way to go. It is not enough to talk about the indiscipline of Okada riders and others; it behoves the business community to also develop a disciplined corporate culture, a culture of innovation, of seizing opportunities available with our local content policy, with the rising investments in the mines and agriculture sector, with the increased possibilities for PPPs in many sectors. Government cannot do all; we have all seen the consequences, in many countries where Governments attempted to do all. Our freedom, growth and prosperity is best guaranteed by all of us turning our corners of endeavours into centres of excellence, discipline, and productivity. Only then can we bring home the destiny of prosperity embedded in our land, our seas, our history, and our culture.

Distinguished Ladies and Gentlemen, now is the time to seize the opportunities facilitated by an administration headed by a person who believes in the potentials of the private sector. I am the first head of Government in this country to have come from the private sector; we are the first government in the country that is attracting hundreds of millions of dollars of investments; our belief in the private sector as the engine of transformation is unsurpassed by any other government. Seize the opportunities made available by our beliefs, our commitments and our actions. There are remaining challenges, but together we can do much more. Act more than you complain. You have a friend as President, seize the opportunities now.
I thank you for your attention.