Since he became Minister of Trade and Industries, efforts have been tailored towards diversification of the country’s exports. Alhaji Osman Boiye Kamara is presently placing emphasis on exports, as a way of improving the foreign reserves of the country. He recently spoke to ABUBAKAR HASHIM on current steps to open up the economy
Small and Medium Enterprises (SME) development is an important policy programme of government, as stated by President Koroma in Abuja recently. What is the present state of SMEs in the country?

Sierra Leone has seen consistent growth in GDP form 6 per cent in 2011 to 15.2 per cent, led mainly by Foreign Direct Investment (FDI) in the mining sector, and supported by agriculture, services and the construction industries. Inflation has steadily fallen from 18.5 per cent in 2011 to 11.6 per cent in 2012. It is anticipated that with the government’s new policies, investments in iron ore production and recovering agriculture and manufacturing sectors, GDP growth is projected to be at 13 per cent in 2013 and 12.1 per cent in 2014, while inflation is expected to drop to 7.1 per cent in 2013 and as low as 6.9 per cent in 2014.

Despite this growth, the country continues to face challenges of dire poverty and long-term unemployment. Based on a recent UNDP report on the status of youth employment, 60 per cent of the youth between the age of 15 and 35, an estimated 2,000,000 people, remain unemployed or seriously underemployed, while 70 per cent of the households in the country rely on micro and small businesses in the private sector for their livelihoods.

Mining and agriculture remain the key contributors to GDP. However, since 2007, there has been significant increase in the contribution from the mining sector, with a rise in 2012 due to the start of iron-ore exports in 2012, contrasted with a drop in the contribution from the agriculture sector.

The private sector is dominated by FDIs in large scale enterprises in the extractive industries, with recent increase in investment in the mining sector (iron-ore, bauxite and rutile). Indications of oil deposits have further added investments in the sector. Agriculture, including fisheries and forestry, contributed about 46 per cent to the GDP in data of 2013 and provides 75 per cent of employment in the country.

SMEs will remain the life blood of the country’s socio-economic development. In addition, the country has tremendous untapped potentials in the tourism sector, with attractive landscapes for recreation and an emerging market to attract the business traveler. However, due to a lack of quality infrastructure and human capital, it will be difficult for the sector to develop without involvement of the public sector and international donors.

The Government made a solid start in establishing the positive business environment essential for private sector development, with the first national policy paper, the Agenda for Change, followed by a robust 5-year policy, Agenda for Prosperity: the Road to Middle Income Status. Government has consistently expressed its expectation that the investment in these key sectors will lead to national economic growth, as stated most recently in the new Agenda for Prosperity (AfP) for 2013-2017. The Agenda will be to build a stable economy, founded on private sector-led growth, and diversified across several competitive sectors to achieve our economic and human development vision.

The most important of achievements since the inception of the Agenda for Change include:

Maintenance of a stable political and macroeconomic environment; Major improvements in physical infrastructure, including roads, power, and transport; Public sector reforms to increase efficiency and accountability; And substantial programmes to spur private sector development, including broad-based programming in small-scale agriculture, notable infrastructure investments for artisanal fishermen, substantial youth employment programming in public works, and selected financial assistance for small and medium enterprises.

Currently, Sierra Leone’s private sector is characterised by a large informal sector, an estimated 70 per cent of the economy. At the most fundamental level, small businesses in Sierra Leone are constrained by weak and highly fragmented markets. Profitable market opportunities are in ample supply but small-scale entrepreneurs have problems linking up with them. Though improved, the business environment remains a costly one, particularly for small business owners, many of whom struggle to compete with lower-cost imports. Even with profitable projects in hand, small businesses rarely can access loans, finances and other key financial services. Avenues by which small business owners can acquire needed personal and business skills are not well developed and demand for skills upgrading goes unmet.

What is the current trade policy of the country?

Sierra Leone’s trade policy is part of its strategy of poverty reduction and in line with its ECOWAS commitments. A key feature of the government’s effort to increase and sustain growth rates is through the establishment of a liberalised trade regime. Trade policy development and instruments have taken into account fiscal and reform-related priorities such as:

The consolidation of regional economic integration;
The restarting of exports to mineral resources;
The diversification of agricultural output and exports (e.g., rice); and
The creation of an industrial free zone.

Sierra Leone’s trade policy addresses issues of the country’s excessive reliance on a few exports, which makes it highly vulnerable to external shocks. Increasing and diversifying the production and export of non-traditional goods, to maximise the potential benefits from deeper integration into the world economy, is the current strategic focus. With an underdeveloped manufacturing sector, Sierra Leone imports manufactured products and exports commodities. It is a price-taker at international markets. Export base is highly concentrated in a few primary commodities, with very little processing or manufacturing. Imports vary, with heavy concentration in petroleum, machinery and transportation equipment, chemicals, and foodstuffs.

For Sierra Leone to make an impact on the poverty situation, it needs to revive existing exports, work towards export diversification, and create a supportive environment for local entrepreneurs to invest in competitive industry.

What is the country’s International Trade relationship?

Sierra Leone’s direction of trade is concentrated on a few external markets. Partly for historical reasons, the EU is Sierra Leone’s largest single trading partner, buying an average 80 per cent merchandise exports and providing 30 per cent of its merchandise imports. The trade relationship between Sierra Leone and the EU is thus important for the region’s development, and proposed free trade agreements (FTAs) under the planned Economic Partnership Agreements between the EU and ECOWAS could have a significant impact on Sierra Leone.
Is there any trade relationship with Nigeria?

Yes. Nigeria is a key trading partner with us. But this is mainly in the informal sector. We are putting policies in place. With the formation of the Nigerian Chamber of Commerce here, this area will be formalised.