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The mining industry’s contribution to Sierra Leone’s post-Ebola economy

10 October 2015 at 01:57 | 3480 views

Commentary

By John Bonoh Sisay, Freetown*

Two months ago, I was asked to speak at the University of Makeni on the subject of the mining industry’s contribution to Sierra Leone’s post-Ebola economy. It is a conversation that cannot be had without reference to African Minerals and London Mining. Despite their well-publicised difficulties, it remains my belief that the mining industry still has a significant part to play in our country’s sustainable development.

To do so, we have to look at the mining industry and Sierra Leone’s economy differently. We, like many resource-rich African countries are faced with a dual economic structure, one where overall, there is generally limited participation in mining supply chains by other Sierra Leonean companies. The mining industry imports the majority of its equipment because we do not have a manufacturing industry or the technological know-how to produce what we need in-country. The minerals we extract are exported as raw materials by foreign-owned shipping lines to be processed in other countries, again because we do not have a sufficiently developed manufacturing industry or the necessary skills set to do so in-country.

It is here our Local Content Policy could play a part by focusing on enhancing the benefits from mining sector investment; creating linked industries and developing a solid industrial base which can supply goods and services or process the raw materials. To create these linkages, we would need to view Local Content as a tool to develop stronger domestic industries and a supplier network that can genuinely add value to our mining industry.

International experience shows what can be done. Take Brazil’s oil and gas supply industry for example. Local supply has increased from 57% to 75% from 2003 to 2008. An agreement between Petrobas – Brazil’s major oil producer - and SEBRAE—a national small business support association—has generated US$113m in transactions for local materials and equipment supplies. Brazil’s local content approach has also contributed to the rapid growth of the Brazilian shipbuilding industry. In 2003, there were only two shipyards in operation and the number of jobs in the sector totalled 7,465. By 2017, the number of direct jobs in Brazil’s shipyards is expected to reach 101,000.

Outcomes like these, require that the government mobilises and manages the revenue from the extractive sector and targets it at productive sectors. Part of this process would entail bridging the technological divide, dealing with infrastructure deficits, addressing institutional weaknesses and improving our overall business climate.

Developing Local Content in the mining industry can also help address Sierra Leone’s employment and skills development gap. Again, we need to look critically at the skills available in Sierra Leone. The tertiary education participation rate is 6.1 percent for males and 4.8 percent for females; it is 0.4 percent for poorest households and 13.4 percent for richest households. Those figures, in themselves, indicate an undersupply of the skilled employees we need.

Two years ago, a World Bank report ‘Education in Sierra Leone - present challenges, future opportunities’ noted:

"There is an undersupply of skills in the identified growth areas of applied sciences, technology and engineering sectors. Sierra Leone needs skilled doctors and other health workers, science and mathematics teachers, engineers, technicians, managers, and other professionals to support the main growth areas and to provide basic human services. Although, quantitative evidence is scarce, lack of skills is seen as one of the binding constraints in achieving economic growth through the development of agriculture, natural resource, and oil and gas sectors."

But while the mining industry can still be a significant growth engine for our economy, it should not be seen as a panacea for the country’s economic woes. In 10 years’ time, when we look at our post Ebola economy, it is essential we see one that is more diversified and that utilises the huge potential of our other natural assets.

Our Port for example is the largest natural port in Africa and the third largest in the world. The potential is there for this to be a good transhipment harbour for other West African countries, providing a support and supply base for the region.

Agriculture remains our biggest contributor to Sierra Leone’s GDP - around 50% and employing two thirds of the country’s workforce. And yet it remains under developed – in common with most of Africa. Of the world’s agricultural land, 24% is in Africa but only 9% of agricultural production is in Africa. In Sierra Leone up to 85% of our arable land is uncultivated. This despite the agricultural potential of a growing season in most parts of the country that exceeds 260 days, about eight months a year; annual rainfall which averages 3000mm; and the irrigation potential of the nine major rivers and three minor ones.

There is a little considered potential for synergy between the mining industry and agriculture. Both industries are the mainstay of many African economies. Most mining companies operate in rural areas, where those who do not work in the mines work in the fields. With their large workforces, mining companies also have a need for agricultural produce.

One of Sierra Rutile’s most important CSR initiatives has been African Lion Agriculture - an agri-business. This year we entered into an agreement with Carmanor Limited, an emerging-markets focused agricultural company. This arrangement allows Sierra Rutile to focus its resources, both human and capital, on its core operations, while at the same time ensuring all agriculture projects will continue to advance without further cash contributions from Sierra Rutile.

The project is intended to make a positive contribution to community development by creating jobs, and developing value added economic activities that are independent of mining activities. For Sierra Rutile diversification begins at home.

*John Bonoh Sisay is Chief Executive Officer at Sierra Rutile Limited in Sierra Leone.

Editor’s note: Here is John Sisay being interviewed at Stocktube in June this year:

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