Sierra leone diagnostic trade integration study table of contents

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Adding Value through Trade

for Poverty Reduction
Diagnostic Trade Integration Study

November, 2006





1.Introduction and Socio-Economic Background 1

Introduction 1

Socio-Economic Background 2

Recent Efforts at Macroeconomic Reform 3

Results to Date 3

Macroeconomic Constraints on Investment, Trade, and Growth 11

2.Trade & Poverty in Sierra Leone 15

Introduction 15

Poverty in Sierra Leone 15

Impact of Trade on the Poor 17

Direct Effects and Multipliers 18

Indirect Effects 24

Impact of Trade on Risk and Uncertainty Faced by the Poor 26

Conclusion 27

3.Agriculture, Agro-Industry and Forestry 28

Introduction 28

agricultural production, Processing, and marketing 28

Potential for expanded production and exports 36

Choices to Promote Trade, Growth, and Poverty Reduction 44

Constraints inhibiting achievement of potential 45

Priority actions 48

4.Fisheries 54

Current Situation 54

Potential for Improvement and Its Constraints 56

Short-term Actions 60

5.Mining 62

Introduction 62

Industrial large-scale mining 63

Artisanal mining 64

Competition for resources 65

A Case for transparency 67

Potential for value-added 68


Tourism and Development 69

The Potential in Sierra Leone 70

Options 72

Challenges 73

Priorities for Moving Forward 73

Implementation 75

6.Customs and Trade Facilitation 76

Current Situation 76

Priorities 77

Other key issues 78

7.Infrastructure and Public Services 85

Transport 85

Electrical Power 91

Telecommunications 93

8.Financial Services 95

Brief Review of Existing Situation 95

Financial Constraints to Expanded Trade and Growth 98

Options for Overcoming Financial Constraints 99

Vision for the Future 103

9.Trade Policy and Institutions 104

Introduction 104

Capacity to Define, Negotiate and Implement Trade Policy Objectives 104

Sierra Leone and Multilateral Trade Negotiations 106

Market Access Issues: Exports to the EU and the US 108

Regional Integration through ECOWAS 110

Export Promotion and Development in Sierra Leone. 111

Developing Standards Management Capacity to Support Export Diversification 112

List of Tables

List of Boxes

List of Figures


Currency unit =


US$1.00 =

Le2,957 (May 31, 2006)



Agreement on Customs Valuation (WTO)


African Development Bank


African Growth and Opportunity Act


Bank of Sierra Leone


Customs and Excise Department (NRA)


Common External Tariff


Credit Guarantee Fund


Department for International Development (United Kingdom)


Diagnostic Trade Integration Study


Everything But Arms (agreement)


Economic Community of West African States


Extractive Industries Transparency Initiative


Economic Partnership Agreement


Economic Policy Research Unit (Ministry of Finance)


Economic Rehabilitation and Recovery Credit/Grant


ECOWAS Trade Liberalization Scheme


European Union/European Commission


Financial Sector Assessment Program


Fast Anti-Smuggling Team


Farmer Field School


Gold and Diamond Department (NRA)


Gross Domestic Product


Heavily Indebted Poor Countries


Harmonized System (of tariff lines)


International Monetary Fund


Information Technology Agreement (WTO)


International Trade Center


Ministry of Agriculture, Forestry and Food Security


Monitoring, Control and Surveillance


Microfinance Institution


Ministry of Fisheries and Marine Resources


Ministry of Mineral Resources


Ministry of Finance


Ministry of Trade and Industry


National Coordinating Committee on Trade


National Cooperatives Development Bank


National Development Bank


National Power Authority


National Revenue Authority


Policy, Planning and Research Department (MTI)


Poverty Reduction and Growth Facility (IMF)


Poverty Reduction Strategy Paper


Postal Savings Bank


Pre-shipment Inspection


Secure and Facilitate Global Trade (framework of standards to)


Sierra Leone Export Development and Investment Corporation


Sierra Leone Maritime Authority


Sierra Leone National Tourism Board


Sierra Leone Port Authority


Sierra Leone Produce Marketing Board


Sierra Leone Road Authority


Sierra Leone Road Transport Authority


Sierra Leone Standards Bureau


Small and Medium Enterprise


Sanitary and Phytosanitary (standards)


Statistics Sierra Leone


Sustainable Tree Crop Program


Technical Barriers to Trade


United Nations Peacekeeping Mission in Sierra Leone


United Nations Conference on Trade and Development


United Nations Development Program


West African Economic and Monetary Union


World Customs Organization


World Trade Organization


The Sierra Leone Diagnostic Trade Integration Study (DTIS) has been prepared under the Integrated Framework (IF) for Trade Related Technical Assistance to Least Developed Countries in response to a request from the Government of Sierra Leone.1 The ultimate objective of the study is to build the foundation for accelerated growth in Sierra Leone by enhancing the integration of its economy into regional and global markets.

A preliminary mission was held in July 2005 to discuss the objectives and priorities of the study with the authorities. Terms of reference were then prepared and transmitted to the Government for approval. The main mission, consisting of national and international consultants, visited Sierra Leone in October 2005. During the mission, a national workshop was held to build understanding and ownership of the Integrated Framework process and goals. The workshop was sponsored by the Ministry of Trade and Industry, UNCTAD, and UNDP.

The members of the main mission, and their areas of responsibility, were as follows: Philip English (World Bank, task team leader), Dirck Stryker, (lead consultant, macro, finance, agriculture), Paul Brenton (World Bank: trade policy and institutions), Alan Hall (World Customs Organization, customs), Peter Jaeger (agricultural marketing), Jan Ketelaar (mining), Richard Lacroix (agro-industry), David McEwen (tourism), Rene Meeuws (transport and trade facilitation), Tom Roberts (agricultural production), and Gert Van Senten (fisheries). The team was ably assisted various public officials and local consultants: Edison Borbor (MTI, trade policy and institutions), Mussa Randy Kabia (transport), Abu Kamara (fisheries), Raymond Kamara (NRA, customs), Aiah Koroma (forestry), Lovetta Fatmata Sesay (EPRU, macroeconomics) and Danial Siaffa (tourism).

All the draft chapters of the report were then presented to technical staff in the ministries as well as other interested stakeholders during a technical review meeting in May 2006. The report was then revised to take into account the various comments received. The study has been reviewed internally within the World Bank, and among the IF agencies and selected donors. The report and its Action Matrix were discussed during a three-day workshop organized by the Ministry of Trade and Industry in October 2006. After the inclusion of proposed revisions, the Action Matrix was validated.

The study team wish to thank the Government of Sierra Leone and notably the Minister of Trade and Industry, Honorable Kadi Sesay, and the Director of Policy, Planning and Research, Beatrice Dove-Edwin, for their wholehearted and most competent support to the DTIS process. We also thank all the members of the national steering committee who enriched the study through their active participation in various meetings and workshops. Finally, we owe a special word of thanks to Josette Percival for her dedication and professional administrative support throughout the entire process.


    1. Sierra Leone is once more at peace and its people are ready to tap the bountiful resources bestowed on them by nature to rebuild their economy and society. Its mineral wealth is legend, though it goes well beyond the rather infamous diamonds. The seas are still full of fish of various species, some stocks actually replenished when the war years disrupted the fishing industry. One visit to Freetown, and the majestic hills rising above pristine sandy beaches easily evoke visions of a thriving tourism industry. And perhaps most important of all, plentiful rainfall and good land suggest a variety of agricultural exports, bringing cash directly into the hands of rural households. How many countries might envy Sierra Leone’s good fortune, were it not for its troubled past?

    2. Unfortunately, Sierra Leone’s period of violent civil conflict from 1991 to 2001 wreaked havoc on the country’s social fabric and its economy, exposing its people to extreme hardship and vulnerability. Today the country is ranked among the world’s least developed countries and second-to-last on the Human Development Index. Infrastructure has been destroyed, institutions have disintegrated, people have fled. The country is almost starting over again, putting the pieces back together again.
    3. The country has had to start with the most basic needs – re-establishing food supply, ensuring peace and security, rebuilding essential government services. Progress has been rapid, assisted by the donor community and by the significant inflow of cash from the artisanal diamond sector. But it is time to focus on a broader strategy of economic growth to generate much needed employment and revenues to pull people out of poverty and to finance public services. And in a country with only six million people of minimal purchasing power, it is clear that the domestic market is too limited to drive that growth and that exports must therefore play a major role. Happily, the country has many options. The question is where to start, how to make the most of the limited human and financial capacity currently available to kick-start a virtuous cycle of growth?

    4. The time frame for this study is the next five to ten years. In this period, Sierra Leone’s comparative advantage lies in a number of agricultural, agro-industrial, fishery, mining, and tourism activities. Over the longer term, exports of manufactures and other services should also be encouraged, and an update of this report would be useful to explore such options. Fortunately, many of the actions taken to increase exports in the areas covered by this study will also contribute to building capacity for trade in these other sectors.

    5. This study is not intended to provide a growth strategy or a poverty reduction strategy. Rather, it aims to identify the role which trade might play in such a strategy, by (1) analyzing the key constraints to expansion of trade, (2) providing a sense of priorities for maximum impact of trade on poverty reduction, and (3) developing a targeted Action Matrix of policy and regulatory reforms, technical assistance and investment projects. It is primarily about export development, as Sierra Leone has already adopted a relatively liberal import regime – one which is now determined on a regional basis. After validation by the Government and a broad spectrum of stakeholders, multilateral agencies and the donor community will support the Government as it implements the Action Matrix. The study will also serve to strengthen the trade and growth dimension of the PRSP and ideally contribute to building a consensus on the way forward.

Macroeconomic Context

    1. Though trade is ultimately about products and sectors, it depends critically on a sound macroeconomic environment if it is to flourish. The foreign exchange rate is arguably the most important price in the economy, followed closely by the domestic interest rate. The tax structure, whether it is be for imports, sales, or income, is another critical dimension. This study highlights three macroeconomic concerns:

(1) the potential overvaluation of the Leone resulting from heavy dependence on mineral exports and foreign assistance – at present there would not appear to be a problem, but future movements of the real exchange rate need to be monitored;

(2) fiscal deficits leading to inflation, increased public borrowing, higher interest rates, and crowding out of private sector borrowing – the Government must avoid the situation which prevailed in 2004 where public borrowing pushed the interest rate on treasury bills above the prime lending rate, undermining the incentive to lend to the private sector;

(3) the heavy dependence on taxes collected by customs for public revenue – with customs duties comprising almost 50% of government revenues, trade policy and customs administration is likely to be driven by fiscal considerations. This may be weakening commitment to the ECOWAS free trade area and may reduce the focus of Customs on trade facilitation.
Trade and Poverty

    1. Increased trade can have direct impacts on the poor by affecting their levels of income and employment, and the prices they face as both consumers and producers. Trade can also affect poverty indirectly by stimulating economic growth and its linkage effects and dynamic processes, and through the impact on government revenues and expenditures that affect the poor.
    2. Artisanal diamond exports have been the main avenue for direct poverty reduction through trade in the last five years, and they will continue to play this role for the next five. However, output in this sector is probably close to its peak, and employment is expected to fall as diamonds become more difficult to find and mechanization becomes increasingly necessary. The focus here must therefore be on better management of the existing level of production, better distribution of the benefits in favor of the poor, and a plan for orderly exit for surplus labor.

    3. Large, modern-sector mining is about to take off once again, with the promise of significant fees, taxes and royalties for government. This could have a major indirect impact on poverty if these resources are properly managed. This depends on improved public expenditure management and governance which is beyond the scope of this study but the justified preoccupation of many others. It also requires a sophisticated regulatory regime which ensures that an appropriate fiscal regime is in place, and properly enforced.

    4. The industrial fishery presents similar if even more complex challenges to those of modern mining, as the main players are very mobile and hard to reach. Here again, the medium-term contribution will be indirect through government revenues, and the immediate priority must be to establish a sound regulatory framework. In the longer-term, the sector should be in a position to generate significant direct benefits, as national artisanal and small to medium-scale fishermen gradually replace the foreign industrial fleet. However, to achieve this goal, the fishery stock must be managed so as to ensure its sustainability.

    5. There was a small but thriving holiday tourism industry in the 1980s and there is every reason to believe that it can be rebuilt. However, the country faces a major image problem due to its troubled past, so it is going to take time to bring back both the investors and the tourists in significant numbers. When they do come, skilled and unskilled jobs will be created, primarily near Freetown in the Western Peninsula and at Lungi, with further benefits through linkages to suppliers of goods and services. The impact on the rural poor will only be modest.
    6. Agricultural exports offer the most important potential for a major increase in incomes in rural areas, where the majority of the poor reside. Sierra Leone used to export a wide range of agricultural products, albeit in modest quantities, and many of the trees are still there, albeit in poor condition. Cocoa holds particular promise for fairly rapid growth in the next ten years which could bring direct benefits to more than 140,000 households, many of them very poor. It is already the most important agricultural export, in spite of negligible support. The experience of Cote d’Ivoire and Ghana offers ample proof of the potential. International market conditions remain sufficiently robust to absorb whatever Sierra Leone might produce for the foreseeable future, providing reasonable quality standards are met. And cocoa expansion could help absorb some of the labor which will be released from artisanal mining over the next ten years. As the Government’s capacity to drive agricultural export production is extremely limited for the moment, this study’s first and most important message is: get the cocoa sector working again.

Table ES-1:

Export Potential for Key Agricultural Crops by 2015


Current Exports (tons)

Exports at Producer Price


Potential Exports


Gain in Revenue

(US$ mil.)











Palm Oil





Palm Kernel Oil

















    1. This recommendation is based on a comparative assessment of cocoa with various other options, and some of these also warrant support. Oil palm, cashew nuts, ginger, gari (cassava), and rice have potential and should be encouraged to the extent possible. Palm oil, gari and rice exports will be largely confined to the sub-region, with modest growth potential, while cashew nuts and ginger will benefit a smaller number of farmers. Coffee is one alternative export crop that could reach similar numbers, but the international market for robusta coffee is not promising. Prices have been very weak over the last five years and are expected to remain so. Farmers have understood and some are uprooting their trees. Export horticulture is too demanding in terms of logistics, standards, and marketing to be a viable option in the immediate future. Table ES-1 summarizes a proposed package of export crops, headed by cocoa, which deserves priority attention. If the predicted levels of exports are achieved, the total annual income gain to rural producers could be 463 billion Leones, benefiting as many as 250,000 households across the country – at least one-quarter of all rural households.
    2. The case of rice is more complicated. Rice is being exported to neighboring countries, but some observers feel it should be diverted to Freetown to reduce imports. However, since local rice is actually preferred by consumers, but normal market forces result in exports, this must be because the traders can obtain a better price this way. This is not surprising since the transaction costs are undoubtedly lower when transporting across the border than when navigating the poor road infrastructure to sell in Freetown. Transaction costs inevitably get passed on to the farmer in whole or in part. Lower transaction costs will generally mean a higher price for the farmer. Thus the option of exporting rice to neighboring Guinea translates into better incomes for Sierra Leonean rice farmers. Rather than block exports, a better policy would be to reduce transaction costs to Freetown and improve productivity and processing of local rice production so that it can eventually compete with imported rice.

Agricultural Exports

    1. With its very limited capacity, it is vitally important that Government focus its energies on areas which no one else can do. These include formulation of an overall agricultural strategy; establishing an enabling environment for NGOs, private sector investment, and farmer organizations; assuring plant and animal protection; supporting agricultural and livestock research; and providing for the acquisition, multiplication, and dissemination of new and improved plant and animal material. NGOs have proven particularly effective at disseminating information on new techniques and technologies. Farmer organizations also have an important role to play in this dissemination, as well as in helping to develop markets, storage, finance, and other ancillary services. The private sector should be encouraged to build its capacity to deliver a wide range of services.

    2. A better knowledge of market conditions must be obtained by investigating the regional market for gari, rice, palm oil, palm kernel oil, and cashews to see what quantities can be offered and what are the quality specifications. Another priority is a tree crop survey of the distribution, demography, and condition of the major tree crops: cocoa, oil palm, cashew. Farmer Field Schools (FFS) and other stakeholder organizations should be supported through the development of a protocol. FFS should serve as the principal vehicle for the multiplication and distribution of improved plant material, and technical advice regarding planting, maintenance, and rehabilitation. They should be encouraged to establish regional buying centers and be federated into Marketing Associations. The media should be used to disseminate best practices. With the need to import new varieties of plant material, it is imperative that a strong phytosanitary policy and a quarantine system for imports be established.


    1. The overriding concern in the cocoa industry is decreasing productivity, especially due to the high incidence of black pod disease. Although chemical control is possible, cultural techniques are another option. In addition, it is important to introduce high-yielding hybrid cocoa varieties used in Ghana and Côte d’Ivoire. The operations of the experimental seed gardens need support. Another short-term priority is quality improvement. Cocoa exports currently suffer a large price discount due to the prevalence of mould. Drying techniques need to be improved either through farm groups or through investment in small-scale fermentaries. A pricing system which offers an incentive for farmers to supply better quality cocoa would help. The number of inspections of cocoa must be rationalized, and the Ad Hoc Committee disbanded. The Sustainable Tree Crop Program based at IITA in Ghana could bring valuable experience from neighboring countries while helping coordinate and catalyze the various initiatives underway in Sierra Leone. Most importantly, there needs to be a consensus across Government that the cocoa sector is a top priority so that everyone will play their part.

Oil Palm

    1. The highest short-term priority is rehabilitation of existing plantations, both estate and village. This may require a redistribution of estate land to individual farmers or groups of farmers. Technical assistance should be provided to these farmers, and in some cases replanting with improved seedling varieties promoted. Entrepreneurs should be encouraged to invest in small-scale mills for processing. The Marika plant should be supported with its test export shipments of palm kernel cake and other products. Improved plant material should be obtained from Malaysia or other countries within West Africa, where oil palm has been extensively developed.


    1. Raw cashews should be exported until the level of local production justifies processing. Production and distribution of another set of cashew seedlings by the Kamcashew Enterprise should be approved and funded. A five-year plan for seedling production and sales should be prepared. Workshops on cashew crop production and processing management should be conducted and the information disseminated to farmers. Seed nuts of high yielding cashew varieties, probably from Guinea-Bissau, should be obtained


    1. The profitability of making small-scale equipment available for processing cassava into gari should be assessed under village conditions. Gari stores well, is easily transported, and quickly prepared, and is thus ideal for urban consumption and for export. A study is required to improve the present system of marketing, including the establish-ment of one or more markets that could act as entrepôts for more efficient distribution.


    1. The main priority for ginger is to monitor carefully the varieties that have recently been introduced and to assess any potential damage to the local crop. Local varieties should be tested to see how well they might respond to export market requirements. Workshops should be conducted on ginger processing and quality control.

Milled Rice
    1. The introduction of small rice mills should be supported and expanded. It is important to test different models of rice mills under local conditions in Sierra Leone to see which are most suitable. Support for provision of spare parts and servicing is also critical. Purchase of the rice mills by a leasing company and the leasing of these mills to local entrepreneurs may be the most effective way of transferring title of the mills and assuring their repair and maintenance.

Forest products

    1. Forest resources are being depleted through the spread of shifting cultivation, excessive logging, and fuelwood harvesting. There is little effective regulation of the use of forests, and no policy of reforestation. Some timber is being exported and this activity, although illegal, appears to be expanding. The closed high forest from which most timber is extracted accounts for only 5% of the land area of Sierra Leone. Given the many advantages to maintaining forest cover, including for eco-tourism and non-wood exports, it would seem unwise to promote timber exports. There is an urgent need for a proper plan for the management of forest resources, and the control of logging.


    1. Sierra Leone’s export sector has traditionally been dominated by mining, and will remain so in the immediate future even as it pursues the essential diversification of its economy. Export revenues from mining reached $143 million in 2005, regaining the previous peak achieved in 1991. With the reopening of rutile and bauxite mines, and the prospect of new modern gold and diamond mines, annual mineral export revenues could exceed $370 million. The Government of Sierra Leone, however, faces several challenges. In the modern, large-scale sector, it must attract more foreign investment – and keep that which has already been attracted – while extracting a fair share of the rents, and using them for the benefit of the wider population. The Government and the private companies also need to ensure that the communities in the immediate vicinity of the mines receive their fair share of the benefits.
    2. In the artisanal mining sector, the focus needs to be on increasing the share of revenues going to the poor and their communities, improving working conditions, reducing the environmental impact, maximizing the total output of the sector, and managing the transition to mechanized operations. The Ministry of Mineral Resources must extend its extension services on diamond identification, sorting and basic techniques used in valuation to enhance miners’ knowledge and bargaining power. Similar services are required for improved reclamation of mined-out sites.

    3. The increasing competition between the modern, large-scale mining companies, artisanal mining, and the emerging small-scale mechanized sector has become critical. The geological extension services should be used to identify known and new alluvial deposits appropriate for exploitation by artisanal methods, while deeper deposits are reserved for small scale mechanized or industrial mining operations. The development of a Mining Cadastre is the corner stone of a secure mineral rights system, and is fundamental in developing investor confidence and administering the artisanal mining sector. A Mining Cadastre is now being developed on a trial basis. It needs to be extended to all the main mining areas and, starting in 2007, all mineral rights should be issued using the Cadastre system on a first-come first-serve basis to reduce the potential for discretionary intervention and improve transparency.

    4. Transparency is critical. Large sums are at stake in the mining sector and everyone needs to know what the laws are, and why they are considered fair, and be reassured that they are being respected. The Government is establishing a Public Information Unit. This is a welcome initiative and it should be made operational immediately. The Extractive Industries Transparency Initiative (EITI) supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues. This should be incorporated into the legal framework for mining.


    1. Sierra Leone has two different fisheries – industrial and artisanal – and most of the current exports come from the former. Furthermore, there are three designated transshipment zones in port where the licensed vessels normally do transshipments and local landings. Despite this, some transshipments are reportedly done which is illegal and these are not captured in the official statistics. Sierra Leone must learn to manage the resource rents inherent in the fishery, collect its fair share, and expand its share over time. Expansion of fish exports should be pursued not only in terms of expanding volumes, but particularly through greater value-added. In the long-term, the sector’s contribution will be maximized through its transformation into a locally owned artisanal-cum-semi-industrial fishery. However, to achieve this vision, measures must be put in place immediately to prevent over-fishing and ensure the sector’s sustainability. A program to build the capacity of the private sector will also be essential.

    2. The short-term strategy will support the sustainable expansion of the industrial fishery. This must start with an assessment of the true status of key fish stocks; improvements in monitoring, surveillance and control; a cautious increase in the number of licenses for industrial vessels; investment in port and processing infrastructure; and satisfaction of EU food safety standards. As this will be expensive, financial resources must be attracted through the negotiation of one or more fisheries agreements and/or donor support. However, the former should only be pursued after careful preparation and consultation with other countries in a similar position.


    1. There should be no doubt that tourism has the potential to generate significant economic benefits for Sierra Leone. The degree of leakage through imports is comparable to other industries in the modern sector, and like them, incomes can be earned if a competitive product can be provided. Jobs will be created, local food and other supplies purchased, excursion and taxi services hired, and government taxes paid. But the government must be careful not to over-invest public resources in the sector, depending instead on private initiative for the bulk of expenditure.
    2. That said, government has a critical role to play in planning and promoting the sector. A strategic plan, with regional master plans, is urgently required to lay out the parameters for private sector development. Otherwise irreversible investments may be made which end up restricting the sector’s potential. The Aberdeen/Lumley Beach area requires urgent attention, followed by the Western Peninsula. Small-scale beach hotels offer the best opportunity in the short-term, but if the right large-scale hotel operator could be attracted it could send an important signal to the industry and kick-start the sector in Sierra Leone. Until such time, a low-cost but persistent campaign is needed to convey the message that Sierra Leone is at peace and open for business.


    1. While the Customs and Excise Department has started to reform since the creation of the National Revenue Authority, the approach has been tactical and reactive rather than strategic. This is understandable given the limited experience of its senior management. There has been no skills and knowledge development around international standards such as the Revised Kyoto Convention, WTO Agreement on Customs Valuation (ACV) or the Framework of Standards to Secure and Facilitate Global Trade (SAFE). In meeting these standards, Customs must introduce concepts of risk management, client segmentation, sound technical ability, ready access to management information and a high degree of automation. These elements are largely inter-dependent, which means developments in isolation are of limited value. And Customs must learn to balance its revenue-generating, trade facilitation, and regulatory functions.

    2. The current valuation system is unfair to genuine traders, increases the already high cost of trade, lacks transparency, and contravenes WTO rules. Yet, the ACV has proven difficult for most sub-Saharan African countries to implement, even those with much stronger customs services. Sierra Leone does not have the capacity to implement it, and will have to rely on the pre-shipment inspection service currently in place for another two years or more to improve valuation and other procedures. But that service contract needs to be better managed so that the company fulfils its original mandate to build national capacity and works itself out of a job.
    3. Other priorities include work on tariff classification, revision of the customs legislation, simplification and automation of procedures, introduction of Fast Anti-Smuggling Teams, differentiation among traders depending on their record of compliance, management and staff training, better consultation with stakeholders, partnerships with other Customs administrations, and strategic planning.


    1. Infrastructure suffered badly from the war, most notably in the rural areas. The road system is in poor shape, adding considerably to the cost of bringing agricultural exports to the port, and discouraging tourists from venturing into the interior. Roads are now being rehabilitated but there is much to do. The road maintenance budget is seriously deficient and priorities are often distorted by emergency requests. Greater attention needs to be paid to the requirements of the export sector, beginning with the Eastern cocoa-producing region. This will help generate additional funds which can be ploughed back into road maintenance. These priorities should be captured in a new National Transport Strategy and Investment Plan.

    2. An enabling regulatory framework should be introduced to promote public-private partnerships in the building and operation of ports, dry ports, terminals, and handling and storage facilities. The clearing and freight forwarding market would benefit from opening to entry by foreign companies. Dialogue between the various stakeholders in the private and public sectors could be improved through the establishment of a National Working Group on trade facilitation.

    3. Electric power services are seriously deficient, very expensive and unreliable, posing major problems for the competitiveness of commercial and industrial enterprises. They generally find that it is cheaper – and safer – to rely on their own diesel generators. Considerable effort is being put into increasing supply for the national grid, but it is proving difficult even to keep up with demand in Freetown. Hence, this study assumes that agro-industrial enterprises will furnish their own power in the foreseeable future.
    4. Telecommunications coverage and quality are very poor. Sierra Leone has one of the lowest tele-densities in the world. To the extent that there is any regulation, this is done by Sierratel, the state-run landline telecommunications company, which is also a major player in internet service and potentially for cellular service. The Government needs to look at the possibility of introducing an independent telecoms regulator. Insofar as trade is concerned, cell phones are the main means by which farmers, processors, traders, and exporters communicate and receive information on prices, orders, specifications, and the like. Extension of these wireless networks is a high priority.

Financial services

    1. Experience in Sierra Leone and elsewhere suggests some directions along which the financial sector should evolve to meet the needs of the export sector. It is vital that interventions be undertaken that support broad-based development of the financial sector in general and rural finance in particular. This approach is in contrast to the subsidized, directed credit schemes of the past, which undermined financial sector development.

    2. The experience with the National Cooperatives Development Bank (NCDB) and microfinance institutions (MFIs) suggests the importance of group lending based on credit history for the development of the financial sector in rural areas. Although the initial size of loans is often insufficient for SMEs, those with a good credit history should be able to move ahead as individual borrowers over time. Eventually, commercial banks may become interested in working with the MFIs.

    3. Commercial banks should become more involved in lending to processors, traders, and exporters, perhaps through structured finance (letters of credit, warehouse receipts). Competition in the banking sub-sector can be increased by moving ahead with the privatization of the two state-owned banks, and by facilitating the entry of reputable new banks (e.g.Ecobank). The BOSL needs to disengage from the Community Banks and a private sector apex organization established to oversee and work with these banks.

Trade Policy and Institutions

    1. An effective trade policy process requires a) a clear trade and export strategy, b) effective consultation with the private sector and civil society, c) successful inter-ministerial coordination, d) access to accurate trade information, d) capacity for analysis of trade policy issues, and e) effective trade support institutions – standards, export promotion, customs. In all of these areas, capacity in Sierra Leone is very weak.

    2. The Ministry of Trade and Industry (MTI) needs to move away from its old structure. The existing Trade Division should be abolished and in its place, an Industry and Commerce Division and an International Trade Division should be established to operate alongside the existing Administrative and Co-operative Divisions, and the Policy, Planning and Research Division (PPRD). The PPRD, which is now the heart of trade policy making, is totally dependent on external funding. This must change. Provision must be made in the national budget for salaries and expenses, and a senior civil servant must be nominated to overlap with the current Director before she leaves. The government and donors need to make a longer term strategic commitment to trade policy, beginning with the provision of a larger and more permanent staff for the PPRD, and a medium-term program to build their capacity.

    3. The PPRD must work with other relevant ministries and stakeholders to formulate and implement a detailed trade and export policy for Sierra Leone. Both the Ministry of Finance and the Bank of Sierra Leone have economic policy research capacity which must be tapped. It will also be necessary to promote policy-relevant research in the university or research centers. Such independent analysis can also serve to build public understanding of and support for action on key trade issues. The National Coordinating Committee on Trade (NCCT) will play an important role in implementing such a strategy, but it will require a stronger PPRD to support its work.
    4. Export promotion and development is the responsibility of the Sierra Leone Export Development and Investment Corporation (SLEDIC). It is currently being restructured. Success will depend on its new mandate, its private sector focus, the quality of its staff, and the resources that are provided. The initial priority should be to serve as an advocate for exporters across the various agencies of government. It should focus on the constraints placed upon exporters by a hostile business environment. As these constraints are alleviated, the agency may be able to turn to the provision of services to exporters that enhance their competitiveness on world markets and allow them to enter new markets and introduce additional products. But it will need to remain very modest and focused in its ambitions given the limited resources available.

    5. The capacity to meet commercial quality requirements and comply with standards is increasingly important. Quality and standards are closely related, but they are not identical. A product may not face any mandatory standards, yet it may suffer serious quality issues – the case of cocoa. Other products may be of sufficient quality yet the mechanisms are not in place to prove their compliance to the satisfaction of the importer – witness the case of fish exports to the EU. Sierra Leone should concentrate at present on the most basic functions. Development of broad awareness and promotion of the adoption of ‘good’ agricultural and manufacturing practices and quality management systems will set the stage for later developments. Initial efforts should focus on particular higher risk/higher gain export-oriented sub-sectors that require specific regulation and institutional structures. Fish and cocoa are clearly the main products demanding attention at present, together with maintenance of the integrity of the Kimberley process for diamonds. The Government should proceed slowly with investment in expensive testing and laboratory services.

    6. Finally, the study provides some advice on the various trade negotiations facing Sierra Leone. In particular, it is recommended that more attention be devoted to the Economic Partnership Agreement being negotiated between ECOWAS and the EU, to determine how best to approach these negotiations. Sierra Leone should also work to improve the implementation of the ECOWAS free trade area.

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