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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