ADDRESS
BY HIS EXCELLENCY THE PRESIDENT
ALHAJI DR AHMAD TEJAN KABBAH
ON THE TRANSFORMATION OF THE SIERRA LEONE
PORTS AUTHORITY ON THURSDAY, 3RD JUNE, 2004
---------------------------------------------------------------
On
the 3rd of June 1953, some fifty-one years ago
today, Sir Robert de Zouche Hall then Governor
of Sierra Leone changed the name of this Port
from Deep Water Quay to the Queen Elizabeth
the Second Quay (QEII Quay) to mark the coronation
of the Queen of the United Kingdom and the Commonwealth.
By that action Governor de Zouche Hall demonstrated
the degree of national importance he attached
to the Port.
On
becoming President, I also appreciated the importance
of the Port to the nation and had expected that
its operations will contribute significantly
to our efforts in developing the country. So
far my expectations have been dashed, hence
the reason for my visit on this 51st anniversary
of QEII Quay.
For most developing countries a major source
of revenue is derived from international trade
taxes that are collected at sea ports. The volume
and value of such trade also determines the
volume of resources available to the government
for use in providing services and other facilities
to the people. It is therefore important that
officials of the Sierra Leone Ports Authority
(SLPA) and Customs Department of the National
Revenue Authority (NRA) operating at QEII Quay
at Cline Town execute their duties selflessly,
in the public interest, since they are a vital
source of revenue that Government needs to build
the nation and provide service to the people.
Regrettably, activities at the port have often
been reported to be anything but that. Unfortunately
it is common knowledge that there are systematic
and institutionalised arrangements designed
to make transactions through the port costly
and a humbug for most people using the Port.
Reports have reached me that almost 20% of some
commodity imports are being stolen. Tariffs
on imports are deliberately distorted by Customs
Officers for personal gains. There are cumbersome
procedures and long delays in processing documentation
to clear goods. Illegal payments are routinely
being demanded by some officials involved with
the process of clearing goods. This culture
of financial irregularities, inefficient management
and occasional criminal violence and vandalism
can no longer be allowed to continue.
Earlier
this year I made a surprise visit to the port
at Cline Town in order to gain first hand experience
of its operations. At the end of the visit I
was persuaded that government has to take immediate
drastic action to address these problems as
well as contain the drain on SLPA finances and
promote efficient management. Financial mismanagement
at the Port has had a long history as evidenced
by two of the enquiries set up by Government.
One was in 1976 chaired by Justice S.J. Forster
and another in 2002 presided over by Mr. Chris
Jasabe to look into the irregular purchase of
a forklift. Appropriate disciplinary measures
were taken as a result of these enquiries.
Some
of the remedial actions that government is currently
taking to transform the port include the privatisation
of some of its activities and the other reforms
taking shape at the NRA. To accelerate this
transformation it was necessary to learn from
the experience of similar institutions in the
sub-region that have undertaken radical restructuring
that induced profound changes in attitudes and
operational systems and brought about significant
financial benefits to both the institutions
themselves and their national economies.
During
one of my recent official visits to Ghana, I
and some of my senior Ministers took the opportunity
of visiting the Ghana Ports and Harbours Authority
(GPHA) at Tema, which is reputed to be properly
managed. We were deeply impressed with the professional
and committed way GPHA management conducted
its affairs. They have been able to post healthy
levels of profits between 1998 and 2002 with
operating profit rising from US$19.9 million
to US$26.8 million. GPHA has paid corporate
taxes of around US$18 million and undertook
capital expenditure totalling US$32.5 million,
and it has also loaned its Government US$14.4
million.
On
my return to Freetown, I promptly decided to
send to Ghana a high powered delegation comprising
Mr. A.R. Turay, Chairman of the National Commission
for Privatisation, Capt. A.R.N. Macauley, Chairman
Sierra Leone Ports Authority and Dr. John Karimu,
Commissioner-General, National Revenue Authority
with a mandate to study the structure, organisation
and operations of the GPHA and related agencies
with a particular focus on the privatisation
of selected functions of GPHA, and the collaboration
that has been developed between GPHA and the
Ghana Customs Administration. The delegation
which left Freetown in April was also asked
to learn useful lessons from the GPHA operations
that could be adapted and dovetailed into the
current reforms being undertaken at Sierra Leone
Ports Authority and the Customs and Excise Department
of the National Revenue Authority. Furthermore,
I asked the delegation to make a diagnostic
analysis of SLPA in order to identify the reasons
for its poor financial performance over the
years.
The
delegation has returned and has submitted a
report which, among other things, contains a
financial analysis of the operations of SLPA
between 1995 - 2002 and a set of recommended
remedial actions that should improve the financial
health of SLPA, promote its management's efficiency
and streamline the management's functions and
procedures of the Ports Authority and Customs
Department.
Let
me now share with you some of the highlights
of the delegation's report. Between 1995 and
2002, the turnover of SLPA rose by a factor
of more than three times from Le6.2bn to Le20.1bn
whilst gross earnings increased by the same
multiple from Le4.3bn to Le13.1bn. However,
earnings before tax resulted in a loss of Le40m.
in 1995. In 2002, administrative costs alone
amounted to Le12.76bn. This huge difference
between gross earnings and the net losses is
explained mainly by the relatively faster rate
of increase in administrative costs and irregularities
arising from inflated supply contracts and fraud.
The number of people employed at SLPA in 1980
was 2315 of which 300 were casual workers. In
2003 there was a steep increase in staff strength
to 2662 with the number of casual workers rising
to 1032, which is ten times higher than the
level in 2002.
Interestingly,
the business activities at the port have been
on the increase. Total container volume traffic
rose from 10,391 Tons Equivalent Units (TEUS)
in 1999 to 34681 in 2002.
From
the brief analysis that I have just shared with
you it is quite evident that SLPA operations
are potentially profitable. But I regret to
say that my Government has yet to receive any
dividends from SLPA since 1996. This is largely
because revenue generated by the port is being
absorbed by very high administrative costs,
principally those relating to staff, operations
and maintenance. It is notable that some of
the maintenance costs contain inflated contract
values for the supply of equipment and services.
Government
has therefore decided to take immediate steps
to check the growth in these major cost components
in order to turn around the financial health
of SLPA. Additional measures are also to be
taken to review the management functions and
procedures at the SLPA including those of customs
and related agencies so that the port could
have a comparative cost advantage in the sub
region.
Government
Action Plan
In
addition to the current structural reforms at
the Sierra Leone Ports Authority and Customs
Department of the National Revenue Authority,
the Government is developing a long-term strategy
to contain escalating administrative and associated
costs.
Instead
of being directly involved in revenue generating
activities, SLPA's role is to be limited to
that of being the Port's landlord earning its
income by charging fees on the turnover of the
private sector franchisees at the Port. The
NCP will therefore have to advance the time-table
for the privatisation of the core activities
of the Port, namely stevedoring, traffic handling
and container terminals so that it is concurrent
with the programme for delinking the non-core
activities such as the clinic, security, ferry
and slipway. These changes will undoubtedly
bring about a reduction in the level of the
labour force directly employed by SLPA while
in fact increasing job opportunities in the
industry as a whole. The Government is therefore
exploring the possibility of setting up a Dock
Labour Company (DLC) by SLPA, with the Dock
Workers Union, the stevedores and other major
stakeholders at the Port who will own shares
in this company and share in the profits of
the company. The DLC will become the sole supplier
of labour to the Port and would protect and
secure jobs as well as provide for pension and
terminal benefits. SLPA has to fund the cost
of its equity contribution to the DLC and the
terminal benefits that may be necessary when
it switches its role to landlord. The Government
is also investigating possible revenue sources
to assist with this project.
However,
in the short term the SLPA management is urged
to review its employment policy of permanent,
casual labour and maintenance contracts to cut
out all wasteful expenditure. Government is
also reviewing the structure of the Board and
management at SLPA with a view to putting in
place an organisation that can manage the projected
changes competently.
Effective
from today the Government's mission statement
for SLPA and NRA is "to make QEII Quay
at Cline Town the least-cost Port in the sub-region
that would enable it to develop a vibrant transhipment
business". The corporate objective of SLPA
is to make its operations profitable. The NCP
is therefore urged to task the management and
Board of SLPA to produce a five-year corporate
plan which should aim at turning around the
fortunes of SLPA within the first twelve months.
Finally
Government expects that the Port and customs
operations are to be streamlined jointly as
soon as possible by the introduction of a system
similar to the Ghana Community Network (GCNET)
used at Tema Port. This system should be coupled
with the installation of a container scanning
facility to facilitate the speed of transactions
and enable Sierra Leone to comply with the new
International Ship and Port Facility Security
(ISPS) code which becomes effective 1st July
2004.
Until
the Dock Labour Company (DLC) is established
the National Commission for Privatization (NCP)
will monitor very closely the quarterly movements
in revenues and costs of SLPA with a view to
arresting any adverse trends.
-End-
