“The widest gap in Sierra Leone as a constraint for development is the absence of a capital market,” said the Bank Governor Samura M.W. Kamara yesterday at the opening ceremony of a training seminar on collective investment scheme.
In his statement at the Bank of Sierra Leone (BSL) recreational complex at Kingtom in Freetown, the Bank Governor explained that the three-day training seminar which was organised by BSL in collaboration with the Commonwealth Secretariat (COMSEC) and the Sierra Leone Stock Exchange (SETC) was “a process of preparing a comprehensive financial sector reform programme.”
This, he pointed out, “is mainly at the instance of our need to meet the requirements of the poverty reduction mode facility of the International Monetary Fund (IMF) which is already out at least within the bank in the preliminary stages.”
“What we do not do was to sit in the bank on our own as it is usually done to write a whole book and then try to define views and recommendations of potential stakeholders,” he explained.
“How do we go about preparing the preliminary stages of the financial sector reform plan?” asked the Governor rather rhetorically. “We have been supported by initiatives of the World Bank as well as consultants under the auspices of the IMF,” he disclosed.
Governor Kamara explained that a broad based working group was formed which included the participation of the Commercial Banks, Government Ministries and Insurance representatives. “We try to bring in people from the informal sector who are also stakeholders,” he disclosed.
The Bank Governor explained, “we did a seminar along with the private sector business forum – at that seminar the idea cropped up to set up a working group to help us develop a comprehensive financial sector reform plan. What we are seeing today is just one component of the financial sector reform plan, [which will eventually lead to] the development of a robust comprehensive as well as a very useful capital market in Sierra Leone.”
The reason for a capital market, the Governor explained, is that “in the capital market proper we are looking for longer term maturity, savings and investment regulation in a more proper way.”
“Most of the savings that we have within the financial establishment are very short term and I am sure the commercial banks can attest to it where what we call the access liabilities management profile is very narrow, the services are relatively narrow and therefore they could not take us far. We could not go into longer term investment like five, ten to twenty years type of investment,” he stated.
He noted “we hope as we develop the capital market and with it the stock exchange we will try to have a complimentary system that will drive investment and savings into this country and therefore meet the actual challenges of development.”
The Governor explained that at the end of the seminar participants will have a “clear idea of what it takes to set up a CIS and what is involved in it and what regulatory framework do you operate.”
In his keynote address and official opening of the seminar the Deputy Finance Minister Momodu Kargbo explained the CIS benefit to investors and the economy at large.
He noted that the CIS are “schemes established for the purpose of collecting funds from investors and investing them on their behalf for a fee, and each investor’s contribution to the schemes fund can be as small as they can afford…”
Mr Kargbo highlighted some of the benefits of the CIS, pointing out that it significantly increases the liquidity depth and demographic outreach of a country’s financial market, there by facilitating among other thing the establishment of investment banks.
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