Interviewing the West African Institute for Financial and Economic Management (WIAFEM) Director General, Dr Osic Itsede at a sub-regional seminar on financial sector reforms for post conflict economy at the Kimbima Hotel, he noted that “agriculture is the bedrock of the manufacturing industry.”
Although he noted that addressing issue of the global financial crunch was not part of WAIFEM’s mandate, Mr Itsede said, “[the crisis] is beyond the control of anybody.”
The director general pointed out that the linkage [of the global economic crisis] with the financial sector reform was that the crisis would enable us to look at what was happening in the different sectors and access what roles the financial system could play to intermediate resources for the different sectors.
Throwing light on the adverse effect of hiking fuel prices, he said, “fuel is one of the many inputs into the production and consumption process, there are so many other inputs whose prices too can affect the general level prices in different economies.”
The director general added that, “fuel is used massively for transportation, but its input to the agricultural production process in Africa is still very low because agriculture is not heavily mechanized yet in the region, but by and large when you have a major input like fuel that changes in its price it can ricochet in other sectors of the economy and vice-visa just the same way that fundamental swings in prices of agriculture can also affect the manufacturing sector because agriculture produces the bulk of the input for manufacture- the clothes you wear are from agriculture… so you will find out that agriculture is the bedrock of the manufacturing industry so the prices normally feed into one another so the bottom-line is to have a robust financial system, that can withstand this kind of shocks when they do occur and that will be part of the issues that will be discussed during this seminar; how to develop robust financial systems for Liberia and Sierra Leone,” he said.
Explaining the objective of the seminar, Mr Itsede said, “the objective of this conference is for a financial sector reform for post conflict economy; to appraise the current status of the financial sectors in Liberia and Sierra Leone and chat the new course of financial sector reforms to enable the economies grow and develop.”
Liberia and Sierra Leone, he noted “are the two post conflict countries in the WAIFEM membership therefore they were afflicted by similar problems so they have identical problems to which we are here now to find a common solution, but luckily the two countries are neighbours, so programmes designed for one of them can easily be replicated in the other.”
Speaking to Awoko, assuming he was managing the economy the Bank Governor of Sierra Leone, Dr Samura Kamara said, “we did not foresee [the present financial crisis], but now that it is before us we need to find some sort of intervention programmes both in the short term as well as the long term. Short term basically we need to develop some safety net that will ease the immediate burden on the poor people in particular.”
“The long term is about the supply sides, he said. “It is about creating necessary supply… we need to have some emergency programme… at the moment the government is doing quite a lot, the government is providing subsidies as well buy subsidizing rice and it is being done both directly and indirectly,” he maintained.
“Indirectly,” he pointed out, “[through] reduction in government taxes by customs and excise duties and at the same time government is also out sourcing to make sure rice is available at the market at affordable prices.”
Similarly, the governor continued, “the same is being done in terms of energy- pump rises- what is available at the market does not reflect the fully part through what happen at the international market, so there is an element of subsidy on the side of government,” Dr Kamara stressed.
“What we want to do is to place the financial sector to be in the position were, now and in the future, we should be able to finance this type of transactions- see if you are an oil importer you should be able to access finance from the domestic banking system to help. If you are rice produce you should be able to have the appropriate financial mechanisms to be able to produce rice in the long-term,” disclosed the governor.
The governor noted that global prices hike was something that was out of control of any domestic economy, particular an economy like Sierra Leone, “but as I said you need short term intervention mechanisms it don’t have to be permanent. In the case of food it is about production, in the case of energy it is about having more affordable energy supply system- perhaps we might want to move away from thermal energy, oil base energy to wind base energy or solar system,” the governor pointed out.
Five themes are expected to be covered in this five-day seminar: state of the financial sectors of post-conflict countries; financial sector reforms in post-conflict countries; issues and challenges for financial sector development; corporate governance in the financial sector; and plan of action for financial sector development.