KEYNOTE ADDRESS BY HIS EXCELLENCY
THE PRESIDENT OF THE
REPUBLIC OF SIERRA LEONE,
ALHAJI DR AHMAD TEJAN KABBAH
AT THE SIERRA LEONE COMMONWEALTH BUSINESS COUNCIL
(CBC) INVESTMENT CONFERENCE
FREETOWN, SIERRA LEONE

MARCH 27TH - 30TH 2006
----------------------------------------------------------------------

Mr. Chairman,
The Honourable Connor Lenihan, Minister of State for Development Cooperation of the Republic of Ireland,
Honourable Ministers and Members of Parliament,
Your Excellencies, Members of the Diplomatic Corps,
Distinguished Foreign and Local Investors,
Ladies and Gentlemen:

Let me begin by expressing my sincere appreciation to the Honourable Connor Lenihan, the Minister of State for Development Cooperation of the Republic of Ireland and all other foreign dignitaries here present, for attending Sierra Leone's first international investment conference. His Excellency President Olusegun Obasanjo who would have been here with us today regrets that due to some pressing international engagements has not been able to do so. I should however acknowledge his commitment to, and strong support for, this conference and what it stands for.

I would also like to thank the UK Department for International Development (DfID) and other agencies for sponsoring this historic event, and the Commonwealth Business Council (CBC) under the able leadership of Dr Mohan Kaul, for collaborating with my Government in organising the conference.

On behalf of the Government and people of Sierra Leone, I wish to extend to all of you a very warm welcome to Sierra Leone and I trust that you will find time to enjoy the beauty of our country, not only in Freetown but also in the provinces, where I have no doubt, a similarly warm welcome awaits you. Especially to our visiting foreign investors, the people of this country are anxiously looking forward to work in partnership with you. Of course, as you may be probably aware, this country has in recent decades faced huge challenges of civil conflict, deep-rooted poverty and bad governance. In recent years, however, we have worked hard to restore peace, security and stability such that, as the flyer for this conference accurately depicts, there has never been a better time for international investors and entrepreneurs to take a look at a country on the verge of full recovery and sustainable high private sector-led growth. Sierra Leone is today one of the most peaceful and stable countries in the African continent. While focussing on ways to consolidate this achievement on a sustained basis, my Government, our development partners and the strong and resilient people of this country are also looking for innovative ways to boost the private sector's role in providing meaningful and impacting investments. Investment policy is at the heart of my Government's broader development policy framework aimed at creating a healthy investment climate for all categories of investors, local as well as foreign. Our investment policy emphasises the following core principles: transparency, predictability, social responsibility, and, above all, non-discrimination.

Your Excellencies, Distinguished Ladies and Gentlemen, please permit me to further emphasize that this conference is timely because, after several years of Civil War, Sierra Leone has embarked on a new journey, which should lead us to lasting peace, sustained economic development and social justice for our people. We are sparing no effort in rebuilding our economy, our infrastructure as well as our political and social institutions in order to help drive this nation forward. Our overriding ambition is to achieve the goals for economic growth, poverty reduction and improvements in human welfare laid down in our National Vision 2025, our Poverty Reduction Strategy and the international Millennium Development Goals.

Mr Chairman, trade and investment are increasingly recognized as the powerful and self-sustaining engine for promoting broad-based economic growth, poverty reduction and social development in our very much-stressed developing countries. Barely a month ago in a similar event in Nigeria, I was fortunate to share my views with the gathering on the promotion of private investment in developing countries and, in particular, the progress Sierra Leone is making in this direction as well as the remaining key challenges for pushing the investment agenda farther, given the huge post-conflict reconstruction demands. Today, while it may be relevant to reinforce those aspects, I will prefer to focus on the important challenges of policy advocacy, image building, promoting linkages and market space.

In the policy framework, what does Sierra Leone have to offer? I can confidently inform our potential investors that the policy environment in the country has measurably improved since my Government effectively resumed a series of progressive wide-ranging structural reforms after the war. Notably, our macroeconomic performance has been strengthened on several fronts including lower inflation rate. Interest rates and the exchange rate are market-determined. Real interest rates have remained positive while the exchange rate remains relatively stable. As we continue to remain on track with programmes supported by our development partners, there is a sustained availability of official foreign exchange through an auction system by the central bank. Satisfactory monetary and fiscal policies have helped us to reduce the fiscal deficit thereby curbing inflationary tendencies further. At the same time, access to international debt relief and better public debt management have led to better debt service ratio and improved creditor confidence. As a whole, Sierra Leone appears to have settled on a more stable, though relatively low growth path, with real GDP growth rate between 6-7% per year. Particularly important for international investors is the fact that, since the end of the war in 2002, we have embarked on a new generation of very challenging reforms aimed at improving political, economic and corporate governance, building institutional capacity, and strengthening public financial management, legal and judicial systems. These reforms have substantially strengthened the integrity of government transactions and provide room for a more equitable share of benefits of public investment amongst all groups of the population. A better economic information system has also helped to promote external investment and private sector growth.

Regarding conditions and facilities for doing business, it is true that the creation of financial and other specific incentives directed at attracting foreign investors is no substitute for pursuing the appropriate general policy measures, and focussing on the broad objective of encouraging investment. However, Sierra Leone is now able to provide a comprehensive range of investor services; and a series of fiscal incentives are offered to foreign investors. My government is fully convinced that tax incentives are important to attract investment. To this end, in 2004 an Investment Promotion Act was promulgated that meets international best practices. It eliminates discretion in the awarding of contracts and prohibits discrimination among investors, and provides internationally accepted guarantees against expropriation and facilitates repatriation of profits. An Investment Incentives Bill is also currently being finalized. Government is conducting a study on Effective Marginal Tax Rate, which should assist us to further review our taxes to create more elbow space for investment promotion, both foreign and domestic.

Furthermore, our tariff regimes are now being aligned with those in the ECOWAS sub-region within the framework of the Common External Tariff (CET) policy. This is resulting in lower average tariff rates across a wide range of goods and services. In combination with opportunities available under the US Africa Growth and Opportunity Act (AGOA) and the European Everything-But-Arms (EBA) this represents a very open and positive trading environment.

On the international front, Sierra Leone offers investment protection through the Multinational Investment Guarantee Agency (MIGA) of the World Bank, the International Centre for Settlement of Investment Disputes (ICSID) and the Bilateral Investment Protection Agreement with the United Kingdom. A number of our development partners continue to help us in providing us with a better understanding of our investment climate diagnostics and the further development of strategic approaches, especially to attract foreign investors.

The judiciary is undergoing comprehensive reforms, providing the platform for the prompt and fair settlement of investment disputes. We have embarked on wide-ranging private sector development programme that will facilitate the removal of barriers to investment, streamlining procedures for starting and operating a business, as well as for accessing land. Implementation of this programme has begun, currently focusing on customs and tax reform, establishing a land cadastre and a land titling system. Also key to reform is the restructuring of our Sierra Leone Export Development and Investment Corporation (SLEDIC) into two more functional and efficient entities specifically focusing on investment promotion and export development. Government is actively streamlining administrative processes and procedures including the easing of business registration requirements and the introduction of a one-stop shop approach to reduce time and monetary costs of doing business in the country.

Mr Chairman, Your Excellencies, Distinguished Ladies and Gentlemen, image building is a foundation block in the process of attracting foreign investment. To meet this challenge, our investment policy is primarily that of focusing investor interest on the location and overcoming what may be regarded as negative perceptions rather than directly persuading a specific company to invest in the country. Indeed, it has been argued that the perceived investment climate is as important as the actual one and so addressing the so-called negative perceptions is an important part of encouraging investment. We are pursuing a number of policies and actions in trying to overcome any negative perceptions that people may have about Sierra Leone. These include modernising our laws; a strong commitment to combat corruption through the work of the Anti Corruption Commission; and the enactment of an anti money laundering legislation.

Let me at this juncture pause to acknowledge the outcome of a review recently conducted by the UN Security Council of the security situation in Sierra Leone. The review has now resulted in removing our country from the World Risk Insurance that imposed high premium on insurance levied on ships bound for our ports in Sierra Leone. The implications of this are that henceforth the Cost Insurance and Freight (CIF) on goods delivered at our ports will be at the normal rate, thus lowering the prices of imported commodities sold in our stores. Importers of goods into Sierra Leone should now find it easier to compete with their counterparts in other countries, particularly in the Sub-region.

These image building measures are especially important for Sierra Leone, given that we have a relatively poor track record in attracting foreign investment; we are undergoing rapid political, economic and social reforms; we have recently emerged from a period of a senseless devastating civil conflict; significantly, Sierra Leone is perhaps too small to attract the attention of the international media in terms of creating a positive image of the country in the eyes of their home investors.

Mr Chairman, another important question that continuously occupies my attention is, what steps can be taken to promote investment linkages, in particular, between sectors, and more importantly, between foreign investors and domestic entrepreneurs? Investment recipient countries benefit from foreign investment in part because the intangible assets, including proprietary technology, management and marketing skills transfer spill over into the local economy. Similarly, input-output transfers between economic sectors through value-added production strengthen economic performance. These beneficial spillovers will arise only through strong business linkages between foreign investors and local enterprises, whether as suppliers, customers, partners or competitors. Indeed, we are improving the environment for such linkages through education and training and investments in human capital. We realise that many of those countries that have succeeded in continuously fulfilling the evolving skills needs of industry have had a very strong competitive advantage in attracting new investment and moving up the skill and value chain in the type of industry attracted. Given its critical importance, we will continue to pursue the promotion of investment linkages more deeply with assistance from institutional facilities provided by our development partners with interest in this area. In the long run, support for improvement in the host country business climate and technical assistance to develop local human capital and supply capacity in local firms, will have the greatest impact on investment flows to our country.

Your Excellencies, Distinguished Ladies and Gentlemen, increasing the levels of domestic investments and attracting larger volumes of foreign capital investment will also require that we take action to expand our market space both locally and internationally. Domestically, there is no doubt that our efforts in deepening economic and financial sector reforms; poverty reduction; improving governance systems and the efficiency of public institutions, enhance the opportunities for an increase in employment, personal income levels, and hence, purchasing power of our people.

From the viewpoint of foreign investors in a specific destination country, an important question is what are the chances of accessing regional and international markets? Here, it is important to note that, more than ever, Sierra Leone's access to international markets is becoming more favourable; increasingly, international markets are becoming more open to products from our country. Within the region, several economic integration initiatives have made tangible progress in recent years. In this regard, we can make reference to NEPAD and the ECOWAS customs harmonisation initiatives. At a broader international level, we can for example, cite AGOA and the EU Everything-But-Arms initiative.

Trade liberalisation is a priority policy focus for the Government. We continue to promote and strengthen regional cooperation and integration efforts to create larger markets that have the potential of being more attractive to foreign capital, more than before.

Mr Chairman, Your Excellencies, Distinguished Ladies and Gentlemen, details of the many investment opportunities available within Sierra Leone will be forthcoming over the course of the conference. However, let me briefly outline some of the key sectors which Government feels can drive both the country and private investment forward. These are our priority entry opportunities for investors wishing to invest in the country.

Admittedly, physical infrastructure is currently the weakest link for promoting any meaningful investment in our country. We have seen a significant turnaround in telephone communications. However, the provision of the other main infrastructural services including roads and transportation, electricity and water is limited, and therefore a basic constraint for investors. Yet, while Government is making efforts to address this challenge, for investors with a long-term perspective, the weak infrastructure base in Sierra Leone should actually represent significant investment opportunities. In the road sector, several of our major trunk and feeder roads are being rehabilitated or constructed, and this will help improve the production-to-market link as well as the direct connection between the capital and provincial markets. On power generation, there are ongoing projects that will shortly increase substantially electricity generation capacity both in Freetown and in the provinces. These include the near-completion of the Bumbuna hydro power project, the upgrading of the Bo-Kenema hydro power facility, the 7.5 MW additional Freetown power generation capacity, and the Black Hall Road power rehabilitation project that aims to provide adequate power in the industrial estate located in the eastern part of Freetown where most of our manufacturing industries reside.

Sierra Leone needs investment in exploratory activities, particularly in non-traditional minerals, to improve the quality of geological data and map new deposits. The current level of processing of minerals is considerably low, and therefore opportunities exist for potential investors to increase their downstream processing activities. All of these however, require huge capital and technology transfers to Sierra Leone. There have been important changes to the laws and regulations related to mining, thus making the sector attractive for foreign investment.

Similarly, attractive opportunities exist for investment in agriculture, which is the mainstay of our economy. A striking feature of agricultural development in the country is that despite the extensive arable land area and favourable climate, including abundant water, we are still experiencing some food deficit, mainly with respect to rice. Our new policy drive therefore aims at diversifying agricultural production and promoting food processing as potential areas for profitable foreign investment. Having emphasized the favourable conditions for rice production, we look forward to investors capitalising on this advantage that can lead to surplus rice production for export. At the same time, cash crop production for export needs revival. We are therefore encouraging the increased use of fertilizers and machinery as well as improvement in water management to lift productivity.

There are immense opportunities for commercial farming based on private ownership or public-private partnerships, strongly enhanced by favourable land reforms. In addition, there are also private or public-private investment opportunities in tourism and in the key social sectors of education and health. You will hear more details on these from my respective ministers and other officials. My message to you is that Sierra Leone wants to expand its trade by producing and selling a greater quantity and range of quality products that can compete on regional and global markets. We therefore need investment and joint-venture partners to help us move beyond exporting raw commodities to producing and exporting value-added products through competitive and sustainable local enterprises.

Another good way of entry for our potential foreign investors is in the opportunities provided under our extensive privatisation and divestiture programme, covering more than 20 state owned enterprises including commercial banks and utility companies. We await your active participation in this activity. My Government is also in the final stages of establishing a Stock Exchange to facilitate medium and long term lending and borrowing transactions in money and money-denominated instruments. The Exchange will in the medium term ease capital bottlenecks in the domestic market and contribute strongly to private sector investment and the mobilisation of capital flows. These programmes will be articulated to you more fully during the course of the conference.

Mr Chairman, Your Excellencies, Distinguished ladies and gentlemen, investment and development go hand in hand. Greater investment will drive the development objectives of our nation, and that development in turn will drive the improvements in infrastructure, human resource base and institutional conditions that private investment relies, and feeds, on. Our broader development vision is therefore of immediate and direct relevance to current and future private investment. Sierra Leone has successfully developed and is firmly implementing its Poverty Reduction Strategy, backed by a firm support and commitment from our development partners during a Consultative Group meeting for Sierra Leone, held in London, November last year. We are presently on the verge of completing our journey through the enhanced HIPC framework.

With the newly established United Nations Integrated Office in the country mandated through a Security Council resolution to create "an enabling environment for private investment", private sector investment promotion in the country will continue to be accorded high priority in our economic transformation process. My country has also acceded to the statutes of the African Peer Review Mechanism (APRM) within the framework of NEPAD, a manifestation of our commitment to good political, economic and corporate governance policies, which are a precondition for creating a conducive business environment.

Our aim with these programs is, of course, much more than economic growth. Our aim is also to distribute that growth, make it accessible, expand the benefits and rewards of our economic development to all our people. We have learned that the creation of wealth that only benefits a small minority is not the way to move forward. We have come to realize that in order to make our economic development and security environment sustainable, it must include all sectors of society, all regions of the country. In short, the fruits of economic development must reach all of our people. I therefore invite all investors to explore investment opportunities not just in Freetown but also in the four regions of the country and all sectors of the economy. You are assured of special incentives for investment in the provinces.

We are convinced that through greater prosperity, many of the disturbing inequities that my Government inherited will begin to be corrected. We believe that more and better employment, a diversification of economic entrepreneurial activities, and in general the opportunities that arise with greater economic activity will lead to an increase in social justice in our country.

This conference is proof that our journey has not just begun, but that we are well down the road. We hope that with the decisive support of private investors, both domestic and foreign, Sierra Leone will continue to move towards an era of prosperity, peace, and economic well being for all of its citizens. Profitable private investment should help all concerned to make the most of their place in the world, including of course the investors gathered here.

Let me, once again, welcome all of you to this our small and beautiful country that has so many good things to offer, validating the expression that "good things come in small packages". I wish to assure you that Sierra Leone is indeed ready for business, and we hope and trust that this message will come across most strongly over the course of this conference. All the people of Sierra Leone warmly welcome you and hope you will have a rewarding and pleasurable stay. And while you will be deeply rooted in the plenary and working sessions of this conference, please do not forget to spare time to explore the beautiful beaches and other tourist attractions this country is endowed with.

I thank you for your attention.

-End-