BOOST FOR BANKS AS THE ECONOMY PICKS UP
Central Bank Governor says liberalization is the only way to achieve sustainable growth

J.D. ROGERS Governor of the Central Bank of Sierra Leone

The establishment of peace and security has led to the rebuilding of the financial sector. Bank branches forced to close by the conflict are being reopened both in the capital, Freetown, and the provinces.
J.D. Rogers, the Governor of the Central Bank, attributes the revival of the sector to the resilience of the people, the enterprise of business operators, and the support of the financial institutions. “Since the end of the war, there has been increased business activity leading to buoyancy in the economy, which has led to a rise in the demand for foreign exchange.”

Deposit rates have risen to mobilize savings, while prime lending rates have been reduced to encourage private sector borrowing.

A regulatory framework has been established by the Bank of Sierra Leone Act and the Banking Act of 2000, and the Other Financial Services Act of 2001, which provide the ground rules for the operation of the banks and other financial institutions.

The assets and profitability of the six commercial banks have grown, with the government-owned Sierra Leone Commercial Bank and government-controlled Rokel Commercial Bank dominating the sector. The sole international bank is Standard Chartered, which has been present in the country since the colonial days. Some of the banks have introduced automatic teller machines (ATMs).

“We need to make sure that we reduce the interest rate on loans to a level that increases the demand for money, especially for investment by the commercial sector,” says Dr. Rogers. “However, we must keep the balance so as not to increase the volume of money in the economy to an unsustainably high level and fan inflation.”

One of the key elements of the Bank of Sierra Leone Act is its guarantee of the independence and autonomy of the Central Bank. “This has enabled the bank to pursue the objectives of monetary policy in an environment that enables it to optimize the achievement of its goals,” states the Governor.

Dr. Rogers backs the government’s moves to open up the economy to market forces, which he sees as the only path to growth. “Within the financial sector liberalization will encourage the banks and other financial institutions to become more imaginative and ambitious, diversify their products and services, and extend their geographical reach. It will also mean opening our doors to other participants in the sector.”

State-run firms line up for privatization
The process of privatizing state-owned enterprises is under way, but still in its early stages, as the National Commission for Privatization (NCP) assesses the assets of each of the public companies to be sold off, with the help of foreign consultants. This will be completed by 2005, when foreign and local investors will be invited to take part in the bidding.

ABDUL RAHMAN TURAY Commissioner at the National Commission for Privatization

More than 20 state-run enterprises are lined up for sale, including some of Sierra Leone’s largest parastatals. They include the Sierra Leone Telecommunication Company (SierraTel), the National Power Authority (NPA), Sierra National Airlines (SNA), the Sierra Leone Ports Authority (SLPA), Sierra Leone Roads Authority (SLRA), Sierra Leone Housing Corporation (SALHOC), and the State Lottery.

The government wants to replace dependence on subsidies with improved productivity and profitability. It believes the companies can make a more effective contribution to the country’s economic development in private hands, with investors contributing new capital, know-how, and technology.

Abdul Rahman Turay, who heads the NCP, says the major challenge is to change the way the parastatals do business. “Privatization involves the companies restructuring themselves so that they become more efficient and work with whoever comes along and buys them. All of these companies have a lot of potential and, with a change of mentality, could make money.”

KADI SESAY Minister of Trade and Industry

The government has been working on a new Investment Code to encourage investors to come to Sierra Leone.
“We are trying to make this country an attractive destination for investors from all over the world,” declares Minister of Trade and Industry Kadi Sesay. “We are now firmly on the path of liberalization, and the Investment Code will guarantee the safety of any investment from nationalization.”

The government wants to encourage investment across Sierra Leone. “We want investors to look outside the capital and invest in other parts of the country,” the Minister says.
A special Mineral Investment Code has been created to attract foreign investors to the mining sector. Minister of Mineral Resources Alhaji M.S. Deen says the country’s mineral reserves are largely unexplored. “The terms we provide are attractive enough to encourage American companies.”