There has been much talk about a boom in Sierra Leone's economy. Between 2011 and 2012 the GDP grew by 15% - from US$ 2.92 billion to $ 3.7 Billion. It is projected to rise by 6% to US$ 3.9 Billion, and US$ 4.7 Billion (13%) if you include the iron ore sector. So Politico spoke to the Finance Minister, Dr Kelfala Marrah on whether this has impacted the ordinary Sierra Leone. First he gave us the GDP forecast for 2013?
Kelfala Marah – There are ambitious numbers being put out by several institutions. Basically what we have decided to do as a government is to be as modest as possible and to say it is to grow between 13, 14 and 15 percent. We know that numbers from other quarters go higher above that.
Politico - Does that include or discount revenues expected from iron ore?
Kelfala Marah – If you discount iron ore that will be around 6 percent which is very strong and, in fact, I’m sure you might have heard that we are the highest-growing economy in the sub-region.
Politico – These, like you say, are just figures. The forecast for last year’s growth was put at 51 percent and that never materialized. It ended at 15 percent. What would you give as reason for that?
Kelfala Marah – You might have heard that iron ore exports happen to be the biggest stake of the economy and those numbers were announced simply because of what we anticipated. But there were constraints particularly on the side of African Minerals. We forecasted 15 - 18 million metric tonnes. Unfortunately export on that side was less than a million tonnes. Again prices dropped. We anticipated prices to be between 120 or 130 dollars per metric tonne but then it dropped to about 55 to 60 dollars. And so we have learnt our lessons. But what we anticipate this time round is that they will ramp up production and because they have tried as much as possible to fix the rails and this includes London Mining that export will be higher. So we have decided to learn our lesson and say this time that our GDP will be between 13 to 15 percent and we wish to peg it at 13%.
Politico – Now, impressive growth figures you say these are. The ordinary man on the street will say that they don’t seem to be feeling this. They don’t feel that there is a trickle-down effect of this on them. What would you say is responsible for that?
Kelfala Marah – Well I would say this: that the growth of an economy does not boil down to for example growing cucumbers that you nurse them today and you end up harvesting them tomorrow or the following week no. Growing economy is like a cash crop it takes time and you have to work on it. The good news here that all of us should celebrate is that our GDP is growing, inflation has dropped, our exchange rate has stabilised. And so the macroeconomic fundamentals are far better than many economies in the sub-region. So it meant that under the Agenda for Prosperity what government will continue to do is create an enabling environment such that many sectors within the economy would thrive. The foreign direct investment is on the increase. It meant that more jobs will be created. We know that we have problems with unemployment. But the more our local content policy works and the more we bring in many more companies the stronger the possibility of job creation and we also are thinking that under agriculture that many of the agribusiness centres that have been established including farmer based organizations and financial services that we have established will go a long way to help Sierra Leoneans to take advantage of those opportunities and move on with their lives. So I would say that it will take time but government is working very, very hard to ensure that it trickles down to the citizens but it will take time I must say and I don’t want to be evasive about it and I don’t want to pretend about it. But the truth is the fact that the economic fundamentals are there and they are strong meant that the opportunities for Sierra Leone to be transformed is greater far more greater than some economies in the sub region and this is something worth celebrating by each and every Sierra Leonean
Politico - And how long do you reckon it'll take before there is this trickle down effect?
Kelfala Marah – It depends on several parameters. One, there is the external economic environment. We are a small state fragile and so it depends on the economic activities around the world that may impact for example prices of commodities or prices for example of iron ore that we may export for example to China and elsewhere. But it also depends on the policies that we will put in place. But the fundamentals are good as I said. We are going for inclusive growth. We want to diversify our economy, we want to strengthen our position in agriculture, we want to ensure that we begin to export our fisheries products, we want to ensure that tourism booms, so many of these opportunities are there. The truth is the level at which Sierra Leoneans will warm up to the idea and take advantage of the opportunities created by government. Those elements will then help us to transform the economy. I'll wish to allude to two things: you have agribusiness centres established. You have the fibre optics that have landed. To what extent that Sierra Leoneans will take advantage of this will also be the extent to which we will be able to trickle down the effect of the economic boom within the economy. So it will take time. But I would say that Sierra Leoneans really need to look beyond the current low borders within which they operate – think out of the box, collaborate more with others, form partnership. For example we want to strengthen corporatives across the country. We want to ensure that we work with farmer-based organizations. These groups and these bodies really need to work with government. Take advantage of the financial services organizations that we have set up – the community banks that we have established so that people will have access to credit should be leveraged. That is why I strongly believe that this economy will grow. And I have not made mention of energy and roads which we think we are doing well in. and so I strongly believe that we are in for a boom. I would not say here and right now but all of us have to work, government and citizenry including the private sector to thrive.
Politico - And the fact, as you say, that the trickle down effect will not happen overnight you don’t think that the optimism of the public should be mellowed somewhat. I ask because the fact that there seem to be figures that are being bandied about raises some expectations amongst the people of Sierra Leone.
Kelfala Marah – I have said this before and I will say it again that when we say Agenda for Prosperity we are not saying that mannas will fall again. If mannas fell they fell in biblical times. Mannas will not fall down any more. Prosperity means to work hard. We have to perspire, we have to think out of the box and do things differently. So it is our change of behavior to economic activities that will underscore the level at which we will be able to transform our economy. And so in terms of youth unemployment which people talk about everyday, it is a global issue and we are conscious of it as a country. And so what has Mr President done? He has established a special ministry to be responsible for that including a Youth Commission. Now what we are doing is putting in place projects and programmes to be able to address those issues. We have put in place a local content policy mindful of the fact that skills levels in this country are low so what do we do? We need to go down the path to ensure that we build the skills of our people. So that they will be marketable within the jobs market. So it's really about each and every one taking advantage of what has been put forward now. But there is something here to celebrate. I have said this once and I will this here again: the fact that our economy is growing, the fact that there is infrastructural development which is the foundation for economic uplift, the fact that social inclusion is now a part of the Agenda for Prosperity that meant we have maintained it. The fact that opportunities are open for citizens to participate in the economy, the fact that there is opportunity for individuals to access credit meant that government is mindful of everything and is on the right path in terms of addressing the economic challenges of our generation. And I would say this: that we would grow and continue to grow but the fact that it will happen right now here and now may not be the case. But let us come together and work. Our offices are open, we have the Non-state Actors Unit here in the Ministry of Finance. We have been engaging them. It is an inclusive government. Let us all work together and find ways and means to address the challenges that we are facing. But let us not discount the fact that we are doing in the economy far above others in the sub-region. Let us celebrate that but also mindful that we have a lot more to do. The fundamentals are there. Now what we have done is we have brought down interest rate from about 20% from ninety one days treasury bills to five percent or less than five percent. What does that mean? It meant that the banks should begin to intermediate, it meant that they should begin to do business with the private sector with small businesses. These rates should be reflected. And I have the support of the Governor of the Bank of Sierra Leone in this particular regard. So we want to continue to ensure that we keep interest rates at a very low level so that we would not continue as a government to crowd out the private sector. It is the most prudent way to go about it and that is what we want to underscore here. So in short I would say Sierra Leone under the leadership of President Koroma wants to go down the path of financial inclusion or economic inclusion ensuring that each and everyone becomes a participant but doing things differently. We have to be robust, we have to be strong and we have to be innovative. So I would say inclusive innovation growth is what we require in the country but I am certain and positive that we will grow.
Politico - One last question I would like to ask you because you mentioned the issue of a drop in the interest rate at the treasury bearer bond front. How about the banks? People say they have prohibitive high interest rates of over 20%.
Kelfala Marah – You know behavior or human behavior is one thing that normally holds for some time including institutions. But I strongly believe that will change. If you speak, for example, to individuals – those in the private sector – they will tell you that it is beginning to change. I had a meeting in my office a few days ago where people the ordinary men in the streets who are saying that government is doing well, now banks talking to us and we think that if it continues this way interest rates will go down and we will thrive. Now the promise I made as I have had conversations and support from the Governor of the Bank is that to continue to keep interest rate low we have to go down the path of revenue mobilization and ensure that fiscal prudent prevails. Fiscal discipline is the cornerstone of the administration of President Koroma. He has been calling for discipline. So I strongly believe that if we continue to go down this path of fiscal discipline ensuring that our appetite for borrowing does not crowd out the private sector the behavior of banks will change.
Politico – But I understand that government borrowing has dropped but the interest rates are pretty high amongst the banks – anywhere between 20 and 26 percent.
Kelfala Marah – We have adopted a zero borrowing policy between January and now and people out there didn’t believe that this government could do that. And between that period and now we have also not benefited from donor support directly. And so it meant that we are doing the right thing. We are on the right path. We are cleaning or sanitizing the economy and that is why we are certain that the behaviour of the banks will change and it will change not immediately but will change in the future because they too are under pressure.
Politico - When you say “the future” are we talking about months or years for them to particularly reduce their interest rate?
Kelfala Marah – I have told you that the business of economic growth is one that looks like growing cash crops. It doesn’t happen here and now. But I can tell you that if you do a snap shot survey across the banks you will know that behaviour of some of these banks is beginning into change favourably for small businesses. And it is the responsibility of government to continue to keep this policy as it is such that small businesses will grow and government cannot do it alone. It has to do with ensuring that we build the capacity and create an enabling environment for small businesses to thrive. That is what we are doing.
Politico - thank you very much Mr Minister
Kelfala Marah – thank you
Transcribed by Tilly Barrie
