2003 Press Releases

US Statements at Paris Donor Conference

November 20, 2002

Freetown, Sierra Leone

STATEMENTS BY U.S. DELEGATION
TO SIERRA LEONE CONSULTATIVE GROUP
PARIS, FRANCE
NOVEMBER 13-14, 2002

The United States delegation to the Sierra Leone Consultative Group meeting in Paris, France, headed by U.S. Ambassador to Sierra Leone Peter Chaveas, made the following statements during the course of the conference:

U.S. STATEMENT
FOR THE WORLD BANK SIERRA LEONE CONSULTATIVE GROUP MEETING CREATING AN ENVIRONMENT CONDUCIVE TO PRIVATE INVESTMENT

We meet at a moment of historic opportunity for Sierra Leone.  More than ten years of horrific violence have ended.  The most peaceful elections in the country’s history have been conducted over the entirety of the nation’s territory and a newly elected government is successfully extending its presence throughout the land.  The country is at peace and those responsible, both Sierra Leoneans and Sierra Leone’s friends in the international community, should take great satisfaction in what has been accomplished.  The United States is proud to count itself among Sierra Leone’s friends and is committed to staying the course as you seek to rebuild a peaceful and stable environment in which the country’s considerable resources can be mobilized for the benefit of all your citizens.

Regrettably, the situation is not all good news.  By every social and economic indicator, Sierra Leoneans live in a dramatically diminished state.  The country’s infrastructure is in ruin.  Far too much of the country’s best human capital has left the country for other shores, including the United States.  Many of the institutions of governance lack capacity and continue to be plagued by corruption and an aversion to transparency. 

Perhaps most significantly for this gathering, the Government of Sierra Leone’s budget and the country’s immediate prospects for development are extraordinarily dependent on official donor resources.  This is hardly surprising given the events of the recent past, and we are here in recognition of the fact that sustained donor commitment is critical to consolidating the fragile peace that we all have worked so hard to achieve.     

But Sierra Leone has no desire to remain permanently dependent upon the generosity of others nor can the donor community be expected to provide indefinitely for a country so well endowed with resources that properly exploited could provide the basis for strong, sustainable economic development.  Sierra Leone must begin now to create the conditions that assure that those resources are much more effectively mobilized than has been the case in the past.  It goes without saying that peace and security remain of paramount importance in the creation of an atmosphere conducive for investment.  To this end, the USG remains committed to its on-going security, humanitarian and reintegration assistance efforts.  These programs, closely coordinated with the broader GOSL and donor community recovery and reconstruction efforts, remain essential for the development of a durable foundation on which a sustainable economy can take root.

It is time, however, for Sierra Leoneans to cast their vision beyond relief and recovery dependent on donor support.  Only by marshalling the resources of private investment, both domestic and foreign, can Sierra Leone hope to realize the sustained economic growth necessary to lift itself out of the poverty in which it is currently mired.  

Unfortunately, Sierra Leone's reputation with many potential investors is that of an unstable country that is both costly and risky to operate in.  It is not just regional instability that gives them pause.  They also see a devastated infrastructure – including grossly deficient telecommunications and inadequate and damaged road networks – widespread corruption, and government ownership and mismanagement of enterprises better operated by the private sector.  They also observe the difficulties faced by investors who have made long-term commitments to Sierra Leone and yet experience great difficulty in obtaining fair treatment from government, which would permit them to operate profitably.  We applaud recent temporary measures taken to address some of these concerns and hope that they will be confirmed in the upcoming budget presentation to Parliament.

To overcome this reputation, the Government and citizens of Sierra Leone must demonstrate their commitment to overcoming the pervasive corruption that was so fundamental in creating the circumstances that led to the past decade of violence.  We applaud President Kabbah’s recent statement reconfirming his government’s commitment to support the work of the Anti-Corruption Commission.  Now, firm and sustained action must give real value to those words and overcome the legacy of past decades.
 
A strong and clear Investment Code is needed to offer incentives to foreign and domestic investors alike and to assure them that the rules of the game will endure.  Although numerous attempts were made in the past to draft an Investment Code, consensus has never been reached.  We support Government's renewed focus on this important document and urge continued and productive attention in getting an investment law on the books – a code that recognizes that Sierra Leone is only one of many countries seeking to benefit from private investment and that it must be competitive.

The recent establishment of a commission to oversee the privatization of some of Sierra Leone’s largest parastatals is an excellent step forward.  This Commission must be free to pursue its work efficiently and expeditiously, unburdened by political pressure and corruption.  International investors wait in the wings to see how this program proceeds.  Particularly critical will be timely action to privatize Sierra Leone's woefully inadequate telecommunications sector, which is currently a drag on all potential investment and on efforts to harness modern telecommunications to rebuild critical sectors such as health and education.

In support of Sierra Leone’s efforts to encourage the private sector, I am pleased to announce that Sierra Leone is now fully eligible to receive benefits under the African Growth and Opportunity Act.  This Act, known as AGOA, provides duty-free access to US markets for African countries that meet its criteria.  These benefits can serve both to increase domestic capacity and attract investment.

It is important to note that significant progress is being made in mobilizing new investment in the exploitation of Sierra Leone’s natural resource wealth.  Prior to 1995, Sierra Leone was among the world's most important producers of rutile.  Sierra Rutile Limited (SRL) was the largest private sector employer and one of the Government's most important revenue sources.  We anticipate that final negotiations on a financial package, including substantial participation by the Overseas Private Investment Corporation, will be concluded shortly, resulting in the initiation of rehabilitation work early in 2003 and restoration of production one year later.  The relaunching of SRL, under new ownership, will have a very positive direct impact on the economy and will convey a message that major investors have confidence in Sierra Leone.  Both government and the private sector in Sierra Leone should seize this development as an opportunity to attract other reputable foreign investors.    

Diamonds must never again be permitted to provide the fuel for conflict.  We congratulate the Government of Sierra Leone for its efforts to bring the country's diamond resource under a better management regime.  We note the exponential increase in legal diamond export values from a low of $US 1.5 million in 1999 to a projected level of $US 40 million in 2002.  This owes to several positive factors, including the implementation of the UN-approved Diamond Certification scheme, the reinstitution of government authority throughout the country, and the creation of the Diamond Area Community Development Fund, giving local communities a real stake in the legal exploitation and export of diamonds.

Despite this progress, much remains to be done.  We have three areas of special concern that directly impinge on the stability and security of Sierra Leone:
 
1.  Level Playing Field.  In order for the benefits of the diamond resource to be more broadly felt,  free-market principles need to be in effect.  Real competition in the marketplace needs to exist so that miners can receive competitive prices for their stones.

2.  Monitoring and enforcement.  The system for tracking stones from the time they are mined to the time they are exported is inadequate.  This is due, in part, to the current quality of monitoring and enforcement.  There is no reliable means to track leakage’s from the system (i.e., smuggling) or illegal entries (e.g., stones smuggled into Sierra Leone from Liberia).  Smuggling cheats the government and communities of their allocations of export taxes and puts the stones into the hands of actors who may have illicit motives, such as money laundering, tax evasion, or arming of criminal or terrorist groups.

3.  Corruption.  Public officials are misusing their positions to extract "gratuities" from business people in exchange for "protection" or for expediting their paperwork.  Other officials are involved in clear conflicts of interest – on one hand they are regulators of the sector, while on the other they have vested interests in diamond mining or marketing ventures.  These abuses undermine the good work that has occurred in the sector and will hinder future progress.

Finally, there is an issue that threatens every aspect of Sierra Leone’s effort to recover and chart a path to sustainable peace and economic prosperity.  HIV/AIDS poses the next great threat to Sierra Leone’s future.  Left inadequately addressed, it will impose great human tragedy and enormous social costs.  It will threaten your national security in ways never imagined during the violence of the past decade.  And it will undermine every effort to reestablish your economy, including acting as a major disincentive to new investment.  Confronting HIV/AIDS must be as much a part of Sierra Leone’s economic development plan as it is of your health or educational effort.

Continued improvement in the investment climate will depend on a broad-based and sustained effort on the part of Sierra Leoneans.  The country's leaders and citizens need to address the issues that gave rise to the conflict in the first place – since those factors are the very ones that keep potential investors at arms length.  Sierra Leone's decades long tradition of economic mismanagement must change.  The United States is convinced that the people of Sierra Leone are up to the task, and that it is their will to bring about that kind of change.  They can depend upon our support for their efforts.

U.S. DELEGATION STATEMENT
FINAL SESSION

The United States is pleased to have provided significant support to Sierra Leone in addressing humanitarian needs as well as in providing transitional assistance with the elections, the reintegration of those affected by the war, and economic reconstruction at the community level.   

In each of the past two years, we have devoted approximately $70 million to these efforts.  These efforts have included:

• over $50 million in food assistance
• over $20 million in disaster response, such as emergency shelter, rehabilitation of medical clinics, and distribution of seeds and tools to vulnerable communities
• providing over 55,000 ex-combatants and war-affected youth throughout Sierra Leone with life skills training, including instruction in health practices, conflict management, basic farming techniques, and self-awareness
• helping communities heal themselves through an integrated package of assistance that includes psycho-social counseling, trade skills training, community rehabilitation, and micro-credit
• logistic and technical support to the May 2002 elections
• assistance to the Government of  Sierra Leone and diamond-producing communities in improving the management of their diamond resource

Ongoing US programs include a range of activities, including:

• Disaster and humanitarian assistance
• Food aid
• Rehabilitation of the Koidu and Kailahun Hospitals
• Rehabilitation of primary and secondary schools in Kono and Kailahun
• Small-scale community rehabilitation
• Continuation of the Education for Peace and Nation Building programs
• Continuation of assistance in the diamond sector, including the Kono Peace Diamond Alliance
• Training of civil society organizations to help them engage more constructively in the political process
• Capacity development with Parliament
• Provision of personnel, training, equipment and helicopter support to the RSLAF in cooperation with IMATT
• HIV/AIDS awareness and prevention program in cooperation with the RSLAF

Due to the nature of our budget process, we are unable to project resource levels for 2003 and beyond.  However, the United States fully intends to remain engaged in Sierra Leone and assist with the country’s economic and social redevelopment over the coming years.  The sorts of commitments the government has undertaken at this meeting, in particular to place the economy on a more solid footing by implementing equitable rules of the game, will enable a more fruitful partnership between the United States and Sierra Leone in this regard.