Abubakar Hashim/Freetown

Despite that the third-quarter of the year records a fall in revenue flows, Sierra Leone still remains a potential investment hub in Africa. Here is how.

President Ernest Bai Koroma

Though Sierra Leone has recorded a relative stability in its economic drive since President Ernest Bai Koroma’s second term in office in 2012, the beginning of this quarter (July – September) has witnessed a downward trend in revenue inflows, mainly due to changes in activities in the mining (iron ore) and agricultural sectors. The multinational companies in these sectors are presently engaged in export of their products and not into construction and other allied works, which initially saw massive inflows of foreign exchange into the country.
The temporal boom that was created by these companies has dropped. Foreign exchange inflows plummeted and government revenue, inadvertently, was affected. The Gross Domestic Product (GDP) that was hovering between 7 to 8 per cent, now stands at 6 per cent.

On the expenditure side, some categories of expenditure were not adequately budgeted, while new expenditure requirements have suddenly emerged. This development resulted in an increase in expenditure by 120 billion leones, from 4.16 trillion leones to 4.28 trillion leones.

Presenting a Supplementary Budget to Parliament a few days back, the Minister of Finance, Dr. Kelfala Marah, admitted a shortfall in revenue drive by government. “Some revenue streams are not performing as expected,” he told parliamentarians. “There was an increase in expenditures and new expenditure requirements have emerged.”
Buttressing this view further, the newly- appointed Central Bank Governor, Momodu Kargbo, remarked that, “The major revenue spinners of the economy – African Minerals, London Mining, Addax Bio Energy and Socfin – do not bring in much foreign currencies into the economy as witnessed during their early formative stages. He admitted that the iron ore sector of the economy created sudden boom to GDP. But presently, the economic situation has remained normal.

Another area that resulted in drop of revenue to government is the apparent false declaration of goods by importers to Customs officials at the ports. Foreign expatriates were brought in by the Department of foreign International Development (DFID) of the British Government, to oversee operations at the National Revenue Authority (NRA).

Upon arrival, they discovered lots of irregularities. Declaration of goods were falsified and under-invoiced by importers, resulting in loss of revenue to government. The situation was properly addressed by the NRA authorities, but the importers went on the rampage, calling on shop owners to shut down. There was slight pandemonium and the police had to intervene to disperse the crowd.

The other area that the Sierra Leonean economy witnessed a relative setback during this quarter under review (July to September), is the exchange and interest rates. The new Central Bank Governor admitted that the exchange rate that has been on the upward trend of recent, is artificial and will be adequately addressed soonest. “Government has reverted to its former monetary policy and the exchange rates will surely be reverted.” On the interest rates, he revealed to this medium that “there will be a Forensic Audit of the interest rates by an independent consulting firm to bring it to normalcy.”

Another area worth mentioning during this economic quarter (July to September), which has received international attention, is the issue of the deadly disease, Ebola.

It is a health issue that has put severe pressure on government expenditures. Government has so far spent closed to 120 billion leones (over $3 million) toward fighting this outbreak, which has presently caused over 130 dead, mainly in the eastern parts of the country. The Presidency has declared war on Ebola and is fully involved, with 50 per cent deduction from government officials’ salaries, geared toward information and support services. The private sector too, has made huge donations to combat this disease.

Recently, there was a World Health Organisation (WHO) delegation to Freetown, led by Dr. Keiji Funkunda, Assistant Director-General for Health Security. There was also an ECOWAS Minister of Health, followed by Heads of State, meeting in Accra, Ghana, with President Goodluck Jonathan donating $3 million to the ECOWAS Ebola pool fund.
Expenditures on this disease are mainly for public sensitisation, supply of protective gears for health personnel, provision of disinfectants for schools and offices, training of additional health attendants and intensive surveillances.

The outbreak of the Ebola virus has impacted on the tourism sector of the economy. An inflow of 41,820 tourists was recorded between January and June last year. This dropped to 31,082 for the same period this year and it is on a steady decrease, revealed the Minister of Tourism, Peter Conteh.

Though there has been a lull in revenue inflows and over- expenditure, government officials are optimistic that it is a transition period to be overcome. With the multinational companies already in the country and more waiting in the wings, irrespective of the challenges, Sierra Leone is still making development strides as an emerging economic investment destination in Africa.