By Kemo Cham
In Kissy, in the east of Freetown, some women are defying the odds with an ambitious business. It is hardly high tech yet; they only process and package agricultural products (juice, jam, yoghurt, and pepper sauce) which are sold in the local market. But the Leleima Women Development Association (LEWODA), a community-based organisation, aims to soon transform this business into an empire.
"We are promoting Sierra Leone," says Mariatu Jusu, the association's leader and managing director of the business. Amidst difficulty in acquiring white-collar job, Sierra Leoneans have been moving in droves into entrepreneurship.
LEWODA has 20 employees - all young men and women. However, these women's dream, like all upcoming businesses, faces serious obstacles. When few months ago they approached the Sierra Leone Commercial Bank (SLCB), they were told it had stopped giving out loans.
The civil war dealt a serious blow to the country's infrastructure but it also left it virgin in terms of business and other opportunities. The infrastructure, although slowly picking up, is in massive ruins. It will therefore take more than just ideas to exploit these opportunities.
But with a fast growing population, competition for the meagre resources is terribly tense. Therefore, Sierra Leone needs new businesses to provide employment and boost the easily exploitable sectors.
The problem is capital.
In the west end of the city, Gladys England has been going through the same struggle. Her juice bar and restaurant situated on the way to Murray Town has been in existence since 2011.
"Sometimes I am discouraged...In most of the powerful economies in the world, the backbone is SMEs. So they help them. But here that is not the case," she laments.
She conceived the idea while working for an NGO in the early days of post-war Sierra Leone. Her job was such that she travelled widely across the country and so was struck by the vast endowment in the form of fruits, like mangoes and oranges, and the wastage they were exposed to.
Those were the days it was extremely hard to think entrepreneurial, she recalls. But it obviously did not deter her from starting off with $ 4,000 she'd saved. Today, England`s business has grown to over $50, 000, she says. 13 people, including two casual workers, are on her payroll. She reinvests her earnings into the business in anticipation that it will get bigger, she says.
But erratic electricity supply is proving a major hindrance. She spends Le 135, 000 daily on fuel for the generator. And despite the epileptic power supply from the National Power Authority (NPA) and the irregular water supply from Guma, the charges are unbelievably exorbitant when the bills come, anyway. For the LEWODA women in Kissy, the only option has been to buy water from porters as the taps are not running at all.
At the time of this interview last year, Jusu could not remember the
last time they had power supply from NPA.
Uncertain future
Both women have been nursing the idea of taking a loan to expand their businesses but are concerned by high interest rates. Commercial banks lending rates are currently between 22 and 28 percent, with prime lending rates at 17 and 18 per cent. Both the Bank of Sierra Leone (BSL) and the Sierra Leone Chamber of Commerce and Agriculture (SLCCA) have queried this trend although they seem helpless to do anything about it.
"Access of finance has been a significant barrier to the growth of SMEs in the country," Gladys Strasser-King, President of the Chamber, told a recent forum which brought stakeholders together to discuss the telling effect of lending rates on the development of entrepreneurship.
The Economist Intelligence Unit`s Country Report for 2014 is hardly encouraging either. It notes that owing to a looser monetary policy and ongoing fiscal consolidation measures by the BSL, interest rates are likely to fall.
But, it adds, "Commercial lending rates are expected to remain high owing to structural constraints, such as a lack of credit information on potential borrowers." The BSL's Credit Reference Bureau idea meant to discourage non-loan repayment has clearly faltered.
Over 90 percent of the assets of Sierra Leone`s financial sector is in the banking segment, and, interestingly, according to a recent Reuters report, credit to the private sector has been reducing rather than increasing [7.3% in 2012, down from 22.6% in 2011].
Aisatou Jalloh Abadjie, managing director of First International Bank - Sierra Leone argues at the SLCCA forum that between 15% and 20% of its loans have gone bad thanks to a culture of repayment apathy. BSL figures show 18% nonperforming loans in all commercial banks, which officials say is undermining their efficiency.
But there have been reports of some customers getting multiple loans from multiple banks, suggesting some heads of banking institutions are in connivance with business people of questionable characters. The infamous Kaba Kallu versus SLCB is a typical example.
Meanwhile, very few people lucky enough to be considered for loans meet heavy security demands or advance payment guarantees.
Consequently, genuine SMEs in need of capital, like Gladys England and the LEWODA women, have uncertain future.
The puzzle
Storage, packaging, and preservation are three of the most important reasons why the LEWODA women desperately want loan. Unlike Gladys [who struggles to meet a whopping monthly rent of over Le 20 million], they don't pay rent as their business is housed on a family property of their members.
But the problem with that, besides legal uncertainties, is that the building wasn't done for the 'factory'. Part of the loan they seek is intended to be used to extend it to accommodate all their equipment. They also need cartons for packaging and storage, so that they can be able to produce to full capacity.
In addition to her neck-breaking utility bills, England bemoans the burden of "endless" tax payment - from corporate tax, to charges by the tourism authority and the Freetown City Council.
Critics say Sierra Leone`s tax regime is designed to frustrate indigenous businesses.
Last November, the Concord Times newspaper quoted the national youth coordinator of the Sierra Leone Labour Congress as saying that local businesses were paying all the taxes while importers (foreign investors), were exempted in the name of incentives.
Emmanuel Delwyl Pratt says the implication is that importers make huge profits by selling at competitive prices.
"Local [businesses] pay a huge amount of taxes to government as well as contribute immensely to addressing the perennial youth unemployment in the country, unlike importers who only own warehouses in the country and therefore employ very few workers," he says.
"Indigenous businesses are good because the capital stays in the country. But big businesses repatriate their earnings," adds England.
"My intention is not to remain small, but in this circumstance it will be impossible to grow." he says.
But in spite of these narratives, these women`s stories some ways represent good news about the promises Sierra Leone holds for its people, only if the right political decisions are made.
Economic indicators suggest there has been gradual progress in growth. Last year`s 13.3% GDP growth is expected to improve upward, according to various predictions.
Endowed with a vast mineral wealth and a tropical climate, the country`s potential economic development is good. Why all this is not impacting on upcoming and aspiring entrepreneurs remains the BIG QUESTION to be answered, however.
Annually, about 6,000 youth graduate from tertiary institutions in this country, and with the meagre slots for employment, there is a serious need to rethink job creation.
Despite huge promises in the mining sector, which has been described as the main driver of the country`s economic growth, very dismal progress has been made.
The government`s local content policy is still hopelessly unable to take any shape, despite endless discussions around its implementation. A vast majority of those involved in small scale selling of goods and in the provision of services barely earn enough to sustain their own lives, let alone their dependants'. This is largely because, with lack of proper skills and nonexistence of the right infrastructure, few know how to build their businesses into profitable ventures.
The Graduate Employment Enhancement Programme (GEEP) by the African Foundation for Development Sierra Leone (AFFORD- SL) and Volunteer Services Overseas (VSO) could be a solution to this. Through the GEEP project, youths get to develop their skills by
volunteering and training opportunities.
AFFORD is also affiliated with the Organisation of Women's Network for Entrepreneurs (OWNERS), which is a partnership initiative between it and the Cherie Blair Foundation for Women.
Women make up more than half of Sierra Leone`s population yet a vast majority of them continuing to face serious economic challenges. Therefore, OWNERS provides a platform and allows them coordinate their efforts and exchange ideas with the goal of assisting one another in seeking, among other things, financial services and advocates for policies that favour the interest of women in business.
Both Jusu and England are part of OWNERS, and they both have also been beneficiaries of AFFORDS` annual Business Bomber competition. The government`s development blue print, the 'Agenda for Prosperity', identifies the private sector as key partner. But the apparent weakness of the private sector means it can hardly serve its purpose.
Jusu and her colleagues partly blame partisan politics gimmicks for the plight of young businesses like theirs. She says she is "tired of attending workshops with no action from government". The government, she says, is not using the proper institutions which know the right people to empower, and so when opportunities come for agribusiness training the politicians involve Abacha women or bike riders.
"If we remove politics from issues, the country will develop. Otherwise, forget it," she stresses.
(C) Politico 17/02/14
