ADDRESS
BY HIS EXCELLENCY
ALHAJI DR AHMAD TEJAN KABBAH
PRESIDENT OF THE REPUBLIC OF
SIERRA LEONE ON THE OFFICIAL OPENING OF THE
INTERNATIONAL COMMERCIAL BANK (SIERRA LEONE)
LIMITED (ICB)
RAWDON STREET, FREETOWN
WEDNESDAY, 8TH DECEMBER 2004
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[Salutations]
I
am gratified, once again, to take part in an
occasion that signifies another milestone in
our effort to rebuild and strengthen the financial
sector of a country that has been severely ravaged
by a senseless and completely unjustified war.
The opening of the new International Bank (Sierra
Leone) Limited (ICB) by our Malaysian friends
is significant in light of the erosion of public
confidence in the banking system and the vacuum
created, following the dissipation of banking
services during the 10-year war.
The
establishment of the International Commercial
Bank (Sierra Leone) Limited is of special significance
not only for the development of the financial
sector but also for the general economic and
social development of our country. This is because
in addition to being a very successful Banker,
Mr Tun Dain Zainudin, the principal shareholder
of this bank is also an accomplished Development
Practitioner with several success stories to
his credit. With his business interests established
in Sierra Leone we are bound to benefit from
his wealth of experience in these areas and
from his extensive network of business contacts
not only in Malaysia but throughout South East
Asia and indeed the world.
Mr
Chairman
We
are proud that since the end of the war, Sierra
Leone has made significant progress towards
getting the banking sector back to where it
was before the war and putting in place a comprehensive
financial policy environment that is more favourable
to poverty reduction, job creation, food security
and private sector development. The addition
to the number of commercial banks currently
existing in the country comes at a time when
we are poised to make the transition from post-conflict
recovery to long-run growth through the implementation
of a poverty reduction strategy. I must stress
that there are fundamental financial intermediation
gaps that are critical if we are to achieve
our PRS objectives. Indeed, despite the large
number of informal intermediaries, non-bank
institutions and foreign exchange bureaux, the
financial system is dominated by commercial
banks. The onus is therefore on them to take
a firmer, more pro-active and generally convincing
leadership in providing the type of financial
intermediation services and products that will
drive our poverty reduction strategy.
Mr
Chairman
The
PRS will address major impediments in the economy.
To start with, like most developing economies,
the Sierra Leone economy is vulnerable to external
shocks including the recent oil price and its
inflationary tendencies, as well as the restricted
international market access for our commodities.
Macroeconomic stability is relatively weak and
fragile given our susceptibility to the pass-through
effects of adverse developments in the global
economy. The cost of borrowing from the domestic
banking system by both the public and private
sectors is relatively high, thereby frustrating
meaningful productive and value-added investment.
Foreign exchange earnings are desperately low
relative to demand, resulting in a weak local
currency vis-à-vis our foreign trading
currencies. Black market activities are still
prevalent.
In
the course of implementing the PRS, the reform
of the financial sector will continue, including
the licensing of new financial institutions
that will mitigate the current financial services
and product gaps such as rural credit, micro
financing, venture capital, agro-finance, mortgage
finance, etc. Privatization of the national
development and commercial banks, and the modernization
of the regulatory and supervisory environment
in line with international principles and best
practices for effective bank functioning will
continue the process of liberalization and seek
to ensure sound financial services.
Despite
the progress in improving their geographical
spread, a number of our banks operate almost
exclusively in Freetown, maintain high minimum
deposit balances, and lend primarily for short-term
transactions, especially trade and credit finance.
This limits their customer base to a handful
of low-risk, high value customers. Competition
in banks has remained low and small and medium
sized urban enterprises, as well as the rural
population continue to have limited access to
bank services.
Mr
Chairman
As
we are all aware, poverty in Sierra Leone is
essentially a rural phenomenon as over 70% of
our people live in rural communities. Over 80%
of rural dwellers are under-resourced poor farmers
and petty traders. They lack access to capital,
credit and banking services. Commercial banks
have a key role to play in reaching out to rural
communities. They can do so through diversification
both in their geographical spread and in the
products and services they offer to the public.
By doing this, they would be able to provide
the necessary support for the productive sectors
of the economy- agriculture, mining, industry
and manufacturing, to grow and enhance the much
needed food crop and export production.
The
commercial banks should also play a key role
in mobilizing savings, discouraging capital
flight and attract external resources. They
must enhance investment by attracting a growing
proportion of total savings out of real assets
into the financial system, which will in turn
be directed towards productive investment. The
savings are made available in the form of affordable
credit to viable business enterprises for expansion
of their productive capacity, as well as to
other consumers for such purposes as housing
and input requirements. The lack of bank credit
stifles expansion of our productive base and
limits the creation of jobs and wealth.
Mr
Chairman
The
opening of this new bank is in line with Government's
overriding objective of rebuilding the economy
after many years of destruction. The emphasis
is on enhancing the capacity of our people to
undertake economic activities to improve the
quality of life while reducing our dependence
to donor support. Commercial banks must collaborate
with society to propel the economy into self-sustained
growth. This requires a lot more imagination
and venture into areas hitherto considered by
them to be high risk; in agriculture; in rural
small-scale production; and in construction.
I would expect the new International Bank (Sierra
Leone) Limited to reflect in these intermediation
weaknesses and provide us with a new dispensation,
including better customer care.
In
this regard I am pleased to note that the bank
is coming to Sierra Leone with a strong international
exposure and a wealth of experience in wide
ranging banking services and products far beyond
the conventional instruments. Thus, besides
deposit taking, trade finance, loans and overdrafts,
remittances and foreign exchange transactions,
ICB Sierra Leone has promised to deliver customized
and differentiated products to suit the diversity
and specificity of customer needs, thereby providing
for itself a competitive cutting edge among
commercial banks in the country. With an initial
share capital of Le4,286 billion, the bank is
already in operation, supported by a pool of
top and dedicated local and foreign management
and staff with expertise in banking and product
development. Here, please permit me Mr Chairman,
to recognize Mr Tan Lye Hin, the Chief Executive
Officer of the bank, and Mr Emile O Davies,
Senior Manager. I wish you, gentlemen, every
success in piloting the bank's operations. I
am reliably informed, and I am sure my Governor
in the Bank of Sierra Leone will confirm this,
that ICB Sierra Leone has recorded profits within
the first quarter of the commencement of operations.
This is indeed a promising beginning and should
send a signal to potential investors that Sierra
Leone is a good investment destination. Let
me assure you that government's resolve to continue
to provide an enabling environment for investment,
including the introduction of the appropriate
legal and regulatory reforms, remains strong.
May
I, in conclusion, recognize the presence of
the Malaysian business delegation that traveled
with Mr Zainudin to Sierra Leone and to wish
them a very rewarding visit.
It
is now my great pleasure to declare the bank
open.
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