ADDRESS BY HIS EXCELLENCY THE PRESIDENT
ALHAJI DR AHMAD TEJAN KABBAH
AT THE ANNUAL DINNER OF THE SIERRA LEONE
CHAMBER OF COMMERCE, INDUSTRY AND AGRICULTURE
ON 18TH DECEMBER 2003
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Mr Chairman
President and members of the Chamber of Commerce
Mr Speaker
Honourable Chief Justice
Ministers of Government
Members of the Diplomatic and Consular Corps
Distinguished Ladies and Gentlemen:

There is always a catch when one accepts an invitation to dinner from your association, which is that one is expected to sing for one's supper. I do not mind doing so as it enables me to touch base with members of your chamber who are important partners of government in the business of promoting economic growth and improving the welfare of our people.

Mr Chairman, a year ago when I spoke to you I highlighted a number of challenges we were faced with as a nation just emerging from over ten years of civil war. The economy has to be revitalised, with the private sector playing a leading role. Appropriate supportive institutions were needed to facilitate the promotion and maintenance of good governance. The decision-making process had not only to be decentralised but also diffused to a larger number of people than has happened in the past. In the economic sphere I advocated the need to forge a public private partnership involving continuing consultations prior to the formulation of major economic policies. I also urged that we endeavoured to seize trade opportunities provided by external trade facilities such as the African Growth And Opportunity Act (AGOA) in the USA, Everything But Arms (EBA) of the European Union and of course the extended market in the ECOWAS region. To attract new investment I indicated that the government would endeavour to promote a friendly environment for investors, from an Investment Advisory Council to the enactment of an Investment Code. Finally I cautioned there were important lessons to be learnt from some of the causes of our recent civil conflict particularly those related to bad governance and corruption. I then appealed for us to be selfless and strive to discharge our public and civic responsibilities with integrity and national pride.

Mr Chairman, let me now examine how much ground we have covered on some of these issues since last year. The peace and security processes are continuing to hold firmly, and for this achievement, we are grateful to our security forces and the international community. With the cessation of hostilities in Liberia I am hopeful that not only Sierra Leone but also the Mano River Union sub-region as a whole will be better secured. Here at home we are consolidating the peace process by the work of the Truth and Reconciliation Commission and the Special Court together with the various actions the Government is taking to make it more accountable to the electorate.

The Government has set up a Commission to carry out a re-profiling of the Senior Executive Civil Service. It is intended that it will also review the compensation package for all workers in Sierra Leone. This would help to improve the capacity of civil servants to assist in the formulation and implementation of government policy, as well as raise the productivity of the workforce throughout Sierra Leone.

Furthermore, we have tried to decentralise the decision making process by engaging in wide ranging discussions with various civic groups prior to the construction of the national budget. During the year we held three cabinet meetings outside of Freetown, in Bo, Kenema and Makeni. The purpose has been to identify strategic projects, jointly with the local communities, that the elected councils could carry forward when they become operational, and also ensure that these Councils have the manpower and logistical capacity to carry out the functions that will be devolved to them.

We are now finalising plans to conduct the Local and District Council elections in the first half of 2004, but meanwhile we have instituted a Council of Chiefs, which provides another tier in the process of political decentralisation. Incidentally, this Council has also been mandated to review the land tenure system with a view to facilitating access to land for investment in agriculture.

Mr Chairman, on the economic front, we have had some successes. The economy expanded by some 7% with the major boost coming from the agriculture and construction sectors. There is domestic price stability but the exchange rate has depreciated by around 10% with respect to the US dollar and pound sterling largely as a result of a slackening in the inflow of foreign currency into the banking system. Government is pursuing measures to ensure that there is a stable exchange rate. Our relations with the Bretton Woods institutions, the World Bank and the IMF have remained good.

Mr Chairman, in spite of the significant progress made so far with the development of the Investment Code, its finalization has been delayed by the need for it to be redesigned to meet both the concerns of the donor community and the need to safeguard potential sources of corporate taxation. We will continue to consult you up to the time it is finalized. Foreign investors including those from China, Malaysia and Thailand are being encouraged to form Joint Ventures, with government and Sierra Leonean entrepreneurs taking shares, in the agricultural and industrial sectors. An important British trade delegation will visit Sierra Leone next month. No doubt, this will open further avenues for collaboration with indigenous entrepreneurs. It is anticipated that some positive results will emerge from these developments.

Advanced arrangements are in place in the resuscitation of the rutile and bauxite mining operations in the Moyamba District. The Overseas Public Investment Corporation (OPIC) of the USA has made a guarantee commitment of around US$30 million towards funding the cost of the reconstruction and rehabilitation of the rutile mines. This is a significant development as it demonstrates that our sovereign and political risk ratings are improving. Three companies submitted bids last June to explore for oil in our coastal waters. Since then, two of these companies have established offices in Freetown and appointed Country Managers. The third is in the process of doing so. Perhaps more significantly two of the companies are firming up plans to start operations by the end of this month with one of them anticipating to engage about fifty employees during this period. Notwithstanding the recovery of diamond exports, the industry continues to pose serious challenges but the government remains committed to rationalise mining operations in order to minimise the foreign currency leakage from its export earnings.

There is however an aspect of our national conduct which remains worrisome. This relates to the elimination of corruption in the execution of our civic and public functions. We have, with assistance of the UK's Department For International Development (DFID) and the Commonwealth Secretariat, recruited three international judges and a prosecutor to strengthen the capacity of the Anti Corruption Commission. I am hoping this bolstering of the Commission's capacity will help to clear the backlog of cases for prosecution, thus sending a powerful message that government is relentless in its fight against corruption, a cancer that is marring our efforts in building a just and better society.

Mr Chairman, some international commentators and we as a nation often talk about our country's abundant natural resources and our inability, through mismanagement, to transform this stock of wealth into income flows that will benefit our people by increasing their living standards. In my speech last year I focused on the real economy and identified areas where remedial action could be taken to assist in the transformation of our stock of wealth into income flows.

Mr Chairman, tonight I will like to switch our attention to the financial sector of the economy. The banking system has played a significant role so far in the development of our economy but what is now needed is to reinforce its contribution.

Mr Chairman, over the past years, I have observed some interesting developments in the banking and financial system of our country. The banks have achieved significant growth in balance sheet footings and profitability and have contributed immensely to the development of our commerce. They have in the process introduced new financial instruments that have facilitated financial intermediation whilst maintaining price stability.

But commercial banks have yet to tailor their products to meet the needs of what are regarded as "non bankable" customers or small borrowers who happen to constitute the bulk of our people and are engaged in agriculture and commerce. The challenge for the banks is to fashion lending policies and financial instruments that are appropriate for these customers and at the same time ensure that the resultant lending exposure is not harmful to the quality of their overall loan portfolios.

We do know that in general commercial banks are largely involved in the provision of short-term facilities. But I would like to see, apart from their hard core overdrafts, the introduction of roll-over facilities that could extend the maturities of some of their facilities. Indeed, this approach should be accompanied by the development of syndicated lending to spread the risk burden of large amounts of loans that are needed in capital formation.

Mr Chairman, financial intermediation must be deepened by the development of capital and securities markets. These market structures need to be underpinned by appropriate laws. I am aware that some work has been done to revise our corporate laws. Government will continue to be amenable to providing the legislative backing associated with the development of other financial market institutions. We are fully aware that a free market economy such as we are endeavouring to promote, can only thrive with an enabling legal framework.

I welcome the emerging development of a secondary market through the setting up of the First Discount House. We believe that there is an urgent need for the establishment of a securities market, albeit in a relatively modest form initially, to assist with corporate financing. Such a market can also be a primer for the deployment of personal savings, a substantial amount of which is currently locked up in sterile capital assets. I therefore hope that the Chamber working with operators in the financial sector will take these observations into account as we all strive to reinvigorate the economy.

Finally I thank you for the dinner and I hope I have paid for it in full. I now wish you all a very merry Christmas and a happy and successful 2004.

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