DR. JD ROGERS Governor, Bank of Sierra Leone

Summit Communications: Firstly, thank you very much Dr. JD Rogers for receiving us today. I'd like to start off by asking a general question on the economic outlook here in Sierra Leone. There was real G.D.P. growth of 7:4% for 2004 and, since the end of the conflict, Sierra Leone's economy is showing really signs of promise. You're former Deputy Minister of Finance and as well as obviously being the present Governor of the Central Bank. What is your outlook for the economic performance in the short and medium term here in Sierra Leone?

Dr. JD Rogers: I think the prospects for growth are very good. On the macro side, the growth variables that you have referred to are looking up very bright indeed. 7.4% growth last year and a projected 7.8% growth in the next year or two is really a very encouraging development. In fact, the projected growth over the next three to four years is on average 7%, which seems a reasonable expectation. Our challenge now is to distribute the benefits of this growth through the creation of jobs and investment in education and health as well as improving housing and access to basic facilities such as safe drinking water, electricity and transport.

This is in tune with one of the key assumptions of growth theory, that given increasing labor demand, increase in wages, increase in productivity and decelerating rate of price increases, economic growth will general benefits and distribute them equitably. However, the unseen hand which is expected to effect this is not always visible. There is therefore need for intervention through fiscal policies such as progressive taxation, lower tariffs, and monetary policies such as exchange rate stabilization and low inflation to ensure equitable spread of the benefits of growth. On the whole, the prospects for growth and development are good.

Summit Communications: So do you feel that in the medium term sustainable development will become a real prospect?

Dr JD Rogers: Current fiscal and monetary policies point in this direction. In the medium term, our challenge in the financial sector for example, will be to ensure that we diversify and deepen the sector. Firstly, we need more institutions, with diversified products that will support private sector development. We presently have seven Commercial Banks with thirty-one branches, across the country. Deepening the financial sector will contribute to poverty alleviation. We are also putting measures in place to increase the minimum capital of financial institutions to enable them respond more positively to demand for investment capital by the private sector. In addition to this we are facilitating the establishment of Community Banks in high economic potential communities to mobilize idle savings and enhance the growth of those areas.

Summit Communications: In the shorter term, of course donor aid remains a central component of the Sierra Leone budget. Indeed, at the Sierra Leone National Debt Conference, you said and I quote: "A number of factors that have impacted negatively on the debt burden of many low income countries range from inadequate and untimely debt relief by creditors to exogenous shocks and weak governance on the part of debtors." Could you please share with our readers what you feel it is that Sierra Leone needs from the international community in order to bring its debts to a sustainable level?

Dr. JD Rogers: Well the G8 has laid the foundation for this. What we need is total debt cancellation. Internationally, emphasis is placed only on external debt, but the domestic debt component has been equally burdensome to the country. Debt Service on domestic debt accounts for 25% of total domestic revenue. Sierra Leone's total international debt to multilateral and bilateral institutions is $1.7 billion. Incidentally, this is equivalent to the budget for the country's approved Poverty Reduction Strategy Programme (PRSP). Debt cancellation will free resources for investment in direct Poverty Reduction Programs.

Having said that, I believe debt cancellation is not only an economic act on the part of the developed word, it is also a moral act because it would contribute to global development in a manner that is equitable. Cancellation of debt does not only make economic sense but it also makes moral sense, as well. What the developed world also needs to do is to open opportunities to us, to give us access to markets and the opportunity to add value to the primary commodities produced in countries like ours. At the moment, we produce cocoa, and export the raw beans at very low prices and then import a variety of chocolate products at a much higher cost. We must enrich the economy by creating opportunities for adding value to our primary commodities so that we will be able to maximize returns to farmers and other producers in the economy.

Summit Communications: Returning to the issue of debt. It is essential for Sierra Leone to communicate to the international community the measures that she is taking to improve governance here. Dr. Rogers, please share with our readers your role in this general improvement in governance, transparency and accountability and also the measures taking place throughout Sierra Leonean society. Can they be confident that donor money will be properly utilized?

Dr. JD Rogers: I did say at the last conference, which you quoted, that there are two elements involved in the management of donor funds: One element deals with internal management issues such as governance, corruption, transparency in addition to meeting quantitative targets for programs. The other element deals with the obligation of the international community to fully understand our situation and be able to respond more positively and efficiently.

On the domestic front, we should be judged on the efforts being made to address good governance and issues relating to corruption and efficient management of resources. The available evidence shows that significant strides have been made. Free and fair democratic elections were conducted in 2002. The process of decentralization, which commenced about three years ago, is far advanced, with the creation of decentralized institutions such as district and town councils, to spread the management of the economy across the country and bring it closer to the people. Elections have been held for all these councils with full adherence to democratic principles and practices. For instance, here in the capital city, the opposition won the City Council Elections one of the clearest indications of government's commitment to democracy and good governance.

Government also recognizes that transparent and accountable use of resources is a key requirement for strengthening Public Financial Management. A new Government Budgeting and Accountability Act was enacted by Parliament in February 2005. To support private sector development, Government in consultation with all stakeholders, has developed a transparent and competitive Investment Code based on international best practices. The Code was promulgated into law in 2004. A National Commission for Privatization (NCP) has been established to implement Government's divestiture program, aimed at promoting operational efficiency of public enterprises with a view to making them financially and economically viable, better service providers and less dependent on Government subsidies.

The Anti-Corruption Commission is also a clear evidence of the government's commitment to addressing corruption. Public officials like us have to tread very cautiously because colleagues of ours in similar positions have been brought to book. I am sure you are familiar with the case of former Senior Government Ministers and many other public officials that have been brought to book. The Anti-Corruption Commission's independence is guaranteed by the fact that the government solicited technical assistance from the UK and the US to ensure that independent people serve on the commission.

The Anti-Corruption Commission (ACC) enforcement capacity has also been strengthened. The education and prevention wings of the ACC have carried out extensive public awareness of the implications of corrupt practices.

In the economic sphere transparency is among other things, a function of the way the financial sector works. There are rules and regulations such as the Bank of Sierra Leone Act, the Banking Act and the Financial Services Act, which regulate financial institutions and make sure that their activities are carried out in a transparent and professional manner. Transgressors are penalized. For instance, I recently cancelled the licenses of six foreign exchange bureaus that had fallen foul of these regulations. Accountability is a central plank in addressing corruption. The Banking Supervision Department of the Central Bank ensures that all financial institutions are compliant with the rules and regulations.

The Government has also put in place participatory budget process as well as a Public Expenditure Tracking Survey (PETS) all geared towards transparency and accountability. There is a lot more to be done, but certainly, significant strides have been made and these should be recognized and rewarded by our international development partners.

Summit Communications: In your role as Governor you play the role of supervisor and regulator of the financial sector. We know that you have introduced many reforms in your time here such as increasing the cash reserve ratio or developing the Anti-Money Laundering Act. Dr Rogers, how would you characterize the state of the financial sector in your country and would you reassure our readers that is it stable?

Dr. JD Rogers: The Financial Sector has over the last two years remained relatively stable in terms of exchange rate movement and inflation. We also have an attractive investment environment, a competitive market situation close to the textbook version of pure competition, where entry and exit is free and the regulations investor friendly. The Central Bank's role as regulator and supervisor is not only to ensure that the institutions play the game by the rules, but also to ensure that they are given the enabling environment to grow. The focus of policy now is on deepening and enriching the financial sector. The reason for increasing the cash reserve ratio of the commercial banks from 10% to 12% is to control the excess liquidity in the banking system, given the direct multiplier relationship between reserves and money supply. The Central Bank is also playing a lead role in wide ranging legal reforms. The Anti-Money Laundering Act, the Companies Act, Bankruptcy Act and a Securities Bill are being reviewed in addition to the Banking Acts. These are all geared towards creating the legal and regulatory environment for financial sector growth.

Summit Communications: One of the Central Bank's main monetary policy aims is to cut inflation to low single digits. However, this year it continues to be in double digits, registering 11.4% on the Freetown Consumer Price Index in June. Dr. Rogers, how do you plan to bring inflation under control?

Dr. JD Rogers: Increase in the general level of prices is one of the key challenges facing the economy. Our objective is to bring inflation down to single digits. This can be done through increased production of consumables and exports, competitive tariffs and improved exchange rates.

Governments Food Security and Trade Policies are geared towards increasing production and supply of food and export commodities.

As far as the exchange rate is concerned, we have an auction system where we offer US$1 million weekly on public auction. The Foreign Exchange Auction is also one of the monetary policy instruments used by the Bank to mop up excess liquidity in the market.

The two main objectives of monetary policy low inflation and stable exchange rate are being pursued vigorously and that is why over the last two years or so, the exchange rate has stabilized and we have been able to bring inflation under control.

Summit Communications: Dr. Rogers, as you can see from the layout of our reports, we're also interested not just in interviewing the key institutions. We're also interested in speaking to the personalities who are spearheading the changes in any country. You have studied in the UK and the US and have gained many years of experience with the UN and other development organizations as well as being Deputy Minister for two different Ministries here in Sierra Leone. Please share with the readers of the New York Times how this wealth of experience has influenced the way you carry out your present job?

DR. JD Rogers: The experience I have gained from previous jobs has certainly prepared me for this and future assignments. What one learns from textbooks can only provide a framework that is enriched and deepened by the knowledge and experience you gain through life. I started my career as a secondary school teacher after my first Degree in Economics and a Diploma in Education from Fourah Bay College. I later went to Newcastle University, did a masters degree and came back and lectured in the University for four years. In fact, I began my work in the area of money and banking, when I lectured these subjects at Fourah Bay College. Thereafter, I worked for a multitude of organizations. I worked as an Economist at the Commonwealth Secretariat in London and the International Labour Organization (ILO) in Geneva; I moved on to the ILO JASPA Programme in Ethiopia, and then worked in a Canadian Organization called the Canadian University Service Overseas (CUSO). During my work with CUSO, I did a diploma course in NGO Management at St. Francis Xavier University in Canada, and later a Ph.D in Development Studies in Washington University USA. All of these have provided me with the kind of background and experience to be able to meet the many challenges faced in managing an emerging economy, such as ours. My background is essentially economics and development. I have several publications in the ILO, "Labour Review". I have also written economics books and have two new books coming out soon.

Summit Communications: You're referring to your book on Rural Development in Sierra Leone?

Dr. JD Rogers: Yes. "Rural Development in Sierra Leone" is not only about the lessons learned, but also about the missed opportunities over several decades of rural development experience in Sierra Leone There is also a book coming out at the end of November on "Anarchy in Sierra Leone", which deals with some of the elements of the civil war and anarchy in the country, which I am sure will make interesting reading. This background has prepared me for this job.

Summit Communications: Dr. Rogers, you have been in your present post since April 2003. Which of your reforms so far would you highlight as the most important?

Dr. JD Rogers: Well, the systemic and structural reforms that I have introduced in the Central Bank have given me a lot of satisfaction. Since my arrival here, I have created a number of new units, including a Micro-Finance Unit, a Private Sector Unit and a Legal Unit. I have also been instrumental in facilitating the development of the Sierra Leone Stock Exchange, which should be up and running by the end of the year. That will give us the economic space for managing long-term investment instruments.

In terms of money market interventions we have introduced a lot of reforms. Presently the Central Bank's key money market intervention mechanism, given the weak and underdeveloped nature of the secondary market, remains the open market type of operations conducted through the primary auction of 91-day treasury bills. This mechanism is complemented by a rediscount facility where bank and non-bank participants have free access to the Central Bank to transact their liquidity requirements on an outright basis at prices pre-determined by the Central Bank. The Bank is currently working on developing and introducing new instruments of various maturity terms.

The Bank has also taken the lead to introduce reforms relating to open market operations. For example, we have reformed the payments system and streamlined the clearance of all financial transactions. On the domestic front, we have also introduced SWIFT (the Society for Worldwide Inter-bank Financial Telecommunication).

We have introduced some legal reforms to support security trading as well as introducing re-purchase and master repurchase agreements. We have initiated reforms that will promote and encourage competition in the banking system, both through the diversification of the institutions both in terms of geographical location and products offered.

We are presently working on reforms to dematerialize the treasury bearer bonds and introduce new securities with various maturity terms. We are also putting a book entry systems project in place, as well as pushing reforms for the introduction of Lombard facility that will support the Bank of Sierra Leone in its role as lender of last resort. Progress in these areas has given me a lot of satisfaction.

Summit Communications: I am getting towards the end of my interview. I would like to introduce with the words of Nelson Mandela; he said and I quote "After climbing a great hill, one only finds that there are many more hills to climb." Sierra Leone has traveled a long way since the peace was reintroduced into the country a few years ago. What are your hopes and aspirations for the country in the coming years?

Dr JD Rogers: We must consolidate the peace and to do that we must continue opening up the economy and creating choices for the people. We must develop the Investment Code and make it operational, as well as develop complementary policies that will encourage investors, including, for instance, harmonization of tariffs within the sub region, to facilitate the flow of goods and services across boundaries. We must ensure that we achieve monetary union through the West African Monetary Zone so that all of the transaction costs that inhibit the free flow of trade in the sub-region will be eliminated. Once these measures are in place, I believe that the prospects for growth will be enhanced. We have huge human and natural resources. In addition, to diamonds, rutile and bauxite, plans are now well advanced for the exploration of iron ore in the north and there is also the prospect of crude oil exploration. If all of these materialize, then the sky will be the limit. We could become the Switzerland of West Africa!

There are also huge prospects for tourism. The climate, the topography, the landscape, the biodiversity, the beaches, give us enormous opportunities for growth of tourism and eco-tourism. We are truly blessed with an abundance of opportunities, the best country anyone could wish for. These advantages will propel us into the 21st century. The prospects are extremely good.

Summit Communications: Dr. Rogers before finishing the interview, I would like to give you the opportunity to send a final direct message of friendship or of invitation to the readers of the New York Times. Please go ahead.

Dr. JD Rogers: Thank you very much. I think the message is simple. The publicity in the international media has been very negative and that is perhaps due to lack of information. I have always told people out there that they should come and see for themselves. This is a country that is on the verge of breaking into the 21st Century. Everything we need to take us there is here. So I would encourage investors to come. Foreign Direct Investment (FDI) is needed to complement domestic efforts to lift the economy out of the doldrums and move forward. The international community should be objective in its assessment of policies and efforts to encourage investors come to Sierra Leone.