Read full Document - Bank of Sierra Leone

Review
Economic and Financial Review January - June 2012
1.0 Highlights
Macroeconomic performance during the first half of
2012 was relatively stronger and more broad based
compared to that in the preceding half year. This was
mainly as a result of improved revenue performance
derived from enhanced efficiency gains from tax
administration and public financial management,
complemented by one-off payments of corporate
taxes from mining companies and external inflows for
budgetary support. The expansion in economic
activity during the review period was supported by
strong performance in agriculture, construction and
services sectors, as well as the scaling-up of
infrastructure investment and implementation of
projects in the mining sub-sector. Though external
price shocks, combined with a relatively moderate
expansion in money supply during the first half of 2011
contributed to holding inflation in double digits,
inflationary pressures eased somewhat during the
reporting period, with the year-on-year inflation rate
for June 2012, declining to 12.50 percent from 16.65
percent in December 2011. This was attributable
mainly to various factors including the easing of food
inflation, sustained tight monetary policy, stable
exchange rate and the removal of custom duties on
petroleum products. Going forward, the prospects
for the medium-term are significantly positive, as iron
ore production is expected to boost further growth
in 2012, though the risks from global uncertainties
still remain.
The Fourth Review Mission of the International
Monetary Fund (IMF) visited Sierra Leone from
March 28 - April 11 2012, to hold discussions with
major Stakeholders and Government Ministries,
Departments and Agencies in respect of the IMF
supported three year Arrangement under the
Extended Credit Facility (ECF) that was approved
by the IMF Executive Board in June 2010. Following
the conclusion of the Fourth review, the Board
approved the disbursement of an amount equivalent
to SDR4.44 million (about US$6.9million). This
brought to SDR22.2 million (about US$34.4million)
total disbursements under the Arrangement. The
Board also waived the continuous non-performance
on the criterion on new non-concessional external
debts. All the end June 2012 quantitative performance
criteria (Net Domestic Bank Credit to the Central
Government, Net Domestic Assets and Gross Foreign
Exchange Reserves of the Central Bank were met.
Non-iron ore Real GDP growth rate for Sierra Leone
is projected at 6.3 percent for 2012, driven by
enhanced performance in agriculture, construction and
services sectors and very strong performance in the
mining sub-sector.
In the fiscal sector, corrective measures were put in
place during the first half of 2012 to address the fiscal
slippages that occurred in 2011. This included the
establishment of a high-level Cash Management
Committee coupled with the preparation of monthly
cash-flow statements. These measures significantly
contributed to improving fiscal management and
enhanced coordination between fiscal and monetary
policies during the reporting half-year. Other measures
intended to improve debt management capacity and
ensure that new loan commitments are consistent with
debt sustainability requirements were also put in place.
Fiscal Performance on cash flow basis indicated that
total revenue (plus grants) of Le1052.48bn was
collected during the first half of 2012, which was 8.09
percent lower than the budgeted estimate of
Le1,145.17bn. The amount was also 10.90 percent
lower than the preceding half-year’s revenue of
Le1,181.22bn but 6.36 percent more than the
corresponding half year’s revenue of Le989.54bn.
Total expenditure and net lending in the sum of
Le1,268.98bn was well within the programme target
of Le1,507.18bn, but 11.55 percent lower than the
preceding half year and 3.66 percent that of the
corresponding half year in 2011. The above
developments resulted in a narrowing of the budget
deficit from Le253.49bn in the second half of 2011
to Le216.50bn in the first half of 2012.
Following the enactment of the Bank of Sierra Leone
Act 2011, which provided for a statutory ceiling on
direct central bank financing of the budget, the Bank
strictly adhered to this limit during the reporting period
while at the same time used its monetary policy
instruments to actively manage liquidity, thereby
reducing inflation expectations. It is envisaged that the
tight monetary policy stance of the Bank will continue
throughout the remaining half year. The thrust of
monetary policy in the first half of 2012 focused on
achieving price stability and low inflation at levels
consistent with macroeconomic growth and stability.
In line with these objectives, the Bank of Sierra Leone
continued to conduct active monetary operations
using the monetary targeting framework with Reserve
Money as the Bank’s operating target and Broad
Money, the intermediate target. Movements in
monetary aggregates were mixed during the first half
of 2012, with Broad Money (M2) growing by
Le28.58bn (1.05%), from Le2719.74bn at end
December 2011 to Le2748.32bn at end June 2012.
The growth in M2 during the reporting period was
lower when compared to the 7.56 percent and 13.06
percent growth recorded in the preceding half-year
and the corresponding period in 2011 respectively.
In contrast, Reserve Money (RM) contracted by
Le6.09bn (0.71%), from Le859.60bn at end
December 2011 to Le853.52bn at end June 2012.
1

The Central Bank continued to operationalize the
Monetary Policy Rate (MPR), which remained
unchanged at 20.0 percent as at end June 2012.
Domestic inflation, though persistently in double digits,
slowed down during the first half of 2012, as the effects
of the petroleum price adjustment in mid 2011 eased
and the exchange rate continued to remain relatively
stable. The national year-on-year inflation rate as
measured by the consumer price index (CPI) declined
steadily throughout the period from 16.83 percent in
January 2012 to 12.50 percent in June 2012.
Consequently, the average half year inflation rate
dropped by 2.37 percentage points, from 16.66
percent in the second half of 2011 to 14.29 percent
in the first half of 2012. Notwithstanding the decline
in the national year-on-year inflation rate, the country
continued to breach the West African Monetary
Zone’s (WAMZ) criterion of single digit inflation.
In the mining sub-sector, performance continues to
indicate potential buoyancy with output of all minerals,
except bauxite, recording increased performance
during the first half of 2012 over the second half of
2011. Diamond output rose significantly by 46.55
percent, as did gold output which rose by 23.79
percent. Rutile output increased over the six months
period by 4.38 percent and ilmenite by 5.45 percent.
The London Mining Company commenced
production in December 2011 with a maiden shipment
of 49,656 metric tons of wet iron ore in January 2012.
It is expected that output will be significantly higher in
the second half of the year.
In the energy sub-sector, generation of power supply
declined during the reporting half year of 2012, relative
to the preceding half year in 2011. Total units of
electricity generated during the first half of 2012 was
80.87 million kilowatts hours (kwh/hr), indicating a
16.30 percent reduction when compared to 96.62
million kilowatts hours (kwh/hr) generated in the
second half of 2011. It was however 0.63 percent
higher than the corresponding period’s position of
79.04 million kilowatts hours (kwh/hr) in 2011.
Performance in the transport and communications
services sub-sector improved during the review
period, largely driven by the significant increase in the
total number of vehicles registered and licensed as at
end June 2012.
External sector outturn during the first half of 2012
indicated significant improvement over the second half
of 2011. The overall deficit in the trade balance was
recorded at US$359.92mn, which was 55.60 percent
lower than the preceding half-year’s position and
35.30 percent that of the corresponding period’s
position of US$556.39mn in 2011. The improvement
in the trade balance was on account of a significant
131.50 percent increase in export receipts from
US$174.93mn in the preceding half year to
US$405.05mn in the reporting half year, as well as
the 22.4 percent decline in the import bill from
US$985.88mn in the preceding half year in 2011 to
US$764.98mn in the review period. Consequently,
gross external reserves position increased by 1.58
percentage points from US$376.79mn at end
December 2011 to US$382.74mn at end June 2012,
equivalent to 3 months of imports cover. The average
exchange rate of the Leone to the United States Dollar
depreciated moderately during the first half of 2012
compared to the preceding half year in 2011.
In the financial sector, the Central Bank continued in
its efforts to build stable and robust financial system
architecture that will safeguard the interest of existing
customers and win the confidence of new ones. In
line with this objective, the Bank of Sierra Leone has
put in place a number of supervisory reform measures,
including strict compliance of commercial banks with
the Basel Core Principles, revision of prudential
guidelines, as well as encourage commercial banks
to undertake self stress tests and develop own
contingency manuals.
Structural reforms implemented during the review
period were supported by technical assistance from
the country’s development partners which focused on
public financial management, the financial sector and
private sector development. Continued progress in
these areas is key to strengthening fiscal and monetary
policy efforts and support the growth prospects.
During the reporting period, the African Development
Bank (AfDB) and the Government of Sierra Leone
signed a US$1.2-million grant financing agreement in
Arusha, under Pillar III of the Fragile States Facility,
to provide urgently-needed support to the country’s
Financial Sector Development project. The grant will
be used to provide technical assistance and training
to staff of the Central Bank of Sierra Leone.
Sierra Leone’s performance under the West African
Monetary Zone (WAMZ) convergence criteria in the
first half of 2012 indicated that two primary criteria
(central bank financing of fiscal deficit of not more
than 10 percent of previous year’s tax receipts and
gross international reserves equivalent to 3 months
of import cover) and one secondary convergence
criterion (Public Investment from Domestic
Receipts of not less than 20 percent) were met. This
level of performance compared with the preceding
half-year’s level of one primary criterion and one
secondary criterion.
2

2.0 Real Sector Developments
Performance in the real sector as reflected in selected
indicators of the economic sub-sectors suggested that
economic activity improved during the first half of
2012. The manufacturing, mining, construction and
tourism sub-sectors recorded higher output growth
during the review period, reflecting increased activities
supported by inflows from the country’s development
partners.
In the construction sub-sector, Sierra Leone benefited,
under the African Development Bank Group Boards
approval in April 2012, of an amount of US$34.08mn
(out of a total amount of us$250.95mn in favour of
Sierra Leone and Tanzania) for road construction
projects. The amount is to finance the Matotoka-
Sefadu Road Rehabilitation project in the centraleastern
region of the country. It comprises
US$18.59mn Grant from the Fragile States Facility,
US$10.56mn African Development Fund (ADF)
Grant and US$4.93mn being ADF Loan. The overall
estimated cost of the project is US$46.13mn, part of
which will be contributed by the Sierra Leone
Government and the Organisation of Petroleum
Exporting Countries (OPEC) Fund for International
Development.
During the review period, the energy sector of the
country also received a boost as two projects under
the West Africa Power Pool (WAPP) received
US$144.5mn in zero interest financing and a
US$31.5mn grant to scale up electricity supply and
reduce energy cost in Cote d’Ivoire, Liberia, Guinea
and Sierra Leone. The estimated cost of the two
projects is US$476mn, with US$176mn to be
financed by the World Bank’s International
Development Association (IDA), US$280mn by the
African Development Bank (AfDB) and the European
Investment Bank (EIB), and US$20mn by the
participating countries. The first project is the financing
of about 1,349km infrastructure for the transmission
interconnection between the four countries, and the
second project is the financing of technical and
analytical studies to ensure the development of key
hydropower projects to be used for trading electricity
along the WAPP transmission line.
In the mining sector, London Mining Company, which
began production in December 2011 made its first
shipment of 49,656 metric tons of wet iron ore from
its Marampa installation in northern Sierra Leone, in
January 2012.
The tourism sub-sector continued to record
improvements during the first half of 2012, with
increased tourist arrivals and the provision of
improved services. The number of arrivals in the
reporting period recorded a 32.62 percent increase
over the preceding half-year. The sub-sector also
received US$3mn in financial support from the World
Trade Organization (WTO) Enhanced Integrated
Framework (EIF), as funding for the implementation
of a three year sustainable tourism development and
promotion project. EIF is a donor programme that
helps the world’s least developed countries to play a
greater role in the global trading system and promote
sustainable development.
The World Bank’s Board of Executives during the
reporting month, also approved the Pay and
Performance Project for Sierra Leone in an amount
equivalent to US$17 million, to finance the achievement
of priority pay and performance reforms in the civil
service, which are needed to achieve the economic
growth and poverty reduction goals of the country. In
another development, the Government of Sierra
Leone received the sum of US$24mn as budgetary
support, from the World Bank’s International
Development Association (IDA). The amount is a onetranche
disbursement in support of the government’s
overall reform program designed to promote growth
through structural reforms.
Real GDP growth rate for the Sierra Leonean economy
is projected at 22.6 percent in 2012, compared to 6
percent in 2011, which puts Sierra Leone amongst
the fastest growing economies in the world. The
growth is expected to be driven by buoyant activities
in key sectors of the economy. All sectors are
projected to register positive growth rates. In terms
of sectoral contribution to the GDP growth, agriculture
is projected to register a growth rate of 41.98 percent,
industry 27.26 percent, of which iron ore is projected
at 19.93 percent, while the services sub-sector is
expected to contribute 27.72 percent.
The year-on-year inflation rate, as measured by the
composite consumer price index slowed down in the
first half of 2012 as the effects of the petroleum price
adjustment in mid 2011 leveled off and the exchange
rate remained relatively stable. The June 2012 inflation
was 12.5 percent, down from 16.83 percent in
December 2011. In line with this development, the
half year average rate of inflation declined to 14.29
percent in the first half of 2012, from 16.66 percent
in the preceding half year of 2011.
2.1 Agriculture
The agriculture sub-sector is the mainstay of the
country’s growth efforts and accounts for about 42
percent of projected GDP in 2012. The sector also
employs nearly two-thirds of the country’s labour
force. The 2012 budget allocation to the Ministry of
Agriculture, Forestry and Food Security is about
3

2.3 Manufacturing
In the manufacturing sub-sector, production levels for
most of the selected items increased in 2012,
suggesting a relatively improved performance of the
overall sector in the review period. The production
of Maltina drink and soft drinks rose by 29.63 percent
to 183.89 thousand cartons and 5.85 percent to
938.11 thousand crates respectively. Similarly, output
of confectionery increased by 4.34 percent to
1784.92 thousand pounds and common soap by 3.37
percent to 338.31 thousand metric tons in the first
half year. Paint production also went up by 2.11
percent to 98.12 thousand gallons, reflecting increased
renovation activities. The increase in the production
of these items was attributable, among other things,
to increased availability of raw material, as well as
limited competition from imported brands. Cement
production grew by 5.7 percent to 156.39 thousand
metric tons, also reflective of increased construction
activities in the review period. Declines were however
recorded in the production levels for beer & stout,
acetylene, oxygen and flour. Output of beer & stout
declined by 23.93 percent to 380.08 thousand
cartons, acetylene by 4.24 percent to 91.40 thousand
cubic feet, oxygen by 5.34 percent to 122.50
thousand cubic feet and flour by 59.49 percent to
2.97 thousand metric tons. The drop in output levels
of these commodities over the reporting period was
attributed to limited availability of raw materials used
in the production processes.
2.4 Mining
The mining sub-sector recorded improved
performance during the review period with all minerals,
except bauxite registering increases in production.
Diamond output as valued and recorded by the
Government Gold and Diamond Department (GGD),
was up by 46.55 percent to 212.68 thousand carats,
comprising 64.81 thousand carats of industrial
diamonds and 147.87 thousand carats of gem
diamonds. Rutile, ilmenite and gold also recorded
increases in their respective production levels as
follows: rutile by 4.38 percent to 42.61 thousand
metric tons, ilmenite by 5.45 percent to 10.32
thousand metric tons and gold by 23.79 percent to
2.72 thousand ounces. In contrast, production of
bauxite dropped by 17.8 percent to 549.61 thousand
metric tons. In comparison with the corresponding
half year in 2011, diamond output was up by 1.18
percent, rutile by 56.95 percent and ilmenite by 115.16
percent. Production of iron ore had barley
commenced in the first half year of 2011. Output
volume in the period under review was recorded at
2,733.32 thousand metric tons. Bauxite production
during the review period, declined by 30.33 percent,
and gold by 11.69 percent, compared to the
corresponding period in 2011. The overall
performance in the mining sub-sector during the
reporting period was driven by increased mining
activities against the backdrop of favourable weather
conditions, coupled with the increased number of
investors’ entrance in the sub-sector.
2.5 Tourism
In the first half of 2012, performance in terms of tourist
arrivals at the Lungi International Airport was
impressive. The total number of tourist arrivals
increased by 32.62 percent to 32,579 in the review
period, compared to 16.93 percent in the
corresponding period in 2011. The steady increase
in the number of tourist arrivals in the country is
reflective of the growing importance of the sub-sector
to the growth and development of the economy. Total
arrivals comprised 19.43 percent from ECOWAS
countries, 9.61 percent from NON-ECOWAS
countries, 10.69 percent from Asia, 19.08 percent
from the Americas, 6.45 percent from the Middle East,
27.61 percent from Europe and 6.26 percent from
Australasia.
2.6 Electricity Generation
Total electricity generation during the review period
was recorded at 98.17 million kilowatt hours (kWh),
representing a 1.62 percent increase. The increase in
generation was contributed mainly by the thermal plant,
as routine maintenance on Bumbuna hydro electric
plant couple with strike actions by staff disrupted
operations at the Bumbuna hydro electric plant. Power
generation during the review period improved by
24.21 percent, compared to the corresponding period
in 2011.
Monthly figures indicated that aggregate units
generated ranged between 13.65 and 18.12 million
kWh, with the highest generation of 18.12 million
kWh in January 2012.
The percentage contributions to the gross units
generated in the reporting period (of the two thermal
plants and the hydro electric plant) are depicted below:
Of aggregate power generation during the review
period, Bumbuna hydropower accounted for 52.98
percent and the rest was contributed by the thermal
plants.
2.7 Electricity Consumption
Total electricity consumption for the period was
recorded at 56.31 million kWh, comprising 17.18
million kWh by the industrial sector, 10.57 million kWh
by the state and 18.56 million kWh by domestic and
10 million kwh by the commercial consumers.
2.8 Transport
The transport sub-sector registered improved
performance in terms of vehicle registration and
5

preceding half year of 2011. This followed similar
trend in the year-on-year inflation rate which recorded
16.83 percent in January 2012 before declining to
12.50 percent in June 2012.
During the period under review, the national inflation
rate mirrored price movements in the various regions
of the country. In the Western Area, inflation rate was
recorded at 18.4 percent in January 2012 but fell
gradually throughout the period to record 14.75
percent in June 2012. Similarly in the Northern
Province inflation rate moved steadily downwards from
13.46 percent in January 2012 to close at 10.87
percent in June 2012. In the Eastern Region, the
inflation rate registered 17.17 percent in January 2012
but fell steadily throughout the period to 14.46 percent
in June 2012. Also in the Southern Region, the rate
moved gradually downwards from 16.48 percent in
January 2012 to settle at 11.31 percent in June 2012.
The analysis suggests that inflationary pressures were
more pronounced in the Western Area and the Eastern
Region.
3.0 Fiscal Operations
Government’s fiscal operations strengthened
somewhat during the first half of 2012, amidst
challenges geared towards addressing the issue of
outstanding obligations in 2011 carried over to 2012.
With improved performance in domestic revenue,
coupled with prudent expenditure management (which
included revising the budget in April 2012, tight budget
execution through weekly meetings of the Cash
Management Committee, etc.), budgetary operations
yielded a much lower overall deficit of Le216.50bn
(1.45% of GDP), compared to a target deficit of
Le362.01 (2.42% of GDP) and the preceding half
year’s deficit of Le253.49bn (2.18% of GDP).
3.1 Revenue
Government revenue and external grants received
during the reporting period amounted to
Le1,052.48bn or 7.05% of GDP, representing a
10.09 percent decline when compared to the
preceding half year but an increase of 6.36 percent
compared to the corresponding half year in 2011. This
was attributable to lower grants received due to delays
in disbursement of external budgetary support.
Consequently, the projected target of Le1,145.17bn
for revenue and grants for the first half of 2012 was
missed by Le92.69bn (8.09%). Domestic revenue
recorded a marked improvement during the review
period with total amount collected recording
Le854.68bn or 5.72% of GDP. This represents
increases of 7.40 percent and 28.28 percent
compared with the preceding half year and the
corresponding half year of 2011, respectively. The
period’s total domestic revenue over-performed
relative to the budget target of Le824.69bn. Domestic
receipts also accounted for 81.21 percent of gross
government revenue and grants compared to 67.37
percent in the preceding half year period. Total
domestic receipts comprised Customs and Excise Tax
of Le132.61bn (0.89% of GDP), Income Tax of
Le434.35bn (2.91% of GDP), Goods & Services
Tax (GST) of Le204.47bn (1.37% of GDP) and
Miscellaneous Revenue of Le80.35bn. The increase
in domestic revenue was mainly derived from income
tax collections, which grew by 81.48 percent and were
41.83 percent above the budget target of
Le306.25bn. The significant increase in income tax
was attributed to advance payments of PAYE tax by
both Sierra Rutile Limited (US$17mn) and African
Minerals Limited (US$20mn), which was 67.64
percent above the target of Le257bn. Collections from
customs & excise duties were 14.29 percent lower
than that in July-December 2011 and 26.31 percent
that of the corresponding period in 2011. The lower
receipts were attributed to the suspension of import
and excise duties on petroleum products, coupled with
the large number of discretionary duty waivers granted
during the period. The target of Le158.92bn for
customs & excise tax receipts was also missed by
16.56 percent. Total collections from goods and
services tax rose by 16.89 percent during the period
under review, though falling by 0.91 percent short of
the budget target of Le206.34bn.
Revenue collected from miscellaneous sources
amounted to Le80.35bn, indicating a 63.29 percent
decrease when compared to the preceding half year’s
period and 54.65 percent increase when compared
to the corresponding period in 2011. Consequently,
miscellaneous collections fell short of the Le139.79bn
target by 42.52 percent. The drop in miscellaneous
revenue was a reflection of the significant 70.07
percent fall in receipts from licenses from Le176.10bn
in the preceding period to Le52.70bn in the first half
of 2012, as well as the 64.43 percent decline in other
revenues to Le17.79bn, including the unexpected
shortfall in iron ore royalties.
Revenue generated from Road User Charges
amounted to Le2.90bn or 0.02% of GDP during the
review period, accounting for a 54.21 percent drop
compared to the preceding period and 82.46 percent
relative to the corresponding half year of 2011. The
petroleum formula was revised during the period in
order to maintain the petroleum pump price at its
current level. Consequently, a 78.31 percent shortfall
in revenue generated from road user charges was
recorded against the budget target of Le13.39bn.
Foreign grants received during the first half of 2012
amounted to Le197.80bn (1.32% of GDP), reflecting
a 48.68 percent decrease over the preceding half year
7

Table 4
Government Fiscal Operations
(In Millions of Leones)
Jan - Jun
2011
Jul - Dec
2011
Jan - Mar
2012
Apr - Jun
2012
Jan - Jun
2012
Prog. Target
Jan - Jun 2012
1 2 3 4 5 6 7
TOTAL REVENUE (PLUS GRANTS) 989,536 1,181,223 550,785 501,694 1,052,479 1,145,169
DOMESTIC REVENUE 666,269 795,831 409,571 445,112 854,683 824,692
Of which:
Customs & Excise 189,015 154,721 67,610 65,000 132,610 158,924
Import Taxes 128,655 153,758 66,773 65,000 131,773 157,038
Excise on Petroleum 55,311 0 0 0 0 0
Other Excise Dutties 0 0 837 0 837 1,372
Freight Levy from Marine Administration 5,049 963 0 0 0 514
Income Tax Department 233,809 239,341 206,083 228,268 434,351 306,249
Company Tax 62,034 11,398 1,830 1,174 3,004 45,953
Personal Income Tax 165,724 227,732 203,858 226,993 430,851 257,002
Other Taxes 6,051 211 395 101 496 3,294
Goods and Services Tax 174,930 176,519 104,583 99,884 204,467 206,341
Import GST (Import Sales Tax) 83,017 46,532 34,773 39,322 74,095 119,874
Domestic GST 91,913 129,987 69,810 60,562 130,372 86,467
Miscellaneous 51,956 218,908 28,391 51,960 80,351 139,790
Mines Dept. 17,017 185,327 17,667 36,882 54,549 80,608
Royalty on Rutile 560 124 0 0 0 5,389
Royalty on Bauxite 0 0 0 0 0 1,221
Royalty on Diamond and Gold 6,335 9,100 1,854 0 1,854 3,295
Royalty on Iron Ore 0 0 0 0 0 47,458
Licences 10,122 176,103 15,813 36,882 52,695 23,245
Other Departments 34,939 33,581 10,724 15,078 25,802 59,182
Royalty on Fisheries 6,569 5,282 3,409 4,604 8,013 7,601
Parastatals 0 0 0 0 0 1,571
Other Revenues 28,370 28,299 7,315 10,474 17,789 50,010
Road User Charges 16,559 6,342 2,904 0 2,904 13,388
GRANTS 323,267 385,392 141,214 56,582 197,796 320,477
Programme 130,482 149,741 101,938 22,207 124,145 159,873
HIPC Debt Relief Assistance 8,540 13,401 4,304 5,916 10,220 7526
Japanese Food & Oil Aid 0 0 33,385 0 33,385 33,452
Global Fund Salary Support 10,390 3,461 5,164 2,843 8,007 10,103
Kuwaiti Fund Refund 1,685 0 0 0 0 0
UK (DFID) 74,283 30,995 56,869 13,448 70,317 73,569
EU 0 61,416 0 0 0 0
AfDB 0 40,467 2,217 0 2,217 2,221
WB 10,727 0 0 0 0 0
Peace Building Fund 24,857 0 0 0 0 33,001
Emergency Power Programme 24,857 0 0 0 0 0
Others (projects) 0 0 0 0 0 33,001
and 38.81 percent on the corresponding half year in
2011. Of the total amount of external grants received,
Le124.15bn was budgetary support and Le73.65bn
grants for development projects. Grants for budgetary
support comprised Le10.22bn in HIPC Debt Relief
Assistance, Le33.39bn from Japanese Food & Oil
Aid, Le8.01bn in Global Fund Salary support for
Health Sector workers, Le70.32bn from the United
Kingdom/Department for International Development
(UK/DfID) and Le2.22bn from the African
Development Bank. Total grants for budgetary
support was 22.35 percent short of the budgeted
8

Table 4 contd…
Government Fiscal Operations
(In Millions of Leones)
Jan - Jun Jul - Dec Jan - Mar Apr - Jun Jan - Jun Prog. Target
2011 2011 2012 2012 2012 Jan - Jun 2012
1 2 3 4 5 6 7
TOTAL EXPENDIUTRE & NET LENDING 1,317,233 1,434,716 763,078 505,903 1,268,981 1,507,183
Of which:
Current Expenditure 768,019 834,802 520,932 371,912 892,844 970,629
Of which: 0 0
Wages & Salaries 300,570 380,776 225,880 218,814 444,694 447,360
Domestic Interest 94,556 131,581 43,142 63,238 106,380 117,117
Foreign Interest 11,927 12,155 5,006 3,800 8,806 13,313
Goods & Services 165,130 231,122 99,547 34,086 133,633 136,690
Transfers to Local Councils 44,732 31,326 25,554 592 26,146 45,072
Fuel Subsidies 95,444 0 0 0 0 11,894
Social Outlays 0 0 34,767 32,422 67,189 65,379
Grants to Education Institution 23,744 24,670 38,871 15,266 54,137 42,151
Transfer to Road fund 2,000 10,282 2,904 0 2,904 13,388
Elections & Democratisation 29,916 12,890 45,261 3,694 48,955 78,265
Development Exp. & Net Lending 549,214 599,914 242,146 133,991 376,137 536,554
Foreign Loans & Grants 424,889 362,091 77,206 85,063 162,269 324,702
Loans 232,104 126,440 37,930 50,688 88,618 164,098
Grants 192,785 235,651 39,276 34,375 73,651 160,604
Domestic 124,325 237,823 164,940 48,928 213,868 211,852
Lending Minus Repayment 0 0 0 0 0
CURRENT BALANCE+/- (Including grants) 221,517 346,421 29,853 129,782 159,635 174,540
ADD DEVELOPMENT EXPENDITURE (549,214) (599,914) (242,146) (133,991) (376,137) (536,554)
Basic Primary Balance (89,676) (120,168) (182,892) 95,004 (87,888) (149,094)
OVERALL DEFICIT/SURPLUS +/-(Incl. grants) (327,697) (253,493) (212,293) (4,209) (216,502) (362,014)
FINANCING 327,697 253,493 212,293 4,209 216,502 362,014
Domestic 135,800 19,059 41,277 130,912 172,189 143,142
Of which:
Bank Financing 77,600 (11,003) 9,372 110,316 119,688 129,205
Bank of Sierra Leone 8,773 1,144 (68,267) 52,241 (16,026) (6,894)
Commercial Banks 68,827 (12,147) 77,639 58,075 135,714 136,099
Non-Bank Financing 24,059 30,062 31,905 11,991 43,896 10,247
Privatisation Receipts 34,141 0 0 8,605 8,605 13,937
Extenal 212,183 92,447 133,965 41,962 175,927 224,088
Of which:
Loans 232,104 126,440 141,703 50,688 192,391 267,871
Project 232,104 126,440 37,930 50,688 88,618 164,098
Programme 0 0 103,773 0 103,773 103,773
Amortisation (19,921) (33,993) (7,738) (8,726) (16,464) (43,783)
Debt Relief 0 0 0 0 0 0
Others* (20,286) 141,987 37,051 (168,665) (131,614) -5216
* Others include resheduling/write off,
financing gap, privatisation net & unaccounted amounts
Source: Budget Bureau, MOF
target of Le159.87bn, as total grants for
Development Projects was 54.14 percent short of
the Le160.60bn target.
3.2 Expenditure & Net Lending
Total government expenditure and net lending during
the first half of 2012, recorded at Le1,268.98bn or
8.5% of GDP, was 11.55 percent lower than the
preceding half year period’s aggregate and 3.66
percent that of the corresponding half year in 2011.
The amount also represented an impressive
performance relative to the target ceiling of
Le1,507.18bn (10.09% of GDP). Government
expenditure comprised recurrent expenditure of
Le892.84bn (5.98% of GDP) and development
expenditure and net lending of Le376.14bn (2.52%
9

(LeM n)
Chart 3. - Fiscal Performance
800000
600000
Total Rev
Total Exp
Deficit
400000
200000
0
-200000
-400000
-600000
of GDP). Recurrent expenditure recorded an increase
of 6.95 percent compared to the preceding half year’s
level which was within the target ceiling of
Le970.63bn. Development expenditure and net
lending fell by 37.30 percent over the six month period
but remained within the reporting half year’s ceiling
of Le536.55bn. Recurrent expenditure comprised
Personnel Emoluments of Le444.69bn (2.98% of
GDP and 49.8% of recurrent expenditure) interest
payments of Le115.19bn (0.77% of GDP and 12.9%
of recurrent expenditure) and non-salary-non-interest
payments of Le330.07bn (36.97% of recurrent
expenditure). “Non-salary and non-interest payments”
comprised payments for goods and services in the
sum of Le133.63bn, transfers to local councils totaling
Le26.15bbn, social outlays of Le67.19bn, grants to
educational institutions of Le54.14bn, and elections
and democratization process of Le48.96bn. Personnel
Emolument, Goods and Services as well as total
interest payments, together constituted the largest
component of recurrent expenditure. Although total
payment for personnel emoluments accounted for
16.79 percent which was higher than the preceding
half year’s and 47.95 percent that of the
corresponding half in 2011, it was still well within the
ceiling requirement of Le447.36bn. This development
was attributed to the fact that the increase in wages
and salaries stemming from the recruitment of health
workers and teachers was compensated for by the
savings made from the retirement of senior and
management staff during the review period. Total
interest payments and payments for goods and
services were also within their budget targets of
Le130.42bn and Le136.69bn, respectively.
Development expenditures and net lending comprised
foreign financed capital expenditure of Le162.27bn
(1.09% of GDP) and domestically financed capital
Period
expenditure of Le213.87bn (1.43% of GDP). Foreign
financed capital expenditure was 55.19 percent below
similar expenditures undertaken in the preceding half
year and was within the ceiling requirement of
Le324.70bn. Domestically financed capital
expenditure, which was 10.07 percent below the
preceding half year’s position, was 0.95 percent above
the budget ceiling of Le211.85bn.
The overall fiscal deficit (including grants) for the
reporting period was Le216.50bn, financed from both
domestic and external sources. Foreign financing was
Le175.93bn while domestic sources accounted for
Le172.19bn. Foreign sources included Projects and
Programme Loans as well as disbursements amounting
to US$24mn from the World Bank. Compared with
the preceding half year, foreign financing was up by
90.30 percent but 21.49 percent short of the budget
target of Le224.09bn. Domestic financing included
Le135.71bn from commercial banks, non-bank
financing of Le43.90bn and privatization receipts of
Le8.61bn. The Bank of Sierra Leone reduced its
holdings of treasury bills by Le97.97bn, while the
utilization of Ways and Means Advances by the
Government was Le5.29bn higher at the end of the
review period
4.0 Monetary Developments
The thrust of monetary policy in the first half of 2012
was focused on achieving price stability and low
inflation at levels consistent with growth and
macroeconomic stability. In line with these objectives,
the Bank of Sierra Leone implemented monetary
policy within the monetary targeting framework, with
Reserve Money as the operating target and Broad
Money Supply the intermediate target. However,
monetary policy management during the reporting
10

T able 5
M onetary Survey
( Million Leones)
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
1 2 3 4 5 6
Reserve Money 741,909 787,326 859,604 848,636 853,515
Broad Money 2,528,578 2,551,955 2,719,741 2,751,602 2,748,317
Broad Money* 1,718,196 1,775,242 1,868,262 1,901,936 1,969,625
Narrow Money 1,128,497 1,164,644 1,209,324 1,230,537 1,236,188
Currency in Circulation 572,424 575,492 641,832 646,226 650,634
Demand Deposits 556,073 589,152 567,492 584,311 585,554
Quasi Money 1,400,081 1,387,311 1,510,417 1,521,065 1,512,129
Foreign Currency Deposits 810,382 776,714 851,479 849,666 778,692
Time Deposits 123,780 122,611 138,734 143,211 165,618
Savings Deposits 457,236 484,084 515,694 524,860 564,612
Other Deposits 6,631 1,855 2,468 1,287 1,168
Time Savings and Foreign Currency deposits(BSL) 2,051 2,048 2,041 2,041 2,039
Net Foreign Assets 1,826,933 1,891,616 2,053,066 2,088,129 2,031,604
Bank of Sierra Leone 985,518 1,056,487 1,117,916 1,161,459 1,159,541
A ssets 1,486,341 1,566,486 1,661,061 1,701,369 1,666,977
Liabilities 500,824 509,999 543,145 539,910 507,436
Commercial Banks 841,416 835,128 935,150 926,670 872,063
A ssets 857,237 850,950 949,227 940,111 920,605
Liabilities 15,822 15,822 14,077 13,441 48,542
Domestic Credit 1,863,188 1,940,430 1,932,040 1,977,608 1,989,973
C laims on Central Govt. Net 9 3 5 ,3 9 2 952,845 879,751 886,450 917,866
of which:
BSL 574,925 595,821 585,498 512,556 471,869
Total Claims 606,387 619,962 601,222 570,948 506,719
Treasury Bills 82,895 71,269 132,435 129,935 34,462
Treasury Bonds 24,960 13,727 11,009 12,145 15,788
W ays and Means Advances - 37,199 26,886 - 32,172
2010 W ays and M eans A dvances Stock A /C 77,516 77,516 - - -
SDR Bridge Loan 64,292 64,292 - - -
BSL losses for conversion 9,740 8,305 6,998 5,109 538
Stock of NNNIB 81,801 81,801 81,801 81,801 81,801
BSL Holdings of 3-Year Medium Term Bond 77,516 77,516 77,516
5YR Bonds for Recapitalization 264,430 264,430 264,430 264,430 264,430
Government Departments 753 1,423 147 12 12
Deposits 31,461 24,141 15,723 58,392 34,850
Treasury Income and Expenditure(net)* 7,193 2 2 37,996 (47)
Departmental A ccounts 23,749 23,619 15,201 19,877 34,377
Blocked A ccount 7.78 8.00 8.00 8.00 8.00
Commercial Banks 360,467 357,024 294,253 373,894 445,997
Total Claims 5 4 5 ,0 2 9 547,073 533,460 610,981 696,010
Treasury Bills 511,214 508,487 491,773 565,138 651,178
T reas u ry Bearer Bo n d s 14,948 14,948 15,448 14,798 5,769
Loans and Advances 18,868 23,638 26,238 31,045 39,063
Deposits 184,563 190,049 239,207 237,087 250,013
Demand Deposits 100,909 126,140 182,039 172,250 170,909
Sav in g s A cco u n ts 14,635 13,580 15,073 16,722 21,389
T ime D ep o s its 69,019 50,329 42,095 48,115 57,715
Claims on Non Financial Public Sector 42,475 48,479 53,507 58,920 67,546
Claims on Private Sector 860,843 903,911 962,751 985,852 962,407
o f wh ich
Commercial Banks 849,200 894,091 955,897 970,795 949,789
Claims on Non-Banking Inst. 24,478 35,196 36,031 46,386 42,154
Other Items (Net) 1,161,543 1,280,091 1,265,366 1,314,135 1,273,260
* Excludes Foreign Currency Deposits at the Commercial Banks
period was challenged by fiscal outcomes. Fiscal
outcomes were expansionary due in part to delays in
disbursement of external budgetary support. As a
consequence, government borrowing requirements
increased, culminating in increasing interest rates.
However, with the monetary policy rate remaining
unchanged during the period, the bank proactively
adjusted its policy instruments to contain monetary
aggregates, consistent with macroeconomic
fundamentals. This was achieved through aggressive
secondary market repo operations complemented by
weekly auctions of foreign exchange.
11

(L e M n )
Chart 4. Composition of Money Supply
3000000
2500000
2000000
1500000
1000000
500000
0
2011 Q1
C u rren cy in C ircu lation
Demand Deposits
2011 Q2
2011 Q3
2 011 Q4
2012 Q1
2012Q2
Quasi Money
Period
Trends in monetary aggregates were mixed during the
first half of 2012. Broad Money expanded by
Le28.58bn (1.05%), from Le2719.74bn at end
December 2011 to Le2748.32bn at end June 2012.
The expansion in M2 during the reporting period was
lower than the 13.06 percent increase recorded in
the corresponding half-year in 2011 and the 7.56
percent recorded in the preceding half-year. The
expansion in M2 was driven by the significant increase
in Net Domestic Assets (NDA), which outstripped
the decline in Net Foreign Assets (NFA). NDA
expanded by Le50.04bn or 7.51% compared to a
contraction of Le21.46bn (1.05%) in NFA. The
increase in NDA was a result of an increase in
Domestic Credit (Le57.93bn) which was however
moderated by an improvement in ‘Other Items Net’
(Le7.90bn). The increase in Domestic Credit was
mainly on account of fiscal outturn during the review
period, as Government fiscal position registered a
deficit of Le216.50mn that was financed mainly
through the utilization of Ways and Means Advances
and borrowing from the commercial banks.
Reserve Money on the other hand, contracted by
Le6.09bn (0.71%) from Le859.60bn at end
December 2011 to Le853.52bn at end June 2012.
The contraction was lower when compared to the
2.50 percent decline recorded in the corresponding
period in 2011. During the preceding July-December
2011 period, Reserve Money (RM) expanded by
15.86 percent. The contraction in Reserve Money
was a reflection of the efficacy of active monetary
operations during the reporting period which translated
into decreases in both Bankers’ and private sector
deposits. Bankers’ Deposits contracted by 10.79
Table 6
Average Interest Rates (%)
2 3 4 5 6
1
Jun-11 Sep-11 Dec-11 M ar-12 Jun-12
Treasury Bills (3-months) 23.27 23.25 23.42 23.39 23.25
Treasury Bills (6- months) 29.81 29.27 29.55 28.75 27.64
Treasury bills(1 -Year) 25.71 25.84 28.63 29.58 29.14
Treasury Bearer Bonds (1-year) 18.00 18.00 20.00 20.00 20.00
Savings^ 6.48 6.42 6.42 6.42 6.42
1 Month 9.25 9.16 9.16 9.16 9.16
3 Months^ 9.89 9.75 9.75 9.75 9.75
6 Months^ 10.45 10.39 10.39 10.39 10.39
9 Months^ 10.25 10.25 10.25 10.25 10.25
12 Months^ 11.91 11.91 11.91 11.91 11.91
Lending Overdraft Rate 21-28 21-29 21-29 21-29 21-29
12

percent and private sector deposits by 10.15 percent,
thereby offsetting the 1.42 percent increase in
currency issued.
Net Claims on Government by the banking sector
during the review period increased by Le38.12bn
(4.33%) from Le879.75bn at end December 2011
to Le917.87bn at end June 2012 compared to the
5.95 percent reduction recorded in the preceding half
year period. The expansion was however lower than
the 7.17 percent growth recorded in the corresponding
period in 2011. The increase during the review period
was mainly due to the Le151.74bn (51.57%) increase
in Net Claims on Government by the commercial
banks, which was moderated by the Le113.63bn
(19.41%) decrease in Net Claims on Government
by the Bank of Sierra Leone. Net Claims on
Government by commercial banks grew mainly on
account of the Le159.41bn (32.41%) increase in their
holdings of Treasury Bills, while Net Claims on
Government by Bank of Sierra Leone declined mainly
as a result of a Le97.97bn (73.98%) decrease in its
holdings of treasury bills. The utilization of Ways and
Means Advances by the Government increased by
Le5.29bn to record Le32.17bn as at end of the review
period.
The average interest rate in the money market reflected
mixed trends during the review period. The interest
rate on savings, 1 month, 3 months, 6 months, 9
months and 12 months deposits remained unchanged
at 6.42 percent, 9.16 percent, 9.75 percent, 10.39
percent, 10.25 percent, and 11.91 percent,
respectively. The average monthly annual yields on
the 3 months and 6 months Government treasury bills
declined by 17 and 191 basis points from 23.42
percent and 29.55 percent at end December 2011,
to 23.25 percent and 27.64 percent in June 2012,
respectively. Meanwhile, the average monthly annual
yields on the 12 months treasury bills increased by
51 basis points from 28.63 percent at end December
2011 to 29.14 percent at end June 2012. The interest
rate on 12 months treasury bonds remained
unchanged at 20 percent. Commercial banks’ lending
rate on Overdrafts also remained unchanged within
the range of 21-29 percent.
5.0 External Sector Developments
5.1 International Trade
The external sector performance improved during the
first half year of 2012 in comparison with the second
half of 2011. The overall deficit in the trade balance
was recorded at US$359.92mn which was below
the US$810.95mn position recorded for the preceding
half year in 2011. The deficit recorded in the review
period was also an improvement on the corresponding
period’s performance in 2011. The improvement in
the trade balance during the review period was the
resultant effect of a 44.8 percent increase in export
receipts and the 22.4 percent decline in total import
bill. Consistent with this development, the gross
international reserves increased by 1.58 percentage
points from US$382.74mn at end December 2011
to US$382.74mn at end June 2012, equivalent to 3
months of import cover.
5.2 Exports
During the first half of 2012, total export receipts
amounted to US$405.05mn, which more than
doubled the US$174.93mn recorded in July-
December 2011. A similar picture was depicted when
compared to the corresponding period in 2011. The
increased export receipts over the reporting period
was driven mainly by the substantial growth in mineral
export receipts, which accounted for 87.4 percent of
total export receipts. This development underscores
the continuing dominance of the mineral sector in the
country’s export performance. Mineral exports
receipts for the first half of 2012 recorded at
US$354.16mn indicated a substantial increase
(171.2%) over the US$130.59mn recorded in the
preceding half year in 2011. The huge improvement
in export performance was driven mainly by increased
receipts from rutile, iron ore and diamonds exports,
which more than offset the under-performances
recorded in export receipts from gold, bauxite and
zircon. During the review period, receipts from rutile
exports increased from US$19.50mn during the
second half of 2011 to US$87.46mn in the review
period, indicating a more than threefold increase when
compared to both the preceding half year and the
corresponding half year in 2011. The marked increase
in rutile export earnings was directly related to the
significant increase in the volume of rutile exported
from 18.8 thousand metric tons in the preceding half
year to 26.96 thousand metric tons in the reporting
period. The growth in export volume was attributable,
in part, to production efficiency and the increase in
price developments in the international market for rutile
which went up from U$1,036.6 thousand/metric ton
in the preceding half year to US$3,244.6 thousand/
metric ton in the review period.
Export receipts from iron-ore, though below the
projected level, contributed significantly to overall
export receipts during the reporting half year. The
shortfall in iron ore exports was due mainly to logistical
and operational constraints that faced one of the
mining companies. A total of 2,287.85 thousand metric
tons of iron ore valued at US$182.11mn was
exported during the review period, reflecting significant
increases in both volume and value over the preceding
half year in 2011. There was no export of iron ore in
the corresponding period in 2011.
13

Table 8a
International Trade and Reserves
(Million Leones)
Jan-Jun'11 Jul-Dec'11 Jan-Mar'12 Apr-Jun'12 Jan-Jun'12
1 2 3 4 5 6
Merchandise Imports 3,136,841.9 4,334,980.2 1,601,216.9 1,727,802.1 3,329,019.0
of which
Food of which 448,247.3 625,340.2 304,205.0 354,827.3 659,032.3
Rice 172,143.0 198,209.6 117,162.7 130,581.1 247,743.8
Beverages and Tobacco 54,694.6 89,536.7 30,908.4 33,067.4 63,975.8
Crude Materials 34,858.5 45,447.4 34,148.8 39,753.4 73,902.2
Mineral Fuels and Lubricants of which 624,381.8 571,843.6 376,867.1 385,566.5 762,433.6
Fuel 571,478.0 484,946.5 348,627.1 323,488.8 672,116.0
Animal and Vegetable Oils 18,325.5 23,393.8 9,117.9 5,481.3 14,599.2
Chemicals 57,089.4 235,440.7 70,716.4 159,723.8 230,440.2
Manufactured Goods 377,706.1 385,782.4 185,019.7 223,673.5 408,693.1
Machinery and Transport Equipment 1,206,561.0 2,088,215.3 453,533.1 416,015.3 869,548.4
Other Imports 314,977.8 269,980.0 136,700.5 109,693.5 246,394.1
Merchandise Exports 751,173.2 769,841.2 814,237.1 1,048,059.5 1,862,296.6
of which - -
Mineral Exports 472,839.6 574,902.3 654,172.1 986,307.3 1,640,479.4
Diamonds 291,624.8 274,493.9 113,261.9 188,303.7 301,565.6
Bauxite 78,704.6 90,898.3 24,899.5 20,621.0 45,520.5
Rutile 64,355.3 85,784.9 148,720.9 231,469.2 380,190.0
Gold 14,970.9 16,716.7 6,625.2 8,010.7 14,635.9
Ilmenite 6,691.3 12,692.3 - - -
Iron Ore - 65,224.7 357,711.5 534,815.2 892,526.7
Zircom 16,492.6 29,091.6 2,953.1 3,087.5 6,040.5
Agricultural Exports 138,600.3 63,594.7 52,155.3 18,453.3 70,608.6
Coffee 6,789.2 1,905.9 - - -
Cocoa 130,666.1 59,521.8 51,676.3 17,317.2 68,993.5
Piassava 42.7 - - - -
Fish and Shrimps 1,102.2 2,167.1 478.9 1,136.1 1,615.1
Others 87,064.8 39,387.1 34,968.3 31,509.6 66,477.9
Re-exports 52,668.5 91,957.0 72,941.4 11,789.4 84,730.8
Trade Balance (2,385,668.7) (3,565,139.0) (786,979.8) (679,742.5) (1,466,722.3)
Foreign Reserves (Million Leones) 1500.5 1649.5 1692.8 1656.6 1656.6
Total value of diamonds exported during the period
was US$69.38mn, indicating increases of 11.4
percent and 2.8 percent respectively, over the levels
recorded during the preceding half-year and the
corresponding half-year in 2011. The improvement
in export receipts was directly related to the increase
in both volume and value of the mineral from 199.3
thousand carats valued at US$312.6 thousand/carat
in the preceding half year to 212.7 thousand carats
valued at US$326.2 thousand/carat in the reporting
half year. The volume of bauxite exported in the
reporting period was recorded at 449.36 thousand
metric tons valued at US$10.46mn. The amount
indicated a significant decrease when compared to
the 807.18 thousand metric tons of bauxite valued at
US$20.65mn reported for the second half of 2011.
The volume of gold exported during the period under
review was recorded at 2,722.4 ounces, valued at
US$3.36mn. In volume terms, this compared
favourably with the 2,202.9 ounces valued at
U$3.80mn recorded in July-December 2011. There
was no export of ilmenite in the review period.
Relative to the corresponding half year in 2011, export
volumes of bauxite and gold during the review period
decreased by 26.9 percentage points and 11.7
percentage points respectively, while the volume of
zircon export increased by 172.5 percent. In value
terms, the export of bauxite, gold and zircon declined
over the period by 43.0 percent, 3.2 percent and 64.1
percent, respectively.
14

Performance of the agriculture sector improved during
the review period with total export earnings recorded
at US$16.21mn. This represented a 12.3 percent
increase over the US$14.43mn recorded in the
preceding half year. It was however 49.9 percent
lower than the US$32.34mn recorded for the
corresponding period in 2011. The increase was
attributable mainly to export earnings from cocoa,
which rose by 17.2 percent to US$15.84mn and
accounted for about 98 percent of total proceeds from
the agriculture sector. There was no shipment of coffee
and piassava during the first half of 2012. Proceeds
from the export of fish and shrimps declined by 24.5
percent, to US$0.37mn in the review period, which
reflected a marginal increase over the total value of
US$0.25mn recorded in the corresponding period in
2011. The total value of other exports constituting
mainly ginger, assorted plastic wares, sawn timber,
audio cassettes, compact discs, kola nuts was
Table 8b
International Trade and Reserves
(Thousand US Dollars)
Jan-Jun'11 Jul-Dec'11 Jan-Mar'12 Apr-Jun'12 Jan-Jun'12
1 2 3 4 5 6
Merchandise Imports 730,673.4 985,884.2 367,220.0 397,757.5 764,977.5
of which
Food of which 103,673.5 142,210.0 69,753.0 81,696.8 151,449.8
Rice 39,689.9 45,036.6 26,860.5 30,091.3 56,951.8
Beverages and Tobacco 12,798.2 20,343.2 7,088.5 7,611.4 14,699.9
Crude Materials 8,118.8 10,350.8 7,828.8 9,147.9 16,976.6
Mineral Fuels and Lubricants of which 145,636.3 130,121.9 86,454.3 88,751.3 175,205.6
Fuel 133,362.2 110,341.4 79,867.9 74,459.9 154,327.8
Animal and Vegetable Oils 4,311.9 5,318.1 2,089.1 1,261.9 3,351.0
Chemicals 13,352.8 53,686.6 16,218.6 36,787.7 53,006.3
Manufactured Goods 87,936.8 87,779.8 42,439.4 51,482.7 93,922.2
Machinery and Transport Equipment 281,590.2 474,672.2 103,980.7 95,761.3 199,742.0
Other Imports 73,254.9 61,401.6 31,367.5 25,256.6 56,624.1
Merchandise Exports 174,282.4 174,933.0 186,836.1 218,217.1 405,053.2
of which -
Mineral Exports 109,647.4 130,592.3 150,153.7 204,004.0 354,157.8
Diamonds 67,470.1 62,296.1 25,978.4 43,398.5 69,376.9
Bauxite 18,348.2 20,649.8 5,711.2 4,746.9 10,458.1
Rutile 14,936.4 19,500.1 34,147.1 53,313.7 87,460.8
Gold 3,475.1 3,804.9 1,518.9 1,844.4 3,363.3
Ilmenite 1,541.1 2,900.6 - - -
Iron Ore - 14,863.0 82,119.7 99,989.1 182,108.8
Zircom 3,876.4 6,577.8 678.4 711.5 1,389.8
Agricultural Exports 32,344.6 14,434.8 11,959.5 4,248.4 16,207.9
Coffee 1,564.5 436.3 - - -
Cocoa 30,515.3 13,506.6 11,849.6 3,986.9 15,836.4
Piassava 10.1 - - - -
Fish and Shrimps 254.7 491.9 109.9 261.5 371.4
Others 20,085.1 8,912.2 8,005.8 7,249.3 15,255.2
Re-exports 12,205.3 20,993.6 16,717.1 2,715.3 19,432.4
Trade Balance (556,391) (810,951) (180,384) (179,540) (359,924)
Foreign Reserves ($mn) 344.6 376.8 389.2 382.7 382.7
Sources: Customs and Excise Department,Oil Importing Companies and Government Gold & Diamond Department.
recorded at US$15.26mn in the review period. The
amount was 71.2 percent higher than that recorded
in the preceding half year but 24.0 percent lower than
the US$20.09mn recorded in the corresponding
period in 2011. The value of re-exports increased by
8.0 percent over the preceding half year from
US$19.43mn to US$20.99mn in the reporting half
year, which represents a 59.2 percent increase over
the corresponding period in 2011.
5.3 Imports
Total import bill for the review period was recorded
at US$764.98mn, which was 22.4 percent lower than
the US$985.88mn reported for the preceding half
year in 2011 but 4.7 percent higher than the total
import value of US$730.67mn recorded in the
corresponding period in 2011. The significant decline
in import during the review period was accounted for
by the huge decline in the import value of “machinery
15

& transport equipment”, from US$474.67mn in the
preceding half year of 2011 to US$199.74mn in the
reporting period. The lower import value for
machinery and transport equipments was a reflection
of the shift in mining activities from development phase
to production phase. The import value for all other
import categories increased over the reporting period.
Total import value for “consumer goods” increased
only marginally by 1.0 percentage point to
US$169.50mn in the reporting period. The increase
was on account of the hike in import bill for the food
sub-category in the amount of US$151.45mn, of
which the value of rice imports accounted for 38.0
percent. Payments for 138.93 thousand metric tons
of imported rice during the review period valued at
US$56.95mn was 26.5 percent higher than the 76.59
thousand metric tons reported in the preceding half
year in 2011, valued at US$45.04mn. It was also
43.5 percent higher than the value for the
corresponding half year in 2011. In contrast, import
payments for “Beverages & Tobacco” declined by
27.7 percent to US$14.70mn during the review
period and that for “Animal & Vegetable Oils” by
37.0 percent to US$3.35mn. The import bill for
intermediate goods recorded at US$69.98mn during
the review period was 9.30 percent higher than the
US$64.04mn recorded in the preceding half year.
This was on account of the 64.0 percent increase in
payments for import of “crude materials” which more
than offset the 1.3 percent decline in accrued import
bill for “chemicals”. A marginal increase to
US$150.55mn was recorded in aggregate import
payments for “manufactured goods” during the six
months review period. Payments for “mineral fuel &
lubricants” amounted to US$175.21mn, representing
a 34.6 percent increase over the preceding half year
and 20.3 percent over the corresponding 2011 half
year. This phenomenon was reflective of increased
activities in both the mining and construction subsectors.
Import payments for fuel at US$154.33mn
continue to account for the bulk (88%) of total import
payments in this category. The value was 39.9 percent
higher than the preceding half year’s and 15.7 percent
that of the corresponding period in 2011.
5.3 Foreign Exchange Movement
The country continued to maintain a flexible exchange
rate regime supported by the weekly foreign exchange
auctions organized by the central bank and activities
in the commercial banks, the official and the parallel
markets. During the review period, monthly average
exchange rate of the Leone to the US Dollars exhibited
mixed trends in all the foreign exchange markets with
the exception of the official market in which rates
appreciated consistently throughout the reporting
period.
The average exchange rate during the review period
appreciated in all the foreign exchange channels. The
parallel market rate reflected the highest rate of
appreciation of 2.01 percent from Le4,461.74/US$1
in the preceding half year to Le4,372.06/US$1 in the
review period. This was followed by the auction rate,
bureaux rate, commercial banks’ rate and official rate,
which appreciated respectively by 1.74 percent, 1.26
percent, 1.08 percent and 0.96 percent during the
review period. The end period exchange rates in the
various markets were Le4,330.36/US$1,
Le4,343.10/US$1, Le4,346.74/US$1 and
Le4,352.35/US$1, respectively. Compared to the
six-month averages in the corresponding period in
2011, the rate appreciated in the auction market
(0.56%) and the parallel market (0.40%) but
depreciated in the official market (1.13%), bureaux
market (1.03%) and the commercial banks (0.84%).
Quarterly averages indicated an appreciation in all the
foreign exchange markets in January-March 2012,
with the commercial banks, bureaux, parallel market,
official and auction rates appreciating by 1.06 percent,
1.54 percent, 1.76 percent, 0.96 percent and 1.78
percent, respectively. In the second quarter of 2012,
all the exchange rates, except the auction rate,
appreciated. The commercial banks, bureau, parallel,
official and auction rates appreciated by 0.2 percent,
0.47 percent, 0.50 percent and 0.35 percent
respectively, while the auction rate depreciated by 0.30
percent.
The appreciation of the exchange rate could largely
be attributed to the significant increase in export
receipts from the mineral sector, large capital inflows
to support private sector and government projects,
coupled with the decline in import payments which
represented reduced outflow of foreign exchange.
The premium between the average half yearly official
and parallel market rates narrowed substantially from
Le67.28/US$1 (1.53%) in the preceding half year
period to Le19.70/US$1 (0.45%) in the reporting
period.
5.4 Sectoral Utilization of Foreign Exchange
The amount of foreign exchange utilized by all sectors
under the Bank of Sierra Leone’s weekly foreign
exchange auction during the review period totaled
US$24.81mn, representing an increase of 6.5 percent
over the amounts utilized in July-December 2011 and
38.9 percent over that utilized in January-June, 2011.
The impact of the increase in supplementary supply
of foreign exchange through the Bank of Sierra Leone
auction system was reflected in the banking sector in
the form of an increase in rice imports and the general
imports categories. At US$10.84mn, the banking
16

Table 9
Sectoral allocation of Foreign Exchange under the Auction Sytem (US$ '000)
Sectors Jan-Jun'11 Jul-Dec'11 Jan-Mar'12 Apr-Jun'12 Jan-Jun'12
1 2 3 4 5 6
Banks 8,032 9,028 5,200 5,635 10,835
Oil Companies 3,263 4,250 1,300 1,010 2,310
Manufacturing Industries - - - 710 710
Rice 5,353 9,562 4,845 4,920 9,765
General Imports 1,218 465 600 590 1,190
Total Allocation 17,865 23,304 11,945 12,865 24,810
sector utilized the highest amount of the supplementary
foreign exchange supply (43.67%), followed by
foreign exchange utilized for rice imports recorded at
US$9.77mn (39.36%) and that for the oil companies,
general imports and manufacturing industries recorded
at US$2.31mn (9.31%), US$1.19mn (4.8%) and
US$0.71mn (2.86%), respectively. Compared with
the preceding half year in 2011, the commercial banks
accounted for 38.74 percent of the total
supplementary supply, oil companies 18.24 percent,
rice 41.03 percent and general imports 1.99 percent.
5.5 Gross International Reserves
The gross external reserves position of the Bank of
Sierra Leone was recorded at US$382.74mn as at
end June 2012, reflecting an increase of US$5.55mn
(1.47%) over the US$376.79mn recorded at end
December 2011. The augmentation in foreign reserves
supply was largely explained by receipts from external
budgetary support disbursements, mining companies
and Aid/Loan disbursements. However, these receipts
were partially offset by outflows stemming mainly from
government’s foreign exchange needs for
infrastructure projects and debt service payments. At
end June 2012, external reserves level represented
an estimated 3 months of imports of goods and
services, down from the 5.1 months of imports cover
recorded in July-December 2011. Major inflows were
in respect of US$18.99, being export receipts from
Sierra Rutile Company, arrears and Advance tax
payment from African Mineral Mining Company
totaling US$20.77mn, receipts from London Mining
Company aggregated at US$2.66mn, diamond
exporters income and license fees of US$3.22mn.
Other government receipts totaled US$2.93mn, while
privatization receipts amounted to US$2.0mn.
Other significant inflows included Aid Disbursement/
BOP Support of which, US$16.28mn was in respect
of total disbursements by the United Kingdom/
Department for International Development (DfID)
under the Poverty Reduction Budget Support
programme, US$24.03mn was World Bank Loan
disbursement and US$8.0mn was disbursement by
the Japanese Government.
Major outflows comprised US$24.81mn in respect
of foreign exchange utilized under the Bank of Sierra
Leone’s weekly foreign exchange auction,
US$20.99mn on account of Government’s
infrastructure projects for roads, water and energy,
payments to Embassies and Missions abroad
(M illion U S $)
Chart 6. Gross International Reserves
400
360
320
280
240
200
160
120
80
40
0
2011 Q 3
Q4
2 012 Q 1
Q2
Period
17

Table 10. Estimate of External Public Debt as at Jun. 30, 2012 *
(In million US dollars)
Disbursed Arrears
Total Percentage
Outstanding Debt /1 Principal Interest Incl. Interest of Total
1 2 3 4 5 6
Total External Debt 889.5 229.1 - 889.5 100.0
Total Commercial Obligations
& Short-Term Debt 201.2 201.2 - 201.2 22.6
Total Long-Term Debt, of whic 688.3 28.0 - 688.3 77.4
Multilateral 561.09 - - 561.09 63.08
World Bank Group 220.9 - - 220.9 24.8
IMF 116.2 - - 116.2 13.1
ADB/F 81.3 - - 81.3 9.1
EEC 10.4 - - 10.4 1.2
EIB 0.0 - - 0.0 0.0
IFAD 25.1 - - 25.1 2.8
BADEA 35.3 - - 35.3 4.0
IDB 44.1 - - 44.1 5.0
OFID/OPEC 26.6 - - 26.6 3.0
ECOW AS 1.2 - - 1.2 0.1
Official Bilateral 107.6 8.4 - 107.6 12.1
Paris Club - - - - -
Other Bilateral 107.6 8.4 - 107.6 12.1
Of which:
China 31.7 8.4 - 31.7 3.6
Morocco - - - - -
Kuwait Fund 27.5 - - 27.5 3.1
Saudi Fund 12.1 - - 12.1 1.4
India 36.3 - - 36.3 4.1
CDC - - - - -
Other Creditors/Military Debt 19.6 19.6 - 19.6 2.2
* Disbursed Outstanding Debt, including Principal Arrears
amounting to US$6.52mn, outlays for printing of
currencies in the sum of US$8.28mn and Payments
in respect of government travel and other government
outlays amounting to US$7.39mn. Subscriptions to
various international organizations totaling
US$1.54mn and recompense to the Japanese
Government for electricity support amounted to
US$8.00mn. Other outflows constituted debt service
payments to various international organizations totaling
US$16.63mn of which, US$3.51mn was in respect
of debt service payments to the International
Monetary Fund (IMF), other multilateral and bilateral
organizations (US$3.72mn), OPEC/OFID
(US$1.59mn) and other commercial debts
(US$6.50mn).
5.6 External Debts
The stock of external public debts, including interest
and principal arrears was US$889.5mn as at end June
2012. This indicated an increase of 5.89 percent
($49.5mn) on the US$840.0mn recorded as at end-
December 2011. The increase in external debts was
mainly in respect of the increase in total long-term
debts, which stood at US$688.3mn as at end June
2012, and represented 77.4 percent of the total
external debts. Of the total long-term debt incurred,
multilateral debts accounted for US$561.1mn, while
official bilateral debt accounted for US$107.6mn. The
World Bank group remained the largest multilateral
creditor with a total long-term debt of US$220.9mn,
which was 24.80 percent of total credit extended to
the country. The Indian Government was the largest
bilateral creditor. Total commercial obligations and
short-term debts on the contrary, declined by
US$6.9mn (3.3%) from US$208.10mn at end
December 2011 to US$201.2mn at end-June 2012.
Other creditors/military stock of debts also dropped
by US$3.8mn (16.24%) to US$19.6mn.
Principal arrears decreased from US$236.4mn as at
end December 2011 to US$229.1mn as at end June
2012. There were no interest arrears during the
review period.
6.0 Sierra Leone’s Status of Convergence
Report under the West African Monetary Zone
(WAMZ) CONVERGENCE PROGRAMME
(January-June 2012)
18

In the first half of 2012, Sierra Leone improved on
the status of its performance on the WAMZ
Convergence Scale compared with the preceding half
year. The country satisfied two primary and one
secondary convergence criteria, namely; central
bank financing of fiscal deficit of not more than
10 percent of previous year’s tax receipts, months
of import cover of at least 3 months and Public
Investment from Domestic Receipts. This compared
favourably with the one primary and one secondary
criteria met in the preceding half year period. Though
the status of inflation performance improved during
the review period, it remained in breach of the singledigit
criterion stipulated under WAMZ Convergence
Programme. The criterion on budget deficit excluding
grants, also improved, but failed to meet its target
requirement, despite improved revenue performance.
The exchange rate of the Leone to the US Dollar
depreciated marginally in the first half of 2012
compared to the preceding half year in 2011.
6.1 Primary Criteria
Inflation
The WAMZ requirement for a single-digit inflation rate
remained a challenge during the review period,
notwithstanding the Central Bank’s tight monetary
policy stance designed to contain inflation. However,
indications are that this criterion will be achieved in
the very near future. This is against the backdrop of
the steady declining trends in the rates throughout the
review period as a result of the relative stability of the
exchange rate and tight monetary policy stance of the
central bank. Annual inflation rate moved from 16.64
percent in December 2011 to 12.50 percent in June
2012.
Fiscal Deficit/GDP Ratio
The target on fiscal deficit (commitment basis and
excluding grants) ratio of not more than 4 percent of
GDP was missed in the first half of 2012. At 8.9
percent of GDP, it was considered a 6.11 percentage
points improvement over the 15.01 percent of GDP
recorded in the preceding half year. The improvement
was attributable to improved revenue performance,
coupled with a reduction in government expenditure
outlays.
Central Bank Financing of Fiscal Deficit
The Central bank financing of the budget deficit as a
percentage of the previous year’s tax revenue was
Table 11
Sierra Leone’s Performance Under the WAMZ Convergence Criteria
WAMZ Criteria
Primary
Performance
Target
Jul – Dec Jan – June Jul – Dec Jan – June
2010 2011 2011 2012
Budget Deficit/GDP
Less than or equal to 4
percent
Inflation Single digit 17.84% 16.79% 16.64% 12.50%
Central Bank Financing/previous Less than or equal to
year’s tax receipts
10 percent
Gross Reserves
Greater than or equal to
3 months
Secondary
Domestic Arrears
0 n.a. n.a n.a. n.a.
Tax revenue/ GDP
Greater than or equal to 13.70% 13.20% 11.90% 6.10%
20 percent
Wage Bill / Tax revenue
Less than or equal to 67.14% 57.06%
35 percent
Greater than or equal to
Public Investments/Tax Revenue
20 percent
Nominal Exchange rate
Plus or minus 15
percent
Real Interest rate Greater than zero
n.a. - Not available
19

met in the reporting period, registering 8.1 percent
compared to 11.5 percent in the preceding half year.
The performance was well within the WAMZ’s target
of less than or equal to 10 percent of previous year’s
tax revenue. The improvement was partly the result
of the Central Bank’s strict observance of the 5
percent ceiling requirement stipulated under the Bank
of Sierra Leone Act 2011 on direct financing of the
fiscal deficit.
Gross External Reserves/Months of Import
Cover
Gross external reserves of the Central Bank increased
from US$376.79mn as at end-December 2011 to
US$382.34mn as at end-June 2012, representing 3
months of import cover in compliance with the
minimum requirement under the WAMZ Programme.
This was a deteriorating performance when compared
to the preceding half year’s position of 5.1 months of
import cover.
6.2 Secondary Criteria
Tax Revenue /GDP Ratio
The country failed to meet the tax revenue/GDP
benchmark of at least 20 percent in the reporting
period. The ratio declined from 11.90 percent in the
July–December 2011 period to 6.1 in the review
period. It was also a significant deterioration in
performance when compared to the corresponding
January-June 2011 position of 13.20 percent. The
breach was explained by the short fall in tax-revenue
during the period.
Salary Mass/Total Revenue
Sierra Leone also failed to meet the criterion on
Salary Mass/Total Revenue in the reporting half year
of 2012. At 57.06 percent in June, 2012, which was
below the 67.14 percent level recorded in the
preceding half year, the performance of this criterion
was in breach of the WAMZ ceiling requirement of
not more than 35 percent. It was also higher than the
50.4 percent level recorded for the corresponding half
year in 2011. Despite government’s effort to right
size the civil service payroll and improve on revenue
collection, the achievement of the target on this
criterion continues to remain a challenge.
Public Investment from Domestic Receipts
Public investments from domestic receipts in the period
under review stood at 27.75 percent, well above the
WAMZ minimum target of 20 percent. Though the
target was met in June 2012, it was substantially below
the July–December 2011 level of 35.39 percent but
higher than the level of 20.84 percent attained in the
corresponding half year in 2011.
Positive Real Interest Rate
The country’s performance relative to achieving the
target on this criterion continued to remain a challenge.
Recording minus 6.0 percent in the reporting half year
of 2012 as against minus 10.14 percent recorded in
the preceding half year in 2011, the negative real interest
rate criterion is likely to continue as long as inflation
rate remains above the average savings rate of 6.50
percent recorded at end of the reporting period.
WAMZ Nominal exchange Rate Stability
The country breached the requirement under this
criterion during the reporting period, deviating from
the central parity rate by 41.13 percent beyond the
WAMZ band limit of ± 15 percent. The huge deviation
from the central parity rate could be attributed to the
persistent deficit in the trade balance.
20

Documents
Press Release [No. 12/128]
Statement at the conclusion of an IMF Staff Mission to
Sierra Leone
11th April, 2012
An International Monetary Fund (IMF) mission visited
Sierra Leone during March 28-April 11, 2012 to
conduct discussions for the fourth review of the
program supported under the Extended Credit Facility
(ECF) that was approved by the IMF Executive
Board in June 2010. The mission met with His
Excellency, President Ernest Bai Koroma; Minister
of Finance and Economic Development, Dr. Samura
Kamara; the Governor of the Bank of Sierra Leone,
Mr. Sheku Sesay; other senior officials of the
government and the central bank; representatives of
the business community and CSOs; and development
partners.
The following statement was issued today in Freetown
by Malangu Kabedi-Mbuyi, IMF Mission Chief for
Sierra Leone:
“Sierra Leone’s economy continued to expand in 2011
on the back of agriculture, construction, and services,
supported by increased energy supply and
infrastructure investments. Real gross domestic
product (GDP) growth in 2011 is estimated at 6
percent. Price pressures have receded somewhat
since mid-2011 and consumer price inflation eased
to 16.9 percent (year-on-year) at end-2011, as food
price increases subsided and tight monetary policy
helped contain non-food inflation. Gross international
reserves remain at a comfortable level; and the leone
has been relatively stable, depreciating by 4 percent
(against the dollar) over the course of the year.
“The authorities agreed with the mission on the need
to enhance fiscal consolidation efforts, while also
addressing Sierra Leone’s large infrastructure and
social service needs. In this respect, the mission
stressed that it was important to constrain non-priority
expenditure in the remainder of 2012, and to enhance
expenditure and treasury cash flow management. It
encouraged the authorities to take appropriate
measures in anticipation of challenges that would arise
from the expected surge in resource revenue in the
coming years, notably for fiscal and monetary policies.
“The mission concurs with the Bank of Sierra Leone’s
monetary policy stance and encourages it to use its
policy instruments proactively to strengthen liquidity
management and support price stability.
“Performance under the program at end-December
2011 was mixed. With the exception of the continuous
zero-ceiling on contracting of nonconcessional
external debt, all quantitative criteria for end-
December 2011 were met. However, slippages in
budget execution translated into a higher-thananticipated
overall deficit financed through
accumulation of unpaid bills. Regarding structural
reforms, implementation of some of the measures
planned for end-December were delayed. Discussions
with the authorities will continue in the coming weeks,
with a view to paving the way for consideration of the
review by the IMF’s Executive Board in June.
“The mission would like to thank the authorities for
their continued excellent cooperation.”
21

SPEECH BY MR. SHEKU S. SESAY
GOVERNOR OF THE BANK OF SIERRA LEONE
AT THE GOVERNOR’S ANNUAL DINNER
HELD AT THE BANK OF SIERRA LEONE
STAFF RECREATIONAL COMPLEX
KINGTOM, FREETOWN
ON
FRIDAY, JANUARY 27, 2012
• Honourable Minister of Finance and
Economic Development, Cabinet Ministers,
• Honorable Speaker and Members of
Parliament,
• Her Lordship, the Chief Justice
• Your Worship, the Acting Mayor of the
Municipality of Freetown,
• Your Excellencies, Members of the Diplomatic
and Consular Corp,
• Chairmen of the Board of Directors and Chief
Executives of Commercial Banks and Other
Financial Institutions,
• President of the Sierra Leone Chamber of
Commerce, Agriculture and Industry,
• Representatives of the Private sector,
• Members of the Fourth Estate,
• Distinguished Ladies and Gentlemen.
On behalf of the Board of Directors, Management
and staff of the Bank of Sierra Leone, it is with great
pleasure that I welcome you to the Bank’s Annual
Dinner, my third as Governor. Every year the Bank
avails itself of this opportunity to meet its stakeholders
- the government, chief executive officers (CEOs) of
commercial banks and non bank financial institutions,
and the business community- to update them on the
progress the Bank has made in monetary policy
management, its diverse contributions to the economic
and social development of Sierra Leone and the
challenges that lie ahead. This is also a fitting occasion
to rededicate ourselves to the original mandate the
founding fathers adopted at the inception of the Bank
in 1964 namely; to achieve and maintain monetary
stability and a sound, vibrant and stable financial
system.
Distinguished Guests, before I proceed, kindly permit
me to request you to stand and join us in observing a
moment’s silence in memory of our departed
colleagues and pensioners who were with us last year.
May their souls rest in peace.
Distinguished ladies and gentlemen, the theme of my
speech this evening is “Financial Inclusion as a key
enabler to private sector development: The role
of the Bank of Sierra Leone”. As uncertainty over
developments in the global financial environment
grows over time, the need for developing countries
to achieve inclusive growth as a means to reducing
poverty has become more compelling and financial
inclusion has emerged as a major tool for achieving
this objective. To this end, the Bank is spearheading
efforts to promote financial inclusion in support of the
Government’s Agenda for Change and Prosperity.
Before addressing you on this theme, please permit
me to recall developments on the global, regional and
sub regional levels.
Global Financial Developments
Distinguished guests, until recently, the global economy
appeared to be recovering from the financial crisis,
albeit unevenly. Recent developments, notably the
turmoil in the global financial markets in August 2011
and the Euro zone crisis, however suggest that a more
difficult period lies ahead. Global activity has slowed,
confidence has waned and downside risks are
growing. The year 2011 may therefore be
remembered as the year in which it became clear that
the structural problems facing the advanced economies
were revealed to be more serious and more intractable
than at first thought. The year also witnessed a barrage
of shocks and natural disasters; there was
considerable political unrest in the Middle East,
earthquakes in Japan and New Zealand, storms in
the United Kingdom (UK) and the United States (US),
22

flooding in Australia and severe drought in the horn of
Africa.
The World Bank has projected that global growth
will fall to 3.3 percent by 2012, down from 3.8 percent
in 2011. Growth in the advanced countries is currently
expected to be only 1.6 percent in 2011 and 1.2
percent in 2012. This is in large part due to the
unresolved structural fragilities in the Euro area.
The Euro Zone is currently embroiled in the most
serious crisis in its history. Greece, Italy, Ireland,
Portugal and Spain have all experienced huge
government debts over the past ten years. They now
face the toxic combination of high wages, low
competitiveness, inability to revalue the common
currency, low growth and necessary but very painful
spending cuts and tax rises to resolve the debt issue.
These actions are pushing parts of Euro land back
into recession. The large Euro Zone economies such
as France and Germany are already under pressure
for bailouts.
Regional Financial Trends
Distinguished ladies and gentlemen, in spite of the
challenging global situation, African economies have
been relatively strong and growing at around 5.5
percent in 2011, due to strong domestic demand and
elevated commodity prices especially fuel and
minerals. Growth has been spearheaded by oil
producing African countries with estimated growth of
5.9 percent, while non oil producers are expected to
grow by 4.9 percent mainly as a result of the
implementation of sound macroeconomic policies and
new mining booms in a number of countries including
Niger and Sierra Leone. Indeed the threats to African
economies emanate from rising prices of food and
fuel, and reduced foreign private and public inflows.
Sub Regional Financial Developments
Distinguished ladies and gentlemen, Sierra Leone
recently hosted the meetings of the West African
Monetary Zone (WAMZ), and I am pleased to report
that remarkable progress has been made in our journey
to achieve monetary union, a West African Central
Bank and a single currency for the six countries of the
Zone by January 1, 2015. In spite of the global threats,
macroeconomic performance within the Zone was
strong with most countries increasing their level of
compliance with the convergence criteria. Overall
growth within the Zone averaged about 8.0 percent
in 2011, but persistent fiscal deficits and high inflation
continued to be the main challenges facing member
states within the Zone. The Zone has also made it a
priority to examine the problems currently facing the
Euro zone in order to ensure that the pitfalls identified
with the European Monetary Union are avoided.
I am pleased to report on the considerable progress
made on the payments system project which is being
currently undertaken by The Gambia, Guinea, Liberia
and Sierra Leone. As I speak some components of
the project has gone live in the Gambia, which is the
test site and should be complete in Sierra Leone by
end December 2012. The WAMZ College of Banking
Supervisors has been meeting on a regular basis. The
joint supervision of regional banks has commenced
with officials of the Bank of Sierra Leone and the
Central Bank of Nigeria recently examining four
subsidiaries of Nigerian owned banks in Sierra Leone
and the results have been fruitful. The College has
also produced the maiden Financial Stability Report,
which is a step towards harmonisation of policies and
practices within the zone.
Developments on the Domestic Front
Economic Developments in 2011
Distinguished guests, Ladies and gentlemen, the Hon.
Minister of Finance and Economic Development has
given us a comprehensive analysis of the state of the
economy in his statement on the Economic and
Financial policies for Financial Year 2012, delivered
in the Chamber of Parliament on 25th November
2011, but permit me to focus on the developments
pertaining to the financial sector.
The Sierra Leone economy has witnessed sustained
strong growth, driven by buoyant activity in the mining
sub-sector and increased trade activities. In addition,
there has been a strong performance in the
telecommunications, financial services, construction
and quarrying sub-sectors. During 2011, the domestic
economy grew by 5.3 per cent as compared to 5.0
per cent in 2010.
23

Monetary policy in 2011 focused on achieving and
maintaining price stability. To enhance monetary policy
management, the Bank of Sierra Leone introduced
the Monetary Policy Rate (MPR) in February 2011,
to signal the Bank’s monetary policy stance and to
serve as an anchor for all the other market rates.
However, monetary policy management was
challenged by fiscal outturns which reflected increased
expenditures on development projects. The Bank’s
monetary policy stance supported by fiscal
consolidation, especially in the second half of the year,
contributed to the reduction of interest rates on the
91 days Treasury bills from 24.54 percent in
December 2010 to 23.42 percent in December 2011.
The range of commercial banks’ lending rates
increased from 21-28 percent in December 2010 to
21-29 percent in December 2011, but credit to the
private sector by commercial banks still increased by
8.38 percent between December 2010 and
December 2011.
Inflation was projected at single digit by end 2011,
based on the assumption of the absence of international
shocks and a tightening of fiscal policy. However, as
is the case in most African economies in 2011, inflation
remained a challenge despite our best efforts to control
it, due to a combination of exogenous shocks including
rising prices of food and fuel in the world market,
and endogenous factors such as partial removal of
subsidies on fuel, and some exchange rate
depreciation. The year-on-year inflation rate
decreased slightly from 17.84 percent in December
2010 to 16.64 percent in December 2011 after having
dropped to 15.70 percent in September 2011.
Despite improved performance in revenue
mobilization during 2011, as a result of strong
domestic revenue collections from income tax, Goods
and Services Tax (GST) and mining royalties, the fiscal
deficit widened due to higher wage bills, increased
interest obligations, fuel subsidies and increased
spending on infrastructural projects. Deficits are
common features of most government’s operations
but the concern to most central banks is the method
of financing them, bearing in mind the inflationary
consequences. The Bank of Sierra Leone took an
accommodative stance but ensured that the ceiling
for net domestic bank credit to government was
observed throughout 2011.
For the external sector, the Bank of Sierra Leone is
committed to exchange rate flexibility and to manage
the foreign exchange cash flow geared towards
meeting the Gross Reserves target. The Bank’s
intervention in the foreign exchange market is limited
to smoothening short term volatility and to absorb the
impact of foreign financed budget spending.
Foreign Exchange Reserves increased to
US$376.90mn by end December 2011, equivalent
to 4.1 months of import cover, compared to
US$344.80mn as at end December 2010. The foreign
exchange market rate has remained relatively stable
between end-2010 and end-2011, with the Leone/
$US Dollar exchange rate depreciating by 4.28
percent, compared to a depreciation of 8.88 percent
in 2010 and almost 30 percent in 2009.
Sierra Leone’s balance of payments continued to be
constrained as a result of higher imports despite the
near doubling of exports. Total exports of goods
amounted to US$538.03mn in 2011, compared to
US$250.21mn in 2010, and total imports of goods
amounted to US$1.17 billion, compared to
US$511.62 million in the previous year. The higher
level of imports supported real sector activities for a
fast growing Sierra Leonean economy, including
diversity increased activity in the mining and
construction sectors.
Sierra Leone also recently successfully completed its
second and third reviews under the IMF Extended
Credit Facility (ECF), as we satisfied all quantitative
targets and structural benchmarks. The successful
reviews will strengthen the confidence of the donor
community in our ability to manage the economy.
Financial Sector Developments in 2011
Distinguished ladies and gentlemen, permit me to
summarize developments in the financial sector during
2011:
Provisional data indicate that total assets of
the banking industry grew by 16.02 percent to over
Le2.8 trillion, with industry profits increasing by 19.07
24

percent with twelve out of the thirteen banks recording
a profit compared to 2010 when only eight banks
recorded profits.
• Gross loans and advances also increased by
14.3 percent with Non Performing Loans (NPLs)
falling slightly to 14.96 percent compared to 15.61
percent for 2010.
• Nearly all banks have met their paid up capital
as prescribed by the Bank of Sierra Leone and are
all adequately capitalized with the exception of one
bank.
• Despite these achievements in the banking
sector, there are growing numbers of cases of fraud
involving staff of commercial banks. This has
necessitated collective action between the Bank of
Sierra Leone and the commercial banks to strenghten
internal control mechanisms in place and ensure that
names of dismissed staff are entered into a “black
book” to prevent culprits from being recycled.
We note that some commercial banks experienced a
temporary shortage of currency around the festive
period. As Governor of the Bank of Sierra Leone, I
would like to take this opportunity to thank my
commercial bank colleagues for their support in
managing this situation and to the public at large for
their patience during this challenging period.
Such an increase in demand is a common event at
this time of the year in many countries around the
world, but it was exacerbated this year in our country
due to the increase in economic activity and the growth
in the extractive sector, leading to heightened demand
for the Leone. I am pleased to advise that the Bank
of Sierra Leone has taken appropriate steps to ensure
that there is sufficient cash based on forecast demand
now and in the future.
Distinguished guests, the Bank has placed emphasis
on ensuring a robust financial system to protect existing
customers and ensure confidence for new ones. To
this end, the Bank jointly with the IMF, conducted a
financial stability analysis on the banking system, and
the results show that while our banking system is fairly
stable and robust, a number of banks were identified
as being vulnerable to certain shocks. In order to
address these vulnerabilities, the Bank of Sierra Leone
is in the process of taking certain measures, including
strict compliance with the Basel Core Principles,
revising prudential guidelines, encouraging the
commercial banks to undertake self stress tests and
developing their own contingency manuals. One thing
that comes out clearly is that commercial banks need
to adhere strictly to prudential rules and guidelines
and the capital minimum requirements of commercial
banks have to be enforced and increased in the near
future.
Distinguished ladies and gentlemen, I am also pleased
to inform you that the Credit Reference Bill has been
enacted and an interim Credit Reference Bureau has
been established and housed at the Bank, and is now
generating credit information reports which are very
useful to the commercial banks. Going forward, we
expect to see a reduction in the number of non
performing loans (NPLs) which pose great risk to
the banking system as well as a reduction in interest
rates. It is envisaged that the Credit Reference Bureau
will be transferred from the Bank of Sierra Leone to
the private sector. It is also important to note that the
Bank piloted the passage of the Bank of Sierra Leone
Act and the Banking Act in December, 2011. The
revised BSL Act strengthens the Bank’s autonomy,
ensures harmonization with other regional central
banks, endorses the formulation of the Monetary
Policy Committee and defines the conditions for
central bank lending to government. Similarly, the
revised Banking Act strengthens the supervisory
framework with focus on issues such as governance
structure and penalties for non compliance with
regulations and requirements.
Financial Inclusion as a Key Enabler to Private
Sector Development: the Role of the Bank of
Sierra Leone
Financial Inclusion in Other Countries
Distinguished guests, the recent global economic and
financial crisis which had its roots in the developed
world, was a wake-up call to the realization that low
and stable inflation, a sound banking system, and a
high and sustainable economic growth, though
necessary, are not sufficient conditions for financial
25

stability and this has triggered a fundamental rethink
of the role of Governments and Central Banks in
restoring financial stability. It is a fact that a significant
proportion of the global populace does not have
access to formal financial services. This has created
the need to reinvigorate and drive reforms that foster
economic resilience that are also more inclusive to a
wider range of the population.
Ladies and gentlemen, financial inclusion is simply the
extension of financial services to the “unbanked”.
Generally in countries such as United Kingdom (UK)
and the United States of America (USA), the focus
was on providing bank accounts and financial
information to low income and minority groups.
Developing countries such as Fiji, Nepal, Bangladesh
and Kenya focused on increasing access to finance
especially in rural areas through use of community
banks, financial services associations, and microcredit
institutions.
Financial Inclusion in Sierra Leone
In Sierra Leone, financial inclusion remains a challenge
in spite of the many gains and successes we have
achieved in the financial sector over the years. Most
of our businesses are small because of difficulties in
obtaining capital. But financial inclusion is not only
about access to credit and capital but about access
to a whole range of financial services. Every household
needs access to safe and cheap transaction and saving
services. Any household that is sustained by the receipt
of remittances deserves the services of a payment
system without high costs, especially in rural areas.
An inclusive financial system will help financial
institutions and markets mobilize savings, which would
be channeled to the most productive users for
investment thereby providing more growth
opportunities to individuals and entrepreneurs fostering
private sector led growth. It is our hope that greater
financial inclusion will ensure access to appropriate
financial products and services needed by all sections
of the society, including vulnerable groups, at
affordable cost in a fair and transparent manner. In all
this, it remains the paramount responsibility of the Bank
of Sierra Leone to ensure stability and sustainable
growth in the sector. Sustainable financial sector
development will be key in supporting private sector
growth, but recent history has also shown that
uncontrolled and poorly governed financial growth set
the stage for financial crises that impose significant
costs on society. Credit must go to the Government
who took a step in the right direction by ensuring that
all employees are paid through banks. Currently,
Sierra Leone is pursuing financial inclusion consistent
with the Financial Sector Development Plan (FSDP),
which the Bank of Sierra Leone spearheaded. The
FSDP aims to eliminate unnecessary regulatory
burdens, increase competition and improve financial
infrastructure as well as elevate financial literacy and
sufficient consumer protection. Implementation of the
FSDP is now advanced and among the deliverables
so far, are increase in the number of bank branches,
establishment of community banks and Financial
Services Associations (FSAs), introduction of formal
Microcredit Finance Institutions (MFIs), operation of
two mobile money transfer companies and growth in
credit to the private sector.
The Role of the Bank of Sierra Leone
Distinguished ladies and gentlemen, permit me to
proceed with the discussion on the Bank’s efforts to
promote financial inclusion in six areas namely:
increasing access to finance; providing leadership;
promoting diversity; ensuring protection and
confidence; increasing public awareness and
knowledge; and monitoring.
Increasing Access to Finance
Distinguished Guests, it is beyond any doubt that the
access to finance by the general public has significantly
improved over the years. The number of bank accounts
increased from end 2010 to end 2011, with total
deposits growing to Le1.6 trillion over this same
period. The increase in the number of banks and
microfinance institutions has led to an increase in bank
credit made available to the private sector. Financial
intermediation has grown especially in the urban areas
and more recently, in the rural areas.
Notwithstanding these developments, there is still
room for improvement given the low level of bank
accounts with only 966,256 accounts for a population
of nearly six million. Sierra Leone also has one of the
lowest bank branch penetrations in Africa with one
branch per 70,000 people.
26

Against this back ground, the Bank of Sierra Leone
has been actively involved in initiatives to enhance
access to finance especially in the rural areas which
constitute mostly the informal but never the less
significant proportion of the economy. In addition to
the increase in the number of banks from four in 2000
to the current thirteen, there has been an increase in
the opening of new branches of commercial banks
from 19 in 2002 to 81 in 2011. In a move to improve
rural financial intermediation, the Bank of Sierra Leone
has permitted some commercial banks to open
microfinance windows within their operations and
encourage other commercial banks to extend credit
facilities to small and medium scale enterprises
(SMEs).
Furthermore, the Bank of Sierra Leone has facilitated
the establishment of nine community banks in various
rural locations as a post conflict measure to monetize
the informal sector and deliver services to the rural
population, at reduced costs. The main consideration
behind the formation of these community banks was
to extend credit to the agriculture sector through
mobilization of domestic funds and provision of
linkages with the commercial banks and other financial
institutions. While these community banks have
witnessed growth in membership to 18,803
shareholders in 2011, a number of these banks have
been fraught with poor performances stemming from
technical and administrative challenges. This
necessitated a partnership between the Bank and the
International Fund for Agricultural Development
(IFAD) to resuscitate the distressed banks and
provide technical and other support.
To complement the community banks, Financial
Service Associations (FSAs) or village banks, were
also set up. Unlike community banks, the FSAs are
ownership based with members holding shares, which
entitles them to loans given from a pooled fund. There
are currently 26 FSAs with seven more being
established in various rural locations of the country.
FSAs have also witnessed growth in membership to
21,082 by end 2011.
Another dimension to increasing access to finance is
through the use of microfinance. The Bank in
collaboration with stakeholders including Microfinance
Investment and Technical Assistance Facility (MITAF)
has encouraged the growth of a number of Micro
Finance Institutions (MFIs). The National Micro
Finance Policy recognizes the existing institutions and
brings them within the supervisory purview of the Bank
of Sierra Leone. The policy also harmonizes opening
standards and provides a strategic platform for
evaluation of microfinance institutions and promotes
appropriate supervision and adoption of best practice
that will aid in developing a long term sustainable
microfinance sector. Numerous micro-finance
schemes are also being implemented with a view to
promoting small-scale enterprises and informal sector
activities in manufacturing, trade and services. These
microfinance institutions fall under two categories:
credit only, of which there are six and deposit taking
MFIs of which there are two.
Promoting Diversity
Distinguished ladies and gentlemen, the Bank of Sierra
Leone has been implementing policies to promote
competition for the delivery of sustainable financial
access and usage of a broad range of affordable
services as well as diversity of service providers. It is
a generally accepted view that competition brings
about greater value, choice and opportunities for the
customer. However given the challenge of attracting
the informal, unbanked portion of our economy,
competition takes on even more significance with the
need for diversity of products, providers and delivery
methods.
Distinguished guests, the Bank has also been
encouraging technological and institutional innovation
as a means to expanding financial system access and
usage. It is widely acknowledged that one of the most
effective methods of increasing financial innovation is
the application of new technology such as mobile
phone, ATMs and internet banking e.g. the use of
Splash and Zap has enabled money transfer to all parts
of the country faster and cheaper.
Recent years have also witnessed the development
of a broad range of financial products and services
including branchless banking which involves collection
of money from business centres such as petrol stations
and the widespread use of ATMs. Most commercial
banks also have their own instant internal funds
27

transfers including Moneygram and Western Union
to any part of the country at reasonable costs. The
added competition has allowed the minimum deposit
for account opening to be significantly reduced if not
abolished entirely.
To further diversify the financial landscape, the Bank
has introduced guidelines for operational leasing and
mortgage operations.
Providing leadership
Distinguished guests, the Bank of Sierra Leone has
recognized that leadership and commitment is essential
for increasing financial inclusion. The nature of
innovative financial services and products spans across
a number of public institutions as well as private sector
organizations. This requires coordination across the
various institutions in order to avoid conflicting or
inconsistent approaches. The Bank has been working
in close cooperation with the commercial banks, the
Ministry of Finance and Economic Development, the
community banks, financial services associations,
microcredit providers, donor partners and even
mobile phone service providers to put in place
conditions conducive to the achievement of financial
inclusion.
The Bank has also been able to attract the interest
and involvement of stakeholders some of whom have
demonstrated their commitment through financial and
technical support. A grant of US$4million was received
from the World Bank (WB) and US$1.3million from
the African Development Bank (ADB) for the
implementation of the FSDP to enhance access to
financial services and to build financial sector reform
and oversight capacity of the Bank of Sierra Leone.
Other partners such as IFAD and KfW have provided
technical assistance to develop capacity in the
community banks, FSAs and MFIs.
The Bank of Sierra Leone also realizes the importance
of a prompt and efficient payment and settlement
system in an economy aspiring towards financial
inclusion, as this is the bedrock of confidence in the
financial system. The Bank with the support of its
development partners particularly African
Development Bank (AfDB) and West African
Monetary Institute (WAMI), has embarked on
modernization of the payments, clearing and settlement
systems to reduce costs, time and risks involved in
payments and settlement which sometimes
discourages the informal sector from utilizing banking
services. The commercial banks are also part of this
project, which would ensure interconnectivity and
interoperability among the banks.
Ensuring Protection and Confidence
Distinguished ladies and gentlemen, the Bank has
realized that the mix of innovations, new service
providers, and inexperienced consumers has brought
about new risks of fraud, abuse, technical and human
error. The Bank will be developing a comprehensive
approach to consumer protection which incorporates
the role of government, service providers and the
consumers.
To further support the Bank’s initiatives to increase
the use of formal financial channels, the Bank has
addressed the problems of high cost of finance and
the reluctance of commercial banks to lend outside
an elite group. The establishment of the credit
reference bureau will allow commercial banks to
exchange information on customers in an effort to
reduce the incidence of nonperforming loans, reduce
high interest rates on loans, prevent multiple
borrowing, stimulate private sector credit flows and
eventually extend coverage to microfinance
institutions.
Increasing awareness and knowledge
Distinguished guests, the Bank of Sierra Leone realizes
that without financial literacy and capability, regulation
may not be enough to protect consumers or reduce
operational costs. Low levels of financial literacy and
capability is a significant barrier to accessing and
effectively utilizing financial services.
Distinguished Ladies and Gentlemen, BSL has also
been supporting financial inclusion through a focus on
financial literacy programmes. The Bank has been
promoting knowledge on financial services to all
stakeholders by conducting seminars and training
sessions in order to empower all players with relevant
skills to be able to understand the various
opportunities available in the financial sector.
28

Monitoring and regulation
Distinguished guests, in ensuring proper monitoring
and supervision of the Community Banks and FSAs,
the Bank of Sierra Leone is considering the
establishment of a Technical Assistance Agency (TAA)
to undertake first level supervision of Community
Banks and Financial Services Associations (FSAs).
The Bank of Sierra Leone also monitors and supervises
the activities of microfinance institutions through the
Other Financial Services Institutions Division of the
Banking Supervision Department of the Bank. Credit
only MFIs are registered with the Bank and given a
certificate to operate while deposit taking MFIs are
granted licenses and supervised by the Bank to ensure
protection of depositors’ funds.
The Bank is strengthening the Research, Banking
Supervision and Financial Markets Departments
through capacity building and provision of logistics to
enable them provide adequate regulation and
monitoring.
Challenges
Distinguished guests, despite these successes a
number of challenges do remain; these include the
continuing existence of a significant number of the
unbanked, large informal sector, high usage of cash,
high cost of credit and rigid conditions for credit. These
challenges may reflect some other deep rooted malaise
in the society such as illiteracy, mistrust of the financial
system, lack of collateral, poor infrastructure, low
levels of income, complicated account opening
procedures, socio-cultural barriers, locations, and
lack of awareness. Even the Bank of Sierra Leone is
not immune to the problems with higher cash handling
costs being a major challenge. These challenges and
failings have shaped the Bank of Sierra Leone’s
approach towards financial inclusion. Going forward,
access to finance is a key component of the FSDP
with a specific objective of broadening microfinance
and rural credit delivery. Commercial banks are
encouraged to redesign their business strategies to
incorporate specific plans to promote financial
inclusion of low income groups, partly as a business
opportunity and also as part of their corporate social
responsibility. Well designed products could be crucial
in boosting incomes at all levels, which will in turn
boost the private sector, stimulate economic growth
and lead to social development. The Government of
Sierra Leone and the Bank are in the process of
establishing a bank that will cater for medium to long
term financing suitable for agro-industry.
Ladies and gentlemen, in summary, the Bank of Sierra
Leone has been making strides towards financial
inclusion by, first of all, creating the regulatory and
supervisory environment and has implemented
measures which are in line with efforts to promote
competition, diversity and expansion. The Bank has
a policy framework based on the FSDP which outlines
the role of all stakeholders in financial inclusion. The
payment system upgrade will be completed by end
December 2012, which will facilitate faster
transactions and reduce risks and costs. I will also
take this opportunity to appeal to stakeholders and
development partners to join us in our efforts in
promoting financial inclusion as it is one of the ways
to enable private sector development which is the
main engine of growth. The cooperation of institutions
such as insurance companies and Nassit will be useful
in realising this vision.
Conclusion
Ladies and gentlemen, before concluding, I wish to
thank our numerous partners with whom we enjoy
good relations, especially our international, regional
and sub regional partners, for their support and
assistance to the Bank. The Bank has benefitted from
capacity building, training, technical assistance, and
funding from:
The African Development Bank (AfDB);
The Association of African Central Banks (AACB);
The British Department for International Development
(DFID);
The Economic Community of West African States
(ECOWAS);
The European Union (EU);
The German Technical Cooperation (GIZ);
The International Monetary Fund (IMF);
The International Fund for Agricultural Development
(IFAD);
The Reconstruction Credit Institute (KFW);
The United Nations Development Programme (UNDP);
The West African Monetary Agency (WAMA);
The West African Monetary Institute (WAMI);
The West African Institute for Financial and Economic
Management (WAIFEM); and
The World Bank
29

This list is by no means exhaustive.
We want to assure these organisations of our
cooperation at all times and we know that with their
continued support we shall maintain the course despite
the challenges of our time.
I am most grateful for the support and guidance of
His Excellency, The President Dr. Ernest Bai-
Koroma
The Honourable, Vice President Chief Alhaji Sam
Sumana
The Minister of Finance and Economic
Development, his deputies and staff of the Ministry
The Honourable Speaker of Parliament
Honourable Members of Parliament
The President of the Bankers’ Association
I would like to thank members of the Board of
Directors, the Deputy Governor, Management and
Staff of the Bank for the guidance, support and
cooperation throughout 2011. Let me also extend my
gratitude to my family and friends for their prayers,
continued support and guidance, not forgetting the
Fourth Estate for the work they have done in
sensitizing the public on the role and policies of the
Bank.
I thank you for your attention. My very best
wishes to you all for a peaceful 2012 and hope
that it brings good health and prosperity. God
bless.
30

STATEMENT BY THE GOVERNOR, BANK OF SIERRA LEONE, MR. SHEKU S. SESAY,
ON THE OCCASION OF THE 26TH MEETING OF THE COMMITTEE OF GOVERNORS
OF THE WEST AFRICAN MONETARY ZONE, HELD IN FREETOWN, SIERRA LEONE,
JANUARY 19, 2012
Honourable Governors of the Central Banks of WAMZ
Governor of BCEAO
Representative of The ECOWAS Commission,
DG, WAMA
DG, WAIFEM
Distinguished Delegates
Members of the Fourth Estate,
Distinguished Ladies and Gentlemen
1. It gives me great pleasure to welcome you all to
this historic and scenic city of Freetown, the capital
of Sierra Leone, on the occasion of the 26th Meeting
of the Committee of Governors of the West African
Monetary Zone (WAMZ). While I hope colleague
Governors and all other delegates had a pleasant trip
to Freetown, I would like to take this opportunity to
convey, on behalf of the Board and Management of
the Bank of Sierra Leone, fraternal greetings from
H.E. the President, the Government and people of
the Republic of Sierra Leone on your arrival to
participate in the deliberations of this meeting. On a
special note, I would like to congratulate Dr. Lounceny
Nabe, Governor, Central Bank of the Republic of
Guinea (GBRG) and outgoing Chairman, Committee
of Governors of the WAMZ for the exemplary manner
in which he has steered the affairs of the Committee
and distinguished himself in the handling of sensitive
and otherwise difficult challenges that emerged during
his tenure of office as Chairman. We shall always count
on his continued support both to this Committee and
the aspirations of our sub-regional endeavours.
2. Honourable Governors, this being my first time of
hosting the meetings of this august body since I took
over as Governor of the Bank of Sierra Leone, I feel
reassured by the strong show of the Governors, which
is a clear manifestation of their individual and collective
commitment to our shared vision of a monetary union
and a single currency in the WAMZ.
3. In this regard, as we progress on the road to
achieving the target goal of a durable and sustainable
monetary union and a single currency in the WAMZ
by 2015, I would like to reaffirm Sierra Leone’s total
commitment to both the WAMZ single currency
objective and the ECOWAS Monetary Cooperation
Programme.
4. Honourable Governors, holding the 26th meeting
of the Committee of Governors of the West African
Monetary Zone in Sierra Leone this year is significant
in two ways: First, 2012 is an election year in Sierra
Leone and the country will be holding the Presidential,
Parliamentary and Local Council elections during the
course of the year. Second, as we approach the
deadline date for the introduction of the single currency
on or before January 1, 2015, recent developments
in the global environment, notably the Euro zone debt
crisis and the surge in global food and fuel prices have
highlighted the fragility of economic conditions in the
WAMZ member countries with serious implications
for potential socio-political instability. This has proved
the process of devising and implementing reforms much
more difficult than foreseen.
5. Honourable Governors, the task ahead of us is
enormous. We are meeting here today to evaluate
progress that has been made so far, towards the
Convergence programme by each Member State and
to chart the way forward. As we proceed, we must
examine strategies to address the challenges of
growing fiscal deficits, the promotion of fiscal
sustainability and unemployment in our sub-region,
31

against the backdrop of the threat of global recession.
We cannot afford to enter into a monetary union
fraught with all the frailties that are currently threatening
the viability and sustainability of the Euro Zone. We
therefore have to work very hard to put in place
measures that will deliver a monetary zone and a single
currency devoid of such potential problems by
adopting effective expenditure rationalization and noninflationary
methods of financing our various
development projects.
6. Economic performance in the WAMZ is expected
to remain encouraging, attributable partly to increased
activities in the agricultural, industrial and services
sectors in the Member States. New mining production
in a number of WAMZ countries like Sierra Leone
holds the prospect of contributing to stronger growth
in the sub-region. Indications are that strong
macroeconomic performance is reflected in the
Member States’ compliance with the macroeconomic
convergence criteria. Despite the improved Zonal
performance, challenges still remain particularly
relative to sustaining fiscal consolidation and efforts
to contain inflation.
7. I am pleased to note the satisfactory progress being
made so far, in the implementation of the Payments
System project in the four beneficiary countries, which
culminated in the go-live date on 6th December, 2011
for some components, in the Gambia. Sierra Leone,
like Guinea and Liberia, are also making progress, as
the construction of Disaster Recovery sites and
infrastructural upgrading are being addressed. I would
therefore like to recommend that a fast-track
approach to the implementation of the project be
adopted such that we do not miss the deadline of
2012. The WAMZ College of Supervisors also met,
to share experiences and discuss problems, and joint
supervision of regional banks has commenced and
the feedback from such missions has been useful.
Progress is also being made in other areas including
Trade and Financial integration in the zone.
8. Going forward, let me also underscore the
importance of considering the governance and
administrative structures of our institutions, in addition
to considering how the functions of the institutions can
be rationalised in order to bring about greater
efficiency and cost effectiveness in the entire process.
I wish to appeal to us all for the spirit of unity of
purpose, firm commitment and dedication to the cause
to ensure our objective is met by 2015.
9. Sierra Leone continues to make efforts geared
toward achieving full compliance with the WAMZ’s
convergence programme through implementation of
reforms. To this end, the current National budget is
WAMZ compliant as it was designed and formulated
to address the challenges of excessive fiscal deficit
and promotion of fiscal sustainability through effective
expenditure rationalization and non-inflationary
financing of infrastructure projects. The Bank of Sierra
Leone also, continues to further the implementation
of the Financial Sector Development Programme
(FSDP) and benefited from World Bank and African
Development Bank grants. The BSL Act 2011 was
enacted into law to strengthen the central bank’s
independence in managing monetary policy. Similarly,
the Banking Act 2011 was passed into law to foster
the stability and soundness of the financial sector
through strengthened surveillance. In another
development, a policy rate was introduced into the
monetary policy framework to signal the Bank’s policy
stance.
10. In pursuance of institutional reform, a commercial
court was established to fast track commercial
litigation. A credit reference bureau was also set up in
2011 to address the problem of information
asymmetry in the financial markets and channel credit
flows to priority sectors of the economy and its
operation will soon be extended to the rural financial
sector to promote savings mobilization and rural
financial intermediation. Regarding the implementation
of the payments system project in Sierra Leone,
several milestones have been achieved and training
32

programmes for staff of the Central Bank and
commercial banks have been organized as a way to
roll-out the project against the 2012 deadline.
11. On that note, I would like to conclude my remarks
by reiterating the need for Member States to continue
to improve and sustain their performances on the
convergence scale. Our discussions and
recommendations at this meeting will inform the
Agenda of the WAMZ Convergence Council meeting
scheduled for tomorrow. Dear colleagues, I would
therefore like to request that we carefully examine
the recommendations presented by the Technical
committee so as to enable us to advise the
Convergence Council on steps needed to be taken
towards achieving our shared vision of economic and
monetary integration in the Zone.
12. I wish you a pleasant stay in Sierra Leone
and fruitful deliberations. I thank you for your
kind attention.
33

KEYNOTE ADDRESS
BY
MS ANDRINA R. COKER
DEPUTY GOVERNOR
BANK OF SIERRA LEONE
AT THE
OPENING CEREMONY
OF THE
REGIONAL COURSE ON MANAGING HUMAN RESOURCE FOR ORGANIZATIONAL
EFFECTIVENESS,
ORGANISED BY WAIFEM
FREETOWN, SIERRA LEONE,
MARCH 12 - 16, 2012
Prof. Akpan H. Ekpo, Director General of WAIFEM,
Directors of the Bank of Sierra Leone,
Distinguished Facilitators and Course Participants,
Distinguished Guests,
Ladies and Gentlemen
.
1.0 INTRODUCTION
On behalf of the Board of Governors of West African
Institute for Financial and Economic Management
(WAIFEM), it is my pleasure to welcome you to the
opening session of the Regional Course on
Managing Human Resource for Organizational
Effectiveness. I hope you had a pleasant trip to
Freetown and I invite you to feel at home and enjoy
your stay here.
Allow me to use this opportunity at the outset to
commend the West African Institute for Financial and
Economic Management (WAIFEM) for its successful
effort in building capacity in the sub-region over the
past fourteen years.
2.0 HUMAN RESOURCE MANAGEMENT
AND ORGANIZATIONAL FFECTIVENESS
Ladies and Gentlemen,
Human resource management has to do with the
personnel policies and managerial practices and
systems that influence the workforce. Human
resources and the potential they possess drive an
organization.
In today’s continuously changing environment,
organizational change impacts not only on the business
but also on its employees. In order to maximize
organizational effectiveness, human potential,
individuals’ capabilities, time, and talents, must be
managed. Human resource management works to
ensure that employees are able to meet the
organization’s goals. There is consensus among the
various contending schools of thought in human
resource management that human resource can add
value to organizations by being more of a business
partner, than performing only the usual numerous
administrative and legally mandated tasks.
Organizational effectiveness depends on having the
right people in the right jobs at the right time to meet
the rapidly changing requirements. In this era of
globalization, many organizations have come to realise
the need to have a competent, knowledgeable and
capable workforce in achieving sustainable
competitive advantage. Without doubt, there are
34

enormous capacity gaps in the public and private
sectors in the countries of the sub-region.
3.0 PROBLEMS OF HUMAN RESOURCE
MANAGEMENT IN WEST AFRICA
Ladies and Gentlemen, the West African sub-region
has witnessed tremendous challenges in human
resource management especially in capacity building
over the last two decades. The number of highly skilled
professionals in the public sector is small. This
depletion is primarily due to poor economic
conditions, poor infrastructure and lack of the
professional and technological environment conducive
to self-fulfillment.
Overall, the public sector has no competitive
advantage in recruiting and retaining competent
employees compared to the private sector. For
instance, in The Gambia, the rate of attrition is leading
to general apathy to work in the government sector
by the younger generation. In the case of Nigeria and
Ghana, the problem of an ageing population is plaguing
the public sector with the ranks of retirees swelling
dramatically, thus, increasing the costs of maintaining
a pension system. Similarly, Sierra Leone and Liberia
suffered the same plague as the workforce was
depleted from the crisis that rocked both countries.
Lower wages, loss of prestige and unchallenging job
duties have prompted many young graduates as well
as senior civil servants to choose a career in the private
sector over public service. Though this phenomenon
does not constitute a net loss in capacity to a country
as a whole, it must be put under check through the
evolution of appropriate plans and programmes in
order to engender a sustainable critical mass of human
and institutional capabilities in the public sector
necessary for national building.
4.0 THE WAY FORWARD
Ladies and Gentlemen,
Human resource development is among the factors
that have stunted growth of our respective countries.
To resolve the critical skill gaps in our public
institutions, in particular, you may wish to consider
the following approaches derived from best practices
in some developed nations.
4.1 Providing Performance Based Salary
To provide an incentive for better performance and
stem the tide of brain drain from the public sector,
our governments should adopt a flexible pay structure.
A variant of this approach includes payment of
relocation bonuses, retention allowances, etc.
Recently in Nigeria the authorities introduced the
payment of what used to be termed “expatriate
wages”, to engage the services of selected highly
qualified nationals who held lucrative jobs abroad.
4.2 Effective Public Relations for the Public
Sector
In this era of information technology, public relations
play a pivotal role in creating a demand for one’s
products. As a sales pitch, public service should be
construed as one such product. In this regard, our
governments should employ the services of public
relations experts to promote the unique selling points
of government which include a progressive
workplace, a shorter work-week, flexible working
arrangements, work assignments, career development
and national service that can attract national honours.
Through this process, government departments would
be projected positively as desirable career locations
and therefore stand in good stead to compete for job
seekers.
4.3 Exchange between Public and Private Sector
In order to enhance public sector professionalism,
government should consider pursuing a private-public
sector work exchange programme. Under this
35

programme, government officials would swap places
with their private sector counterparts for a specified
period. This exchange would assist public sector
employees to inculcate the work habits of private
operators who are usually well focused on goal
attainment. Also, it will help to introduce into the public
sector business management methods that have
worked well in private enterprises.
5.0 STRATEGIES FOR EFFECTIVE HUMAN
RESOURCE MANAGEMENT
Ladies and Gentlemen, the adoption of the aforementioned
approaches is predicated on strategies that
would enhance human resource management in the
public service which include:-
Introduction of professional ethics in the civil services;
Managing knowledge for the future;
Creating adequate training programmes;
Personnel evaluation that is predicated on rewarding
performance;
Diversity and equal opportunity among workers and,
An enabling corporate culture.
5.1 Professional Ethics in the Civil Service
In order for the civil service to appear trustworthy in
the eyes of the population that they serve, there is
need to incorporate ethical values in existing
regulations, to bring about transparency,
accountability and probity in the conduct of public
affairs. In particular, professional ethics to manage the
interface between the political class and administrators
should be in place. Undue interference in civil service
personnel administration by transient politicians has
only served to politicize the bureaucracy, and worked
against sustaining available human capacity and
institution building in the public sector.
Another approach to the ethical issues is to create an
environment in which employees respect standards,
feel comfortable about raising grievances and are
empowered to work to their full potential.
5.2 Managing Knowledge for the Future
Ladies and Gentlemen,
Knowledge management is a vehicle for shared
learning, common understanding of goals and values,
use of a common language, and unified representation
of an agency’s mission. Thus, sharing knowledge with
colleagues in an organization is emerging as a key
factor in performance evaluation. In addition to
generating and sharing knowledge, there is need to
develop databases, principles and practical tools for
the evaluation and development of skills and
competencies.
5.3 Other Approaches and Challenges
As we approach the implementation of the common
currency project, countries in the WAMZ should begin
to cultivate the concept of diversity and comparability
in public sector jobs as a common challenge. The
WAMZ agenda is expected to facilitate labour mobility
in the sub-region in both public and private sectors;
hence there should be a commonality of purpose in
all countries in meeting the human resource challenges.
Finally, regardless of the sector, product or service
an organization provides, and no matter what its size,
or location, it must procure the right mix of human
resources in order to remain viable. Moreover, if an
organization is to thrive and prosper, it must design
programmes to develop human resources to its fullest
capacity and maintain an unwavering worker
commitment sustained by high morale.
6.0 CONCLUSION
Ladies and Gentlemen,
I have only sought to sensitize you to the various issues
involved in managing human resource for
organizational effectiveness. I am sure that an
exhaustive analysis of the issues would be provided
by the excellent faculty placed at your disposal. I urge
you to avail yourselves of the opportunity provided
by this course.
36

In concluding, I strongly urge you to make your
participation in this course rewarding by taking every
available opportunity to tap into the knowledge and
experience of the eminent team of experts put together
by WAIFEM.
On that note, I have the honour and pleasure to
declare open the Regional course on Managing
Human Resource for Organizational
Effectiveness.
I thank you for your kind attention.
37

KEYNOTE ADDRESS
BY
MS ANDRINA R. COKER
DEPUTY GOVERNOR
BANK OF SIERRA LEONE
AT THE SEVENTH MEETING
OF
THE COLLEGE OF SUPERVISORS OF THE WEST AFRICAN MONETARY ZONE
(CSWAMZ)
HELD AT THE
BANK OF SIERRA LEONE COMPLEX, KINGTOM , FREETOWN, SIERRA LEONE
16TH - 18TH JANUARY 2012
MR CHAIRMAN,
DIRECTOR GENERAL OF WAMI,
DIRECTORS OF BANKING SUPERVISION
OF WAMZ CENTRAL BANKS,
DISTINGUISHED LADIES AND GENTLEMEN,
It is my pleasure to give the keynote address at this
opening ceremony of the seventh meeting of the
College of Supervisors of the West African Monetary
Zone. On behalf of the Governor, Board and
Management of Bank of Sierra Leone, I welcome
you all to this meeting. A special welcome to delegates
who are visiting Freetown for the first time. I hope
you will find time to enjoy the warmth and hospitality
of Sierra Leone.
Mr Chairman, Distinguished Ladies and Gentlemen,
the recent developments in the global financial
environment and increased financial
interconnectedness have clearly demonstrated the
importance of a macro-prudential approach to
regulation and supervision of financial institutions.
Given the increasing presence of subsidiaries of
financial institutions in the sub-region, there is the
likelihood of systemic risk being spread by a shock
suffered by a single financial institution or market in a
member country. It is therefore essential to establish
an effective framework for macro-prudential
supervision that will ensure an integrated analysis of
systemic risks as well as the formulation of appropriate
policies to prevent such risks.
Distinguished ladies and gentlemen, the WAMZ
member countries conscious of this need for an
institutional structure for financial stability in the subregion,
established the College of Supervisors of the
West African Monetary Zone in July 2010.
The College serves as a forum for bank supervisors
of member states to meet and discuss issues relating
to regulation and supervision of financial institutions,
share information and exchange ideas. This is
expected to lead to the development of an appropriate
supervisory framework responsive to emerging
regulatory and supervisory challenges and consistent
with international best practices and standards.
Over the past two years, the College has developed
systems for the regular exchange of information,
sharing of wide-ranging experiences and the building
up of human networks linking banking supervisors
within the sub-region.
38

Distinguished ladies and gentlemen, while we
acknowledge the progress made in enhancing
supervisory cooperation, capacity building for
supervisors, implementing corporate governance
policies and in the harmonization of regulatory and
supervisory practices in the zone, we must however
underscore the need to develop a roadmap to facilitate
the effective implementation of Risk-Based
Supervision, International Financial Reporting
Standards (IFRS), the Basle II Pillars and the
adoption of the Electronic Financial Analysis and
Surveillance System (eFASS ) by all members.
Mr Chairman, Distinguished Ladies and Gentlemen,
I would like to take this opportunity to highlight some
of the efforts made by the Bank of Sierra Leone in
collaboration with our regional and development
partners to enhance our regulatory and supervisory
role, to keep pace with the increasing complexities
and emerging risks in the region and beyond.
The Bank of Sierra Leone has commenced the
implementation of a Financial Sector Development
Plan (FSDP), which provides a framework for
creating a sound, diversified, responsive and wellfunctioning
financial system that would provide
appropriate support to productive activities, thereby
contributing to economic growth and poverty
alleviation.
Within this context, the Bank of Sierra Leone in 2011
focused on establishing the appropriate legal
framework by facilitating the enactment of the revised
Bank of Sierra Leone, Banking and Credit Reference
Acts. The Bank of Sierra Act 2011 strengthens the
Bank’s autonomy with regard to its functions,
increases its authorised and minimum paid up capital
and brings its accounting and auditing standards in
line with the international Financial Reporting
Standards (IFRS).
The Banking Act 2011 gives additional supervisory
powers to the Bank of Sierra Leone over commercial
banks. It also imposes duties and obligations on
commercial banks relating to corporate governance,
thereby protecting the interests of depositors.
The Credit Reference Act of 2011 provides for the
establishment of a credit reference bureau and
establishes the conditions for credit reporting.
The Bank of Sierra Leone has established an Interim
Credit Reference Bureau which is now fully
functioning. This will eventually be handed over to a
competent private Credit Bureau Company.
The revised Anti-Money Laundering and Combating
the Financing of Terrorism (AML/CFT) Bill will be
enacted into law shortly.
In conclusion, Mr Chairman, Distinguished Ladies and
Gentlemen, on behalf of the Governors of Central
Banks of the WAMZ member states, I reaffirm our
commitment to addressing the challenges confronting
the College. We have noted the achievements so far
recorded by the College since its establishment. One
significant achievement is the commencement of joint
cross border on-site examination of subsidiaries of
Nigerian banks in the sub-region. Bank of Sierra Leone
and Central Bank of Nigeria have jointly examined
four (4) subsidiaries in Sierra Leone. We also note
that the College is currently working on the production
of the maiden Zonal Financial Stability Report.
Distinguished ladies and gentlemen, we expect the
deliberations of this meeting will lead to the formulation
of strategies for the effective implementation of the
internationally agreed regulatory and supervisory
standards in the zone and the development of a
comprehensive action plan that will serve as a roadmap
towards the implementation of these standards and
policy initiatives.
With these remarks, Ladies and Gentlemen, I now
have the singular honour to officially declare open the
39

7th Meeting of the College of Supervisors of the
WAMZ.
Thank you for your attention and I wish you very
fruitful deliberations.
40

KEYNOTE ADDRESS
BY
MS. ANDRINA R. COKER
DEPUTY GOVERNOR, BANK OF SIERRA LEONE
AT THE OPENING CEREMONY
OF THE
WAIFEM/UNECA REGIONAL COURSE ON
WEST AFRICA’S INTERNATIONAL TRADE, TAXES AND POLICIES
FREETOWN, SIERRA LEONE,
APRIL 23 – MAY 4, 2012
Representative of the Director General of
WAIFEM
Members of the High Table
Distinguished Course Facilitators and
Participants,
Members of the Press,
Ladies and Gentlemen,
I am delighted to be invited to present the keynote
address at this opening session of the WAIFEM/
UNECA Regional Course on West Africa’s
International Trade, Taxes and Policies. It is my
hope that you had a pleasant trip to Freetown. A
special welcome to those of you visiting Freetown
for the first time. I urge you to take time out of your
schedule to explore and enjoy the hospitality of our
people.
Allow me on behalf of the Bank of Sierra Leone
to commend the organizers, the West African Institute
for Financial and Economic Management (WAIFEM)
and their partners, the United Nations Economic
Commission for Africa (UNECA) for their capacity
building initiative. We appreciate the efforts of the
Director General and his team in sustaining the
mandate of WAIFEM.
Ladies and Gentlemen,
The issue of trade and its impact on economic
development in a globalized world has remained
controversial especially within the context of
developing countries whose major resources are
primary commodities. For the West African subregion,
there has been renewed efforts at scaling-up
the contribution of trade to the economies of the subregion
given the potential benefits of trade in ensuring
political, social and economic upliftment and
integration. For these trade potentials to be achieved,
challenges ranging from complex trade taxes and other
barriers to trade, inefficient transport and
communication system, distance and hindrances at
borders, currency and legal differences as well as
language problems must be addressed. In fact, these
challenges must be overcome.
International trade has long been perceived as an
engine of growth and development and this was
evident during the post-world war II period. The
relationship between trade openness and economic
growth has been the subject of considerable debate,
41

the majority of which suggest a positive correlation
between them.
Interestingly, as countries have increasingly opened
their economies to international trade through
multilateral trading systems, increased regional
cooperation and as part of domestic reform
programmes, there are indications of benefits to these
countries and their citizens. However, despite these
seemingly positive growth aspects of international
trade, empirical evidence of the effects of trade on
economic growth remains mixed. The key questions
are: can developing countries or a sub-regional body
like ECOWAS on their own, determine their trade
volume Which trade policy is best for a sub-region
Ladies and gentlemen,
Within the sub-region, in the 1960s and 1970s, many
countries built interventionist and protectionist trade
regimes which were broadly characterized on the
import side, by restrictive licensing systems, fairly high
tariffs, escalated or cascading tariff structures with
several layers, varying degrees of import prohibitors
and tight foreign exchange controls. On the export
side, the trade regimes were characterized by
substantial implicit and explicit taxes and frequent use
of non-tariff barriers like export prohibition. By the
mid-1980s, many West African countries started the
difficult journey of rationalizing and liberalizing their
trade regime guided and prodded on by World Bank
and IMF in the overall context of integrated packages
of economic policy and reform known as Structural
Adjustment Programme (SAP).
Generally, there is the consensus that an efficient trade
policy should include trade liberalization, streamlining
the import regime, reducing red tape, ensuring
transparent customs procedures, replacing quantitative
restrictions with tariffs, avoiding extreme variation in
tariff rates and excessively high rates of protection,
allowing exporters duty-free access to imported inputs
and refraining from anti-export bias. Trade
liberalization on its own is generally expected to result
in better economic performance due to improvement
in resource allocation as partners are assumed to gain
from producing goods and services in which they have
comparative advantage. It also allows consumers to
benefit from wider and cheaper choice of products
and services.
Ladies and gentlemen,
As a sub-region, given the importance of international
trade to our economies we have no alternative but to
embrace the multilateral trading system and enhance
our participation in negotiations. Despite the costs and
difficulties involved, we must participate in
international trade negotiations to pursue our
commercial interests and protect our existing rights.
It is important to note that the prospects of securing
the protection of rights under the multilateral trading
framework are better than under a bilateral
arrangement.
Indeed, even as we pursue engagements in multilateral
trade, there is the need to intensify efforts at addressing
impediments to intra-regional trade such as the illegal
levies and other obstacles to business. As we trade
more among ourselves, the region would become
more prosperous and even less reliant on external
trade.
42

On the on-going economic partnership
agreement negotiations between the ECOWAS
Commission and the European Union (EU), the
region appears to have reached a cross-road over
the negotiations, with the looming possibility of multiple
trade regimes in the event of a non-conclusion of a
regional agreement. As you will recall, the negotiations,
were launched in 2004 for a free trade area of the
two regions and was expected to have been concluded
in 2007, but the process has run into hitches over
disagreements on some issues.
These relate to the financing of the Economic
Partnership Agreement Development Programme
(EPADP), a US$16-billion programme for
addressing the costs of adjustment and implementation
of the Economic Partnership Agreement (EPA) in
West Africa; the status of the Community Levy which
funds ECOWAS programmes; the Most Favoured
Nation (MFN) Clause as well as the scope and
timetable for the dismantling of the regional market.
There are also disagreements over the scope of
opening of West Africa’s markets to products from
the EU which is insisting on an 80-per cent market
access over 12 to 15 years contrary to West Africa’s
offer of 70 per cent of its market to be liberalized
over 25 years. It is hoped that these issues would be
concluded soon to ensure that there is no disruption
in trade flows between our sub region and the
European Union.
Ladies and gentlemen,
The overall objective of this course, I am told, is to
provide participants with an understanding of these
pertinent issues as they relate to international trade,
taxes and policies. It is our expectation that the course
would provide the needed platform to enhance your
capacity to ensure good and effective formulation and
implementation of external trade policies that would
yield maximum benefits to the countries of the subregion.
I am also informed that a team of experienced
experts, from academia and practitioners from the
sub-region and beyond, has been assembled to
facilitate in this course. This can only make the
programme more interesting and rewarding.
Ladies and Gentlemen,
Permit me to commend WAIFEM and UNECA
once again for responding to the demands of member
countries to hold this course on West Africa’s
International Trade, Taxes and Policies. Freetown is
a peaceful city and an important tourist destination. I
urge participants to take time out to visit the many
tourist attractions as well as seize this opportunity to
enlarge their circle of friends.
On that note, it is my pleasure to declare open the
WAIFEM/UNECA Regional Course on West
Africa’s International Trade, Taxes and Policies.
Thank you for your kind attention.
43

CALENDAR OF SOCIO-ECONOMIC EVENTS
(JANUARY - JUNE 2012)
January 19, 2012
In expressing government’s commitment to improving
fiscal and administrative governance under the
Extractive Industry Transparency Initiative (EITI), the
Ministry of Mines and Mineral Resources in
partnership with international institutions launched the
On-line Repository and Cadastre System. The system
will provide information to stakeholders that would
boost monitoring, transparency, compliance and
accountability in the mining sector.
January 19, 2012
Under the Public Private Sector Partnership (PPP),
the Ministry of Agriculture and Food Security in a
press conference announced that one of China’s
biggest Agriculture Investment Companies, the
Chinese Hainan Company Limited for International
Economic Cooperation, has approved the sum of
US$1.23 billion for the production of rubber and rice
in the country.
January 20, 2012
The West African Monetary Zone (WAMZ) member
countries comprising the Gambia, Ghana, Republic
of Guinea, Liberia, Nigeria and Sierra Leone held the
29 th Meeting of the Convergence Council of Ministers
and Governors of Central Banks in Freetown.
January 24, 2012
London Mining Company announced that 22,685,000
new ordinary shares in the Company “had been
successfully placed” by J. P. Morgan Securities Ltd.,
to “institutional and other investors at a placing price
of 225P per share (the “Placing”).
January 27, 2012
The World Bank, through the agency of the
International Development Association (IDA)
approved a US$24 million budget support for Sierra
Leone. The funding was for the fifth Governance
Reform Growth Credit to the country under the Multi-
Donor Budget Support (MDBS) arrangement.
January 31, 2012
The Sierra Leone Conference on Transformation and
Development commenced deliberations in Freetown.
The thrust of the conference was to map out strategies
on the utilization of the country’s natural and human
resources through democracy and culture with a view
to transform Sierra Leone into a middle income
country in the next 25 to 50 years.
February 02, 2012
The Government of Sierra Leone, through the Ministry
of Transport and Aviation commissioned forty (40)
Ashok-Leyland buses to ease the nationwide
transport constraints.
February 10, 2012
Eco Bank Sierra Leone Limited secured of a loan of
US$2.9 million from the European Investment Bank
(EIB), aimed at easing capital acquisition for Small
and Medium-sized Enterprises (SMEs) in the country.
February 13, 2012
The Ministry of Finance and Economic Development
launched the Public Financial Management and
Business Enabling Support Project, during a twoday
workshop in Freetown. The project is a three
year (2012 - 2014) programme valued at US$6.8
million financed by the African Development Bank
(AfDB), aimed at strengthening the capacity of Private
Sector Development Institutions to fill the gap in
building a competitive and diversified economy,
necessary for inclusive economic growth, employment
generation and poverty reduction.
February 14, 2012
The European Union announced that through its
Millennium Development Goals (MDG) Initiative,
it will contribute Le140 billion to support Sierra
Leone’s Free Health Care Initiative under the National
Health Sector Strategic Plan.
February 14, 2012
The Ministry of Fisheries and Marine Resources
received the sum of £130,000 (equivalent to
US$210,000) from New Partnership for Africa’s
Development (NEPAD) as first tranche of grant funds
for the West African pilot Project (WAPP). The goal
of WAPP is “to enable sustainable contributions
from fisheries to growth and food security”, as
well as “to strengthen the abilities of Sierra Leone
and Ghana to consider, determine and
implement policies that will enable such
contributions”.
February 15, 2012
Skye Bank Sierra Leone Limited received a Le15
billion recapitalization boost from its parent office,
Skye Bank PLC in Nigeria, thereby repositioning the
Sierra Leone branch to meet the regulatory capital
44

equirements and engender its effectiveness and
competitiveness.
February 17, 2012
African Minerals Limited disclosed the finalization of
US$I.5 billion shares subscription agreement with
Shandong Iron and Steel Group of China, following
the approval from the China National Development
and Reform Committee.
February 23, 2012
With support from the Global Fund, the National
AIDS Commission (NAC), donated seven (7) new
pick-up vans to the Ministry of Health and Sanitation
for the promotion of HIV/AIDS/STI prevention
programmes, thus engendering the improvement and
strengthening of the health system in Sierra Leone.
The donation was the first phase of a total of fourteen
(14) vehicles to be distributed to the 14 districts of
the country.
March 02, 2012
The African Development Bank (AfDB), under the
Support to Agricultural Research for Development
of Strategic Crops in Africa (SARD-SC), approved
US$63.24 million fund package for the implementation
of the five-year project aimed at enhancing the
productivity and income derived from strategic crops
in Africa.
March 02, 2012
The Sierra Leone Investment and Export Promotion
Agency (SLIEPA) in partnership with the
Commonwealth Secretariat under the Africa
Directorate Prosperity Programme Fund (DPPF)
2011, launched the nationwide training project to
capacitate Small and Medium Enterprises (SMEs)
engaged in agro business.
March 16, 2012
Revelations from audited statements for the 2011
operations published by some commercial banks
indicated improved soundness, resilience and robust
growth in the financial sector.
March 27, 2012
Parliament ratified the revised mining lease agreement
between the Government of Sierra Leone and
London Mining Company Limited, which stipulated
an upward review of the income tax and a recalculation
of royalty from 3 percent net of taxes to
3 percent of market value of the minerals calculated
on sales value in arms length.
March 28 - April 11, 2012
The Fourth Review Mission of the International
Monetary Fund (IMF) visited Sierra Leone and held
discussions with major Stakeholders and Government
Ministries, Departments and Agencies in respect of
the IMF program supported under the Extended
Credit Facility (ECF) arrangement that was approved
by the IMF Executive Board in June 2010.
April 04, 2012
The African Development Bank (ADfB) Group
approved a USD 250.95 million (UA 162 million)
for road construction projects in Tanzania and Sierra
Leone. Under the approvals made by the AfDB Group
Boards in Tunis, Sierra Leone received two grants
and a loan amounting to USD 34.08 million (UA 22
million) to finance the Matotoka-Sefadu Road
Rehabilitation project in the North-Eastern part of the
country.
April 29, 2012
The Minister of Finance and Economic Development,
on behalf of the Government of Sierra Leone, signed
a loan agreement and two agreements worth thirtyfour
million United States Dollar (US$34mn) with the
African Development Bank (ADB), for the
rehabilitation of the Matotoka – Sefadu Road.
May 01, 2012
Parliament approved a $22 million loan agreement
signed between the Islamic Development Bank and
the Government of Sierra Leone to reconstruct the
Pendembu-Kailahun Road. The Government of Sierra
Leone is expected to provide a counterpart funding
of US$6.9 million for the implementation of the
project.
May 14, 2012
The Ministry of Mines and Mineral Resources, under
the Diamond Area Community Development Fund
(DACDF), disbursed a total sum of Le2.97 billion to
mining communities in the East, North and Southern
regions of the country, to support development
programmes in lieu of mining activities in those
communities.
May 29, 2012
Parliament ratified a $35 million fund agreement for
the rehabilitation of a seventy (70) kilometre stretch
of the Matotoka-Koidu highway.
May 30 - 31, 2012
The West Africa Telecommunications Assembly
(WATRA), the regulatory bodies for
telecommunications in the ECOWAS region, held their
10 th Annual General Meeting in Sierra Leone under
the auspices of the National Telecommunications
Commission (NATCOM). The conference was
centered on developing and coordinating strategies
that would harmonize Information Communications
45

Technology (ICT) policies in the member countries.
This includes personal data protection, electronic
transaction and cyber security laws.
June 01, 2012
The African Development Bank (AfDB) and the
Government of Sierra Leone signed a US$1.2-million
grant financing agreement in Arusha, under Pillar III
of the Fragile States Facility, to provide urgentlyneeded
support to the country’s Financial Sector
Development Plan. The grant will be used to provide
technical assistance and training to staff of the Central
Bank of Sierra Leone, in order to develop a Bankwide
information technology policy and strategy, set
up a records management system and define policy
and strategy to support the implementation of riskbased
internal audit operations.
June 06, 2012
The World Bank’s Board of Executives approved the
Pay and Performance Project for Sierra Leone in
an amount equivalent to US$17 million, to finance
the achievement of priority pay and performance
reforms in the civil service which are needed to achieve
the economic growth and poverty reduction goals of
the country.
June 06, 2012
The Minister of Finance and Economic Development,
and the Head of the European Union (EU) Delegation
to Sierra Leone, signed a 23.5 million Euros roads
project funded by the EU, to enhance regional
integration through rehabilitation of the Makeni-
Kabala Highway, expansion of seven bridges on the
Masiaka Highway, reconstruction of Rue de-la-paix
(peace road from Leicester Peak connecting
IMMAT), Berry Street and finally, the road along the
beach from Lumley to Aberdeen, respectively. The
work is expected to be completed by 2014.
June 07, 2012
Resulting from an agreement reached between the
Government of the People’s Republic of China and
the Government of Sierra Leone in December 2011,
the Minister of Finance and Economic Development,
and the Chinese Ambassador to Sierra Leone, signed
an acceptance certificate of two sets of Mobile
Containers and Vehicle Inspection System, valued at
RMB Forty-One Million Yuan, including freight,
insurance premium and technical service fee for Sierra
Leone.
June 18, 2012
Members of the Sierra Leonean Parliament approved
the ratification agreement on the addendum to the
petroleum exploration between the Government of
Sierra Leone and Talisman Oil Company, an
international investment oil company.
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