By Tanu Jalloh
Very soon Sierra Leone will have, as a policy directive or legislation, some incentives to boost local production and introduce trade regulations that encourage consumers to patronise goods manufactured in country - ‘Made in Salone’.
Under a plan like this, priority is given to almost all manufacturers and business enterprises that supply goods made in Sierra Leone. When this takes effect government, for instance and being the biggest player in the public procurement business, will make it a policy to have almost all goods supplied to ministries, departments and agencies to be of ‘Made in Salone’.
But first, apart from provisions supporting this idea in the 2016 Finance Act, this means that indigenous manufacturers will be incentivised to meet expected supply challenges and standards, energy supply will increase, base materials will be generated and agriculture will be rediscovered.
Much as this may sound brilliant - to promote locally made - some of the challenges will include meeting expectations of the high sense of class of a promising middle income lifestyle at home and abroad. Of course, as it is, things are already being made but quality may be lacking in a country where the middle income earners are getting sophisticated by the day. While defining the middle class maybe difficult, there is a growing number of the business and political class becoming part of that group. Analysts have said that there has been growth, but not as much as many think, suggesting that the African middle class rose to 6.2 per cent of the continent’s population in 2014, up from 4.4 per cent in ten years, according to NewAfrican of December 2016.
Minister of finance and economic development, Momodu Lamin Kargbo, thinks it might be too early to discuss the details of his brainchild. However, I managed to get some indications that it is going to be a huge government project. The initiative will eventually seek to increase production level and stipulate consumption of goods made locally. This will ultimately capacitate local manufacturers to compete and meet acceptable quality akin to global supply benchmarks. He, however, states that his ministry is planning a high level meeting scheduled to hold very soon as a roadmap that will design a blueprint to roll out the ‘Made In Salone’ campaign. This will help them reach an acceptable working explanation of what the idea means before they engage the whole country through massive awareness-raising.
“First we should try to reinvent the will and revisit the economic [manufacturing and production] history of Sierra Leone. This will give us a sense of what we are capable of doing right now. Manufacturing has died and now we have taken to importing. That is a problem. No country prospers without producing. For instance I believe that the food pattern must change, otherwise in the next 50 years we still will be eating rice the same way we do now,” he says.
The minister of finance is very enthusiastic about what he thinks is a nationalist approach to economic diversification based on what he calls the theory of comparative advantage. Using the balance of payment model, minister Kargbo argues that Sierra Leone hasn’t been a production country for a very long time and therefore cannot trade on a scale of comparative advantage. This simply means that the country is not able to negotiate trade deals based on its ability to produce and sell, therefore does not have sufficient foreign exchange base to support its imports.
Meanwhile, there are some controversies around this model, in particular as a guide to the success of nations. But the finance and development mogul holds a completely different view, sounding very confident like the next president of Sierra Leone packaging and selling his vision to turn around the economic situation of the country and its people. Having worked as the Central Bank Governor before he became minister of economic development, he considers himself a leader and an authority in the public financial management of the resource-rich West African country.
“Well…I don’t think so. This is not controversial at all. Look at Japan with a good fit between a nation’s characteristics and its manufacturing industry; you will notice that the production sector enjoys competitive advantages in that country. Cote d’Ivoire and Ghana have something to show as first and third largest cocoa producing countries respectively in the world. If we want to attain this same status we need electricity and transportation. But after 50 years this country still does not have an agricultural irrigation project. We get abundant rainfall but we don’t harvest it. That’s why we still cannot feed ourselves,” he laments, adding that this is more the reason why they’ll need the ‘Made in Salone’ initiative.
Tested by the Sierra Leone Standards Bureau and other certifying agencies around the world, Lemon Grass, Ginger, Tobacco and Bitter Root, are the only four products made by local industries and small and medium enterprises in the export sector, being exported to United States and Europe under the Africa Growth and Opportunities Act arrangement. However, the scale at which this is being done is too small to make any real impact in terms of foreign exchange earnings, plus the fact that most of them are not being used as raw materials to manufacture value added products. For instance, changing the physical form of lemon grass, ginger and tobacco to making them ready for export and local consumption.
Again the minister is positive despite this low base from where to start. He says [production] is possible. But to get it done, he adds, there should be a radical move from the way things are done right now – which are more liberal – to trying some conservative economic policies that more or less appear nationalistic but are also slightly protectionist in nature. He recalls that this approach is slowly taking hold already, citing the policy intervention of the ministry of finance in a recent tax on imported beverage products. The regulation favours Sierra Leone Brewery Limited, SLBL, the country’s only large scale indigenous beverage and alcohol manufacturer.
“Because of that intervention, we saved over 2000 jobs of Sierra Leones. We could have lost those jobs. We hope to add thousands more because Brewery will increase its demands for sorghum, the base materials used in the production of beverages, which is going to increase sorghum farming across the country by multiple folds,” he says.
There have been some criticisms of that tax incentive to Brewery. Critics argue that quality and capacity to meet the growing demands on the ever growing market will expose the local manufacturer and undermine the thrust of the policy against the backdrop of equal opportunity to compete even in a market economy.
“When fully implemented the 2016 Finance Act will help push and sustain local production and even encourage those who know that it is worthwhile to have their investment on the ground to boost the country’s gross domestic product,” Ojo Collier, corporate relations manager at SLBL had said.
In a recent press statement the company promised it was going to meet the ever-increasing demand by doubling annual production capacity. In January this year it also announced it was bringing in new fermentation tanks - modular cylindrical-conical fermenters – which once installed would double production capacity.
“This will create an opportunity to brew, package and distribute all of our award-winning quality products to satisfy current and future consumer demands. All tanks on their way into the country now are made of stainless steel fabricated according to international brewing standards. We can confirm that civil works are already in progress with the contract, running into billions of leones, awarded to a Sierra Leone registered construction company.
(C) Politico 2017