Economic and Sector Work 88691 SIERRA LEONE GROWTH POLE DIAGNOSTIC: The Growth Poles Program [First Phase] August, 2013 Africa Region Vice Presidency Competitive Industries Practice Finance and Private Sector Development The World Bank Group The European Union Currency equivalents (Exchange Rate as of April 1st 2013) Currency Unit: Sierra Leone Leone (SLL) US$1.00=Le 4,330 Abbreviations and Acronyms ABC Agri Business Center HRMO Human Ressource Management RABI Removing Administrative Barriers to ADB African Development Bank Office Invesment ADR Alternative Dispute Resolution ICT Information and Communications SCP Smallholder Commercialization Technology Programme AfDB African Development Bank IFC International Finance Corporation SEZ Special Economic Zone AFFORD African Foundation For Development IMF International Monetary Fund SL Sierra Leone ATM Automated Teller Machine KM Kilometer SLA Sierra Leone Agriculture company CAGR Coumpound Annual Growth Rate KW Kilowatt SLCCIA Sierra Leone Chamber of CSR Corporate Social Responsibility Commerce, Industry and Agriculture LPI Logistics Performance Index DACO Development Assistance SLIEPA Sierra Leone Investment and Export LS&CD Local Suppliers and Contractors Coordination Office Promotion Agency Development DEPAC Development Partners Committee SME Small and Medium Enterprise M&E Monitoring and Evaluation DFID Department for International SMS Short Message Service MCC Millenium Challenge Corporation Development SOE State-Owned Enterprise DRC Democratic Republic of the Congo MDAs Ministries, Departments and Agencies SRI System of Rice Intensification EC European Commission MIC Middle Income Country SRLA Sierra Leone Roads Authority ECOWAS Economic Community of West MoU Memorandum of Understanding SSA Sub Saharan Africa African States EU European Union MW Megawatt TVET Technical Vocational Education and NRA National Revenue Authority Schools Training FDI Foreign Direct Investment NSC National Stakeholder Group UN United Nations GDP Gross Domestic Product OARG Office of the Administrator & UNDP United Nations Development GIS Geographic Information System Program Registrar General GIZ Gesellschaft für Internationale UNESCO United Nations Educational, PM Prime Minister Zusammenarbeit Scientific and Cultural Organization GNI Gross National Income PMU Project Management Unit VFR Visiting Friends and Relatives GoSL Government of Sierra Leone PPD Public Private Dialogue WAPP West African Power Pool GST Goods and Services Tax PPP Public Private Partnership WARC West African Rice Company HQ Headquarter PSD Private Sector Development WB World Bank Vice President Makhtar Diop Country Director Yusupha Crookes Sector Director Gaiv Tata Acting Sector Manager John Speakman Task Team Leader Alexandre Laure Acknowledgments This report is a product of the Africa Region of the World Bank (Finance and Private Sector Development Network). The report was prepared under the supervision of Paul Noumba, Sector Manager (AFTFW) and John Speakman, Acting Sector Manager (AFTFW). It was developed in close coordination through consultations in February and May 2013 with Government Ministries and Agencies, as well as with representatives from private sector and civil society, and key development partners. In all 300 participants contributed to the finalization of the report under the leadership of the Office of the President of Sierra Leone. The authors are grateful to the many people in Sierra Leone who gave their time, insight, and crucial information that was incorporated in the analysis. The core members of the World Bank team included Alexandre Laure (Task Team Leader), Susan Kayonde, Julien Szabla, peer reviewers Guillemette Jaffrin, Syed Waqar Haider, and Emanuel Salinas Munoz, and Alan Moody (Country Sector Coordinator) as well as Ato Brown (Country Manager). The diagnostic benefited from inputs of Pranav Kumar, Luke Jordan, Christopher Gabelle, Hardwick Tchale, Ade Freeman, Gokhan Akinci, Ganesh Rasagam, Mohamed Sidie Sheriff, Elvira Morella, Gozde Isik and Cyrus Talati. The contribution of Eric Rehe, Rebekah Smith, Francesco Bolognesi, Roza Bora and Akshay Regmi is gratefully acknowledged. The CI Practice and CIIP led by Ivan Rossignol, Parth Tewari and Stefano Negri provided strong guidance. The World Bank is supported by a Trust Fund provided by the European Union. The content of this report does not reflect the official opinion of the European Union. Responsibility for the information and views expressed in the growth poles diagnostic lies entirely with the authors. Standard Disclaimer: This volume is a product of the staff of the World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. . Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. User guide IS THIS IS THIS DOCUMENT AA REPORT, REPORT THIS IS NOT A PRESENTATION THIS DOCUMENT IS NOT A PRESENTATION Why this report format? How to read this report? This First Phase Report on Sierra Leone growth poles is the result of a 9 There is more than one way to read this report. Here are some rules of months consultative process led by the Office of the President which the game: (i) you can read the title of each page and be done with the specifically requested that the output of this diagnostic be in an engaging reading in 5 minutes (for your ease please find pages 84 and 85 the format. consolidation of pages’ titles), (ii) in addition you can also take the time to read the leads (sub-titles) and charts and be done with the reading in From this… …to that 30-40 minutes, and (iii) finally you can read it all including the text and be done in less than 60 to 90 minutes. Appendixes in the back up box are Economic and Sector Work there for your reference. Each of the chapters in the report can be read SIERRA LEONE independently. GROWTH POLE DIAGNOSTIC: The Growth Poles Program [First Phase] June, 2013 You will notice that most pages can be read two by two (2 pages at a Competitive Industries Practice Finance and Private Sector Development Africa Region time) as the information on the right hand page usually complements the information on the left hand page. This is normal. When it is not the case, The World Bank Group The European Union a framework page introduces the content of the chapter and will inform you of the flow. The format of this report, which is also referred to as a slideument, is an innovative output of the Finance and Private Sector Development Department of the World Bank based on the needs and aspiration of the Growth poles are simultaneous, coordinated investments at the industry level in Sierra Leone can learn from international experience and lead practices from the Government of Sierra Leone. many sectors to support self-sustaining industrialization in a country A growth pole is a set of expanding industries located in an area and inducing further development of economic activity throughout its zone of influence. Haiti (2013-) World Bank Afghanistan (2011-) Boudeville, French economist, in Problems of Regional Economic Planning, 1966 Integrated Economic Zones Resource Corridors Program Growth poles outcomes consist in Central to the growth pole is a group of Burkina Faso–Bagré Pole (2011-) accelerating economic growth through dynamic industries connected around a spatially targeted investments and industry- particular resource. Ghana Gateway Project (1999-2009) $115m budget level policies. The growth of these anchor industries is Contribute to increase economic activity in • $50 million budget This document is not a presentation, nor is it intended to be used as Combining elements of physical investment, regulatory reform and capacity building., they draw on the following concepts: 1) economies of scale; anticipated to generate further investment, employment, and distribution of factor payments. In turn, external effects of this growth are the project area, resulting in an increase in private investment, employment generation and agricultural production, through 3 components : Dem. Rep. of Congo (2013-) • $68 million new investment • 8,000 direct jobs created • 30,000 indirect jobs created To remove identified constraints to bring such. This document is a report which formatting has been specifically 2) the nurturing of backward and forward expected to develop an ecosystem of Western Growth Poles economic supply linkages and also fiscal suppliers through linkages. (i) Reinforce institutional capacity to Project about development of trade and exports, and and final demand linkages; and foster investment by reducing costs of attract direct investments for industrial and 3) economies of agglomeration, which are Investments are simultaneous across doing business in the zone and enhance infrastructure development. Madagascar Integrated Growth Poles Project (2004-12) associated with spatial clusters and the many sectors and therefore call for pole management Outcomes: designed to be easily disseminated and discussed within Government geographic concentration of economic coordination and adequate financing. (ii) Develop critical missing public Other mining • $100 million To address key constraints to Reduction in the cost of manufacturing, activities. Development programs coordination infrastructure (canals for irrigation, related resource budget investment, including infrastructure, transportation and administration through remains an important challenge to deal equipment for livestock and fisheries, corridors • 3 growth poles business environment, institutional facilities, infrastructure and ICT improvements, Growth pole projects are built around with, and a convening structure is a must- roads) to promote agricultural development (tourism, mining and capacity, skills and access to finance service enhancements for exporters. existing economic opportunities such as have to ensure the delivery of projects and (iii) Develop critical services and direct • Industrial ICT) Lessons learned: and with stakeholders. It will be used as a foundation for the design of a natural endowments and/or an anchor investor, and may address market failures along value chains. minimum overlapping of financing between public money, investors and donors. support to increase competitiveness of smallholders and SMEs Cluster to Resource Corridor in Northern Chile • 5,000 new businesses • 10,000 formal jobs created (i) Rather than using scarce public investment, the project should be leveraged by private sector investments and by the creation of a context for Public The establishment of transport and supply chain linkages with suppliers and exporters beyond the territory of the zone itself. Afghanistan Sierra Leone has a (2009-): 50% • Increased of hotel Private Partnerships. growth poles program. Economic unique combination of Burkina activities within Sierra Leone Madagascar Ghana Mozambique local sourcing room capacity in the (ii) Each sector investment schedule Lessons learnt: diverse economic Faso growth poles DRC growth poles • Maputo should be timed to coincide with other (i) Upgrade to the Integrated Economic Zone #1 #2 #3 #1 #2 #3 #1 #2 #1 #2 #3 activities within a Development • Increase in FDI sectors investments in order to allow the concept with an enabling ecosystem around growth pole where Corridor (1990’): Outcomes: delivery of the integrated services. (ii) To attract a critical mass of firms all the Mining          mining, agriculture, $5 billion in 1. Tourism pole (iii) A more regionally focused approach facilities provided have to be functional: firms Agriculture        tourism and infrastructure 2. Light manufacturing allows optimal allocation of scarce public only considered locating at the Economic Tourism      and industrial pole resources and strategic deployment of Zone once the entire infrastructure and manufacturing can be Manufacturing    development 3. Multi-purpose port limited institutional capacity. services were available Forestry  found simultaneously 19 | | 18 SOURCE: Problems of Regional Economic Planning; World Bank Page 18 Page 19 Contents Chapter Section Page Executive summary 6 Introduction 11 • International lead practices 16 1 The growth poles approach • Characteristics of a growth pole • Growth pole framework (dialogue, institutions, analysis and financing model) • Economic overview and trends 2 The context in Sierra Leone • Managing the mining boom 28 • Economic diversification • Mining and linkages 36 3 The sectors that drive growth • Agriculture and fishery • Tourism • Gaps analysis, champions, key metrics and current status 4 Five enablers of competitiveness • Five dimensions of competitiveness: infrastructure, labor, market efficiency, 46 governance and finance • Rapid assessment of the Northern growth pole 54 5 About the three growth poles • Rapid assessment of the Coastal growth pole • Rapid assessment of the South-Eastern growth pole The proposed growth poles • Delivery systems 6 • Deals–orientation 62 program • Catalytic interventions • Social capital development • Plan future activities 74 7 Next steps • • Prioritize sectorial and cross-cutting interventions Prepare the foundations for growth poles support Report back-up appendix • Supporting material for chapters 1 to 7 82 99 Bibliography • Bibliographic references Executive summary (1/4) GROWTH POLES THEORY AND APPLICATIONS Lessons learnt The concept Lessons learnt from these experiences are that it is not possible to build or create a growth pole from scratch, there is a need to The fundamental concept of growth poles is that they support the development of a growth poles around existing or emerging exploit agglomeration economies and spillover effects to spread resulting inherent revenue producer. Then it is accepted that the value proposition a prosperity from the core of the pole to the periphery. At the basis of this growth pole establishes allows Government to leverage private investment theory is the assumption that economic development is not uniform over a with little public financing (e.g. through Public Private Partnership). Also, region. Rather, it concentrates around a geographic feature or economic the characteristics of growth poles make them a time-bound approach hub. In particular, it frequently concentrates around a key industry, around which can signal commitments while sequencing phases of delivery (quick which linked industries develop. A growth pole can be used to nurture wins, medium-term investment and long term development). Given its direct and indirect linkages from the flagship industry to supporting complexity and uncertainty, it is acknowledged that growth poles design is sectors, which vastly expands the employment generation potential of new flexible to changes, adaptable to seize opportunities and can adjust investments in said flagship industry. The expansion of this key industry targets if required. The big story being growth poles is an institutional implies the expansion of output, employment, related investments, as well challenge of operating in a multi-sectorial context for which political as new technologies and new industrial sectors. economy is a crucial factor of success or failure. Finally, based on World Bank’s quite significant experience in supporting the development of Its origins growth poles in Sub-Saharan Africa, there are three key policy challenges Government can help to address: growth poles coordination, In recent years, growth poles have emerged as an accountability questions, and risk management and risk sharing. innovative approach to seize opportunities and overcome barriers to investment, and to develop agglomeration economies. Growth poles as a THE GROWTH POLES FRAMEWORK FOR A DISTINCTIVE DIAGNOSTIC strategy were introduced in1949 by Francois Perroux, a French economist who taught at the University of Lyon and founded the Institut de Sciences A Dialogue B Institutions C Analysis D Financing Economiques Appliquées. The first growth pole was established in 1966 in The growth poles diagnostic is a process with four France, when the French government identified eight métropoles interrelated focus areas which taken together form a distinctive growth d'équilibre throughout France to promote regional growth and equality pole development strategy. First, there must be constant dialogue among provinces. After several years of dormancy, the growth poles between key stakeholders involved, both in Government level and at approach has recently resurfaced as the World Bank adopted it in several public-private level. Secondly, institutions must be dynamically integrated countries in the early 2000’s. to establish clear objectives and deliver effectively on those objectives. Thirdly, two steps of analysis should be taken to structure the growth pole Its applications – a first to go through a prioritization process that narrows an exhaustive scope to a short list of recommendations, and a second to sequence Growth poles have been used in Sub-Saharan Africa interventions, measure costs and impacts and select targets to be (Madagascar, Burkina Faso, Mozambique, DRC), Asia (Afghanistan, delivered. Finally, a growth poles program should be funded via a China, Malaysia, Indonesia), Latin America and the Caribbean (Chile, combination of financing sources to provide fiscal stability and mitigate Haiti) to promote balanced growth and shared prosperity. Thus far, the risk. Following these four steps, it is possible to develop a growth pole returns appear to be favorable, causing growth poles to be identified as a program unique to the needs of Sierra Leone and that supports Agenda “development fad” for the coming era. for Prosperity (2013-17). |6 Executive Summary (2/4) GROWTH POLES APPROACH IS RELEVANT TO SIERRA LEONE However, developing effective growth poles that can coordinate these three industries is no simple task. While a growth pole Growth poles are simultaneous, coordinated investments strategy has been used to good effect in several countries in recent history in various sectors to support self-sustaining industrialization in a country. from which we can learn lessons, it is difficult to duplicate the results a They usually combine public and private investments and are specifically growth pole project from one country to another. By following a rigorous built around an already-existing resource at a specific location in an framework, it is possible to address this complexity and create a strategy economy. In particular, it focuses on how infrastructure can be developed specific to the country in question. within an existing private investment in a manner that will encourage spillovers into other sectors. A growth pole traditionally will have an FOSTERING COMPETITIVENESS ENABLERS FOR ECONOMIC existing resource that serves as an inherent revenue producer. DIVERSIFICATION Developing this program offers the opportunity to more For Sierra Leone, this revenue producer manifested itself widely distribute the benefits from the mining boom and to make in the recent boom in iron ore mining. The country is currently investments more region- and industry- specific. While the extractives experiencing rapid GDP growth as a result of unprecedented FDI inflows industry will be a vital source of growth for Sierra Leone’s economy, it has in iron ore mining. This growth has the potential to dramatically improve a differential impact in various regions. Some mining poles do not offer Sierra Leone's development outlook. However, without parallel growth in notable linkages to the surrounding regions and therefore should not be a other sectors this boom will not be enough to generate stable employment focus of intervention. A growth poles program would strengthen linkages gains in the medium and long term. Specifically, two job-creating between the mines and the surrounding economy by identifying regionally industries have been identified as having the capacity to augment the relevant industries that can augment the impacts of the extractives boom mining boom to achieve shared prosperity: agriculture (including agro- via parallel interventions. Within the agriculture industry, rice, palm oil, and processing) and tourism. fisheries offer potential for growth. Furthermore value chain could be uplifted through agro processing. Within the tourism industry, a planned logistics hub, new hotels, and the development of new tourist attractions Agriculture employs the largest number of Sierra have the best employment generation potential. These interventions in Leoneans by sector, and increasing investment in the supporting mining, agriculture, and tourism overlap in key geographic regions, which infrastructure for agriculture and extending the agriculture value chain can have been identified as the most promising growth poles. significantly increase overall employment and wages, particularly the link between small holder farmers and established commercial agribusiness. These growth poles can only be successful in generating employment and growth if deficiencies are overcome in five key areas: (i) infrastructure, (ii) labor, (iii) market efficiency, (iv) governance, and The potential tourism market is also largely untapped, (v) finance. In terms of infrastructure, the pressing concerns are those of despite having world class resources that offer the foundation of a strong electricity, connectivity and access to ports. On the labor front, gaps in and lucrative tourism sector which would promote sustainable growth. literacy and youth employment pose threats to the viability of the growth pole. Within market efficiency, the greatest challenges will be the lack of Developing these three industries simultaneously will amplify the potential benefits from the mining boom and ensure that all Sierra Leoneans have the opportunity to benefit from the newfound prosperity. i ii iii iv v 7| Executive Summary (3/4) regulation of the informal economy and poor logistical support for farmers, CONSENSUS FOR A GROWTH POLES PROGRAM traders and entrepreneurs. Concerns regarding governance include corruption and poor delivery of services. Finally, with regards to finance, The proposed growth poles program has been uniquely the overarching concern is insufficient supply of credit and financial designed to support the Government of Sierra Leone’s Agenda for services to both households and industry, as well as the prohibitive cost of Prosperity: an appropriate delivery system; deal-transaction orientation to capital. tap in opportunities for shared infrastructure development; the support of catalytic interventions to remove value chain constraints, and the THREE GROWTH POLES IDENTIFIED development of social capital. Moving forward, the Government should take full ownership of the delivery system that will allow it to capitalize on Addressing these shortcomings will allow the growth unique and timely partnership opportunities. The method of delivery of poles to achieve their maximum impact. An analysis of factor endowments growth poles will be critical not only in avoiding missed opportunities, but and linkage opportunities in the three key industries led to the also in making optimal use of catalytic interventions and in building social identification of three viable growth poles in Sierra Leone where the capital. Proper delivery mechanisms will ensure that implementation individual sectors overlap: (1) The Northern growth pole; (2) The Coastal processes allow for local participation in policy processes and build off of growth pole; and (3) The South-Eastern growth pole pre-existing structures and knowledge at the local and regional level. The Northern growth pole, where the capital city Freetown A set of projects have been pre-identified within the three is located, would focus on developing power and market access, sectors (mining, tourism, and agriculture) but also some that cut across particularly within the mining and agricultural industries; develops support more than one sector and that target deficiencies in the five key issue institutions; and augments mining linkages such as steel manufacturing. areas (infrastructure, labor, market efficiency, governance, and finance). Competitive industries are iron ore, biofuel, light manufacturing, logistics, They have been divided into quick wins, medium term interventions, and rice, palm oil, fisheries and tourism. The Northern growth pole goes from long term interventions. These distinctions are based on their relative Freetown to Tonkilili, including cities such as Lungi, Port Loko, Lunsar and ease of implementation as compared to their expected impact in terms of Makeni. public, private and social returns. This allows to properly prioritize these projects and prepare a financing plan for them based on the constraints of The Coastal growth pole, which stretches from Bonthe to the given financing landscape. Sulima, would focus more on infrastructure development, tourism and agribusiness, in addition to strengthening business linkages in mining and Finally, proper development of delivery systems, deals, agriculture. Competitive industries are bauxite, illemite, zircon, rutile, palm catalytic interventions, and social capital will allow the growth pole to oil, rice, ecotourism, beaches and oil exploration. The game changing achieve its maximum impact and shape the trajectory of Sierra Leone’s factor that will drive the future of this growth pole is the location of Sierra growth to the benefit of all stakeholders. Leone next deep-water port. The South-Eastern growth pole would develop institutions and strategies for cross-border trade, some tourism, small business linkages, and extends the value chain for agribusiness. Competitive industries are cocoa, wood, palm oil, eco-tourism, coffee, rubber and diamonds. |8 Executive Summary (4/4) MOVING FORWARD The next phase of the Sierra Leone growth pole diagnostic will consist of a large, rapid assessment of multi-sectorial studies across the four components identified for a future growth poles program (delivery systems, deals orientation, catalytic interventions and social capital development) that will lead to an integrated action plan of maximum two prioritized growth poles in Sierra Leone, with options for extension to a second and/or third one in the medium term. While the future growth poles program is expected to receive various sources of financing (public and private), the immediate rapid assessment of multi-sectorial studies will be co-financed by the European Union and the World Bank Group. GROWTH POLES PROGRAM Delivery Deals systems orientation Social Catalytic capital interventions development 9| Article from Inside Africa (World Bank Newsletter) Leveraging Fast Growing Economy to End Extreme Poverty and Boost Shared Prosperity WASHINGTON, August 13, 2013 — AFR Finance and Private Sector Coming with this good news, however, is the challenge to make the Development (FPD) team of the Competitive Industries Global right choices in sharing the prosperity in a way that ends extreme Practice in the World Bank has been working round the clock over poverty. the past one year to position the Government of Sierra Leone to take advantage of the country’s recent impressive growth gains to end The Growth Pole Diagnostic is an analytic and advisory product that extreme poverty and boost shared prosperity. informs the choices and provides a framework for a one World Bank Group intervention. Beyond the Diagnostic is a planned downstream This was made possible through an analytic work called the ‘Sierra work to help Sierra Leone implement the selected choices. The Leone Growth Pole Diagnostic’ which the Government is now innovative format of the Diagnostic output allows for a participatory expanding into a wider ‘Growth Poles Program’ and using it to attract multi stakeholders process to take place. assistance for delivery systems that create growth poles and jobs in impoverished communities across the country. The choices in the Diagnostic include using the increased revenue from growth to: (i) provide a combination of hard and soft Country Manager for Sierra Leone Francis Ato Brown says “this infrastructure that benefit the poor and address their opportunities and initiative is coming at the right time as it offers to fulfill the goal of challenges, and (ii) build strong and resilient public delivery systems, shared prosperity which the Government of Sierra Leone has in be deals-oriented for shared facilities, encourage catalytic common with the World Bank Group. Just about the same time, World interventions and develop social capital. Bank Group President Jim Yong Kim (JYK) has announced important steps towards creating incentives for high-reward operations that have The Diagnostic is also proving useful to the country in presenting potentially transformational results. So the Sierra Leone Growth Poles options for addressing the challenges and opportunities for job Program is coming in handy in this regard”. creation and stimulation of local markets. According to Country Director, Yusupha Crookes “In a fragile The Sierra Leone Growth Poles Program (SLGPP) has been country or situation, fast growing economies that are driven by a featured in the World Bank Group’s recent regional showcase of mining boom come with both prospects and risks to ending extreme spectacular operations with high transformational potentials and poverty and sharing prosperity. The Sierra Leone Growth Poles possibilities to harness cross sectors efforts. World Bank’s Africa Program is one that is challenged in two ways: (i) mitigate the risk of Region Vice President Makhtar Diop had a section in his presentation putting all eggs in one basket for growth and, (ii) expand the benefits on SLGPP during his recent IDA replenishment dialogue trip to of putting all eggs in several baskets for shared prosperity”. Managua. Sierra Leone achieved GDP growth of 15.2 percent in 2012, faster Recently also, the Africa Competitiveness Report of 2013 devoted than any other economy in Sub-Saharan Africa for that year. Exports a section on how the World Bank Group support for the stimulation of from mining, especially from iron ore, contributed to this weighty growth poles in mining boom led economies of low income countries increase. and fragile states can help to raise competitiveness and deepen regional integration. | 10 Introduction Sierra Leone economy has experienced a 15.2% GDP growth in 2012, mainly due to the discovery and exploitation of significant iron ore deposits, and is predicated to grow by 13% in 2013 (IMF). However, reaching Middle Income Country status, achieving shared prosperity and meeting job-creation targets will require not only to harness this mining boom but also leverage other opportunities in sectors such as agriculture and tourism, for diversifying the economy and prevent the infamous resource curse. The Growth-pole approach has been implemented in numerous countries across the region and is suggested here as an adequate development tool. The complexity of such an approach lies in the prioritization of both geographical areas and industries, as well as the coordination of investments and stakeholders from public and private sectors. This report thus identifies specific industries and geographical opportunities for the Government to adopt a growth-poles approach for economic development and diversification, and recommends a possible coordination structure and tangible program components, to move towards implementation. The growth poles approach can contribute in managing the mining boom and foster economic diversification Exports per capita, 2010 $ Per capita GDP, $ Equatorial Guinea Oil exporters 10000 <500 Libya South Africa Botswana Diversified Angola Gabon 500-1,000 Zambia Mauritius Tunisia 1,000-2,000 Congo. Rep. Algeria Egypt 2,000-5,000 1000 Namibia >5,000 Nigeria Sudan Cote d'Ivoire Morocco Chad Ghana Cameroon Size of bubble Senegal Mali proportional to GDP Guinea Tanzania Kenya 100 DRC Mozambique Scenarios Liberia Madagascar Uganda Without diversification Rwanda Pre-transition Ethiopia Transition With diversification 10 Note 1: Sierra Leone is 10 20 30 40 50 60 70 80 90 100 currently going towards a Economic diversification resources driven economy Manufacturing and service sector share of GDP, 2010, % (2012 vs. 2010). It is possible Note 2: Countries included above either have a 2010 GDP of approximately US$10 billion or greater, or whose real GDP rate to bend this trajectory toward exceeds 7 percent in 2000-08. 22 countries which account for 4 percent of African GDP in 2010 have been excluded. a more diversified one. SOURCE: OECD; World Bank; McKinsey Global Institute; Authors' analysis 11 | The growth poles approach is relevant to the Government’s strategy and vision . . . Growth poles will support Government’s strategy and provide a trajectory to become a MIC by 2035 “Sierra Leone will need to build a stable economy, founded on private sector-led growth, and Growth Poles Program diversified across several competitive sectors“ “By 2035, Sierra Agenda for prosperity Leone aspires 1. Delivery system to plan, coordinate and 1. Economic diversification to be an monitor priorities 2. Managing natural resources inclusive green 2. Deals-orientation for shared 3. Human Development middle income infrastructure development 4. International competitiveness 5. Labor and employment country“ 3. Catalytic support to competitive industries through business linkages 6. Social protection 4. Social capital development 7. Governance and Public Sector Reform Note: Middle Income 8. Gender equality Country status = $1,006 per capita GNI AGENDA FOR PROSPERITY Implementation: Implementation: M&E: Preliminary Preparatory Work Quick Wins Medium term growth Long Term Growth poles diagnostic Years 0.5 (2012) 1 (2013) 2 (2014) 5 (2017) >10 Scoping We are here Developing specific Creating an First Phase Identifying key development interventions to intervention Diagnostic gaps through consultations address gaps mix Report Second Phase Program and Prioritizing interventions projects and sequencing preparation | 12 SOURCE: GoSL; World Bank; Authors' analysis . . . and provides support to foster economic diversification through the sequencing and implementation of private sector development priorities A strategic focus within Agenda for Prosperity… … on competitive industries development Pillars Agenda For Prosperity Economic Managing International diversification natural competitiveness resources 1 2 4 Agriculture Mineral resources Business 1 2 4 Manufacturing Environment environment Fisheries Marine resources SMEs Pillar 1 Pillar 2 Pillar 3 Pillar 4 Pillar 5 Pillar 6 Pillar 7 Pillar 8 Road network    Tourism Water Land mgmt. Energy Primary focus of the diagnostic Focus Port and airport Oil and gas Secondary focus of the diagnostic Not focus Waterways Forestry Telecom Principles for industries selection and mapping Growth poles identification Rationale Criteria Geo spatial overlays • Can significantly • FDI in industrial mining, commercial farming and hotels • To have transformational contribute to GDP • Business linkages and shared infra development potential impact • Has the potential to grow • Sierra Leone needs a 6.7% • Is labor intensive GNI growth to reach MIC • Creates stable jobs status by 2035 • Builds business linkages • High youth unemployment and • Can cluster for demographic pressure cooperation and • Local procurement from anchor competition investors strengthen domestic private sector and will improve + Industrial mining competitiveness and tax and linkages collection + Selected crops • Industries’ ability to produce and agro-supply chains new goods is key for + Top touristic attractions diversification SOURCE: GoSL; Authors' analysis ≈ Growth poles mapped 13 | Findings Two (2) Four (4) Three (3) mining agribusiness tourism poles and fishery poles poles 3 multi-sectorial growth poles have been identified: 1 Northern growth pole: Freetown to Tonkilili 2 Coastal growth pole: Bonthe to Sulima 3 South-Eastern growth pole: Tiwai to Kailahun | 14 SOURCE: Authors' analysis Proposed growth poles program to signal commitment, pursue quick wins and support Agenda for Prosperity Addressing coordination, accountability and risks Focusing on labor intensive industries 1. Growth pole coordination challenges concern the setting up Stable jobs Vulnerable jobs Unemployed and sustaining of both the spatial and the political economy Agriculture 22 165 linkages that are required to make these poles happen. Retail and hospitality 15 46 2. A delivery system will address the current lack of effective Manufacturing 14 14 inter-ministerial collaboration and capacity to support and Construction 8 3 Stable employment includes wage and facilitate this approach. Transport and communication 7 3 salary employees and business owners; 3. The deals-orientation of the growth poles program will aim at vulnerable employment includes Finance and business services 5 1 developing shared infrastructure to encourage spillovers. subsistence farming, informal self- 4. While infrastructure projects are important, associated Resources 1 employment, work for a family member investments and capacity-building efforts directed at the Utilities 1 private sector are required to catalyze economic Unemployed 34 diversification. 0 50 100 150 200 5. Services delivery by local authorities and shared prosperity Millions of jobs, 2010 with communities are important measures of the success for Note: Estimated using data for Algeria, Angola, Egypt, Ethiopia, Kenya, Agenda for Prosperity (human development, social protection, Morocco, Mali, Nigeria, Senegal, South Africa and Uganda gender, environment and local private goods) Sector Competiveness dimension Focus After this diagnostic, Not focus the next step will Growth poles program infra labor market gov. finance consist of a large, Component Delivery Deals rapid assessment of systems orientation multi-sectorial Delivery studies across the systems four components of the proposed Deals program. orientation This is much needed to signal Catalytic Social commitment; pursue interventions Catalytic capital quick wins; and interventions development prepare for the next Social capital phases of development development. SOURCE: GoSL; International Labour Organization; McKinsey Global Institute; World bank; Authors’ analysis 15 | Chapter 1 – The Growth Poles Approach for Sierra Leone International lead practices 1 The growth poles approach Characteristics of a growth pole 2 The context in Sierra Leone Framework A Dialogue 3 The sectors that drive growth B Institutions C Analysis 4 Five enablers of competitiveness Financing D 5 About the three growth poles 6 The proposed growth poles program 7 Next steps Back-up appendix | 16 Chapter 1 summary Growth poles are simultaneous, coordinated investments The growth poles approach has been used several times in many sectors to support self-sustaining industrialization in a country. before, so far to good effect. It has already been used to leverage mining, They usually combine public and private investments and are specifically agriculture, and tourism in countries all across Sub-Saharan Africa, built around an already-existing resource at a specific location in an including Burkina Faso, Madagascar, the Democratic Republic of the economy. In particular, they would focus on how infrastructure can be Congo, and Ghana. However, every geo-spatial development project has developed within an existing private investment in a manner that will distinctive features, and it is difficult to duplicate the results of a growth pole encourage spillovers into other sectors. A growth pole traditionally will have project from one country to another. an existing resource that serves as an inherent revenue producer. By following a rigorous framework, it is possible to address The fundamental concept of growth poles is that they this complexity and create a strategy specific to the country in question. exploit agglomeration economies and spillover effects to spread resulting The growth poles diagnostic is a process with four interrelated focus areas prosperity from the core of the pole to the periphery. At the basis of this (dialogue, institutions, analysis, and financing model) which, taken theory is the assumption that economic development is not uniform over a together, form a distinctive growth pole development strategy. region. Rather, it concentrates around a geographic feature or economic hub. In particular, it frequently concentrates around a key industry, around First, there must be constant dialogue between which linked industries develop. A growth pole can be used to nurture Government agencies involved and private sector and communities likely to direct and indirect linkages from the flagship industry to supporting sectors, be impacted. which vastly expands the employment generation potential of new investments in said flagship industry. The expansion of this key industry Secondly, institutions must be dynamically integrated to implies the expansion of output, employment, related investments, as well establish clear objectives and deliver effectively on those objectives. as new technologies and new industrial sectors. Institutions should be integrated both vertically, with one governmental agency acting as the sponsor, and horizontally, so that all stakeholders are Growth poles are of particular interest when the key incorporated. industry tends to be very isolated from the rest of the economy. For example, extractive industries are often accused of creating growth without Thirdly, two steps of analysis should be undertaken to generating income or job increases beyond the bounds of its sector. In structure the growth pole. The first goes through a screening model that these cases, a growth pole serves to spread the income generated in the narrows an exhaustive scope of possible projects to a short list of projects core of pole in the extractive industry to the periphery via employment that are feasible and have the highest expected value, and uses this to generation in supporting sectors. In this manner they marry the joint create a prioritization of those projects. The second sequences economic goals of government: to reduce inequality and to promote interventions, measures costs and impacts and selects targets to be economic growth. delivered. This stage factors is both the timing of the projects and the varying levels of risk that accompany that timing. Growth poles focus investment on high-labor-intensity industries and attempt to exploit agglomeration and linkage economies. Finally, the project should be funded via a combination of Frequently they direct investment to a single center of economic activity or financing sources to provide fiscal stability and mitigate risk. Potential a particular geographic feature. The design of a growth poles project is also sources of financing include private funds, public funds, donors, and public- time sensitive; it allows the sequencing of projects in terms of quick wins private partnerships. Following these four steps, it is possible to develop a and medium and long term interventions. Each of these phases is growth pole program unique to the needs of Sierra Leone. interlocked with the previous one to phase up the linkages formed in the previous phase, with the goal of eventually integrating and linking the entire zone to the growth pole. 17 | Growth poles are simultaneous, coordinated investments at the industry level in many sectors to support self-sustaining industrialization in a country A growth pole is a set of expanding industries located in an area and inducing further Haiti (2013-) development of economic activity throughout its zone of influence. Boudeville, French economist, in Problems of Regional Economic Planning, 1966 Integrated Economic Zones Growth poles outcomes consist in Central to the growth pole is a group of Burkina Faso–Bagré Pole (2011-) accelerating economic growth through dynamic industries connected around a spatially targeted investments and industry- particular resource. $115m budget level policies. The growth of these anchor industries is Contribute to increase economic activity in Combining elements of physical investment, anticipated to generate further investment, the project area, resulting in an increase in regulatory reform and capacity building., they employment, and distribution of factor private investment, employment generation draw on the following concepts: payments. and agricultural production, through 3 1) economies of scale; In turn, external effects of this growth are components : 2) the nurturing of backward and forward expected to develop an ecosystem of economic supply linkages and also fiscal suppliers through linkages. (i) Reinforce institutional capacity to and final demand linkages; and foster investment by reducing costs of 3) economies of agglomeration, which are Investments are simultaneous across doing business in the zone and enhance associated with spatial clusters and the many sectors and therefore call for pole management geographic concentration of economic coordination and adequate financing. (ii) Develop critical missing public activities. Development programs coordination infrastructure (canals for irrigation, remains an important challenge to deal equipment for livestock and fisheries, Growth pole projects are built around with, and a convening structure is a must- roads) to promote agricultural development existing economic opportunities such as have to ensure the delivery of projects and (iii) Develop critical services and direct natural endowments and/or an anchor minimum overlapping of financing between support to increase competitiveness of investor, and may address market failures public money, investors and donors. smallholders and SMEs along value chains. Afghanistan Sierra Leone has a Economic unique combination of Burkina activities within Sierra Leone Madagascar Ghana Mozambique diverse economic Faso DRC growth poles #1 #2 #3 #1 #2 #3 #1 #2 #1 #2 #3 activities within a growth pole where Mining          mining, agriculture, Agriculture        tourism and Tourism      manufacturing can be Manufacturing    Forestry  found simultaneously | 18 SOURCE: Problems of Regional Economic Planning; World Bank Sierra Leone can learn from international experience and lead practices from the World Bank Afghanistan (2011-) Resource Corridors Program Ghana Gateway Project (1999-2009) • $50 million budget • $68 million new investment • 8,000 direct jobs created Dem. Rep. of Congo • 30,000 indirect jobs created (2013-) Western Growth Poles To remove identified constraints to bring Project about development of trade and exports, and attract direct investments for industrial and infrastructure development. Madagascar Integrated Growth Poles Project (2004-12) Outcomes: Other mining • $100 million To address key constraints to Reduction in the cost of manufacturing, related resource budget investment, including infrastructure, transportation and administration through corridors • 3 growth poles business environment, institutional facilities, infrastructure and ICT improvements, (tourism, mining and capacity, skills and access to finance service enhancements for exporters. • Industrial ICT) Lessons learned: Cluster to • 5,000 new (i) Rather than using scarce public Resource businesses investment, the project should be The establishment of transport and supply Corridor in • 10,000 formal jobs leveraged by private sector investments chain linkages with suppliers and exporters Northern Chile created and by the creation of a context for Public beyond the territory of the zone itself. (2009-): 50% • Increased of hotel Private Partnerships. local sourcing room capacity in the (ii) Each sector investment schedule Lessons learnt: • Maputo growth poles should be timed to coincide with other (i) Upgrade to the Integrated Economic Zone Development • Increase in FDI sectors investments in order to allow the concept with an enabling ecosystem around Corridor (1990’): Outcomes: delivery of the integrated services. (ii) To attract a critical mass of firms all the $5 billion in 1. Tourism pole (iii) A more regionally focused approach facilities provided have to be functional: firms infrastructure 2. Light manufacturing allows optimal allocation of scarce public only considered locating at the Economic and industrial pole resources and strategic deployment of Zone once the entire infrastructure and development 3. Multi-purpose port limited institutional capacity. services were available 19 | The complexity of growth poles development requires commitment and clear milestones, it is a time-bound exercise 1 Current 2 Quick Wins 3 Medium-Term 4 Long-Term Characteristics of growth pole projects: Quick wins and medium-term investment for long-term development National border Sourcing (direction of money flow) Growth pole area Main sector Secondary sector Local suppliers Entrepreneurs Investments Exports Local market Note: Levels of investment are nonexistent for current, low for quick wins, medium for medium term, and significant for long term. • One main industry • Quick wins are innovative • Scaling up of secondary • Spillovers leading to the in defined location interventions that use existing industry development of robust integrated • Value-chain resources for immediate • Development of local sourcing economic zone Situation sourcing from impact in value chain of both main and • Vast improvements in overseas • Emergence of a secondary secondary industry infrastructure • Poor investment industry sector and investors • Emergence of vibrant • Reinvestment of revenue climate and aware of new opportunities economic activity and scaled generated into local communities infrastructure and spillovers up FDI • Increase in quality of life/ migration • Scoping to determine • Shared-use infrastructure scoping • IFC InfraVentures • Increase in number of long-term key locations on site • Access to finance and skills for • Country-level fund for medium- infrastructure projects • Stakeholder local entrepreneurs term infrastructure development • Institutional support for PPPs Type of consultations • Short-term CSR initiatives for like upgrading utilities and building • Monitoring and evaluation of activities • Issue identification and community development feeder roads strategic objectives set out by diagnostic • Investment promotion activities • Facilitation of local industries in the country strategic plan and growth • Intervention design and tax holidays for secondary supply-chain (industry pole roadmap sector organizations) through funding • Start pipeline for infrastructure projects | 20 SOURCE: World Bank, Authors’ analysis The diagnostic is a process with four interrelated focus areas which taken together form a distinctive growth pole development strategy A Dialogue B Institutions Consultation with key stakeholders Horizontal coordination Developing a growth pole successfully necessitates developing a • Streamlining institutional arrangements to coordinate dialogue with stakeholders in order to: competitiveness, investment, and other issues between central • Understand the current context for development and growth, as and local government, and between public and private sectors well as ongoing and future investment potential • A council or team in a ministry could play an important strategic • Share best practices and success stories role in horizontal coordination and temporal coherence • Generate new ideas for specific growth pole interventions • Test existing ideas Vertical coordination • Identify key “champions” for change and develop partnerships • Because of the dynamic nature of a growth pole project, • Define the role of international finance in encouraging localized implementation arrangements in particular should be attended and inclusive growth to in detail • Take key ideas and develop interventions in concert with local • An effective results-based monitoring and evaluation partners or champions framework, based on multi-stakeholder participation, iterative • Identify projects for funding learning, and peer group studies of other growth poles should • Coordinate among all strategically important initiatives be constructed C (1) & (2) Analysis D Financial model Diagnostics focused on competitive industries Any growth pole would have financing from some combination of financial instruments: Several different types of diagnostics should be utilized: • Spatial analytics analyze, from a locational perspective, some of Each growth pole is a sum of its parts, and any growth the key economic drivers in play, such as agribusiness, natural pole would have financing from some combination of the resources, logistics, infrastructure, and existing manufacturing following: capabilities • Public financing • Sector and subsector analytics, complemented by product space • Donor grants and financing lie outside the budget analysis, identify emergent competitive Advantages • Public private partnerships • Trade competitiveness and services sector diagnostics identify • Corporate social responsibility-like intervention spillovers between sectors • Asset sales/leases • Business school–style case studies of the top five “gazelles” • Privatization of existing SOEs (dynamic, fast-growing companies) are co-produced with local • Private financing with some risk mitigation research institutions to illustrate the methods used by local • Private financing (by no means last) where all risk is with the dynamic enterprises private sector. SOURCE: Africa Competitiveness Report 2013; Authors’ analysis 21 | Developing a growth pole successfully requires a constant dialogue among A stakeholders Public-Private Dialogue ► An effective PPD Dialogue will bring several benefits: ► A continuous Government -led dialogue: • Sharing of expertise & skills • High-Level meetings between business leaders • Exchanging information and Government • Trouble-shooting problems • Regular policy Roundtables • Coordination public & private investments • Face-to face-meetings, regular updates, focus ► PPD has to be structured, inclusive and transparent : groups , online contact • Inclusive dialogue with expanded participation of stakeholders • Effective representation from private sector • Dialogue must have clear objectives • Monitoring of results or dialogue Sierra Leone has existing channels for dialogue amongst stakeholders for a growth poles program but new specialized channels may need to be created Stakeholder Group Existing channels that could be used Possible dialogue format Government • Annual Investment Conference led by SLIEPA • Cabinet Papers on growth poles & Monitoring • Investor round-tables Private • Business Associations: e.g. SLCCIA, British • Government can engage Business Associations Sector Chamber of Commerce in SL , Chamber of on investment opportunities in growth poles & Mines demand driven skills development Development Partners • Private Sector Development Donor Group • Growth Poles focused meetings to prioritize (ADB, DFID, EU, IFC, UNDP,WB, etc.) interventions, attract additional funds & agree on Local Gov’t & joint operations • District Implementation Committees NEW Traditional • Grievance Redress Mechanisms in growth authorities • With private sector participation e.g. poles area addressing land issues National • Traditional consultative mechanism • National Steering Committee on growth NEW • With broad representation of stakeholders chaired Stakeholder poles by key Gov’t authority. NSC provide oversight on Group growth poles | 22 SOURCE: IEG PPD Global Review Presentation, World Bank, Consultations, Team Analysis It also takes dynamic interaction among institutions to best coordinate efforts towards producing the desired outcomes B Institutions and delivery system Institutional & delivery system should Key characteristics of effective institutions to deliver clear objectives to: deliver a growth poles program • Allow Government's leadership and oversight while • Identifies one Government institution with strong convening facilitating wide stakeholder ownership of program power as sponsor to lead dialogue & coordinate • Facilitate horizontal coordination within MDAs & • Assigns clear roles and responsibilities to vertical coordination between various level of stakeholders at early stage of program design Government, and the private sector, civil society • Creates a lean and efficient delivery unit as a center of excellence with focal points in MDAs • Enable efficient execution of project activities • Allows flexibility and adaptability to changes along cycle of • Facilitate informed community level participation project e.g. reassigns roles and reprograms activities • Creates inclusive system that can attract private sector investments and development partner funds Lessons from institutional structures in other Growth Poles Projects Lead Government institution on growth poles and host of delivery unit should have convening power with Government: Office of the Prime Minister in Madagascar, Bagré Growth Ghana Burkina Faso Poles Authority and Ministry of Planning and Development in Gateway Bagré Growth Poles Mozambique Project Project Private Sector needs to be engaged at the early stage of program design if they are to invest within poles e.g. Rio Tinto port investment in Madagascar Madagascar Mozambique Community within growth poles areas should be involved Integrated Growth Integrated Growth Poles e.g. grievance redress mechanism in Bagré; presence of Poles Project Project (planned ) National Secretariat in growth pole area SOURCE: IEG PPD Global Review Presentation; Deliverology 101; Consultations; Authors’ analysis 23 | The first step of the analytical work is to go through a prioritization process C (1) from an exhaustive scope to a short list of recommendations Exhaustive Long list Short list Prioritization process 1 2 3 Why Literature / Sector / industry X X X Reasons X Problem solving index review selection • competitiveness reports/ index • feasibility check • hypothesis/issue trees • logistics performance index • export performance • define growth poles program • porter's five forces components and detailed • doing business report • natural clusters activities • worldwide governance indicators • enterprises survey • world development indicators • FDI analysis Why database • porter's cluster bands • world bank/ IMF publications/ • 7 forms of capital Reasons reports • value chains mapping/ • government documents analysis • porter's diamond • other publications • cost analysis X X X X Covered in the diagnostic phase To be covered in the next phases | 24 SOURCE: McKinsey; World Bank; Authors’ analysis The second step of the work is about change process in order to sequence interventions, measure costs and impacts and select targets to be delivered (2) C Implementation Growth poles Sequencing Change process Prepare Flexible design Deliver Project preparation Engineering adaptable Change architecture • 5 dimensions (infrastructure, decision making • Is the architecture capable of governance, labor, market • business dynamics modeling delivering the program while efficiency and finance) • flexibility in engineering design sustaining energy? • prioritization matrix • plan of action for sequencing • Does it incorporate the • rapid assessment of multi- • feedback systems approach learning process? sectorial studies • Is the delivery system adaptable? Prioritization matrix and Sierra Leone decision model Growth Poles Make decision x Manage change Address y challenges and Private returns Public returns Social returns opportunities • political economy ▪ Direct GDP impact ▪ Shareholding ▪ Direct jobs analysis at ▪ IRR ▪ Tax revenues ▪ Indirect jobs Build lasting Chiefdoms level ▪ Profitability variance ▪ Economic returns ▪ Access to services capabilities ▪ Net present value ▪ Net present value Covered in the diagnostic phase To be covered in the next phases SOURCE: MIT; World Bank; Authors’ analysis 25 | A combination of various sources of financing is required to support growth D poles development Source Examples Public-Private Partnership (PPP) PUBLIC SECTOR PRIVATE SECTOR • Public financing (including donor resources applied through the budget) ACCELERATORS e.g. Government budget (capital expenditure) Sources of • Privatization of existing state-owned Delivery Systems Public ENABLERS Financing enterprises with redundant but useful assets Accountability DELIVER e.g. Privatization of power authority, housing corporation, insurance corporation and others is underway DEALS PPP is an agreement between the government and private Project organizations to develop, operate, maintain and market a Project Development network by sharing risks and rewards Development Facilities Capabillity • Corporate social responsibility–like intervention (companies engage in financing activities with positive impact on welfare) e.g. A mining company contributing towards community development through donation Public-private partnerships to build and operate/renovate Private service delivery in the infrastructure and social and economic • Private financing with some risk mitigation development spaces (industrial estates) e.g Government subsidy, guarantee to minimize e.g: Private sector involvement in infrastructure building; (West risk Africa Gas Pipeline (WAGP)) under NEPAD initiative in west • Private financing where all risk is with the Africa private sector • Asset sales/leases (typically using the value of the land • Donor grants and financing at the sovereign created by the initiative) and sub-sovereign level that lie outside the e.g provision of land to the private sector with low cost budget • Special Purpose vehicle (SPV) share ownership: public and Donor private own SPV as equity shareholders e.g. Fragile state facility (FSF) grants by World e.g. ACE international connectivity in Sao Tome Principe (the Bank; Rehabilitation of priority infrastructure SPV channels contribution of different parties in to the project) (roads, education and health facilities)by • Other forms: Cooperative model, Equity model, European Development Fund (EDF) Concession, Bulk capacity purchase, Management contract | 26 SOURCE: Gallegos (2012); Kelly (2012), World Bank; Consultations; Authors’ analysis 27 | Chapter 2 – The Context in Sierra Leone Economic overview 1 The growth poles approach Managing the mining boom Fostering diversification 2 The context in Sierra Leone 3 The sectors that drive growth 4 Five enablers of competitiveness 5 About the three growth poles 6 The proposed growth poles program 7 Next steps Back-up appendix | 28 Chapter 2 summary Overview account deficit to 48 percent of GDP in 2011 versus 19 percent in 2010) is the result of capital inflows from mining and construction companies Sierra Leone has followed a gradual post-conflict for the procurement of machinery and equipment. Mineral exports are recovery with three successive peaceful elections (2002, 2007 and likely to transform the economic landscape in the short to medium-term. 2012) and clocked an average GDP growth of 6 percent since the end of the war. This recovery from conflict continues to gather pace as Fostering diversification economic recovery gains momentum post financial crisis, with new investments in mining, agriculture, and services driving growth. Economic diversification takes on added significance in the light of the sheer rapidity of these developments, but they come with Managing the mining boom significant downside risks which needs to be addressed to mitigate their corrosive effects. The economic boom in the extractive sector has far- reaching implications for the country’s development trajectory. This Agriculture, including fisheries and forestry, continues to growth has the potential to boost Sierra Leone's by generating be the mainstay of the Sierra Leonean economy. Together they employment. contribute about 46 percent of the Gross Domestic Product (GDP) and provide 75 percent of the employment. Rice is the main staple, Sierra Leone is currently experiencing rapid GDP accounting for about three-quarters of the sector output while cash crops growth as a result of unprecedented FDI inflows in iron ore mining. In like cocoa, coffee and piassava and others contribute up to 14 percent. fact, it has increased the real GDP growth rate from around 6 percent Although the country has huge potential in the extractives sector, per annum from 2002-11 to 15.2 percent in 2012. However, without agriculture will continue to play a key role in the country’s socio- proper policies supporting parallel growth in other sectors, these FDI economic development by providing employment opportunities for the inflows may prove to be a mixed blessing: it poses a threat in which the majority of the population. inflows of foreign currency weaken the national currency, making Sierra Leonean exports in other industries less competitive. It is possible for tourism to continue developing as is— mostly based on individual hotel investments, some donor support and Despite this performance, inflation rose to 18.5% in the limited resources of the Tourism Board, but it will be difficult, if not 2011 in response to high fuel prices, a depreciating Leone (-4.8 percent impossible, for the country’s rich tourism potential to be fully realized against the US dollar) and heavy GoSL borrowing from the Central Bank without public sector leadership and coordination supported by the (for capital expenditure in infrastructure). Fiscal results have been necessary financial and human resources. uneven in 2010 and 2011, both years ending with higher than anticipated deficits, borrowing and arrears. Fiscal consolidation in 2012 is likely to remain a challenge as Sierra Leone enters another election cycle and the GoSL needs to continue its focus on prioritizing infrastructure spending. 29 | Sierra Leone is experiencing high GDP growth as a result of unprecedented FDI inflows in iron ore mining . . . Sierra Leone is one of the top global GDP growth performer Post-war recovery has seen GDP double since 2000 Real GDP and Real GDP Growth Contribution of key sectors to GDP (real) (Value addition) $, billion GDP (real) Sierra Leone World Sub-Saharan Africa Agriculture Industry Services GDP (real), $ bn Growth rates 1.4 1.24 1.17 1.2 1.07 1.11 3 30% 1.02 0.91 0.94 2.5 2.19 25% 1 0.87 1.96 0.82 1.46 0.75 2 1.71 20% 0.8 0.64 0.59 1.5 1.07 1.11 1.17 1.24 15% 0.6 0.91 0.94 1.02 0.82 0.87 1 0.75 10% 0.4 0.5 5% 0.2 0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e 0 -0.5 -5% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -1 -10% Significant FDI provides tremendous opportunities… … but pressure on the current account balance Foreign direct investment Current Account Balance $, Millions % of GDP Net FDI FDI Inflows (% of GDP) Current Account Balance (% of GDP) SSA Fragile SSA Total 715 40 10 0 30 -10 -20 20 238 -30 111 10 91 97 -40 Note: In 2011, the spike in the 61 59 58 overall level of imports is the result 39 10 10 9 of capital inflows from mining and -50 construction companies for the 0 procurement of machinery and equipment. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -60 | 30 SOURCE: Global Economic Prospects ; World Bank WDI; Statistics Sierra Leone . . . but to sustain and share this economic boost, growth has to come from other sectors to have a transformational impact Contribution of sectors to GDP % Current Situation Trends Achievements • Contributes 46% of GDP,75% • SCP for commercialization • 217% increase in cocoa employment efforts of smallholder farming production from 2002-11 • Rice accounts for ¾ of sector • Active investment promotion • 193 ABC settled output but SL is net importer of rice from SLIEPA • 905 Km of feeder roads to Agriculture • Cash crops-coffee, cocoa & • Value chain uplifting in cocoa production centers (including fishery & piassava contribute 14 % of output • Increase in fish production • New large commercial livestock) • Mainly small holder farmers on • Rehabilitation of feeder roads farming investments in subsistence • Support towards research palm oil and bio fuel • Low productivity & limited value through West Africa Regional addition Fisheries Program (WARFP) • Few light agro-processing plants • Import of agro processing • First Step SEZ (special equipment and more economic zone) Manufacturing transformation, especially in • Africa Felix fruits cocoa processing • Steel manufacturing deal • Iron production started, more • Iron ore production ramp up signed (downstream exploration ongoing • Diamonds in decline linkages Samshi – • Bauxite and rutile production • Oil exploration ongoing: high London Mining) and ramp up plans to come discovery rate, $158m spent in • Tonkilili mine (phase 1) Extractive industries • Diamonds and gold mining: 2012 • Marampa mine (phase 1) mainly artisanal • Further discovery in bauxite • Infrastructure and rutile development • Airport capacity is limited • Increase in international arrivals • New expatriate tourists • $15 million in revenues loss for • New expatriate base for tourism • UNESCO accreditation Tourism tourism institutions as bed tax was • Better international application merged into GST in 2008 communication • Three 4 star hotels deals • High end beach resort underway (Radisson Blu, • No large retail shops or malls construction Hilton, Onomo) • Low financial inclusion • Marriott scoping mission Other services • More commercial banks and • Expensive logistics • New airport (+airport city ATM openings up country concept) in negotiation with China SOURCE: Ministry of Agriculture; World Bank; Interviews 31 | The mining boom is changing the development trajectory of Sierra Leone . . . Before 2011, Sierra Leone had seen steady mineral … but 3 iron ore sites are being developed since 2010 production… (Tonkilili and Marampa x2) Production of Selected Mineral Commodities Million Metric Tons 1.2 3rd largest 1.0 1.5 Bauxite iron ore deposit 15.8 17.5 0.8 18.2 1.1 15.9 Lunsar Sefadu globally 15.2 Ilmanite Makeni Rutile Freetown 82.8 78.9 Kailahun 63.9 68.2 67.9 Iron Ore Moyamba Bo Urban centers Kenema 1.3 Industrial mine Bonthe 2007 2008 2009 2010 2011 Iron ore mining Massive FDI inflows in these 3 sites are leading to an … which will soon outweigh current GDP unprecedented boom in mineral production… Iron Ore Production Million Metric Tons forecast Sierra Leone GDP 59 60 56 52 50 46 Iron ore industry revenue $4.4bn (2020e) Cape Lambert 40 32 African Minerals 30 GDP 2012 : 25 25 London Mining $2.94bn 20 17.4 10 5.5 0 1.3 Investments 0 $1.8bn (2015e) Past and future 2010 2011 2012 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e $0.1bn (2011) African Minerals $2,100 million $2,000 million London Mining $340 million $250-$860 million CapeLambert - $1,500 million Note: Estimated revenues based on 2012 iron ore prices Total $2,440 million $3,750-$4,360 million $0.4bn (2012) | 32 SOURCE: US Geological Survey, Minerals Yearbook 2011; London Mining; African Minerals; Cape Lambert . . . but will it be enough to achieve shared prosperity in the medium to long term? Employment generation cannot only rely on the extractives industry Resources sector is not labor-intensive Uncertainty around fluctuating commodity prices GDP growth, 2002-10 Number of stable jobs, 2010 Iron ore prices (3y) $ billion, 2005$ 180 60 $ per dry metric ton Retail and hospitality 160 50 Resources 140 Finance and Agriculture 120 business 40 services - 45% 100 Transport and 30 communication 80 Construction Government 20 Manufacturing and social Note: China import Iron Ore Fines 62% FE spot (CFR Tianjin port), www.indexmundi.com services Junior iron ore companies in Sierra Leone may not have the 10 financial depth to sustain their operations in the event of a crisis Stable jobs added, 2002-10 Million or a sudden downfall in prices. 0 -0.5 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Economic diversification creates the most stable jobs Note 1: Stable employment includes wage and salary employees and business owners; vulnerable employment includes subsistence farming, informal self-employment, and work for a family member. Employment by status, 2010 Note 2: Countries included are Algeria, Angola, Egypt, Ethiopia, Kenya, Morocco, Nigeria, Senegal, South Africa % of labor force and Uganda. These countries accounted for 70 percent of Africa’s GDP in 2010. Unemployed Vulnerable employement Stable employement Mining investments create unrealistic expectations 9 9 • The delay between a mining investment and its social returns is 27 30 long, the mining cycle is different from the political cycle 61 • Communities over estimate the number of jobs available • Most jobs created are in the mining linkages, it is estimated that for 88 85 every job in a mine, 2 to 4 jobs can be created by subcontractors 64 62 • Given the limited capacity and lack of financial resources, it takes 25 time to strengthen domestic SMEs and increase local content 6 9 14 8 utilization 3 Sierra Leone Pre-transition Transition Diversified Oil exporters • Downstream processing activities, such as steel production, depend critically on cost-effective access to complementary inputs like energy. SOURCE: McKinsey Global Institute, International Labor Organization 33 | Agriculture is the main contributor to GDP and employment, and attracts investments in non-cultivated land areas which may lead to agro-processing Key sector for GDP and labor and an untapped Mix of food crops and recent large investments in cash crops 89% of uncultivated arable land Plantation and rice 75% 46% Livestock raising Kabala of labor force of GDP Cocoa, coffee Kambia 100% Fisheries Port Loko Makeni Sefadu Non-Arable, 80% 25% Lungi Lunsar Magburaka Non- 60% Cultivated, Freetown 40% 89% Arable, Kailahun Cultivated, Moyamba 20% 75% Investment promotion Bo 11% Kenema 0% Sugar cane (40,000+ hectares) Total Land = 7.2Mha Arable Land = 5.4 Mha Palm oil (40,000+ hectares) Bonthe Pujehun Agriculture production Rice (120,000+ hectares) • Main exports: cocoa, coffee, fish • Other major agricultural commodities: rice, Sulima cassava, vegetables, oil palm, groundnuts, fruits, Agriculture GDP has increase over the years, owing to increased sugar cane production from crop, livestock and fishery • Main meat production: poultry, cattle, sheep, pigs Real GDP Other sectors Agriculture 1.4 Agriculture remains constrained by challenges 2000 US$, Billions 1.24 1.17 1.2 1.07 1.11 • Low usage of arable land due to lack of 0.94 1.02 1 0.91 connectivity, access to lands and property rights 0.82 0.87 • Low productivity due to poor inputs, harvest and 0.8 0.75 0.64 post-harvest losses and lack of mechanization 0.59 0.6 • Low value addition in value chain due to lack of FDI, quality standards and weak agro supply 0.4 0.66 0.67 0.71 0.57 0.61 chain 0.2 0.37 0.37 0.40 0.45 0.48 0.51 0.29 • Poor access to finance for smallholders 0 • Lack of electricity to foster agro-processing 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 | 34 SOURCE: GoSL; World Bank WDI; SLIEPA; FAO Sierra Leone’s world class assets in tourism are not utilized at their fullest potential Pristine and high quality beaches, hills and The number of holiday-goers below historical pick of 1990 biodiversity Sierra Leone is ranked 137th of 140 countries (World Economic Forum #2 Outamba- Kilimi National Park Tourism Competitiveness Index 2013) 70 Visitors arrivals by air Holiday Total Thousands #1 Mont Bintumani 60 Civil war period 14,626 holiday-goers 50 40 30 20 10 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Highlights: Top 5 citizenship visiting: • $41.7 million in tourism revenues (+13% 1. United Kingdom (9,455) vs. 2011) 2. USA (7,819) • 5,622 to 10,000 employees (mainly 3. Nigeria (4,348) #3 Turtle Islands hospitality) 4. Australia (4,162) • 59,730 visitors in 2012 5. Ghana (3,171) • 40% on business UNESCO World Heritage sites application in 2012 • 24% visiting friends and relatives Critical road infrastructure • 16% tourists National parks Despite improvements, critical challenges need to be addressed Beaches Touristic attractions (ecotourism) • Weak and outdated legal framework for tourism Development # Top things to do (Lonely Planet) • Low skills of workers engaged in the tourism sector. • Weak infrastructure International airport • High costs of air travel to Sierra Leone Highest peak (Mount Bintumani–1945m) • Persistent negative image associated with Sierra Leone’s past Hospital • Weak sector coordination, planning, and information SOURCE: GoSL; National Tourist Board; Lonely Planet; UNESCO; World Economic Forum 35 | Chapter 3 – The Sectors that Drive Growth and Create Stable Jobs Mining and linkages 1 The growth poles approach Agriculture and fishery Tourism 2 The context in Sierra Leone 3 The sectors that drive growth 4 Five enablers of competitiveness 5 About the three growth poles 6 The proposed growth poles program 7 Next steps Back-up appendix | 36 Chapter 3 summary Mining and linkages Developing these two industries (agriculture and tourism) simultaneously with the mining industry through local content While the extractives boom alone will not be enough to utilization support would allow all Sierra Leoneans to reap the benefits of meet job generation targets in the medium and long term, by harnessing the current growth and transform that growth into employment its momentum and creating policies that focus growth in labor-intensive opportunities. This is precisely what the growth poles program is industries, it has the potential to lead to long term increases in designed to do. employment and wealth. Current estimates state that each new mining job can lead to the creation of 2 to 4 new jobs in supporting industries, if Developing this program offers the opportunity to more proper investments are made to support simultaneous growth in those widely distribute the benefits from the mining boom and to make industries. Specifically, two job-creating industries have been identified investments more region- and industry- specific. While the extractives as having the capacity to augment the mining boom to achieve shared industry will be a vital source of growth for Sierra Leone’s economy, it prosperity: agriculture and tourism. has a differential impact in various regions. Some mining poles do not offer notable linkages to the surrounding regions and therefore should Agriculture and fishery not be a focus of intervention. A growth poles program would strengthen linkages between the mines and the surrounding economy by identifying Agriculture employs the largest number of Sierra regionally relevant industries that can augment the impacts of the Leoneans by sector, and is currently the largest contributor to GDP. extractives boom via parallel interventions. Within the agriculture While agricultural productivity is currently low, because it is very labor- industry, rice, palm oil, and fisheries offer potential for growth. intensive, investments in this sector have high returns for employment. Furthermore, value chain could be uplifted through agro processing. Increasing investment in the supporting infrastructure for agriculture and Within the tourism industry, a planned logistics hub, new hotels, and the agro-processing can significantly increase overall employment and development of new tourist attractions have the best employment wages. generation potential. These interventions in mining, agriculture, and tourism overlap in key geographic regions, which have been identified as Tourism the most promising growth poles. The tourism industry is also currently developed, but has huge potential to grow rapidly. Sierra Leone’s world class coastal assets offer the foundation of a strong and lucrative tourism sector, which would not only provide labor-intensive growth but also would promote sustainable growth. 37 | While the extractives industry influences the development trajectory of Sierra Leone and provides a robust case for growth poles support . . . Iron ore production is booming and more exploration is underway, and it is time to… …promote local content Fe Fe Dm Production phase Sierra Leone $218m procurement from mining Fe Exploration Phase companies (2012) but only 5.8% local content utilization xx Minerals Bx Au : Gold Africa Minerals employs Bx : Bauxite 4,800 employees Fe Dm : Diamonds (2013, largest employer) Fe : Iron ore 82% are Sierra Leonans Ti : Rutile Fe Success story: Newmont Ghana Ahafo Gold mine Fe Iron ore poles From 121 contracts (2006, $1.7m) to 282 contracts (2007, $4.2m) Diamonds region after establishing a Fe Bauxite exploration Local Suppliers and Contractors Au Development (LS&CD) Unit Iron exploration Newmont had 1,700 employees Bx Ti Mine and 5,100 jobs in supply chain Fe (2.8 job multiplier) Example of business linkages to be developed in the mining value chain (focus of 2012 Local Content Policy) • Furniture, Fixtures & Office Equipment • Light Vehicle Maintenance • Uniforms • Bulk Construction Materials • Electrical Equipment (Installation, Repair • Equipment & Supplies • Stationary / Office Supplies and Maintenance) • Hospitality Services incl. Camp Catering • Fresh Foods • Transport / Logistics • Infrastructure / Facilities Development Civil • Building (incl. Camp) Construction • Equipment Maintenance (Generators, etc.) Works Construction & Maintenance • Janitorial Supplies & Waste Management • Basic Tools • Computer System Servicing and Maintenance • Laundry Services • Hardware • Personnel Training/ Technical Assistance • Computer Maintenance • Steel Construction Materials • Facilities Light Maintenance • Computer System Servicing and • Dry Goods • Office Services + Security Maintenance • Fleet Management | 38 SOURCE: Mining companies’ annual reports; Ministry of Trade and Industry; World Bank; Local Content Policy 2012 . . . not all minerals have the same impact on the economy in terms of shared prosperity potential Only 2 out of the 3 mining poles have enough linkages potential to be turned into growth poles Potential spillover effects Iron ore driven growth pole High Iron Heavy Dia- • 3 mining operators, Medium ore sands monds potentially 2 more • Need for heavy Limited pole pole pole infrastructure Overall • High linkages potential Infrastructure Road Heavy sands driven growth pole Port • 2 mining operators Rail • Need for infrastructure • Linkages potential Power Linkages Diamonds driven Backward growth pole • 1 main operator and Forward artisanal miners Fiscal • Limited infrastructure need • Limited linkages potential Knowledge Spatial Type of resource pole Other Type of resource corridor Iron ore poles Large mine City Marampa-Freetown corridor Iron exploration Existing railway Road Tonkilili-Pepel corridor Heavy sands corridor Mine road Mining pole Bauxite exploration Barge transport Oil exploration Diamonds region Port SOURCE: Authors’ analysis 39 | Agriculture is the base of rural development and attracts FDI that uplift agro value chains . . . a Current b Prospective c Proposed 1 1 2 6 7 2 5 1 3 2 3 4 Major Agribusiness Investors d Potential poles Agriculture poles Note: these crops (rice, palm oil and sugar Sugar Addax 1 cane) are both Government priorities and cane currently receiving lots of FDI Magbass 2 Goldtree 1 Plantation and rice Exploitation Socfin 2 Exploration Gambia 3 Palm Other SIVA Group 4 oil Proposed site for palm oil Quifel 5 Proposed site for sugar cane SLA 6 Proposed site for rice Herbert Farms Venture 7 Golden Mills 1 Livestock raising Rice Genesis Farm 2 Cocoa, coffee WARC 3 Fisheries | 40 SOURCE: Authors’ analysis . . . but not all crops provide the same yields in terms of revenues and jobs creation, and fisheries may become a source of growth Jobs creation in selected crops Grain value chain and focus on the growth poles Full-time employees per 1,000 hectares Rice – Only 69% of SL is rice self-sufficient, and rice imports remain high compared to total production or even possible exports. Starting from a Grains (excluding rice) 10-20 Staple foods baseline of 638,000 tons of output, the target is 3Mt of rice in 2018. % = price build up Sorghum ≈50 • Increase usage of inland valley swamps • Train smallholder farmers with productive techniques Rice ≈ 500 • Facilitate access to finance Sugarcane ethanol 150-700 35% 53% 12% Oil palm Biofuels 150-350 Rubber 250-400 Horticulture Tomatoes (greenhouse) 2,000+ Focus in the agro-supply chain In addition of promoting out-grower schemes and agro- Palm oil value chain and focus on the growth poles processing, fisheries sector can have a great impact Palm oil - Palm oil has a great potential use as biodiesel. Since 2007 there Fisheries - Sierra Leone is abundant in fish, which constitutes 10% of have been investments in palm oil production, which are expected to become GDP, the only protein source for 80% of the population, and employs operational in 2013 and provide out-grower schemes for local farmers over 500,000 people. Potential is great in terms of food security, poverty % = price build up reduction, and spill-over effect. • Increase cultivated area • Include smallholder farmers in out grower schemes • The fish market is undersupplied (32%) • Facilitate access to finance • Abundance of low and high value fish • Fishing assets are underutilized (cold storage, fishing harbor) • 8,000 fishermen, plus distribution network led by women • Sierra Fishing Company has a 20 metric tons processing plant, and a 19% 13% 42% 26% new one underway meeting EU standards for exports • Fisheries ban to EU expected to be lifted in 2013 Integration Value added of artisanal supply processing SOURCE: McKinsey Global Institute; FAO; ManoCap; Agenda for Prosperity, 2012; National Rice Development Strategy, 2009; World Bank 41 | Tourism has been identified as a key growth sector in the Sierra Leone’s Agenda for Prosperity Natural endowments are there especially for ecotourism Increasing visitors #2 Outamba- Kilimi National Park Visitors arrivals by Air by Purpose (Thousands) 50 40 30 #1 Mont Bintumani 20 10 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Holiday VFR Business Conference Other Total Priority of Agenda for Prosperity Baseline: Target: • Tourist arrival doubled Marketing between 2007 and 2012 Double and the number • 5600 jobs created in the tour guide sector (2012) of jobs training created #3 Turtle Islands • $ 41.7 million in programs government revenue (in the near Game changing factor Overlapping (2012) future) • 3 new 4 star hotels underway with other • New international airport at sectorial poles Mamana to start construction Tourism pole Touristic attractions (ecotourism) UNESCO World Heritage sites application in 2012 # Top things to do (Lonely Planet) Critical road infrastructure International airport National parks Highest peak (Mount Bintumani–1945m) Beaches Hospital | 42 SOURCE: GoSL; Lonely Planet; National Tourist Board of Sierra Leone Selected industries are concentrated around geographical areas 2 mining poles: iron ore, rutile, bauxite 3 tourism poles: Western Peninsula, Bonthe, Tiwai, Gola • Catalytic of • Arrival and logistics infrastructure hub projects • Relatively • Provide accessible touristic significant tax attractions revenues • Hundreds of new • Potential for hotel rooms to open indirect jobs in the coming years creation • New airport • Possibility for location Western steel • Existing Peninsula manufacturing Government Iron ore engagements through tourism Bonteh-Turtle Tiwai Rutile, bauxite board Island Gola 4 agriculture and fishery poles Non selected poles • Base of rural development • Non selection • Catalytic for out- based on lack of growers schemes, linkages or non- stallholders viable commercialization infrastructure and value addition efforts needed • Fisheries: main • These non source of protein selected sectorial poles may benefit indirectly from the Plantation and rice development of other growth Livestock raising poles Cocoa, coffee Fisheries 43 | Emerging growth poles in Sierra Leone 1 Northern growth pole: Freetown to Tonkilili 2 Coastal growth pole: Bonthe to Sulima 3 South-Eastern growth pole: Tiwai to Kailahun 3 Growth pole #3 1 Growth pole #1 2 Growth pole #2 | 44 The growth pole areas encompass many chiefdoms, a level where political economy and decentralization issues may be addressed 1 Growth pole #1 19-28 chiefdoms Sierra Leone has 3 administrative layers. The first one is administrative regions: the Northern Province, Eastern Province, 3 Southern Province Growth and the Western Area. Second one is the pole #3 subdivision of provinces into 16-25 fourteen districts. The 2 third-level unit is the Growth chiefdoms chiefdom. The districts pole #2 of Sierra Leone are divided into 149 chiefdoms. 16-24 chiefdoms 45 | Chapter 4 – Five Enablers of Competitiveness for Economic Diversification Gaps analysis 1 The growth poles approach Fiver enablers I Infrastructure 2 The context in Sierra Leone II Labor 3 The sectors that drive growth III Market efficiency IV Governance 4 Five enablers of competitiveness V Access to finance 5 About the three growth poles 6 The proposed growth poles program 7 Next steps Back-up appendix | 46 Chapter 4 summary SIERRA LEONE COMPETITIVENESS IS BASED ON ITS FACTOR Labor ENDOWMENTS On the labor front, gaps in literacy and youth Sierra Leone is the second least competitive economy employment pose threats to the viability of the growth pole. The in the world (143 out 144 countries assessed) according to the World Government of Sierra Leone has implemented two programs, the Youth Economic Forum’s Global Competitiveness Index (GCI). GCI defines Literacy Action Plan and the National Youth Commission, to address “competitiveness as the set of institutions, policies, and factors that these issues. Lack of training has also been identified as a major determine the level of productivity of a country”. Sierra Leone’s economy business concern within the country, and part of the program for industry is mainly factor-driven; competitiveness is based on its factor growth should include employee training that is industry specific. endowments–primarily; low-skilled labor and natural resources. Companies compete on the basis of price and sell basic products or Market efficiency commodities, with their low productivity reflected in low wages. Maintaining competitiveness at this stage of development hinges Within market efficiency, the greatest challenges will be primarily on: the lack of regulation of the informal economy and poor logistical support • well-functioning public and private institutions for farmers, traders and entrepreneurs. • a well-developed infrastructure • a stable macroeconomic environment Governance • and a healthy workforce that has received at least a basic education Concerns regarding governance include corruption and poor delivery of services. While improvements have been made with THE DIAGNOSTIC IDENTIFIED FIVE ENABLERS OF COMPETITIVENESS IN regard to corruption and government accountability, it still remains as a THE CONTEXT OF SIERRA LEONE EMERGING GROWTH POLES key concern of business investors. The Government of Sierra Leone should also enhance its deliberate focus on delivery in order to obtain The identified growth poles can only be successful in maximum returns from the growth pole program – implementation of this generating employment and growth if deficiencies are overcome in five policy and delivery of the services provided by the program will be as key areas: infrastructure, labor, market efficiency, governance, and important as the actual content of the program itself. finance. Finance Infrastructure Finally, with regards to finance, the overarching concern In terms of infrastructure, the most pressing concerns is insufficient supply of credit and financial services to both households are those of electricity, connectivity and access to ports. Currently only and industry, as well as the prohibitive cost of capital. This has been 10 percent of Sierra Leoneans have access to electricity, and lack of particularly limited within key growth industries such as agriculture electricity frequently appears as one of the top three concerns for doing (where many of the potential beneficiaries of financing are smallholders business in Sierra Leone. This significantly limits industrialization and that offer large returns in terms of poverty alleviation) and manufacturing. constricts the ability to extend the value chains within industries, as factories and processing plants all require large amount of electricity. Shortcomings in these five areas must be addressed for Less than 5 percent of arable land is irrigated, and only 7.6 percent of the growth pole to be effective. the population has access to piped water. 47 | In order for a growth poles approach to deliver successful results in Sierra Leone, it must address gaps in 5 key areas Key Areas Key Stakeholders Key Metrics Status 1. Ministry of Transport & Aviation I 2. Min. of Works & Infrastructure Roads 3. Min. of Energy & Power Ports 4. Min. of Lands 5. SLRA Air Infrastructure 6. PPP Unit Utilities–Power and Water Supply 7. Ministry of Finance 1. Private Sector II 2. Universities & TVET schools Skills Training 3. Min. of Education Labor Education 4. Min of Labor and Employment 1. Min. of Trade & Industry Laws – Property Rights and Taxation III 2. Judiciary(Commercial Court) 3. Min. of Lands Suppliers and Local Content 4. NRA Trade and Investment Market Efficiency 5. OARG 6. Industry associations Ease of Doing Business IV 1. Office of the President Government Effectiveness 2. Judiciary 3. Parliament Political Stability and Security 4. Anti—Corruption Commission Rule of Law and Regulatory Quality Governance 5. Police 6. HRMO Control of Corruption Concentration of Power 1. Bank of Sierra Leone Availability and Quality of Financial Services V 2. Commercial Banks 3. Micro-Finance Institutions Loans and Venture Capital Finance 4. IFC and other development partners Soundness of Financial Institutions Fair competitiveness priority | 48 SOURCE: Global Competitiveness Index; Stakeholders consultation; Authors’ analysis Low competitiveness Infrastructure bottlenecks and missed opportunities for shared usage impede Sierra Leone competitiveness I Sierra Leone is underperforming globally Pipeline for infrastructure projects is dense Note: Sierra Leone Low income fragile Low income non fragile 90 Prospective projects 33 46 46 42 40 in yellow 10 15 20 11 10 24 Tagrin port (illustrative) Industrial park Access to Power Capacity Power outages System losses (w/ steel Bumbuna (national) (%) (MW/million) (days/year) (% generation) manufacturing) upgrade Note: 2009 data, except for Sierra Leone access to power and capacity (2010 data) Makeni Infrastructure capacity can’t keep up private demand Power is a game changer which could enable further Lunsar development Freetown • The commission of Bumbuna hydropower plant (50 MW capacity with potential future investment and increase to 250 MW) has doubled installed capacity in 2009 and diversified power generation mix • However, only 10% of the population has access to electricity, with end-users paying an expensive $0.28/kWh New airport, airport city • Bumbuna’s capacity for generation is seasonal (50 MW in wet season, but only 20 MW during dry season) Bonthe • Also, the power grid is in state of disrepair: only 20MW of Proposed Chinese distribution capacity located mainly on the western Freetown grid Manna Point Sewa river power • 66% of power generated in the country is privately produced by multi-purpose port plant 33,000 generators (175 MW) (alternative in SIVA Group Sulima) Manna Point SEZ and • Mining power demand is expected to be over 600 MW in 2020 Power Plant Water and sanitation are major constraints for better livings Freetown Main road • Less than 5% of cultivated land in Sierra Leone is equipped for City Railway irrigation, with only two major dams (Guma and Bumbuna) • In 2008, only 7.6% of the population had access to piped water Public power generation Airport Transport connectivity Private power generation Port • Only functioning railway is privately used by a mining company Special Economic Zone Agriculture activities • Freetown port access needs to be streamlined SOURCE: AICD Country Report, Pushpak et. al (2011); Economist Intelligence Unit; Authors’ analysis 49 | Labor demand from firms is not matched II because of the lack of technical skills and low literacy rates Weak attendance to educational system results in poor skills • Inadequately educated workforce is the 4th most problematic Excerpt from the “Doing Business Report 2013” factor for doing business • Literacy rate is indeed very low (35% total, 47% for male, 24% for female as of 2006) • Low enrollment in secondary school (13%) prevents Sierra Leonean youth from acquiring marketable skills • Huge mismatch between needs of companies and skills taught in schools. • Citizens don’t recognize the value of vocational skills training. • This weak capacity leaves 800 000 (or 40%) of 15-24 year olds unemployed, unpaid or underemployed • Current government actions include :  National Literacy Action Plan (increase of literacy rate to 50% by 2015)  National Youth Commission (develop youth potential, creativity and skills) Potential solutions The State of Education in Sierra Leone # of students enrolled; % of students who continue further studies • Increasing communication between educators and employers • Formalizing technical career path placement procedures. • Educating citizens on importance and value of vocational training. Junior Senior • Working with companies to define their needs, and encouraging Primary Secondary Secondary Tertiary them to offer adapted training to working population as a form of corporate social responsibility • Incentivize companies to hire local people, including in middle 13% 29% 37% and top management • Increase secondary enrollment and highlight apprenticeship 1.4% formation. • Fund Adult Literacy Centers to increase the literacy rate and to 122,885 155,052 44,924 16,625 provide older citizens with new marketable skills SOURCE: Global Competitiveness Report 2012/2013; Global Education Digest (2006); African Development Bank; World Bank | 50 Low market efficiency can be addressed by starting from anchor investors to strengthen their suppliers and improve logistics along their value chain III Around the mining sector, businesses strive to develop Doing Business Indicators • Between 2012 and 2013, cost to export a container decreased by • With informal trade estimated at 45% of GDP and corruption 12% and days to register property decreased by 22%. • Since 2005, Sierra Leone’s Doing Business performance indicators ranked 3rd among the most problematic factors for doing have made significant improvements in 6 of 10 areas, while the other business, regulation and law enforcement are problematic 4 areas have seen small improvements or have held steady. issues 2012 LPI Country Score and Comparison • Starting a business is relatively easy (76 out of 155 economies), but its development lacks access to finance (most problematic factor for doing business) • While FDI has increased due to discoveries of natural resources and good protection of investors, trading across borders remains slow and costly, due in particular to poor logistics (150 out of 155 economies in Logistics Performance Index 2012) • Few initiatives of local content utilization have been undertaken so far. Linkages have been poor because of lack of infrastructure and quality requirements from the suppliers Potential solutions Sierra Leone Doing Business Rankings (out of 185 Countries) Starting a Business • Increase access to capital for small and medium enterprises Resolving Dealing with Insolvency Construction… • Develop SMEs capacity through matching grants fund Enforcing Getting • Implement policies that ensure governmental and regulatory Contracts Electricity transparency Trading Across Registering • Increase investment in local content utilization through Supplier Borders Property Development Program, Catalytic Fund and Vicinity Development program Paying Taxes Getting Credit • Develop linkages with anchor investors by lifting up the quality of Protecting SMEs outputs Investors SOURCE: Doing Business 2013, Logistics Performance Index 2012, Global Competitiveness Index 2012/2013 51 | Despite the boom of the extractive sector, improvements in governance IV will not occur automatically as the development process unfolds Sierra Leone ranks low in SSA regarding global Conclusion from a survey showed that trust in local in governance indicators at national level officials at local level is low  Despite the boom of the extractive sector, improvements in Perceived trustworthiness of councilors (2008), % governance will not occur automatically as the development process unfolds; no virtuous circle will suddenly begin to operate. Over 80  A key lesson from other countries in a similar situation is that, for 60 - 80 example, economic diversification strategies needs to be a 40 - 60 priority from the start and not only once resource riches start 20 - 40 becoming depleted. Under 20 Regulatory quality Sierra Leone The Gambia South Africa Note: this map shows the mean percentage of respondents for 65.9 each of Sierra Leone's 70 Percenttile Rank chiefdoms who view local 60 50 43.1 government councilors as 40 trustworthy. 30 20 15.2 16 16.5 10.3 8.8 10.8 13.2 12.3 23.9 25.4 26.1 10 4.9 14.7 0 1996 1998 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Spend revenue effectively (2008), % Government effectiveness Over 50 80 40-50 64.9 Percenttile Rank 70 60 30-40 50 40 31.8 20-30 30 20 10-20 8.8 9.8 9.8 11.7 10.7 9.6 10.5 10 10 4.4 4.4 4.4 4.9 6.8 Under 10 0 Voice and accountability Note: this map shows the mean percentage of respondents for 80 65.7 each of Sierra Leone's Percenttile Rank 70 60 chiefdoms who believe that their 50 councilor is likely to spend 43.8 42.7 40 38.9 37.5 34.6 revenue effectively and for the 27.9 30.8 38.5 40.8 40.8 good of the community rather 30 27.9 than use this revenue for 20 10 9.6 private gain. 5.8 13.1 0 | 52 SOURCE: Worldwide Governance Indicators; Growth; Why Quality Matters, Sacks & Larizza, 2012 Better access to financial services is needed to seize opportunities V Scarcity of financial institutions offers Sierra Leoneans poor access to banking and high cost of borrowing Interest rate spread (lending rate minus deposit rate % 13 89 18 Commercial Banks Commercial Banks Branches 16 14 50% in Freetown 12 13 10 Community Banks 8 (mainly rural) serving 6 1.65% 4 2 8 of population 0 micro-credit institutions 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Access to credit to critical sectors of the economy, e.g agriculture is limited Sectorial Distribution of Loans and Advances, Dec 2012 % 12 out of 1,000 adults <10% 35 borrow from commercial banks population own a bank account 30 25 20 Opportunities: 15 10 • Financial Sector Development Plan (FSDP) envisages an 5 increased access to capital, reduced risk of lending and 0 diversified financial products • Continuously narrowing interest rate spread, implying increased access and affordability of loans • Increasing credit to the private sector SOURCE: Bank of Sierra Leone (as at December 2012 ) and Agenda for Prosperity; Authors’ analysis 53 | Chapter 5 – About the Three Growth Poles of Sierra Leone Northern growth pole (#1) 1 The growth poles approach Coastal growth pole (#2) South-Eastern growth pole (#3) 2 The context in Sierra Leone 3 The sectors that drive growth 4 Five enablers of competitiveness 3 5 About the three growth poles 1 6 The proposed growth poles program 2 7 Next steps Back-up appendix | 54 Chapter 5 summary Growth poles focus investment on high-labor-intensity The Coastal growth pole : Bonthe to Sulima industries via hard and soft interventions within defined geographic areas. Analysis of factor endowments and linkage opportunities led to The Coastal growth pole, which stretches from Bonthe the identification of three viable growth poles in Sierra Leone: to Sulima, focuses more on infrastructure development, tourism and agribusiness, in addition to strengthening business linkages in mining 1. The Northern growth pole and agriculture. In particular, it will refine agricultural production by 2. The Coastal growth pole investing in agro-processing and strengthening linkages between small 3. The South-Eastern growth pole and larger holder farmers. It also seeks to strengthen linkages from the mining industry to the rest of the economy and to ramp up mineral While several other potential growth poles were also production within the heavy sand minerals (bauxite, rutile, zirconium, identified, these three were selected as offering the greatest potential for and illemite). This region is attractive as it is the likely to be the growth. Their locations were also strategically selected as distributing headquarters of the emerging oil industry, and is an ideal location for a growth across the entire country. The growth poles approach is about deep water port and a highway to Liberia. However, in order to reach sequencing, therefore these growth poles will be supported one at a maximum potential, it needs further development of roads and access to time. finance. It is also somewhat limited in that it is not very populous and has limited skilled labor. Competitive industries are bauxite, illemite, zircon, The Northern growth pole: Freetown to Tonkilili rutile, palm oil, rice, ecotourism, beaches and oil exploration. The game- changing factor that will drive the future of this growth pole is the location The Northern growth pole focuses on developing power of Sierra Leone’s next deep-water port. infrastructure and market access, particularly within the mining and agricultural industries, as well support institutions and mining linkages. Raw outputs to be developed in this growth pole include iron ore, rice, The South-Eastern growth pole: Tiwai to Kailahun bioethanol, cassava, and palm oil. At the industrial level, agro- processing, fisheries, services, and tourism are all key focuses of this The South-Eastern growth pole, which stretches from growth pole. This region has numerous advantages that make it ideal for Tiwai to Kailahun, provides a platform to develop institutions and this investment, including a large relatively educated population that strategies for cross-border trade, some tourism, small business linkages, provides a robust labor supply, a preexisting SEZ, an international and extends the value chain for agribusiness. This area has some of the airport, and easy access to shipping via port. In order to achieve optimal greatest tourism potential with Tiwai Island as an attraction and several impact, it still requires more investment in roads, skills trainings for other potential ecotourism sites. Agro-processing in cocoa and coffee employees, and enforcement of government regulations. Competitive can add significant value, particularly as an export. The region is the site industries are iron ore, biofuel, light manufacturing, logistics, rice, palm of many schools and universities, which will be invaluable in developing oil, fisheries and tourism. The Northern growth pole goes from Freetown the labor force, though more technical training is still necessary. Other to Tonkilili, including cities such as Lungi, Port Loko, Lunsar and Makeni. competitive industries are wood, palm oil, rubber and diamonds. 55 | Rapid assessment of growth pole #1: Freetown to Tonkilili Overview # of chiefdoms: 19-28 Industrial mining (iron ore), bioethanol (sugar cane), manufacturing (agro processing), services (logistics), agriculture (rice, cassava, palm oil), fisheries and Main urban centers: tourism Freetown, Lungi, Port Loko, Lunsar, illustrative 90 MW Makeni, etc. 175 MW 165 MW Endowments/Opportunities Constraints/Challenges • International airport • Urban planning i • Container port • Congested roads network • Proposed location of the new international airport • Difficult airport transfer Infrastructure • Bumbuna II and III • Utilities distribution uneven • Planned industrial park in Port Loko • Large population in the Peninsula • Limited population the Northern province ii • Availability of schools and universities • Limited offers for technical skills (e.g. urban planner, mining engineer) Labor • Accessibility to courts, market proximity • Enforcement issues iii • Companies HQ based in Freetown, the capital city • Government administration • Fishing jetty, >20 ABC Market Efficiency • FDI in tourism, mining, rice, bio ethanol, steel manufacturing iv • Proximity of Government, more capacities • Corruption available Governance • All banks have a branch in Freetown • Few bank branches v • Makeni is a booming city for businesses • Few ATM • Port Loko and Lunsar growing • Cost of capital Finance | 56 SOURCE: Government of Sierra Leone; World Bank; Authors’ analysis Competitive industries • Iron ore Zoom on Northern • Biofuel Kabala Growth Pole (#1) • Light manufacturing illustrative • logistics • Rice Power • Palm oil • Extend Bumbuna capacity • Fisheries • Complete distribution network Kambia • Complete WAPP • Tourism • Facilitate the production of bio Policy Makeni energy to the grid • Manufacturing- specific policy WAPP Agriculture making • Build feeder roads • Finalize SME • Build storage facilities and SEZ policies • Promote the horticulture and Freetown • Support Kailahun vegetables farming decentralization • Support linkages with smallholders and agro-processing Bo Kenema Cross-cutting • Support Institutions Government • Set local content program capacities in • Operationalize minerals agency planning and • Operationalize local content delivery committee • Connect with • Implement cadastral system ICT and Bonthe • Train commercial courts and support utilities ADR at the Chamber of Commerce • Investment promotion Tourism in Western Peninsula Sulima • Support hotels development Illustrations of Freetown integrated Zone development • Support hospitality school private sector services delivery • Power SEZ • Improve airport transfer development • Complete master planning • Build storage facilities activities for the • Improve solid waste • Create one-stop shops Ports proposed management system • Streamline exports • Finalize privatization of Freetown growth pole • Improve public transport procedures from the zone harbor area • Increase water distribution • Create industrial park • Reduce days for imports and • Build new port/airport(city) • Create logistics base in Lungi exports 57 | Rapid assessment of growth pole #2 : Bonthe to Sulima Overview # of chiefdoms: 16-24 Industrial mining (bauxite, illmenite, zircon, rutile), agriculture (palm oil, rice) tourism, and oil Main urban centers: Bonthe, Sulima, Matru, Pujehun, etc. illustrative 90 MW 175 MW 165 MW Endowments/Opportunities Constraints/Challenges • Highway to Liberia to be built • Off the grid i • Ideal location for deep sea water port • Limited feeder roads access • Expected to become the oil region HQ • No major public port Infrastructure • Plan of hydro, coal or gas power plant (350- • No international airport 600MW) ii • Artisanal craft skills from piassava • Limited skilled labor (rural area) • In-firm trainings (Sierra Rutile) • Not very populated: biggest city xxx habitants Labor • Land pre-identified by Government • Traditional law important iii • FDI in rice, palm oil and mining • Limited business development facilities (ICT, • > 20 ABC schools) Market Efficiency iv • Administrative and traditional local authorities • Lack of Government capacities in region • Low level of insecurity Governance • Few bank branches v • From substance to commercial farming will allow • Few ATM smallholders involved in out growers scheme to • No access to mobile money (check Splash) Finance borrow money to increase the yields productivity • Limited access to financial institutions | 58 SOURCE: Government of Sierra Leone; World Bank; Authors’ analysis Zoom on Costal Kabala Growth Pole (#2) illustrative Competitive industries Policy • Bauxite • Manufacturing- • Illemite specific policy Kambia • Zircon making • Rutile • Finalize SME Makeni • Palm oil and SEZ policies • Rice • Support • Ecotourism decentralization • Beaches • Oil exploration Freetown Kailahun Cross-cutting • Support local Bo Kenema authorities Deals-orientation with planning • Port location paper with capacities key stakeholders • Connect with • Port action plan ICT and • Flexible design power port/railway • Increase Bonthe trade flows • Investment promotion Sulima Illustrations of Support ecotourism Revive colonial Ramp up minerals Support linkages with private sector • Support merchant city production small holders and agro- development development in • Commercialize • Support local processing activities for the Turtle Islands piassava content utilization • Increase cultivated area proposed • Improve access products • Develop • Increase productivity growth pole (water) • Build new fish technical skills • Provide loans area jetty • Continue CSR • Build feeder roads 59 | Rapid assessment of growth pole #3: Tiwai to Kailahun Overview # of chiefdoms: 16-25 Tourism, coffee, palm oil, cocoa, rubber , wood, and artisanal mining (diamonds) Main urban centers: Kenema, Kailahun, etc. illustrative 90 MW 175 MW 165 MW Endowments/Opportunities Constraints/Challenges • Highway to Liberia to be built • Land lock i • ICT backbone planned • No international airport • WAPP distribution line planned Infrastructure • Proposed special economic zone ii • Accessibility to schools and universities • Limited technical skills • Proximity to urban centers Labor • Exports tradition with coco and coffee • No gateways iii • Operational cooperatives • > 20 ABC Market Efficiency iv • Administrative and traditional local authorities • Lack of Government capacities in region • No insecurity Governance • From substance to commercial farming will allow • Few bank branches v smallholders involved in out growers scheme to • Few ATM Finance borrow money to increase the yields productivity • No access to mobile money (check Splash) • Limited access to financial institutions | 60 SOURCE: Government of Sierra Leone; World Bank; Authors’ analysis Zoom on South-Eastern Kabala Growth Pole (#3) illustrative Competitive industries Policy • Cocoa • Manufacturing- • Wood specific policy Kambia • Palm oil making • Ecotourism • Finalize SME Makeni • Coffee and SEZ policies • Rubber • Support • Diamonds decentralization Freetown Kailahun Bo Kenema Cross-cutting • Support local authorities with planning capacities • Connect with ICT Bonthe • Increase trade flows Sulima Illustrations of Develop tourism potential Support linkages with small Define strategy to increase private sector • Communities initiative for holders and agro-processing cross-border trade with development Tiwa Island • Increase quality of crops for Guinea and Liberia activities for the • Promote eco-tourism exports (coco, coffee) • Assess viability of special proposed • Train tourism workers and • Support value addition economic zone growth pole park rangers • Support cooperatives • Develop infrastructure area • Protect the environment • Build feeder roads platform 61 | Chapter 6 – The Proposed Growth Poles Program to Support Agenda for Prosperity Delivery systems 1 The growth poles approach Deals orientation Catalytic interventions 2 The context in Sierra Leone Social capital development 3 The sectors that drive growth A B 4 Five enablers of competitiveness Delivery Deals systems orientation 5 About the three growth poles 6 The proposed growth poles program Catalytic interventions Social capital 7 Next steps development C D Back-up appendix | 62 Chapter 6 summary The growth poles program has been uniquely designed support and develop public-private partnerships. to support the Government of Sierra Leone’s Agenda for Prosperity Catalytic interventions (2013-17). The Government will take ownership of the delivery system in a manner that allows it to capitalize on unique and timely partnership The catalytic interventions support initiatives that opportunities. encourage the development of enterprises. These types of interventions can be supported through matching grants and catalytic & innovation Delivery systems fund that will address key weaknesses (skills, innovation, business development capabilities etc.) in value chains and enterprises as well as The delivery system will facilitate effective coordination encouraging the development of opportunities and investment. The between key Government Ministries, Departments and Agencies (MDAs) catalytic interventions are particularly relevant to the labor and finance that are central to the implementation of the program. This will require an dimensions of the growth poles program, as blockages along the value- emphasis on transparency and robust public-private dialogues, chain including lack of vital infrastructure, inadequate business skills surrounding a central hub that provides leadership and technical training, and lack of financing for entrepreneurs are addressed. guidance and acts as a center of expertise that supports and is interconnected with the MDAs. A complete delivery system includes Social capital development capacity building to ensure proper implementation, information systems to prevent against communication failures and share knowledge, and The social capital development component addresses master planning to make best use of land. In each of these components, the needs of key stakeholders that would otherwise not benefit from the it is vital that there be a clear link between the strategy of implementation growth pole, including communities in mining areas that are not seeing and the end goal. the benefits of the mining, small farm holders which will be encouraged to link with large holders, and groups that could be disadvantaged. In This method of delivery of growth pole will be critical not addition to key dialogues with these stakeholders, the social capital only in avoiding missed opportunities, but also in making optimal use of component builds the delivery system for the growth poles program in a catalytic interventions and building social capital. manner that is sensitive to its gender impacts and environmental impacts, which will be critical in ensuring that the growth poles program Deals orientation maximizes its positive spillovers. The delivery system must be built in such a way that takes these considerations into account. To allow the development of shared infrastructure in Sierra Leone, the program will support feasibility studies to identify transformational projects, provide advisory work and financing plans to 63 | Four building blocks of the proposed Sierra Leone growth poles program Delivery focus drives impact and builds capacity within the system Government should structure its role in deals to seize opportunities A through a consistent set of tools B for shared infrastructure development and regional integration Hub and Spokes of Delivery System Expected outcomes Large deposit in Sierra Leone and in the Mano River Union are tremendous opportunities to develop shared infrastructure and increase regional integration and connectivity Roles Key infrastructure to be look at within growth poles (examples) • Plans, prioritizes, and set targets Deals Mining related • Railway network Growth Poles Delivery Hub* Centre hosted at • Monitors implementation by continued tracking e.g. through Presidential Stock-takes Processes • Creates strong information systems with MDAs & maintains regular communication 1. Clear prioritization and setting of targets Delivery infrastructure Public goods infrastructure • Deep sea water port • Highways, roads, feeders roads • Storage and market facilities • ICT backbone and facilities (Presidency or Central Ministry) • Creates systems for regular reporting and communication s that facilitates quick-decision making • Creates a centers of excellence that attracts skilled staff and channels expertise to MDAs 2. 3. Accountability system of MDAs in place with reporting to the center Effective implementation of program activities systems orientation Urban infrastructure Power • Public transport system • Solid waste management • Water distribution • Hydro, coal and gas power plants infrastructure • Transmission and distribution 4. Improved coordination between MDAs in policy design and program operations • Ensure alignment between Growth Poles Growth program and MDAs policies Principles for Government to promote shared usage Poles Focal Points • Troubleshoot implementation • Transparent delivery system with key public private champions involved • Build capacity of MDAs to deliver Growth Pole • Strong public private dialogue on infrastructure gap MDA’s • Deal with reputable private companies to get things done Initiative • Simple transaction to minimize risks and delays in financial Public financing is not enough closure • Technical assistance (legal and financial) to PPP unit and Define clear Set a Anticipate Data for Establish Learn from Est. cost of infra (US$ bn) % GDP % Ntnl. Budget funding for pre and feasibilities studies goals delivery trajectories measuring routines lead • Maximize private, public and social returns in the long term chain progress practices Sierra Leone 1.5-2.1 42-54% 250-330% Guinea 10.4-13.6 181-236% 850-1100% * Through Technical assistance provided in low capacity ministry | 66 SOURCE: Authors’ analysis | 68 SOURCE: CIA World Factbook; RBC Capital Markets; IFC How to deliver How to establish value and program targets? develop shared infrastructure? A B How to create How to share C business prosperity with local D opportunities? communities? Catalytic fund sets foundations for conducive ecosystem to economic C diversification with focus on building linkages for better jobs D Services delivery and livelihoods should be considered in light of social capital Targets Expected outcomes (for Government and development partners) Social Capital 1 Protecting the environment Agro supply chain • Support operational ABC • Increased rice production • Social capital refers to the institutions, relationships, and • Link ABC to growth centers • Rice imports stopped norms that shape the quality and quantity of a society’s • Extractive industries, by nature, can pose significant threats to Increase social interactions. the environment. revenues and • Promote investments in value addition • Rice exports started, increased rice exports • Social capital provides opportunities for success for • Sand mining has destroyed many natural habitats and exports in • Disseminate SRI in rice out growers • Increased palm oil exports beaches in Sierra Leone, decreases quality of life, and makes individuals and communities. Identifying, cultivating, and commercial schemes • Productivity gain for small holders (rice, leveraging social capital is important when deciding where to citizen’s homes more susceptible to natural disaster. farming and • Increase cultivated areas for rice palm oil) locate a business and how to execute business activity • It is important to control these threats through policies that fisheries • Support out growers schemes (rice, pal m • Reduced post harvest losses (agro-supply • Identifying, cultivating, and leveraging social capital is ensure enforcement, responsibility, accountability, and oil) chain for fruits) important when deciding where to locate a business and transparency • Provide financial assistance to small • Increased exports of processed/ how to execute business activity • Preserving and improving the environment is key to creating holders transformed agricultural products Environment and preserving social capital. 1 • Build storage and cold storage facilities • Increased distribution network for fish • Link artisanal fisheries to processing plant • Fish exports to EU started, increase fish Gender Equality 2 2 Promoting gender equality Human Capital • Build new fish jetties exports Investment Education • Studies show gender ranked as the highest factor on a list of Social Capital • Invest in critical public goods infrastructure differences that created divisions among people and equipment Knowledge Based Health Productivity • Men have greater access to higher skilled and higher paying jobs • Streamline manufacturing, SMEs and SEZ • Production of steel started (integrated than women, who mostly work in the household. Mining Cross linkages cutting (e.g. Technology • Interventions to help women grow the value chain should focus on regulation production) Social capital business linkages, Transfer • Provide catalytic support in business • Exports of steel in ECOWAS started Physical Capital increasing the quantity of women in the work force tourism, hospitality, manufacturing) Create quality linkages to first movers • Invest in critical public goods infrastructure and equipment • Provide matching grants for skills development • Increased local content utilization of SMEs • Increased in tax revenues collection • PPP established for technical skills development Catalytic Investment Steps to creating and preserving social capital Machines Tools and Equipment • Identify ways to measure existing social capital in Sierra Leone • Increasing literacy rates among girls will help achieve this goal. • Since 2004, the Gross Enrollment Ratio of girls has increased greatly, indicating increased female participation in formal education Male vs Female Employment by Industry (%) development jobs Trade interventions • Focus on creating and strengthening networks that result in Manufacturing • Promote private investment • Increased number of beds increased social capital and opportunities for Sierra Leoneans. Hotel & Restaurant Men • Strengthen capacities of regulators and • Increased number of holiday-goers arrivals Mining investors • PPP established for skills development Women Culture Banking • Invest in critical public goods infrastructure Sources of Agriculture Quality jobs in Institutions Growth and equipment Construction hospitality Geography 0 20 40 60 80 100 | 70 | 72 SOURCE: François J. Bourguignon; African Development Bank; MARS; World Bank | 64 Support is needed for the Government to set up the building blocks to coordinate numerous ongoing and planned activities within the growth pole areas First building blocks that can coordinate and add value to ongoing and prospective activities Component Objective Illustrative content • EU Urban Planning Project at Ministry of Lands and Planning and Freetown City A  Capacity building Council Address Delivery  Information systems • GIS Core Team at Ministry of Lands and coordination systems  Growth poles master planning Planning challenge  Governance • Donors support to the PPP Unit in the Office of the President B Support  Project identification and feasibility studies • DFID Market Development Program Deals development of  Project development financing • GIZ skills development project orientation shared  Advisory work for PPPs • AFFORD Bomba competition to domestic infrastructure  Investment climate private sector • Manocap private equity investments in C Finance initiatives  Matching grants for skills development fishery, logistics, and storage  Public goods investment in equipment and • Special economic zones development Catalytic that encourage infrastructure strategy in support to forthcoming SEZ Policy interventions the development • Supplier development program design with of enterprises  Value chains support (e.g. manufacturing) Ministry of Trade and Industry and supplier development program • CSR from miming companies D Address the  Local economic development (livelihoods • Feeder roads program Social capital needs of key and community linkages) • Small holder commercialization plan development stakeholders that  Environmental safeguards • Agri Business Center (ABC) in every would otherwise  Disadvantaged groups (women, chiefdoms not benefit unemployed youth) • Out grower schemes (stallholders linked to nucleus farms) Projected aid Delivery system Deals orientation finance UN, MCC World Bank resources World Bank EU, AfDB (2013-17) EU Delegation MCC, IFC infra labor AfDB Private sector US$ 2bn Catalytic Social capital interventions GIZ, USAID World Bank UN, World Bank EU, IFC, MMC, DFID EU, AfDB, IFC market Private sector Private sector gov. 65 | Delivery focus drives impact and builds capacity within the system A through a consistent set of tools Hub and Spokes of Delivery System Expected outcomes Roles • Plans, prioritizes, and set targets Growth • Monitors implementation by continued tracking e.g. through Poles Presidential Stock-takes Processes Delivery Hub* • Creates strong information systems with MDAs & maintains 1. Clear prioritization and setting of regular communication targets Centre hosted at (Presidency or • Creates systems for regular reporting and communication 2. Accountability system of MDAs in Central Ministry) that facilitates quick decision-making place with reporting to the center • Creates a center of excellence that attracts skilled staff and 3. Effective implementation of program channels expertise to MDAs activities 4. Improved coordination between MDAs in policy design and program operations • Ensure alignment between Growth Poles Growth program and MDAs policies Poles Focal Points • Troubleshoot implementation MDA’s • Build capacity of MDAs to deliver Growth Pole Initiative Define clear Set a Anticipate Data for Establish Learn from goals delivery trajectories measuring routines lead chain progress practices * Through Technical assistance provided in low capacity ministry | 66 SOURCE: Authors’ analysis A delivery unit is being considered for the growth poles program, and it will require capacity building at every level of the delivery chain Objectives of proposed institutional option Capacity building is key to the success of the delivery system 1 Facilitate stakeholder coordination For the delivery unit To key ministries Monitoring ▪ Individual coaching and ▪ Individual coaching and ▪ Needs assessments of Allow governments ownership support for team members support for working team existing capabilities 2 and oversight ▪ Delivery unit internal ▪ Training program within ministries 3 Provide efficient execution of project training programs offerings ▪ Updated raining Permit local government and community ▪ Training program ▪ Staffing of high level program offerings 4 offerings experts level participation 5 Decentralization of activities Capacity building can be done through trainings, high-level staffing and study tours. Possible institutional structure for growth poles in Sierra Leone National Steering Committee • Key MDAs: Agriculture, Energy, Finance, Fisheries, Lands, Trade National Steering Committee and Industry, Local Government, Mines, Transport and Aviation, Chaired Central Government authority Works and Infrastructure • Private Sector (10): 5 representatives of lead mining companies, Agribusiness and tourism sector actors, 5 representatives from Local private sector • Local communities Technical Technical Committees: Sub-Committees Comprised of technical focal points in the MDAs. Implementation body: Implementation organ • Can be special unit (delivery unit) created & reporting to central government body or a specialized semi-autonomous body (Growth Project Coordination Unit or Agency Poles Authority). (DELIVERY UNIT) • Lean and efficient, with technical capacity • Project execution, oversight • Coordination with MDAs through MOUs and focal persons Local level implementation Local level implementation Local Government: structures structures • E.g. District implementing Committees , Grievance reporting mechanisms • Should facilitate local ownership, linkages programs 67 | Government should structure its role in deals to seize opportunities B for shared infrastructure development and regional integration Large deposit in Sierra Leone and in the Mano River Union are tremendous opportunities to develop shared infrastructure and increase regional integration and connectivity Key infrastructure to be looked at within growth poles (examples) Mining related • Railway network infrastructure • Deep sea water port • Highways, roads, feeders roads Public goods • Storage and market facilities infrastructure • ICT backbone and facilities • Public transport system Urban • Solid waste management infrastructure • Water distribution Power • Hydro, coal and gas power plants infrastructure • Transmission and distribution Principles for Government to promote shared usage • Transparent delivery system with key public private champions involved • Strong public private dialogue on infrastructure gap • Deal with reputable private companies to get things done • Simple transaction to minimize risks and delays in financial Public financing is not enough closure • Technical assistance (legal and financial) to PPP unit and Est. cost of infra (US$ bn) % GDP % Ntnl. Budget funding for pre and feasibilities studies • Maximize private, public and social returns in the long term Sierra Leone 1.5-2.1 42-54% 250-330% Guinea 10.4-13.6 181-236% 850-1100% | 68 SOURCE: CIA World Factbook; RBC Capital Markets; IFC How to establish value and develop shared infrastructure? Intervention Activity Key Government Point Decision Lessons/project/ country Type Agency maker Government, World Bank, IFC Initiate dialogue and consultations with extractive companies and other IFC advisory project, Timor-Leste - Dili Airport PPP State government, National Government private sector actors on the necessity of shared infrastructure, the India: greenfield development-the Krishnapatnam Railway mineral development existing capacity and improving partnership Company corporation Government, African iron Ore Establish joint venture special purpose Vehicle Simfer SPV, Guinea (51% government of Guinea and Rio Partnership Group, Extractive companies, Government Tinto, Chalco and the IFC the remaining 49% IFC Government, Extractive Introduce Golden share type of control : Government ownership of companies, Planning Vale, Brazil majority control despite very little investment in the infrastructure commission , State pension Government Indian government taking share in SPV L&T Metro Rail Funds Hyderabad Government Improve the capacity of the legal and regulatory institutions through Capacity trainings , individual coaching, sharing experience with other countries Government South-South experience sharing tour building and advisory High level advisory to the government in strategic review of the Nigeria, Strategic review of the airport sector to implement services infrastructure sector (port, airport), including due diligence review, IFC Government private sector participation transaction structuring, marketing and investment promotion, Mauritius, cargo handling operations, Port Louis harbor Ivory Coast, article 72 of the Mining Code draft legal provisions mandating shared use which are clear, precise, with Government Government Cameroon, article 80 of the Mining Code Law and a clear legal remedy for their breach, Burkina Faso, article 69 of the Mining Code Regulations Develop infrastructure access regimes, case by case public declaration Surface Transport Board, (sector specific) Economic regulation Authority Government Australia, USA Government, Rail truck Establish an efficient coordinating mechanism through an industry corporation, port corporation coordinator (authority), extractive Government The Hunter Valley Coal Chain Coordinator, Australia companies Establish independent government coordinator and regulator responsible Institutions for monitoring compliance of the actors Economic Regulation Authority Government Australia Zambia Environmental Establish a third party commercial operator with core competence in Management Agency (ZEMA), infrastructure Private sector and foreign Government Zambian Northwest rail company investors Government Liberia ,RSPO National Interpretation for Liberia (IFC Map the value chain of the potential infrastructure assets Government, World Bank, IFC project) Project Development Assess the capacity of the extractive industry ,the private sector and undertake feasibility studies of potential infrastructure projects Government, World Bank, IFC Government India, inclusive growth partnership (IFC project) 69 | Catalytic interventions will set the foundations for conducive ecosystem C to economic diversification with focus on building linkages for better Targets jobs (for Government and development partners) Expected outcomes Agro supply chain • Support operational ABC • Increased rice production • Link ABC to growth centers • Rice imports stopped Increase revenues and • Promote investments in value addition • Rice exports started, increased rice exports exports in • Disseminate SRI in rice out growers • Increased palm oil exports commercial schemes • Productivity gain for small holders (rice, farming and • Increase cultivated areas for rice palm oil) fisheries • Support out growers schemes (rice, pal m • Reduced post harvest losses (agro-supply oil) chain for fruits) • Provide financial assistance to small • Increased exports of processed/ holders transformed agricultural products • Build storage and cold storage facilities • Increased distribution network for fish • Link artisanal fisheries to processing plant • Fish exports to EU started, increase fish • Build new fish jetties exports • Invest in critical public goods infrastructure and equipment Mining Cross linkages cutting (e.g. • Streamline manufacturing, SMEs and SEZ • Production of steel started (integrated regulation production) business linkages, • Provide catalytic support in business • Exports of steel in ECOWAS started tourism, linkages to first movers • Increased local content utilization of SMEs hospitality, • Invest in critical public goods infrastructure • Increased in tax revenues collection manufacturing) and equipment • PPP established for technical skills • Provide matching grants for skills development Create quality development jobs • Promote private investment • Increased number of beds • Strengthen capacities of regulators and • Increased number of holiday-goers arrivals investors • PPP established for skills development Quality jobs in • Invest in critical public goods infrastructure hospitality and equipment | 70 How to create business opportunities? Intervention Activity Implementi Program Components Project Decision Maker Issue Area Country Type ng Agency Funds Business Technoserve Skills training, business development Kenya, Plan Strengthening Rural Youth Mastercard Skills; Youth and and mentoring to young people ages $11.5M Rwanda, Competitions Development through Enterprise Corporation jobs Mastercard 18 to 30 in Uganda Supplier Newmont Local suppliers development; Development Skills; SME Ahafo Linkages Program Ghana Gold local economic development; $4.6M IFC Ghana Programs development Limited institutional capacity development Business Registry, One Stop Shop (Results: In Rwanda, time Regulation / Reduce number of steps for Burkina to start a business was reduced Competitivene Regulation, Policy administrative registration, reduce time $2.5M Ministry of Commerce Faso, from 18 days to 2 days, and the ss Committee Taxation Streamlining and cost to start business. Rwanda number of steps required was reduced from 9 to 7) Innovation Investment in infrastructure, Government through MSME Linking smallholders to Competitively and equipment, and services; providing Investment Committee, development, Republic of agribusiness value chains and selected Demonstratio linkages between smallholders and $17M Public Private access to Mozambiqu linking MSMEs to the natural private Fund n Catalytic agribusinesses, Establishment of Stakeholder, World markets, e resources-related value chains Manager Fund Training Centers, Skills Programs Bank (financier) technology Provide sub-loans and matching Provide sub-loans of up to $500,000, Gov’t of grants, based on transparent with borrowers expected to cover 20% Vietnam, Business selection criteria (i) to private of total project cost. Provide matching Matching Ministry of EDA PMU, Development, enterprises for promoting grants for 30% of cost of approved $33M Vietnam Grant Planning and NAFOSTED and PFIs Commercializat inclusive technologies and (ii) to subprojects, with maximum grant size Investment ion, Scaling SMEs for upgrading their of $125,000 to $250,000 dependent (MPI) technological capabilities. on project type InfoDev incubator for Provide financial and non-financial Business Senegal, agribusinesses, aims to help Private services, demonstrate product, InfoDEV Development, Incubator $23.7M Tanzania, entrepreneurs accelerate the Organizations process, and business model Board of Incubator Competitivene Ethiopia growth of their enterprises innovation across focal sectors. ss, Jobs Uganda cost sharing grant scheme in which Business Government, Ugandan firms could receive 50% of Private Sector Competitivene Business Uganda Development Development Uganda costs of using consultants and other $7.5M Foundation Uganda ss, access to Uganda Scheme Programs Investment service suppliers (ie marketing, (PSFU)??? services Authority production, planning) Technology Transfer and State Office Access to Central Project Information Markets. for Applied research, building exhibit markets and Innovation Management Office Demonstrate new technology Comprehensiv facilities, leading to new innovations in $16M services, China Support Fund (CPMO) and make agricultural products e Agricultural areas such as energy and farming competitivenes available to smallholders Development s 71 | Services delivery and livelihoods should be considered in light of D social capital Social Capital 1 Protecting the environment • Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society’s • Extractive industries, by nature, can pose significant threats to social interactions. the environment. • Sand mining has destroyed many natural habitats and • Social capital provides opportunities for success for beaches in Sierra Leone, which decreases quality of life and individuals and communities. makes citizen’s homes more susceptible to natural disasters. • It is important to control these threats through policies that • Identifying, cultivating, and leveraging social capital is ensure enforcement, responsibility, accountability, and important when deciding where to locate a business and transparency how to execute business activity • Preserving and improving the environment is key to creating Environment and preserving social capital. 1 Gender Equality 2 2 Promoting gender equality Human Capital Investment Education • Studies show gender ranked as the highest factor on a list of Social Capital Knowledge Based differences that created divisions among people Health • Men have greater access to higher skilled and higher paying jobs Productivity than women, who mostly work in the household. Technology • Interventions to help women grow the value chain should focus on Transfer Physical Capital increasing the quantity of women in the work force Investment • Increasing literacy rates among girls will help achieve this goal. Machines Tools • Since 2004, the Gross Enrollment Ratio of girls has increased and Equipment greatly, indicating increased female participation in formal education Steps to creating and preserving social capital Male vs Female Employment by Industry (%) • Identify ways to measure existing social capital in Sierra Leone Trade • Focus on creating and strengthening networks that result in Manufacturing increased social capital and opportunities for Sierra Leoneans. Hotel & Restaurant Men Mining Women Culture Banking Sources of Agriculture Institutions Growth Construction Geography 0 20 40 60 80 100 | 72 SOURCE: François J. Bourguignon; African Development Bank; MARS; World Bank Community Driven Development Initiatives can be used to enhance linkages and build trust in communities surrounding the Growth Poles Community driven initiatives have been established as best practice in many regions of the world, and have been developed in numerous forms to support shared prosperity CDD Type Activity Implementing Program Components Project Decision Maker Issue Area Country Agency Funds Community Laguna Lake Environmental Policies ($3.6M) Laguna de Bay Institutional Municipal Water and Development Pollution Management ($3.6M) Philippines Participatio Strengthening and Authority Civic Engagement ($3.6M) $12.45M Development Fund Sanitation; n Initiatives Community Participation Office Environment Resource Management ($1.7M) Training Youth Labor Training Youth Labor Training Program – Coordinating Unit Program PROJoven (% training courses provided by Skills; Youth Programs grads having paid job up by within Labor training centers $10M Ministry of Labor Jobs Peru Ministry 4 to 8 percentage points) Mentorship/ Mozlink Mentorship Mozambican Offering work packages for small Mozal Aluminum Coaching Program (average 34% Mozambiqu Investment businesses $20M (IFC; co-financier Skills Programs sales increase for e Promotion Center Capacity building for SMEs program coordinator) particpating SMEs) Challenge Civil society Two competitive application rounds Genesis Analytics; Sub- Education; Funds Financial Education Fund organizations resulting in fifteen grants $5.4M Cardno Emerging Gender Saharan (DfID) Baseline studies and monitoring Markets Africa Risk Lesotho Hospital Public Maseru referral Ensures implementation of a Government of Guarantee Private Partnership-Partial hostpial public-private hospital $5M Lesotho Health Lesotho Facilities Risk Guarantee Benefits Minera Escondida Fundación Educacional Provides funding to support literacy Sharing Foundation Regional government Escondida (Escondida and k-8 school enrollment $9M Education Chile Agreement (Escondida Mine of Antofagasta Educational Foundation) programs for children in Escondida s Foundation) Incentive Education quality improvement Afghanistan Ministry Education, Afghanistan Reconstruction Control and Audit Grants Trust Fund Office Rural access programs $5M of Finance (World Infrastructure, Afghanistan Irrigation rehabilitation Bank, financier) Gender Rural infrastructure ($66M) Department Of Block Grant National Community Driven Civic engagement ($66M) Philippines Ministry of Infrastructure, Social Welfare And $ 2B Philippines Development Project Social Development ($66M) Finance Gender Development • Voluntary Agreements • Empowerment Agreements • Institution Initiatives Illustrative List • Indigenous Land Use Agreements • Impact Benefit Agreements • Access to Capital of Other • Partnering or Partnership Agreements • Social Trust Funds • Business Plan Competitions Possible CDDs • Community Contracts • Community Joint Venture Agreements • Supplier Development Programs • Shared Responsibilities Agreements • Investment Agreements • Matching Grant 73 | Chapter 7 – Next Steps Plan of activities 1 The growth poles approach Prioritize interventions Structure program 2 The context in Sierra Leone 3 The sectors that drive growth 4 Five enablers of competitiveness 5 About the three growth poles 6 The proposed growth poles program 7 Next steps Back-up appendix | 74 Chapter 7 summary (1/3) This report has detailed the growth poles approach to Monitoring and evaluation (M&E) will be particularly development and its potential to dramatically enhance Sierra Leone’s important given the uncertainty that surrounds large infrastructure growth trajectory. In the next steps, we will continue to focus on building projects of this nature, where much of the information is impossible to the foundations that will lead to transformational impacts and shared obtain ex ante. In order to incorporate flexibility into the design of the prosperity for Sierra Leone. These next steps involve building the growth pole and its accompanying projects, it will be critical to have program (including the delivery systems, deals orientations, catalytic reliable, current information that can be used to alter project designs interventions, and social capital development projects), communicating even in the middle of their implementation. the goals and strategy of the program to all relevant stakeholders, and preparing for immediate and critical Government investment based on This requires a flexible approach to assessment and the techniques outlined here. M&E that incorporates an iterative learning technique. To do this, the delivery system must first establish measurable intermediate goals. It RELATED TO FURTHER STRUCTURING OF THE GROWTH POLES APPROACH should then use those metrics to identify bottlenecks and market failures: AND STRATEGY TO SUPPORT AGENDA FOR PROSPERITY places where the project is not progressing as planned. From there it should experiment, learn, and adapt to the ever-changing surrounding Throughout this report, we have outlined the step by environment. The R&D involved in this process should be a joint venture step process through which a country can achieve shared prosperity with between involved private entities and the government agency a growth poles program. The first of our next steps will be to build such a responsible for acting as the “hub” of the program, particularly as each program specific to the needs of Sierra Leone. This will require tailoring will have access to different information regarding the project. As always the delivery system, deals, catalytic interventions, and social capital in M&E, collaboration and communication will be key to having accurate investments to the unique social and political climate found in the metrics. country. The structure of this relationship between the government in the public sphere and the firms in the private sphere will Delivery systems be crucial to the success of the project. A delivery system requires that a government agency act as a central hub that provides leadership and The delivery system is three fold: it requires a delivery technical guidance and acts as a center of expertise that is mechanism, a governance model to form the “hub” of the pole, and just- interconnected with all of the relevant agencies, departments, and in-time support to policy reforms. The delivery mechanism is precisely independent stakeholders. The first step in developing this structure is to what was described in the last chapter: capacity building, information identify an optimal governance model for a “growth pole coordination systems, master planning, and financing plans via public-private unit.” Accomplishing this will require an advisory team to work with the partnerships. Each of these four components should be subject to Government for three months to identify a governance structure that will rigorous monitoring and evaluation to ensure that the project is draw on the existing capacity of different agencies and will design a unit progressing as planned and being implemented in the most effective that will serve as the coordination and delivery unit of the growth poles manner possible. approach. 75 | Chapter 7 summary (2/3) The second step in designing the program is to design Catalytic Interventions the delivery systems of the unit and prepare an operational plan that will be ready in 2014. In this phase, the advisors will build on the model Another next step in developing the program will be to developed in the first phase to prose a detailed design of the unit and an design and support catalytic interventions that support entrepreneurs operational plan that will provide the TORs for staff and the performance and develop business linkages and demand-driven skills needs that contract for the unit coordinator. Finally, in the third phase, support may prepare small and medium enterprises to move up the value chain as be offered via high-level advisors in the actual establishment and suppliers in growing industries. This step seeks to address the gap in the foundation of the coordination and delivery unit, at which point the initial existing market between the demand and supply of goods and services delivery system will be fully formed. in the mining and agribusiness sectors, with particular emphasis on local content. As such, it will develop specific, measurable opportunities that Deals orientation can be tapped by the private sector, and supporting them with catalytic interventions that address key weaknesses (skills, innovation, business After the delivery model is complete, the next step is to development capabilities etc.) in value chains and enterprises. begin to develop deals regarding the major projects in the growth pole program. Chief among these will be the development of an action plan This will also require integrating multiple stake holders for the construction of a deep water port. The location and design of the into an iterative problem-solving process via public-private dialogues. port is as yet undetermined; a role the World Bank can contribute to in These should be used not only to support SMEs in capacity building, but this process is to get all of key stakeholders around the same table and also to develop a roadmap of what exactly are the goods and services determine the effect of different designs on various interest groups. To that have the highest chance of being captured in-country by 2017 and this end, it will also offer expertise by providing analysis of the impacts 2022 by in-depth supply chain mapping analysis (value chain analysis, different port locations and designs and producing a paper with the infrastructure prioritization, business linkages, social capital). Several results. This will be a key part of the innovation in this program: this value chains (including rice, palm oil, steel, and juices) have already paper will introduce flexibility into the design of the port. Uncertainty been pre-identified as having high value-added potential; these frequently undermines large infrastructure investments of this nature, by opportunities should be formalized via market diagnostics and concrete taking longer than anticipated or running significantly over budget. A value chain analysis. flexible design limits the initial capital expenditure, while planning for and allowing further expansion if M&E suggests that it would significantly add Social capital development value. In this manner, flexible systems not only allow for an increase in expected value by avoiding downside risks, but also leave room to take Finally, in terms of the development of the growth poles advantage of opportunities. Lead experts on flexibility can prepare a port program, it is crucial to invest in building and enhancing social capital. design that can adapt at mid-project as more information surrounding the The key focus of this component is to build the growth pole program in a port become available. This will draw on the iterative nature of the M&E manner that addresses the needs of key stakeholders that would to offer the governing body the ability to change course and see whether otherwise not benefit from the growth pole, including communities in it is possible to generate additional spillovers that attract public and mining areas that are not seeing the benefits of the mining, small farm social returns. holders which will be encouraged to link with large holders, and groups that could be disadvantaged. This will require dialogues with all of these stakeholders, with a particular emphasis on local government and chiefdoms. | 76 Chapter 7 summary (3/3) Decentralized service delivery continues to be a key TO CONTINUE PUBLIC-PRIVATE CONSULTATIONS, LEARNING element in improving basic services in education, health and water and EXPERIENCES EXCHANGE AND CONSENSUS BUILDING sanitation, and the time may be ripe for further deepening of the decentralization process. In many ways, Sierra Leone‘s progress on The second component of the next phase will be to decentralization could hold useful lessons for other post-conflict communicate, as outlined in the first segment of this conclusion, to all countries, especially in terms of deconcentrating powers by devolving relevant stakeholders. First and foremost, the program will be responsibilities to local authorities, improving service delivery, and communicated via public-private dialogue workshops. These will include strengthening accountability. A majority of the functions envisaged for representatives of government, industry, finance, and the community at devolution under the 2004 Local Government Act (LGA) have been large to evaluate the proposed plan and integrate their feedback. On a devolved to Local Councils. Recent discussions amongst stakeholders broader level, outreach activities will be conducted in communities so have highlighted that Agenda for Prosperity is a good time to revisit the that they can be fully informed on what to expect from the LGA and reflect upon lessons from experience, in order to deepen the implementation of the program and can address any concerns they may devolution process. Such a review should look at devolving authority have. In terms of informing decision makers, a lead practices tour that over line agency staff to Local Councils, and further refine the will inform them on best practices and previous approaches will be intergovernmental fiscal transfer arrangements on the basis of a full undertaken so that they will start the growth poles program with the understanding of local revenue collection and management. The necessary skills and capacity. Finally, for instance, a video will be opportunities provided through the decentralization process to actively prepared that depicts and explains the growth poles program. This video engage with citizens and promote social accountability are being taken will be accessible to all levels and can be used to cheaply and quickly forward and are expected to continue. educate the public as well as all major stakeholders regarding the coming growth pole program. One of the unique benefits of working in Sierra Leone is that it offers a strong chiefdom system that can play an active role for the RELATED TO A PUBLIC INVESTMENT TO KICK-START THE GROWTH decentralization of services delivery. Initial discussions have already POLES PROGRAM taken place at multiple levels of government. The focus at the chiefdom level should be how to best build, enhance, and sustain capacity for The third and final component of the next phase is the community level development initiatives and participation of the possible preparation for Government intervention to support initiatives community in supporting growth pole projects. This can be particularly selected through the growth poles prioritization process. This component crucial for distribution processes to more rural areas and monitoring will include performing economic analysis (including the economic rate performance and impacts at the community level. of return) and the direct cost/benefit analysis for each selected intervention. After performing a detailed screening model, these Social capital will also be important in ensuring that the interventions will be selected on the basis of quick wins costing and growth poles program is implemented in a way that environmentally identification. Once the projects have been prioritized by the model sustainable and gender sensitive. This should include, as per the World described in the back up box appendix, the most pressing initiatives with Bank’s safeguards standards, performance indicators on environmental the highest returns will be evaluated further for possible financing and and social outcomes in project results frameworks and ensure implementation. systematic collection of data to monitor and evaluate safeguards performance. 77 | There are three sets of activities to be undertaken to turn the growth poles approach into an operational strategy: the growth poles program Months Plan of activities I II III IV V VI . . . Activities related to structuring the growth poles program: multi-sectorial studies to select interventions and signal commitments Delivery platform agreed Design Adaptable M&E Start delivery unit* Master planning A Delivery systems work upon* framework defined Start capacity building, set information systems Design work and Decision model building Project development National B Deals orientation protocol action workshops Feasibility studies* financing and advisory plans Flexibility in system design services Design 4 case Case studies studiesdeveloped developed Build business case and size Catalytic Design Innovation strategy Start supplier detailed development C interventions work Pilot courses catalytic evaluated interventions (skills, work and piloted program and catalytic fund* and linkages, skills and value chains analysis equipment, infrastructure, financing) Social capital Political economy analysis Decentralization of services Social capital D development at chiefdoms level (trust, Launch social capital activities delivery in growth pole areas development livelihoods, gender, environment) strategy such as block grants* (planning, monitoring) assessment Activities related to communication and consensus building to operationalize the proposed growth poles strategy Lead practices tour Growth Communication Public private dialogue poles Communication and outreach campaigns* and stakeholders consultations video Activities related to a possible Government operation to pursue quick-wins, kick start at least one growth pole and sequence the interventions Possible First Quick wins identification, costing and implementation Project preparation, operation Government Effectiveness* including cost/benefit and economic analysis agreed operation* Procurement mechanism defined upon * contingent upon stakeholders approval and the length of their administrative processes | 78 SOURCE: Please check back up box in appendix for further reference Institutional arrangements will depend on final components of the program but early planning is necessary • Learn lessons from similar multi-sectorial program s & adapt to Sierra Leone e.g. cluster Draw Lessons from development initiatives (China, Singapore, Malaysia); Growth poles projects (Madagascar, Similar projects Burkina Faso [Bagré Pole], Mozambique): Multi-sectorial projects in Sierra Leone, e.g. Rural and Private Sector Development Project • Study reports, reviews. Peer-to-peer exchanges, South-South learning exchanges (Study tours) • Identify lead institution that will sponsor growth poles program and host implementation body • Identify key Government institutions that will be critical to implementation, assess current systems, Planning staffing and institutional capacity needs • Assess institutional options i.e. small coordinating units working in host institution or created a dedicated growth poles agency. Considerations :Adaptability of institutional design, long term institutional building Set-up • Develop framework of institutional arrangement's on growth poles • Pass framework document e.g. Project Implementation Manual or enact a law to create a growth poles agency. Initial Considerations Lead Institution Implementation body Central role of Office of President and Min of Finance Possible gradualist approach: From PCU to Agency • Has convening power of Government required to • Can be created within host institution & staffed coordinate growth poles. with expert staff (Coordinator, Procurement • Strategic Role of Chief of Staff (Strategy and Policy Project Specialist) Office of the Unit, Cabinet Oversight ) to monitor Growth poles • Acts as a hub but coordinates with MDAs through Coordination President • Host PPP & MCC Units-PPPs will be strong delivery placed focal points Unit of growth poles. Coordination between MCC Can be set-up May not have sufficient process and Growth poles to avoid duplication autonomy and power quickly • Plays a donor coordination function through DEPAC & Dev. Ass. Coordination office • Will need to be created by law (DACO) • semi-autonomous body , governed by a Board Ministry of Growth Poles • Oversees GoSL resources, and also looks at Long legislation It is not adaptable to Finance Agency fiscal risks, etc. ensuing from PPPs process will cause changes • Creating Public Investment Systems for long- delay in setting up term planning of projects 79 | Prioritize key sectorial and cross-cutting interventions for the program to support the implementation of Agenda for Prosperity Signal commitments to finance priorities interventions Cross-cutting intervention “The Agenda for Prosperity is a mega and multi-faceted project with eight pillars, each pillar carrying its own flagship projects” President Koroma Critical cross- sectorial Pillars interventions Economic Managing International which require a diversification natural competitiveness strong resources Mining coordination 1 2 4 mechanism: Agriculture Mineral resources Business Manufacturing Environment environment The Delivery SMEs Unit Fisheries Water Tourism Land mgmt. Road network Energy Oil and gas Focus Port and airport Potential growth Cross-cutting Not focus Telecom poles’ flagship and multi- sectorial Public returns Decision model interventions Agriculture ▪ Shareholding Measure value proposition of each of the ▪ Tax revenues flagship project under pillars 1, 2 and 4 ▪ Economic returns ▪ Net present value Interventions A Delivery Social returns will be systems ▪ Direct jobs ▪ Indirect jobs prioritized in the Deals B ▪ Access to services next phase orientation through the use Catalytic Private returns of the decision C interventions ▪ Direct GDP impact model and ▪ IRR Social capital ▪ Profitability variance public private D Tourism development ▪ Net present value consultations. | 80 SOURCE: Please check back up box in appendix for further reference Structure a program to mobilize resources and deliver Agenda for Prosperity illustrative Cross-cutting Mining Agriculture Tourism  Set delivery unit Individual coaching, training programs A Delivery and high level staffing systems  Governance Master planning and information systems  Build deep sea  Feasibility  Stimulate bio  Quality deals for Deals water port studies for energy hotels B orientation power generation to  Investment climate & promotion options grid  Policy reforms  Set supplier  Public goods  Public goods C Catalytic (SEZ, SMEs) developme investment in investment in interventions  Matching grants nt program roads, storage utilities (power, for skills and equipment water) development  Gender  CSR  Support out  Protect D Social capital mainstreaming activities, grower schemes environment development block grants and link with ABC Note: These proposed interventions under each of the growth poles program component that have build most consensus in terms of impact and ease of implementation. • Meanwhile the delivery platform (governance model) will be agreed among stakeholders. • Each selected intervention will be assessed (cost/benefit). • Key interventions will be sequenced with flexibility in design. Each step of the sequencing will be turned into individual action plans (quick wins, medium and long terms). • Government and development partners will signal commitments. SOURCE: Stakeholders’ consultations; Authors analysis 81 | Back-Up Appendix 1 The context in Sierra Leone 1 The growth poles approach 2 The growth poles approach 2 The context in Sierra Leone 3 The sectors that drive growth 3 The sectors that drive growth 4 Five enablers of competitiveness 4 Five enablers of competitiveness 5 About the three growth poles 5 About the three growth poles 6 The proposed growth poles program 6 The proposed growth poles program 7 Next steps 7 Next steps Back-up appendix Bibliography | 82 next steps 1 program 3 growth poles 5 enablers 3 sectors 1 approach context Back-up Box 83 | EXECUTIVE SUMMARY EXECUTIVE SUMMARY Consolidation of pages’ headings (1/2) Introduction Chapter 2 – The Context in Sierra Leone ¶ The growth poles approach is relevant to Government ¶ Sierra Leone is experiencing high GDP growth as a result of strategy and vision ¶ and [it] provides support to foster unprecedented FDI inflows in iron ore mining ¶ but to sustain economic diversification through the sequencing and and share this economic boost, growth has to come from implementation of private sector development priorities. other sectors to have a transformational impact. ¶ The mining boom is changing the development trajectory of Sierra Leone ¶ Findings [three growth poles]: ¶ proposed growth poles ¶ but will it be enough to achieve shared prosperity in the program to signal commitment, pursue quick wins and medium to long term? Employment generation cannot only support Agenda for Prosperity. rely on the extractives industry. ¶ Agriculture is the main contributor to GDP and employment, and attracts investments Chapter 1 – The Growth Poles Approach for Sierra Leone in non-cultivated land areas which may lead to agro- processing. ¶ Sierra Leone’s world class assets in tourism are ¶ Growth poles are simultaneous, coordinated investments at not utilized at their fullest potential. the industry level in many sectors to support self-sustaining industrialization in a country. ¶ Sierra Leone can learn from Chapter 3 – The Sectors that Drive Growth and Create international experience and lead practices from the World Stable Jobs Bank. ¶ The complexity of growth poles development requires commitment and clear milestones, it is a time-bound exercise. ¶ While the extractives industry influences the development trajectory of Sierra Leone and provides a robust case for ¶ [This] diagnostic is a process with 4 interrelated focus growth poles support; ¶ not all minerals have the same impact areas which taken together form a distinctive growth pole on the economy in terms of shared prosperity potential. development strategy. ¶ Developing a growth pole ¶Agriculture is the base of rural development and attracts FDI successfully requires a constant dialogue among that uplift agro value chains ¶ but not all crops provide the stakeholders. ¶ It also takes dynamic interaction among same yields in terms of revenues and jobs creation, and institutions to best coordinate efforts towards producing the fisheries may become a source of growth. ¶ Tourism has desired outcomes. ¶ The first step of the analytical work is to been identified as a key growth sector in the Sierra Leone’s go through a prioritization process from an exhaustive scope Agenda for Prosperity. ¶ Selected industries are concentrated to a short list of recommendations. ¶ The second step of the around geographical areas. ¶ Emerging growth poles in work is about change process in order to sequence Sierra Leone: ¶ [their] areas encompass many chiefdoms, a interventions, measure costs and impacts and select targets level where political economy and decentralization issues to be delivered. ¶ A combination of various sources of may be addressed. financing is required to support growth poles development. | 84 ¶ new page key words in orange EXECUTIVE SUMMARY EXECUTIVE SUMMARY Consolidations of pages’ headings (2/2) Chapter 4 – Five Enablers of Competitiveness for Chapter 6 – The Proposed Growth Poles Program to Economic Diversification Support Agenda for Prosperity ¶ In order for a growth poles approach to deliver successful ¶ [There are] 4 building blocks of the proposed Sierra Leone results in Sierra Leone, it must address gaps in 5 key areas. growth poles program. ¶ Support is needed for the ¶Infrastructure bottlenecks and missed opportunities for Government to set up the building blocks to coordinate shared usage impede Sierra Leone competitiveness. ¶ Labor numerous ongoing and planned activities within the growth demand from firms is not matched because of the lack of pole areas. ¶ Delivery focus drives impact and builds capacity skills and low literacy rates. ¶ Low market efficiency can be within the system through a consistent set of tools. ¶ A addressed by starting from anchor investors to strengthen delivery unit is being considered for the growth poles their suppliers and improve logistics along their value chain. program, and it will require capacity building at every level of ¶Despite the boom of the extractive sector, improvements in the delivery chain. ¶Government should structure its role in governance will not occur automatically as the development deals to seize opportunities for shared infrastructure process unfolds. ¶ Better access to financial services is development and regional integration. ¶ How to establish needed to seize opportunities. value and develop hared infrastructure? ¶ Catalytic interventions will set the foundations for conducive ecosystem Chapter 5 – About the Three Growth Poles of Sierra to economic diversification with focus on building linkages for Leone better jobs. ¶ How to create business opportunities? ¶Services delivery and livelihoods should be considered in ¶ Rapid assessment of growth pole #1 (Freetown to light of social capital. ¶ How to share prosperity with local Tonkilili): ¶ Zoom on Northern Growth Pole (#1) communities? ¶ Rapid assessment of growth pole #2 (Bonthe to Chapter 7 – Next Steps Sulima): ¶ Zoom on Costal Growth Pole (#2) ¶ There are 3 set of activities to be undertaken to turn the ¶ Rapid assessment of growth pole #3 (Tiwai to growth poles approach into an operational strategy: the Kailahun): ¶ Zoom on South-Eastern Growth Pole (#3) growth poles program. ¶ Institutional arrangements will depend on final components of the program but early planning is necessary. ¶ Prioritize key sectorial and cross- cutting interventions for the program to support the implementation of Agenda for Prosperity. ¶ Structure a program to mobilize resources and deliver Agenda for Prosperity ¶ new page key words in orange 85 | CONTEXT CONTEXT Credit to the private sector has increased, enhanced by increased savings mobilization and monetary policy Domestic savings reached above 10% of GDP by 2011 Gross Domestic Savings (% of GDP) SSA Sierra Leone 20 • Low level of domestic savings 15 compared to other SSA countries 10 • Low credit to the private sector in 5 terms of magnitude 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 -5 Monetary Policy and reforms 83% of the domestic credit went to the private sector by 2012 Capital formation (private) reached 30% of GDP Distribution of Domestic Credit (%) Gross fixed capital formation, private 100 sector (% of GDP) Central government Private Sector 80 35 60 30 25 40 20 15 20 10 5 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: World Bank, Databank; Authors' analysis | 86 CONTEXT CONTEXT Illustration of facts about FDI flow to Sierra Leone in the past decade (2003-2013) based on FDI markets report on 25 companies Headline figures In terms of project type, 96% of projects are new No of FDI projects 25 investments Total jobs created 3,260 Total capital investment USD 504.53 m Total of 3260 Jobs Created in the 10 years period Average project size USD 100.90 m The largest number of projects was announced in 2012 (6) Metals (extraction) is top sector with almost one-third of Freetown is the top destination (32% of the surveyed projects are in metal companies) The other companies are involved in, tourism, Largest projects originate in UK ($170 million telecommunications, energy, and financial services Job creation concentrated in three sectors: electricity, Most of the investment came from Developed countries extraction, and manufacturing Jobs created in main sectors Source of Investment (%) 16.0 Canada 260 24.0 UK 1000 Electricity 4.0 Nigeria 2000 Extraction 4.0 United States Manufacturing 4.0 Malaysia 4.0 16.0 4.0 India 4.0 Finland 8.0 12.0 Germany SOURCE: FDI Markets, Trends report: Sierra Leone (2013) 87 | CONTEXT CONTEXT Sierra Leone Ranks low on Human Development Index (HDI) compared to other SSA countries, but impressive improvement over the years Sierra Leone Ghana 2005 2012 2012 64.8 48.1 Life expectancy at Birth 44.3 +8.5% 7.0 3.3 2.9 Mean Years of Schooling +13.7% 1684 881 GNI per Capita (2005 PPP $) 610 +44.4% 0.558 0.315 0.359 HDI value +14.0% Target for 2035 (Agenda for Prosperity) • Mean Years of schooling : 7 years • Life Expectancy at Birth: 57 years • HDI: 0.55 | 88 SOURCE: Government of Sierra Leone; UNDP, Human Development Report 2013 SECTORS SECTORS Sierra Leone’s mining industry is concentrated, here is a brief background of major players within the growth pole areas (Northern and Coastal growth poles) African Minerals African Minerals Limited is a minerals exploration and development company with significant interests in Sierra Leone. The company is currently focused on the development of a world class iron ore deposit at Tonkolili and its related rail and port infrastructure. It is the largest employer in Sierra Leone and is set to become the largest contributor to the country's GDP. London Mining London Mining is an expanding producer of high specification iron ore for the global steel industry and is focused on identifying, developing and operating sustainable mines. Production in Sierra Leone (Marampa) started in 2011 and is expected to reach 5Mtpa in 2013. Moreover, Marampa has the capacity to increase its production to 16Mtpa in the few next years. Sierra Rutile Sierra Rutile is a leading mineral sands company, operating world-class assets in Sierra Leone. The company is in the process of significantly expanding its core rutile production, with associated increases of zircon and ilmenite by-products. Sierra Rutile is currently undergoing a significant expansion of its operations. It has commenced the construction of a dry mining operation and introduced a second smaller dredge to reprocess old tailings. Sierra Minerals Sierra Minerals is the only bauxite mine in Sierra Leone and is among the largest mining employer in the country. The mine has a resource base of approximately 31 million tonnes of bauxite and currently produces around 1.2 million tonnes per annum for export. Cape Lambert Cape Lambert Resources Limited is an Australian domiciled, cashed–up resources and investment company with exposure to iron ore, copper, gold, uranium, phosphate and lead-silver-zinc assets in Australia, Europe, Africa and South America. The company’s strategy is to acquire and invest in undervalued and distressed mineral assets and companies and to add value to those assets through a hands on approach to management, exploration and evaluation. SOURCE: Company’s websites 89 | SECTORS SECTORS However, Sierra Leone mining companies appear small when compared to other global mining companies, with the risk of collapse in case of price fluctuation BHP Billiton vs. largest Sierra Leone mining companies BHP Billiton is one of the world’s largest producers of major commodities, including aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium, and has substantial interests in oil and gas. The company’s revenues (for all minerals) in 2012 are enormously higher than those of any Sierra Leone mining company 2012 Revenue $ billion BHP Billiton 72,226$ million (22,601 for iron ore) World x250 African Minerals 1st 286$ million Sierra Rutile 179$ million London Mining SL1st 120$ million SL 2nd SL 3rd Note: Mining companies operating in Sierra Leone are junior mining companies which are more vulnerable to market prices fluctuation. | 90 SOURCE: Company’s websites SECTORS SECTORS Only iron ore and heavy sands are suitable for growth poles, while diamonds have a limited impact on local development Whether minerals are suitable for the development of a growth pole or not depends on the fact that different minerals require different types of infrastructure development and hold different linkages with the local economy • Indeed, iron-ore and heavy sands require means of transportation that are able to sustain their heavy weight. Sierra Leone currently do not maximize the development of shared infrastructure. These heavy infrastructures include roads, railways and ports that will have an enormous spillover effect on the local economic community: roads and railways can be not only shared with among mining companies, but also shared with other types of local industries and even with the population. • On the contrary, diamonds and gold are light minerals which can be transported regardless of the support infrastructure. This means that, due to their negligible weight and high value, diamonds are carried on regular roadways in light-weight vehicles which does not allow opportunities for shared infrastructure development. • Furthermore, historically, it has always been harder to collect royalties from diamond mining (and consequently redistribute the revenues) owing to high rates of smuggling. Even in recent years, estimates of the value of diamonds lost to smuggling range from 50% to as much as 90% of total production by value. Alluvial diamond mining is already showing signs of diminishing returns, and as the decline continues, it could cease to be a viable economic activity. 150,0000 to 200,000 artisanal miners live from this activity. Value-chain approach for minerals Regulation and Collection of Revenue Sound Award of contracts and monitoring of taxes and distribution and sustainable licenses evaluations royalties management projects SOURCE: World Bank 91 | SECTORS SECTORS Palm oil, sugar cane and rice are the largest contributors to Sierra Leone agricultural economy Main factors • World consumption of edible oils is rising • At the same time world production is drecreasing (particularly in the EU, US, Brazil, Malaysia, and Perspective Indonesia due to deforestation) on Palm oil • Only among ECOWAS countries (which is a duty-free access zone for Sierra Leone), palm oil’s exports have risen from 65$ million in 2001 to 450$ million in 2008 (36,000MT unit production) • World demand for sugar cane products (sugar, ethanol, molasses etc) is rapidly increasing due to the rise in income for the emerging markets and the rising interest for renewable fuels Perspective • Four of the five world largest producers of sugar cane (the EU, US, India, and China) have switched on sugar cane from being sugar cane producers to sugar cane importers. • In 2007, the ECOWAS zone alone imported more then 500$ million of sugar cane and more than 100$ million of ethanol (whereas in 2001 they imported, respectively, 20$ and 100$ million), and 70,000MT unit were produced • Unlike for palm oil and sugar cane, Sierra Leone does not export rice • Even though in 2007 SL produced 800,000MT units of rice, the country’s rice self-sufficiency is only at 70% • However, since SL’s independence, agricultural development policies have been focused on the Perspective on rice achievement of rice self-sufficiency for the country. (30.7% of agri GDP) • Major interventions have included both direct government participation and indirect aid through the donor-funded integrated agricultural/rural development projects. • All of these interventions have targeted small- holder farmers, who constitute approximately 90% of the SL farmer population. SOURCE: This is africa, Focus on Sierra Leone; Technical Assistance and Capacity Building for Sierra Leone Export and Investment Promotion Agency (SLIEPA), 2009; National Rice Development Stratgey, 2009; Sierra Leone Opportunities for Investors in the Oil Palm Sector; SL Opportunities for Investors in the Sugar Sector | 92 NEXT STEPS NEXT STEPS The delivery system will translate the growth poles approach into strategic operational documents: each growth pole will have a masterplan Planning: ▪ Based on the existing geo spatial capacity of the GIS core team in the Government of Sierra Leone (Ministry of Planning, phased Freetown City Council) and the ongoing work on the National Spatial Development Plans approach ▪ Planning to be done one growth pole at a time, starting with the Northern growth pole and probably moving south to the Coastal growth pole depending to the location of the future deep sea water port Master plan development Overview of master plan Full project portfolio mapping ▪ 5-year cross-sector, Prioritization and sequencing cross-region road map of projects Costs ▪ Sequencing, resourcing, ▪ Resources ▪ Match projects to resources prioritization, and critical ▪ Duration ▪ Run pilots for risky or new projects ▪ Cash costs projects ▪ Early wins to generate momentum Benefits ▪ Define milestones and targets ▪ Governance model and processes Dependencies/critical path Master plan ▪ Communication plan communication ▪ Owners and Analysis of critical constraints Constraint mitigation & utilization accountability Government budget ▪ Options and levers to ▪ Milestones, KPIs, debottleneck and targets Donor funding if applicable ▪ Budget estimates and fiscal impact Talent/resource pool to drive Additional planning ▪ Monitoring and evaluation projects ▪ Governance strategy and plan ▪ Quality checking Foreign exchange reserves ▪ Communications ▪ Capability building ▪ Delivery task team reporting to delivery monitoring team Monitoring like any other team and tracking ▪ Monthly check-ins ▪ Annual review meeting 93 | NEXT STEPS NEXT STEPS Perspectives on procurement Note: This figure shows the typical sequence of front-end phases of procurement. The horizontal axis, ‘level of escalation’, indicates the extent to which capital has been committed in any phase of procurement. The vertical axis, ‘degree of commitment/lock-in’, indicates the specificity of the chosen project design in the corresponding phase of procurement. Figure 1 thus relates the degree of lock-in in various procurement phases to the consequences of escalating and abandoning the project. ESD Working Paper Series: Making Infrastructure Procurement Processes more Flexible under Uncertainty, Massachusetts Institute of Technology (MIT) | 94 SOURCE: MIT; World Bank NEXT STEPS NEXT STEPS Prioritization matrix : illustrative mining interventions Key Market MINING Gaps 1 Infrastructure 2 Labor 3 Efficiency 4 Governance 5 Finance Impact 1 Build new 2 Incentivize Upgrade existing port power plants hiring from 1 (multipurpose) local talent Build new highway 1 Build more ports (oil) pool 1 Improve 1 network to Liberia 1 Maintain road existing power Supplier development connections to 3 programs ports/mines plant capacity High 5 Set up catalytic fund 5Access to loans local entrepreneurs/SMEs Provide vocational 2 training partnering (streamline artisanal mining) with local companies Improve transparency Implement cadastral 1 Expand existing Investment 4 power grid 4 and accountability in 3 tracking system system (ongoing) government at SLIEPA Create extractives Vicinity development Improve M&E for better 2 curriculum 3 4 programs anti-corruption watchdog effectiveness Improve 4 property Create and expand registration 2 higher education process infrastructure Low ILLUSTRATIVE BASIS FOR NEXT PHASE Decision modeling Flexibility in system design Low Medium High Low cost, <2 years Medium Investment cost, <7years High Investment cost, >10 years Growth poles material Difficulty of Implementation 95 | NEXT STEPS NEXT STEPS Prioritization matrix: illustrative agricultural interventions Key Market AGRICULTURE Gaps 1 Infrastructure 2 Labor 3 Efficiency 4 Governance 5 Finance Maintenance system for Build new highway Impact 1 Improve small-scale irrigation to 1 Improve irrigation for 1 rural road network 1 network to Liberia small holders rice Expand bore-well 4 Improve property 1 and stand-well Supplier development Provide vocational registration process 3 programs 1 Build more ports 2 training to local access (Sulima, Manna Point) 1 Expand Expand piped farmers Set up seed-banks 3 through ABC small feeder 1 Upgrade 1 water access roads existing port (multipurpose) 1 Scale up Vicinity development Implement 4 cadastral out 3 programs (tailored to Build off the grid High growers 1 power network Scale up system and agricultural value – 3 scheme investment lands law chain) promotion Create digital information channels + activities 5 Set up catalytic 3 marketplace (SMS, etc) for farmers Expand channels and fund Improve safety and 5 soundness of local 5 coverage of financial services (ATMs, etc) 5 Access to loans for commercial banks local farmers/SMEs Set up anti-corruption (widen coverage of 4 watchdog for gov. Improve transparency rural banks) agencies 4 and accountability in Improve government 1 existing power plant capacity 1 Improve consumer power access Low Build new 1 power ILLUSTRATIVE Build new airports BASIS FOR NEXT PHASE plants 1 and link to main Decision modeling highways Flexibility in system design 1 Upgrade airports and increase flights Low Medium High Low cost, <2 years Medium Investment cost, <7years High Investment cost, >10 years Growth poles material Difficulty of Implementation | 96 NEXT STEPS NEXT STEPS Prioritization matrix: illustrative touristic interventions Key Market TOURISM Gaps 1 Infrastructure 2 Labor 3 Efficiency 4 Governance 5 Finance Impact Improve Lungi-Freetown 1 Upgrade airports Build new airports Build new highway 1 access/crossing (ongoing) and 1 and link to main 1 network Maintain road 1 connections to increase flights highways Provide vocational training to 2 local tourism service providers ports, tourist Improve access to 1 Expand piped spots 1 electricity Mainstream land one Vicinity development water access 1 Build more ports 4 stop shop in SLIEPA 3 programs Teach foreign (Sulima, Manna Point) Create tourist 2 languages /etiquette 4 police/information Reform police training 4 1 Improve consumer High service power access 5Set up shared-value 1 Upgrade fund existing port 5 Access to loans for 5 Expand channels and (multipurpose) local tourism Scale up investment promotion activities and coverage of financial 3 incentivize investors in tourism sector operators/related services (ATMs, etc) value chain business 2 Incentivize hiring from local talent pool in the hospitality Improve secondary Improve transparency sector 2 school enrollment Create and expand 4 and accountability in 2 higher education government Improve infrastructure 1 existing power Build new plant capacity 1 power plants Low ILLUSTRATIVE BASIS FOR NEXT PHASE Decision modeling Flexibility in system design Low Medium High Low cost, <2 years Medium Investment cost, <7years High Investment cost, >10 years Growth poles material Difficulty of Implementation 97 | NEXT STEPS NEXT STEPS Overview of the Decision Model The decision model provides an analysis of the impact of project implementation on public, private, and social returns at the sector and industry level • The decision model is based on: – An analysis of business plan returns to measure potential – Hypothesis driven infrastructure impact assessment on selected competitive industries to unlock potential – Reverse constraints and risks roadmap from options so to ease implementation • The decision model incorporates both micro and macro economic assessments of projects – Microeconomic assessments are built off of the business plans of selected companies and the agglomerated effects at the industry level – Macroeconomic assessments are built off of economic analysis of the country and sensitivity analysis of the micro models to different macroeconomic conditions Who should use the decision model? Why use this type of model? • The decision model is made to assist: • The decision model is unique in that it – Analysts in formatting and presenting combines in one model the public, private, and their findings social returns of each project – Government officials in understanding the • This allows GoSL to pro-actively support tradeoffs between investing in and shared wealth creation with a mix of targeted sequencing various projects soft and hard interventions – Decision makers in making the ultimate funding decision | 98 NEXT STEPS NEXT STEPS Output of the Decision Model The decision model gives outputs for private, public, and social returns for individual projects and places them in a broader context • The decision model offers three outputs for each project: – Social: Number of jobs created, both directly and through business linkages – Public: Increases in tax revenues generated – Private: Increases in profitability for enterprises either via increased revenues or decreased costs • These outputs are useful for prioritizing projects – The model does not offer statistical precision about the outputs of each project – The numerical outputs should be used to rank the projects in relation to each other What tools does the model provide? How can the model be used? • In addition to providing the ability to prioritize • With the model, the user can: projects, the model: – Change the variables to see the impact of – Creates a macro tool that can be used for different scenarios on outputs other projects outside of Sierra Leone – Extend or narrow the scope of the model growth poles – Change the impact of macroeconomic – Offers government officials the ability to conditions on outputs change the conditions of a project easily and perform their own sensitivity analysis 99 | NEXT STEPS NEXT STEPS Methodology of the Decision Model How is the model built? • The first step is a screening model that separates projects by ease of implementation and impact indices – Around 200 projects are ranked on 10 variables that determine these two indices – The projects that perform best on both indices proceed to the actual decision model • The decision model then models the impacts of the individual projects while placing them within the broader context of the economy – First the impacts of the project are modeled at the individual business level by looking at changes in the financial reports of selected enterprises given the implementation of the project – Next the impacts are modeled at the industry level, by combining the business reports with more macro indicators, such as exports for the total industry – Finally, the model is placed in the context of the economy as a whole by looking at jobs created outside of the industry via business linkages and agglomeration economies • Lastly, the model is built such that several projects can be modeled at the same time to see how they interact with each other – This allows GoSL to prioritize projects and sequence them in a way that maximizes public, private, and social returns Where does the data come from? What is the scope of the data? • The data for the model is primarily obtained • The data includes variables on: from official government sources and publicly – Macroeconomic conditions (GDP, published commercial reports inflation, taxation rates, tariff rates) – Government sources include GoSL documents, World Bank/IMF reports, and – Business returns (profitability, production US State Department publications rates, cash flows) – Commercial reports include business – Industry returns (export rates, plans and financial statements from transportation costs, employment rates) relevant countries and privately produced – Project characteristics (traffic forecasts, competitiveness reports cost of implementation, internal rate of return) | 100 NEXT STEPS NEXT STEPS Flexibility in Engineering Design Flexibility in engineering design increases the expected value of a given project by avoiding downside risks and leaving project managers free to take advantage of unforeseen opportunities • Project teams can improve results by recognizing that the future is inevitably uncertain – Currently projects are frequently undermined by the “flaw of averages”: assessing a potential project at the average of each variable – the average of all possible outcomes associated with uncertain parameters is not equivalent to the value obtained by using the average value of the parameters – This means that many projects are over-budget and overdue on their schedules • Flexibility in design analyzes a range of scenarios and produces a range of possible values rather than a single numerical impact estimate – First the project team analyses numerous scenarios to determine the range of possible values – They then look at what qualities of the project allow for most favorable reactions to changing scenarios and design a project that can be modified around these key characteristics Four Steps to Flexibility Tools for Analyzing Flexibility 1. Estimate the distribution of the future possibilities • Screening Model 2. Identify the points of potential flexibility in a design – Used to identify candidates for flexibility 3. Evaluate and choose flexible designs – Can be bottom-up, top-down, or a simulation 4. Implement flexible design and manage accordingly • Target Curves – Used to identify the overall expected value of the project incorporating flexibility – Important tool for ranking and prioritizing projects • Monte Carlo – Most classic approach to simulation – Important because it allows the modeler to incorporate uncertainty into the probability distribution of different events 101 | Sierra Leone map | 102 Bibliography | 103 Bibliography The World Bank Sierra Leone’s Infrastructure, A Continental Perspective 2011 After 9 years of peace, SL's economy is booming. However, per capita growth rate could rise by 3% if the country rebuilds all the infrastructures destroyed during the civil war. Roads, ports, and telecommunications must be rebuilt. Priorities are: electrification, water, and sanitation, which all have 0-1% access in rural areas. Even though SL has spent $134 million in infrastructures, 66 of that are lost every year to inefficiencies, therefore the country must think strategically about its spending. UNU-WIDER Impact of Foreign Aid on Economic Growth in Sierra Leone 2012 This paper examined the impact of foreign aid on economic growth in Sierra Leone. The study found out that foreign aid has a significant contribution to economic growth in the country, which is in line with the majority of aid-growth literatures. It is also pointed out that, the impact of aid was not as such impressive in the civil war period, which may have to do with weaknesses of the institutions relevant for guiding the effectiveness of the aid. The World Bank, World Economic Forum & African Development Bank, Africa Competitiveness Report, 2013 Improvements in infrastructure have contributed to Africa’s improved economic performance in the past decade; however, critical investment and policy coordination challenges still exist. Balanced growth and improved competitiveness can be realized only through structural changes involving reduced cost of building infrastructure and increased private sector participation. Moreover, sustained support, to the competitive industries with vast potential such as agriculture mining and tourism, is required to achieve comprehensive competitiveness and economic diversification. 104 | Bibliography Bank of Sierra Leone Bank of Sierra Leone. Annual Report and Statement of Accounts for year ended 31st December 2012 2013 This report is the Bank of Sierra Leone’s annual report on the state of the economy and the current account balance for the nation. It breaks down the economy by industry and sector and presents important trends, as well as well as the financial position of the country. M. S. Foon Report on foreign private capital flows, investor perceptions and corporate social responsibility in Sierra Leone, SLIEPA 2012 This paper reviews the economic position of Sierra Leone under the implementation of the Extended Credit Facility. Most of the findings were positive, with real GDP growth at 21.3 percent (though revised down from a projected 51 percent) and non-iron ore real GDP growth at 6.3 percent. The team recommended steps to mitigate risk in terms of variation in iron ore production and FDI inflows. International Growth Center (IGC), O. E. G. Johnson Economic challenges and policy issues in early twenty-first-century Sierra Leone 2012 This book is a compilation of essays on challenges and opportunities currently facing the economy and government of Sierra Leone. It is broken in to four sections that cover macroeconomics and financial sector issues, private sector development and export promotion, real sectors, and governance and social services. 105 | Bibliography Government of Sierra Leone, Ministry of Labor and Social Security (MLSS), Ministry of Youth Employment and Sports (MYES) National Employment Policy for Sierra Leone 2011 The National Employment Policy includes four main pillars to guide employment policy. The first is linking employment with economic growth via investing in labour intensive industries. The second is matching skills with jobs by investing in vocational education and skills development. The third is stimulating investment in enterprise and job creation by expanding access to credit. The fourth is local economic development that focuses on public works. The World Bank Country assistance strategy progress report for the republic of Sierra Leone (International development association, International finance corporation and multilateral investment guarantee agency) 2012 This paper is a World Bank produced Country Assistance Strategy Progress Report for Sierra Leone. It covers recent trends and changes in the country context, reports of the progress towards CAS pillars and human development indices, as well as constraints against progress in the future and proposed adjustments to the current policy. The World Bank (AFTFW), P. Noumba Um Sierra Leone Briefing 2012 This paper details the agenda and objectives for a mission by Paul Noumba, Manager of the African Finance and Private Sector Development department of the World Bank, to Sierra Leone in May 2012. It covers the messages conveyed during the mission, as well as the country context and the lessons for moving forward with policy in Sierra Leone. 106 | Bibliography Government of Sierra Leone National energy profile of Sierra Leone 2012 This paper profiles Sierra Leone’s energy sector, which is frequently cited as one of the top three concerns to doing business in Sierra Leone. Currently less than 10 percent of Sierra Leoneans have access to electricity. To reach sustainable energy levels by 2030, Sierra Leone will require a 100 percent increase in electricity access along with increasing energy efficiency to 12-15 percent. Government of Sierra Leone Competitiveness in Sierra Leone. Leveraging growth in the extractive sector and making the most of boom- time 2012 This presentation covers issues of competitiveness in Sierra Leone in terms of implications for entrepreneurship and infrastructure as well as private sector development. It presents opportunities for development of exporting industries in Sierra Leone on the basis of new growth paradigms and presents solutions to the “productivity tug of war.” Government of Sierra Leone, L. Garrido Sierra Leone's Vision of Prosperity: Overcoming Constraints to Diversification and Growth 2012 This paper is a growth diagnostic for Sierra Leone that defined the benchmarks for the Government’s long term development goals. It set many of the targets included in the Agenda for Prosperity by identifying the current constraints on growth. The main proposal is one of portfolio diversification in terms of growth projects in order to turn the growth from the mining boom into development. 107 | Bibliography SLIEPA, prepared by Business Women Association Corporation (BWAC) Technical Assistance and Capacity Building for Sierra Leone Export and Investment Promotion Agency. Final Agriculture 2013 These three reports outline the Sierra Leone Export and Investment Promotion Agency’s identification of sector specific projects for economic growth. 60 projects were identified within the mining, agriculture, fishing, and agriculture sectors, and the reports then go through a description of each project as well as a breakdown of the valuation techniques used for the projects. SLIEPA, prepared by Business Women Association Corporation (BWAC) Technical Assistance and Capacity Building for Sierra Leone Export and Investment Promotion Agency. Fishers and Marine Resources Sector 2013 SLIEPA, prepared by Business Women Association Corporation (BWAC) Technical Assistance and Capacity Building for Sierra Leone Export and Investment Promotion Agency. Tourism Sector 2013 108 | Bibliography Government of Sierra Leone Sierra Leone’s Agenda for Prosperity 2013 This document presents the strategic policy agenda the Government of Sierra Leone intends to follow in order to achieve Middle Income Status by 2035. Specifically, it represents the agenda for the first five years of this transition and tackles issues of macroeconomic stability and growth, human development, and industrial diversification. The World Bank, IMF Financial Sector Assessment. Sierra Leone 2017 This paper presents a joint IMF-World Bank assessment of the financial sector in Sierra Leone. The report concludes that currently the financial sector is unable to provide adequate support to the private sector, and in particular financial services for SMEs should be developed further to promote entrepreneurship. The World Bank (AFTFP) Sierra Leone Investment Climate Policy Note 2009 This paper presents a World Bank African Finance and Private Sector Group assessment of the investment climate in Sierra Leone. It explores issues of firm performance, investment constraints, availability of finance, and recommendations for further internationalization and export promotion. 109 | Bibliography Government of Sierra Leone, Ministry of Trade and Industry Unleashing the Talent of Our People. A Vision and a Promise. Private Sector Development Strategy for Sierra Leone 2008 This paper presents the Ministry of Trade and Industry’s strategy to develop the private sector in Sierra Leone. It looks at issues of investment and enterprise, innovation and competitiveness, and inclusion and fairness. In moving towards these goals, it seeks to promote entrepreneurship, increase access to finance, create jobs, and improve market efficiency. MIT The Value of Flexibility in System Design for a Resource Corridor Program 2012 This paper analyses the system of flexibility established in Venture Capital, and developed a framework that looks at every level of the organization from structural characteristics to formal processes and rules to informal processes. It then uses this framework to analyze flexibility in the Defense Advanced Research Projects Agency as a governmental organization that has been remarkably successful in incorporating flexibility. MIT Making Infrastructure Procurement Processes more Flexible under Uncertainty 2013 This paper argues that flexibility in project design is particularly valuable in development projects, where uncertainty and unanticipated changes frequently cause delays, budget shortfalls, and stakeholder frictions. Three principles are proposed as providing for more flexible front-end phases of procurement processes: undertraining and properly assessing uncertainty, studying system-wide impacts, and building designs in phases. 110 | Bibliography The World Bank Why Quality Matters. Rebuilding Trustworthy Local Government in Post-Conflict Sierra Leone 2012 In a post-conflict and fragile setting, like the one in Sierra Leone, failing to build accountable and legitimate institutions generates violence. Changes in local government performance influence citizens' beliefs about the trustworthiness of local government authorities. The study's result is that improvements in the quality of decentralized services and in the perceived honesty of councilors are positively related to the trustworthiness of political authorities. Statistics Sierra Leone Tourism Statistics Bulletin 2011 Tourism is not only the largest and fastest growing industry in the world (10% of world GDP), but it also generates foreign exchange revenues, regional and international trade, and investment linkages. Sierra Leone has a strong potential in the tourism sector: excellent beaches, islands, mountains, rich biodiversity, interesting wildlife, friendly people, and rich cultural roots. The bulletin includes all tourism data useful for this sector's development. SLIEPA, V. Saidu-Kamara (Minister of Tourism & Cultural Affairs) Tourism. Sector Overview 2012 Notwithstanding Sierra Leone's touristic amenities, the tourist sector has been cancelled by the 1990 Civil war (tourism had expanded quickly in the 80s) and now no international brands operate in Sierra Leone. To boost tourisms, the government has a 4-point plan: target tourism development in the Western Peninsula, set up tourism schools, government reforms, and update of tourism related regulations. 111 | Bibliography FJP, O. R. N. Jones Private Sector, Infrastructure, and Enterpreneurship: Competitiveness for private sector led transformation 2012 The current paradigm for private sector transformation only takes into account physical factors of production (tourism, natural resources, land management/agriculture, port, water) therefore limiting the chances of turning potential into high and sustainable standards of living. On the other hand, a new better paradigm, with new horizons, must include the role of culture and consider the economy as an outcome variable. FAO Review of past agricultural policies in Sierra Leone 2011 After the acute 2010 food crisis, the world's attention has been focused on food productivity. Especially in developing countries such as Sierra Leone. This document attempts for the first time to give an overview of Sierra Leone's agriculture policies of the past, and their impact on the present state of the country's agri- business sector. London Mining Factsheet, 2013, www.londonmining.com The document presents London Mining company. The company focuses on the development of sustainable mines, and has started production in Sierra Leone (Marampa mine) in 2012. London Mining expects to reach production capacity of 5Mtpsa of iron ore in 2013, and is developing two other potential mines in Greenland and Saudi Arabia. 112 | Bibliography Government of Sierra Leone, Sierra Leone Ministry of Trade & Industry Sierra Leone Local Content Policy 2012 Since the private sector is considered to be Sierra Leone's engine for the overall economic growth of the country, the SL government objective is to support this sector through a wide array of political and economic reforms that simplify or eliminate entrepreneurs’' challenges such as lack of access to finance and lack of skilled labor. US government Minerals Yearbook, U.S. Geological Survey 2011 The Minerals Yearbook is an annual publication that reviews the mineral and material industries of the US and other foreign countries. The document overlooks the mineral sector under the aspects of: legislation and government programs, consumption, prices, and foreign trade for different minerals. These annual reviews contain statistical data and information on approximately 90 commodities. The World Bank Africa Financial and Private Sector Development. Framework for the Design and Implementation of Growth Poles Projects 2012 The concept of growth poles dates theoretically back to 1949 and was more practically redefined in 1966 as " A regional growth pole is a set of expanding industries located in an area and inducing further development of economic activity throughout its zone of influence." The fundamental features of a growth pole are: 1. strong geographic concentration 2. anchor investor 3. lumpy investment 4. endogenous dynamic. 113 | Bibliography Sierra Leone Government, M. Konteh, Minister of Trade and Industry Sierra Leone: Africa's New Investment Destination, SLIEPA 2012 The three documents explore the rising market opportunities for Sierra Leone deriving from the increasing demand (global, regional and local) for palm oil and sugar. Thanks to its abundance of land, Sierra Leone offers a competitive environment for the production of palms and sugar canes, making the country a suitable investment destination both for African and non-African investors. Sierra Leone Opportunities for Investors in the Oil Palm Sector, SLIEPA 2012 Sierra Leone Opportunities for Investors in the Sugar Sector, SLIEPA 2012 114 | Bibliography Sierra Leone Economic Sector Work, E. Mannah and Y. Ngadi Gibril A Skills Gap Analysis for Private Sector Development in Sierra Leone 2012 The private sector is fundamental for Sierra Leone to turn its wheels and move it to a superior level. The private sector environment, potential and initiatives must be promoted in order for the country to prosper. One of the most important factors in private sector development is the training of a highly qualified labor force. World Bank (prepared for), University of Greenwich Contrasting Rice Value Chains. A Benchmarking Study of Rice in Ghana, Senegal and Thailand 2012 The document explores the rice value chain in Ghana, Senegal and Thailand. The analysis covers the whole chain (from seed and chemical suppliers to researchers, consumers and agencies) through existing surveys, literature and interviews on the topic. Moreover, the study adds further data from government agencies, donors and key players in the rice industry. McKinsey, M. Barber, P. Kihn, A. Moffit Deliverology: From idea to implementation 2011 Deliverology means "the science of delivery" and is linked to the delivery of solution. It is an approach to managing reform initiatives that was born in the United Kingdom but has increasingly gained importance all over the world. Three components are fundamental for the formation of a delivery unit: data collection for 1. setting targets and 2. trajectories, and 3. the establishment of routines. 115 | Bibliography Government of Sierra Leone Focus on Sierra Leone. This is Africa, in association with Ministry of Finance Sierra Leone 2013 After its 11-year long civil war (which ended in 2002), Sierra Leone's government is trying to reform its policies in order to boost the domestic private sector and turn Sierra Leone into the favorite destination in all West Africa for foreign investors. Sierra Leone is a country in transition: fair elections have already been hold twice and people are hungry for a change. The World Bank (DECRG), D. Kaufmann and A. Kraay Growth without Governance 2002 All over the world, quality of governance and per capita income levels are positively related. The results of this study, on one side, confirm the relationship between good governance and economic development. However, the innovative result of the study, on the other side, is that, once growth has been achieved, this does not necessarily lead to further improvements in governance: "growth without governance". African Minerals Corporate Presentation, 2013, www.african-minerals.com The document is a presentation of African Minerals corporate. It shows all different aspects of the company ranging from safety to interim results, from development history to geographical maps, from multi-stage growth into multi-generational asset to current production rate. Other topics in the presentation are election updates, mining infrastructures, governance, and 2013 challenges. 116 | Bibliography J. Schultz Follow the Money. A Guide to Monitoring Budgets and Oil and Gas Revenues 2005 In recent years, the public (citizens and civil society) has become more and more interested in government budget issues, gaining more and more voice on the subject. This report sums up all the best practices in budget work that can be applied to the extractive industry. The appendix offers a list of Internet resources for further analysis. UNESCO Global Education Digest 2006 The Digest analyses the increasing demand for higher (tertiary) education by 132 million students all over the world in 2004. The analysis includes data on the type of study and where the schools are. This Digest is divided into 4 sections: basic framework fro analysis, output in terms of graduates, trends in school participation, changes in the international mobility of tertiary students focusing on their countries of origin and of study. Deloitte Global Manufacturing Competitiveness Index 2013 The study collects data from more than 550 CEOs and senior manufacturing leaders in 2012. The scope is to better understand those trends that create a competitive global environment for manufacturing. Therefore, the study analyses all facets of research, development, production, sales, distribution, logistics, customer service, marketing, and support, which are the complex forces that drive the manufacturing industry. 117 | Bibliography The World Bank Education in Sierra Leone 2007 Since the end of the Civil war, Sierra Leone had made progress in almost every field, from the restoration of security to the delivery of public services. In light of this, the country has seen a great increase in the number of student enrollments and an effort in rebuilding schools and school-related building destroyed during the war. However, the education field still requires more struggle as it faces huge challenges. Government of Sierra Leone An Agenda for Change 2013 The Agenda for Change is the result of Sierra Leone's free, fair and democratic elections. The government that Sierra Leoneans have elected is committed to the improvement of the country's social and economic conditions. Sierra Leone must become a prosperous and tolerant nation, where friendship, citizenship and kinship win over divisions and extremisms. Government of Sierra Leone, The World Bank, The European Union Diagnostic Trade Integration Study (DTIS) 2013 (revised) The Diagnostic Trade Integration Study (DTIS) is a document that assesses the competitiveness of a country's current economic and also its potential to engage in international trade. In 2013, the Sierra Leone government, the World Bank, and the European Union have reviewed the previous 2006 DTIS in light of new priorities such ad tourism, fisheries and agriculture. 118 | Bibliography African Development Bank Infrastructure and Growth in Sierra Leone 2012 The Report concerns Sierra Leone's infrastructures. Country's infrastructures suffered greatly during the civil war and, even though now Sierra Leoneans have enjoyed more that 10 years of peace, the nation's infrastructure are still inadequate and poorly maintained. However, there are many opportunities to change the current situation, and the plan of the Report is to offer recommendations and solutions on the subject. IGC , M. Belloc, M. Di Maio Sierra Leone’s National Export Strategy: Implementation Issues and Recommendations 2011 The report focuses on the development of a trade strategy in order to increase Sierra Leone's exports. The IGC has worked under request of the Sierra Leone government, and has collected all data during the May 2011 fact-finding mission. The mission benefitted from the support of the relevant ministries, private sector and international development agencies. Government of Sierra Leone Financial Sector Development Plan (FSDP) 2009 The FSDP focuses on four priority areas for Sierra Leone: 1. build a strong and effective commercial banking system 2. increase access to finance through microfinance, rural credit, and community banks 3. Improve the mobilization and investment of long-term funds 4. establish a suitable environment for finance, through regulatory reforms. 119 | Bibliography Government of Sierra Leone National Sustainable Agriculture Development Plan 2010-2030 2009 The document offers the broad framework necessary to turn the Government's Agenda for Change into action. The NSADP provides solutions to move agriculture, forestry and fisheries towards the country's needs, which are increasing because of population growth and additional income, and towards the creation of additional income to Sierra Leone's economy. The World Bank Integrated Transport Policy, Strategy & Investment Plan (Sierra Leone) 2013 The document analyses the background of the study and compares it to the 2003 NTS&IP. It then Sierra Leone's national transport requirements and performances, and classifies means of transport, categories of strategic interventions and top priorities. Finally, the document proposes strategic interventions in order to deliver practical solutions and summarizes the study. Government of Sierra Leone Smallholder Commercialization Programme (Agriculture) 2010 The Programme presents Sierra Leone's agricultural background, including the economic, poverty and food security statuses. The analysis then goes on by presenting an array of activities that can be undertaken in each sector ranging from production intensification to diversification, from value addition to marketing in order to favor Sierra Leone's smallholders' position. 120 | Bibliography Economist Associati srl (Italy), Center for Economic and Social Research (Poland), The Africa Group LLC (USA) Investment Climate in Africa Program. Sierra Leone 2012 The report on the evaluation of “removing administrative barriers to investment –phase III” in Sierra Leone studied the relevance, effectiveness and efficiency of the interventions, and tried to quantify the impact of the project and specific interventions. The report indicated that the project was successful; the simplification of the business registry system and the elimination of tax advance payment system are among the changes that contributed to the positive result. Developing growth poles and Competitive industries in Sub-Saharan Africa A growth poles project can help direct resources in to industries of highest potential and remove challenging cross-cutting as well as industry specific investment climate reforms. Effective implementation of the project requires policy reforms, infrastructure investments, support to the private sector and support to the public institutions. There are risks associated with growth pole project that could be mitigated by private sector participation, industry linkages, simplicity, political will to remove barriers, local participation and good monitoring and evaluation system. World Economic Forum The Travel & Tourism Competitiveness Report 2013 World Tourism and Travel Council and Oxford Economics conducted research on contribution of Travel and tourism sector to GDP, employment and export in emerging and advanced economies benchmarking against other sectors with global presence like mining and education. In Africa, the industry faces number of infrastructure and investment challenges. However, Travel and Tourism is one of the leading employers in the region surpassing mining, communications and financial services industries, creating over 8 million direct jobs. 121 | Bibliography The School of Mining Engineering and CSMI Resources corridors: experiences, economics and engagement 2012 Development corridors (DCs) should be initiated and pursued based on inherent economic and infrastructure potential. The experience with the implementation of DCs has both success and failure stories. Strong business case, government commitment and leadership, inter-sectoral coordination, strong project management with political access to critical ministries, rapid decision making process, and availability of private funding due to good market demand for the projects products and opportunities for SMMEs are among the qualities observed in the successful projects. S. Jibao, W. Prichard Rebuilding Local Government Finances After Conflict: The Political Economy of Property Tax Reform in Post- Conflict SL 2013 The research tried to explore relatively successful reforms of the local property tax system in the four largest City Councils in Sierra Leone. The study underlined on the importance of targeted support from the international community and the central government grounded on longer term and local level partnerships; high-level reform leadership to overcome resistance, particularly from large property owners; and political leadership, reform strategies that are comparatively contractual can contribute to a virtuous cycle of improved governance and help to build sustainable political support for successful and continued reforms. A. Janneh, J. Ping Africa as a Pole of Global Growth 2012 Africa has witnessed a remarkable economic performance over last decade with GDP growth averaging 5.6 percent (pre-global economic crisis) making it the second fastest growing region in the world. Improved macroeconomic management, good governance and control of corruption and significant FDI flows accounted for part the observed change. This resurgence is giving rise to recognition of Africa as an emerging market and a potential global growth pole. 122 |