“We say we have the ECOWAS Trade Liberalisation Scheme and the other day we heard a release cancelling it” said Dylan Sogie-Thomas the Chief Executive Officer of SLIEPA who was pointing out that that policy inconsistencies do not send a good signal to financiers.
The SLIEPA Chief was discussing a chapter in the recently launched IMF Regional Economic Outlook (REO) for Sub-Saharan Africa (SSA) 2018, on the issue of “Private Investment to rejuvenate growth.”
Speaking on market access, Sogie-Thomas said that the government needs to ensure that they focus on the policies and get them right as commodity prices will keep going up and down, “that is why at SLIEPA we are looking at Sectors that are more sustainable, we are talking about agribusiness.”
In getting that up and running he said, the sector will require energy for industralisation, “we need the private sector there and how to get them there incentives needs to be discussed” he noted.
He stated that he has seen a lot of political will within the new government and hopes it will be sustained because they need it for effective reforms.
In addition, shock in commodity prices, lack of required industrial skills are other challenges which they face when they go out to attract investors, he said adding “diversification is key in moving this economy forward.”
According to the World Bank Doing Business Ranking, Sierra Leone ranked 148 in 2017 and 160 in 2018. “An investor making a decision will look at the indicators and say I am not coming to Sierra Leone that is also ranked 30 in SSA countries.”
“When we go to attract investors we have issues with energy, water, roads, … then you have to offer incentives, as they make decisions based on what you have. So, if we are unable to invest in some of these enablers we have to give incentives to get them to come” Sogie-Thomas emphasized.
The Director of EPRU, Alimamy Bangura, amplified the issue of Public Private Partnerships (PPPs) and that in such investments the government and the private sector share the risks and that usually it is the revenue from the investment that pays the debt.
“So before we embark on PPPs, we should have the institution to manage the risks associated with it, and with the Finance Ministry trying to establish a Fiscal Risks Department, basically it will deal with these issues, because we are now moving into PPPs” he said.
Private investment he stressed is very low in Africa and especially Sierra Leone, noting that there is a dire need for improvement on very good economic policies to ensure macroeconomic stability, structural reforms and good governance.
Bangura advised that if a country wants to use its domestic money market for investment it should be mindful of financial stability, by making it liquid and well capitalized, profitable, “the quality of the asset should be such that they are in a good posture, if the financial sector is not stable it will also discourage private investment.”
On what actually influences the private sector to invest, Director Bangura identified key macroeconomic issues that has to do with the growth prospects of the economy, inflation creates uncertainty, the cost of capital which is said to be very clear in Sierra Leone that interest rates are a serious concern and ranges between 29 to 30 per cent.
The issue of unsustainable debt levels also discourages private investment as the investor will feel that they will be taxed heavily to repay the debt, and also depreciation of the exchange rate.
On the structural factors, he said concerns around trade, financial, judicial and governance reforms are also worth looking into and more importantly political stability.
By Zainab Iyamide Joaque
Monday June 04, 2018.
ADVERTISEMENT