“Reverse the Curse: Maximizing the Potential of Resource Driven Economies” by Mckinsey is a very good reference document for evaluating how we are doing in realizing our 2035 Vision of Sierra Leone as a middle-income country. It not only confirms that we are on the right path, but gives us hope of better days to come. At the same time, it points to the obstacles to be overcome, the errors to avoid, and also the measures to take if we are to remain and move rapidly along the chosen path.
I hope that once the Citizens Committee begins its work, the contents of this article could form the basis for a structured approach for Government, civil society, donors, and the people to mold policies and programmes as we proceed to our goal.
The path to development is a labyrinth with cul de sacs and false openings all along the way; but with the benefits of a bird’s eye view, it is easier to navigate. Being outside the day-to-day demands of running the Government provides me with an objective view of programs and policies and that bird’s-eye view. Hard pressed public officials rushing from one long meeting to the next and resolving daily problems that arise from weak systems, hardly have time for deep reflection, or to rise above the melee to see the big picture.
In future issues I will bring out the evidence that we are on our chosen path and at the same time review private and public sector policies and programs to understand whether or not they will keep us on the straight and narrow path and, where necessary, how we may correct them. To do so we need to go beyond broad brush strokes to find out precisely where a decision is made, who is responsible and what can be done. Let me illustrate by using GDP growth.
The achievement of two and anticipated three years of double-digit growth is one of the necessary conditions for being on the right path. Although this is primarily due to the iron ore production coming on stream, the Ministry of Finance and the Bank of Sierra Leone must be commended for the success in maintaining some degree of stability in the macro economy. Excessive deficit financing and or inability to keep the foreign exchange rate stable could easily undermine the growth.
On the other hand, as designed and as widely interpreted, the local content policy may run counter to our longer term goal of building a competitive economy. I fear we may be using 1970 arms to fight a 21st century battle. In the current global economy, competitiveness is key to sustaining growth. We should focus more on capturing links in the supply and value chains of our raw materials than getting a few jobs within our country. Our labour and other laws – even though sometimes old – when appropriately applied can deal largely with local content issues. A number of recently concluded studies warn of the dangers of the old-style local content policies. Even more revealing are our own experiences all over Africa of what happened. Zairaization in the then Zaire is a classic case, but early nationalizations in the Latin American countries are also worth examining. We should now go beyond getting a few posts in the management of the company, or supplying the few inputs that can be produced here, and to identify those links – whether in or outside the country – that could be captured. Once identified we must launch special long and short-term measures to capture them. Some obvious areas are, short-term finance, travel arrangements, spare parts supply, management and training services etc. Given the difficulties for our private sector to supply such goods and services, the public sector should intervene and support private sector initiatives aimed at preparing for the capture of specific links in the value chain.
In a small economy such as ours, unless we get massive and constant flow of natural resource revenues as in the oil states, we must focus on competitiveness even as we enjoy the comparative advantages offered by our natural resources, in order to sustain growth.
It is in areas like this that we need dynamic Think Tanks for objective advice based on empirical research. The Ministry of Finance, and of Trade the Chamber of Commerce, the Central Bank etc should engage others so we can design an appropriate “local content” policy. In other issues I will elaborate on the challenges we face in the areas of competitiveness and diversification in a small economy.