Document o f The World Bank FOR OFFICIAL USE ONLY Report No. 50351-SL SIERRA LEONE JOINT IDA-IMF STAFF ADVISORY NOTE ON THE ' SECOND POVERTY REDUCTION STRATEGY PAPER September 17,2009 Poverty Reduction and Economic Management 4 Country Department A F C W l Africa Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY I N T E R N A T I O N A L MONETARY FUND AND I N T E R N A T I O N A L DEVELOPMENT ASSOCIATION REPUBLIC OF SIERRA LEONE Joint Staff Advisory Note on the Second Poverty Reduction Strategy Paper Prepared by the Staffs o f the International Monetary Fund (IMF) and the International Development Association (IDA) Approved by Michael Atingi-Ego and Dominique Desruelle (IMF) and Obiageli K. Ezekwesili (IDA) September 17,2009 I.Overview 1. This Joint Staff Advisory Note (JSAN) reviews Sierra Leone's Second Poverty Reduction Strategy Paper (PRSP-11) covering the period 2009-2012. The PRSP-I1 examines achievements and lessons learned under the first PRSP, analyzes challenges and constraints in the economy, and lays out the strategic priorities for accelerating growth and reducing poverty. 2. The PRSP-I1 presents a comprehensive medium-term strategy that focuses on four strategic priorities. These are: (i) enhancing the national power supply; (ii) increasing agricultural productivity and competitiveness; (iii) significantly improving the national transportation network; and (iv) promoting sustainable human development through decentralized service delivery. These priorities are underpinned by good governance, macroeconomic stability, private sector development, financial sector reform, and natural resource management. 1 1. Characteristics o f the PRSP-I1 A. Participatory Process 3. The preparation of the PRSP-I1 included a participatory process involving central and local government, civil society, development partners and parliamentarians. Contributions from key ministries and agencies were shared with development partners, civil society organizations, and parliamentarians. Regional workshops were attended by a wide range o f stakeholders. Agriculture was identified as the number one priority and recommendations resulting from the consultation process indicated the need for more explicit coordination between the transport and agriculture sectors, particularly concerning investments in feeder roads, whose current condition i s a This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without W o r l d Bank authorization. major impediment to agriculture. After a series o f consultations with key ministries and development partners, the PRSP-I1 was then validated at a national stakeholders' meeting, approved by Cabinet and later endorsed by the Parliament. To ensure continued ownership o f and support for the Government's reform program, it will now be important to embark on a wide dissemination o f the strategy to broaden stakeholders' awareness and to similarly involve all levels o f society in monitoring the progress o f the PRSP-I1 implementation. B. Lessons Learned from PRSP-I 4. As noted in the PRSP-11, progress during the implementation o f the PRSP-I (2005-2007) has been mixed. The country maintained a stable macroeconomic environment with strong economic growth, moderate inflation, declining current and fiscal imbalances, an increased level o f foreign reserves, a stable exchange rate and a reduced external debt level. The public financial management system improved and some aspects o f the budget process have been strengthened. Implementation of the decentralization agenda advanced with 19 out o f 34 functions devolved. The National Anti-Comption Strategy (NACS) was revised to include much stronger legal power for the Anti-Corruption Commission and this i s now being implemented. Major reform efforts were undertaken to simplify administrative procedures and reduce the cost o f doing business in Sierra Leone. Progress was made on access to education as the net enrollment increased, although the desiredrequired pupil-teacher ratio target was not achieved. Access to health facilities improved over the years, but infant and maternal mortality figures remain among the highest in the world. 5. The Government has reflected the lessons learned during the implementation o f PRSP-I in the PRSP-11. Specifically, it notes the following key lessons: (i) targets in PRSP-I were too ambitious compared to available resources; (ii) inter-sectoral linkages among various units in different sectors were weak; ( i ) i iprogram implementation was not always aligned with national priorities; (iv) there was no clear strategy for resource mobilization from the development partners; (v) implementation capacity was weak in many ministries, departments, and agencies (MDAs); (vi) many MDAs did not fully implement the programs o f the PRS because they viewed it as a product independent of their own obligations; and (vii) lack o f timely and reliable statistics made the assessment o f the baseline data difficult and, as a result, targets were unrealistic. 6. The staffs commend government efforts in incorporating some o f the lessons learnt in the implementation of the PRSP-I in PRSP-11, especially in the areas o f domestic revenue mobilization through the planned implementation o f a tax reform and the implementation o f the National Revenue Authority Modernization plan; the focus on capacity improvement through the establishment o f the Human Resource Management Office and the ongoing Civil Service Reform; and the planned improvement in statistical data collection through the implementation o f the National Statistical Data System strategy that i s largely funded by donors. The staffs, however, note that the PRSP-11, like PRSP-I, remains overly ambitious, especially in light o f the country's capacity 2 constraints and the global economic downturn. The staffs therefore recommend that the authorities prioritize their interventions during its implementation. C. Poverty Diagnostics 7. The poverty diagnostics underpinning the PRSP-I1 draw on the latest available survey' which supplemented the 2004 household survey. I t i s estimated that the national headcount o f poverty declined from 67.5 percent in 2003 to 61.6 percent in 2007.2 The decrease in poverty i s much larger in urban areas compared to rural areas due to post-conflict growth in the urban areas since 2003. Poverty i s predominately rural and i s concentrated mostly in the northern and eastern regions. In terms o f gender, female- headed households appear to be somewhat worse o f f in terms o f assets, markedly in land ownership, which they are 5 percent less likely to own. 8. Staffs recommend that, going forward, a new household survey be undertaken to update and strengthen the poverty diagnostics and advise that the survey design include modules that can capture pro-poor access to basic services. Disaggregating the poverty analysis would help identify policy actions that are pro-poor. Further analysis o f sources o f income and coping strategies at the household level would also provide for a more informed discussion on pro-poor strategies and the role o f agriculture and rural development. Staffs also encourage the authorities to use the poverty map to better target safety nets that do not appear very well targeted and to conduct an in-depth analysis o f actual and potential contributions o f various sectors, as well as established safety net programs, aimed at securing the incomes o f the poor and assisting them. Such analysis would help the Government to establish clear spending priorities aligned with the goal o f poverty reduction. 1. 11 Macroeconomic Policies and FinancialManagement 9. The PRSP-I1 rightly emphasizes that broad-based, sustained high economic growth i s the primary route out o f poverty. To accelerate growth, the strategy seeks to (i)provide a reliable power supply to the country; (ii) raise production and productivity in agricultural and fishing activities by promoting commercial and subsistence farming; (iii) develop the national transportation network to enable the movement o f goods and people; and (iv) improve the provision o f social services, particularly health and education, through the decentralized provision o f basic services. The PRSP-I1 presents policies underlying each o f these four priorities. The strategy targets a real GDP growth o f 6.5 percent by 2012, and asserts that reducing poverty significantly and improving the lives o f the majority o f Sierra Leoneans will require an annual growth rate o f 10 percent or more. 10. Staffs recommend that the macroeconomic framework underlying the PRSP- I1 be updated to reflect the impact of the global economic crisis on the Sierra Core Welfare Indicator Questionnaire (CWIQ)-2007. T h i s estimate i s made on the basis o f changes i household assets: the 2007 CWIQ did not include n information on household incomes or expenditures. 3 Leonean economy. The framework presented in PRSP-I1 i s based on the projections for the Poverty Reduction and Growth Facility-supported program prepared for the third review concluded in December 2008. Since then, the economy has been significantly affected by the global economic crisis. In particular, the mining sector has been hit hard as the value o f exports has fallen, production has been scaled back, and investment projects have been delayed. Other sectors have also been affected, notably services and tourism. The revised macroeconomic outlook projects real annual GDP growth for 2009- 10 to decline to 4 percent (about 1.5 percentage points lower than envisaged in the PRSP- I)I followed by a gradual recovery to over 6 percent by 2012. The outlook for inflation i s , more favorable than envisaged in the PRSP-I1 mostly due to lower commodity world prices. The external position i s expected to be challenged by a steeper-than-anticipated decline in average world prices and export volumes o f the main minerals. Domestic revenue i s projected to fall short o f the PRSP-I1 targets by an average o f 1 percent o f GDP annually during 2009-12, leading to a corresponding increase in the overall fiscal deficit. Staffs recommend that the first annual progress report o f the PRSP-I1 present a revised macroeconomic and fiscal framework reflecting the impact o f the global downturn on the Sierra Leonean economy. 11. The PRSP-I1 appropriately emphasizes the critical importance o f maintaining macroeconomic stability if higher and sustained economic growth i s to be achieved. With continued donor support during the course o f the PRSP-I, Sierra Leone achieved a relatively stable macroeconomic environment, with moderate inflation, a comfortable level o f foreign reserves, and a relatively stable exchange rate. A sustainable external debt level was also attained after accessing debt relief under the HIPC initiative and the Multilateral Debt Relief Initiative upon the HIPC completion point reached in December 2006. Looking forward, the PRSP-I1 acknowledges the need to strengthen fiscal and monetary policy implementation. 12. The PRSP-I1 aptly identifies the need to strengthen domestic revenue collection and limit domestic public borrowing. The staffs welcome the set o f fiscal measures geared to maximize compliance and collection efficiency o f existing taxes and to broaden the tax base. In particular, an effective implementation o f the Goods and Services Tax (GST) will be critical to improving domestic revenue collection, which remains low by regional standards. In light o f the unanticipated large revenue shortfall during the PRSP-I1 period, the expenditure path presented in the PRSP-I1 could present a challenge to macroeconomic stability and staffs recommend that it be reassessed to ensure budget sustainability over the medium term. 13. The PRSP-I1 recognizes the need to reinforce the central bank's ability to contain inflationary pressures and maintain single digit inflation. To this end, a variety o f measures are proposed, including a further recapitalization o f the central bank, a more flexible reserve requirement system for commercial banks, and promotion o f an effective secondary market. The staffs concur with the authorities that maintaining exchange rate flexibility i s appropriate as this would allow for an appropriate market response to exogenous shocks. The staffs note progress made in strengthening central 4 bank's monetary operations and encourage it to gradually develop capacity in financial stability analysis and economic forecasting. 14. Notwithstanding the progress made in public financial management, key challenges remain to ensure efficient allocation o f public resources. Staffs welcome the adoption o f the Integrated Public Financial Management Reform Program, which i s designed to ensure sustainability and consolidation o f the public financial management (PFM) reforms within a single and harmonized framework. The PRSP-I1 highlights the key areas, notably (i) refining and deepening the Medium-Term Expenditure Framework (MTEF) process; (ii) extending the roll out o f the Integrated Financial Management Information System; (iii) improving budget auditing and oversight; (iv) addressing remaining weaknesses in procurement systems; (v) updating the legal and regulatory framework for the management o f public finances; and (vi) developing the capacity o f local administrations in terms o f financial management. Staffs support deeper P F M reforms to improve the delivery o f public services and reduce the scope for corruption. In this context, staffs note that particular attention should be paid to revamping the MTEF process to ensure that annual budget allocations are consistent with the medium-term objectives o f the poverty reduction strategy. 15. Achieving Sierra Leone's development objectives will require strong mobilization o f external resources, beyond currently identified commitments. In Sierra Leone's medium-term macroeconomic framework under the PRGF, donors are expected to provide about 12.5 percent o f GDP in grants and loans during 2009-12. In the accelerated poverty-reduction scenario, the PRSP-I1 estimates that about US$850 million (12 percent o f annual GDP) o f additional external assistance will be needed during 2009-11 to fund poverty reducing expenditures and public investment beyond those projected in the medium-term macroeconomic framework. The staffs encourage the authorities to set up a coherent and comprehensive external resource mobilization strategy. To this end, staffs recommend that existing aid coordination mechanisms be reinforced and that the Government continue to show strong commitment to implement policies aimed at reducing poverty, as evidenced by satisfactory progress in the PRSP implementation. To ensure that priority areas o f the PRSP-I1 remain protected from potential shortfalls in external resources, staffs also recommend that the Government prepare an expenditure prioritization plan consistent with the baseline poverty reduction scenario. 16. Long-term debt sustainability warrants close monitoring. The debt sustainability analysis (DSA) completed in June 2008 found that Sierra Leone was at a moderate risk o f debt distress. However, the export outlook has been revised downward following the decline in world demand. While all debt indicators are expected to remain below the DSA thresholds in the baseline scenario, additional external borrowing to cover the resources needed in the PRSP-I1 accelerated poverty reduction scenario could rapidly worsen debt indicators. To avoid this, staffs recommend that the PRSP-11's financing plan rely on highly concessional resources. 5 IV. Sectoral Policies A. ~ n f r a s t r u c t u r e ~ 17. T h e impact o f the global recession will require a reevaluation o f whether the ambitious infrastructure p r o g r a m can b e fully implemented. In this regard, public- private partnerships may help alleviate some o f the financing constraints. To exploit this possibility, however, the Government i s encouraged to establish an adequate legal framework to ensure adequate protection and burden sharing for all parties. 18. T h e P R S P - I 1 recognizes the importance o f the energy sector f o r growth and poverty reduction in Sierra Leone. PRSP-I1 focuses o n transformation challenges in the energy sector and policy initiatives in key areas. The PRSP-I1 correctly identifies key challenges in electricity supply, lessons learned from the recent crisis, and weaknesses in institutional governance. Staffs concur that additional energy sector investments are required but caution that these will not be translated into jobs and poverty reduction without additional supporting policies t o exploit the availability o f new power sources. Also, energy investments, particularly in hydropower, will only yield results over a longer time period. Staffs therefore recommend that alternative sources o f energy such as biomass be included to provide reliable energy to the population o f Sieri-a Leone and be made an integrated priority in the energy sector. Staffs agree that major structural reforms are urgently needed, particularly to streamline existing institutional arrangements and develop a sector-wide legal and regulatory mechanism. Also, staffs recommend that a cost-driven, formula-based electricity tariff structure be adopted and effectively implemented to ensure financial viability o f the energy sector, while ensuring that safety nets are provided for low-income consumers 19. In the transport sector, the P R S P - I 1 heavily focuses on rehabilitation o f the r o a d n e t w o r k and construction o f new roads. Staffs welcome the priority given to the road sector but caution that results have fallen short o f expectations for road maintenance and for institutional restructuring and financial reforms in this sector. While there has been progress in preparation o f these reforms, several challenges remain. The most critical include: (i) enhancing legislation t o establish an independent Roads Maintenance i) Fund, outside the road agency; ( i streamlining the road agency by implementing the institutional restructuring action plan; ( i )i i implementing the feeder roads rehabilitation plan and transferring rehabilitated roads t o the District Council; and (iv) developing a maintenance plan for the core road network. The staff supports the authorities' strategy to improve port productivity through concessions to the private sector, creation o f a landlord . port, and encouragement o f timely implementation o f the strategy. B. Agriculture 20. T h e P R S P - I 1 rightly identifies agriculture as a key strategic sector with the potential for improving revenue generation and food security. Agriculture i s the 3 K e y infrastructure sectors include water and sanitation, energy and transport (ports, airports and roads). 6 backbone o f the economy and there are abundant opportunities to improve the livelihood o f those who are engaged in the sector. The staffs support the Government's overall vision and strategy for improving agriculture productivity. However, they recommend that the proposed reform program be sequenced and better integrated with the overall rural development and pro-poor growth strategy. In particular, they propose the following recommendation for the implementation o f the PRS in the agriculture sector: (i) encourage greater private sector participation in the provision o f agricultural inputs and equipment as well as extension services; (ii) develop a clear vision o n h o w the land tenure system can be transformed in order to provide better incentives for investments in agriculture; ( i ) i i prioritize .what can be achieved with short-, medium- and long-term a ~ t i v i t i e s ;(iv) support interventions for tree crops and diversification o f food sources ~ outside o f rice; (v) carefully assess the economic and social cost-benefit o f farm mechanization given the existing high unemployment in some parts o f the country and the unresolved debate concerning access to land and land tenure; and (vi) enhance the role o f rural credit and micro-credit programs in improving agriculture productivity. In addition, the staffs recommend that attention be paid to the inter-sectoral linkages between agriculture and other sectors during the implementation stage for the promotion o f agriculture. C. Mining 21. T h e PRSP-I1 recognizes the importance o f actively promoting the metals and minerals sector which continues to represent the majority o f Sierra Leone's exports. The Government's main focus in the mining sector during the PRSP period i s to strengthen the legal and regulatory framework. The PRSP-I1 identifies weaknesses in the current legal and regulatory framework, as well as the capacity constraints within the Ministry o f Minerals. The staffs concur that strengthening the legal and regulatory framework would help promote the sector, and recommend that enforcement mechanisms also be enhanced. The role o f the newly established National Mineral Agency is a positive step towards improving capacity to enforce compliance in the sector and staffs recommend that its role in the PRSP implementation be better highlighted. Staffs also recommend that mechanisms and capacity within the Government and communities be improved to strengthen their ability to align regulatory compliance o f mining operations with their social and environmental obligations. The staffs observe that several offshore blocks have been allocated to firms exploring for petroleum. In the event that substantial reserves are identified, it will be important to devise a sector strategy and institutional arrangements that ensure revenue mobilization and its equitable and transparent utilization in a manner that would enhance the achievement o f the general objective o f poverty reduction For example, the country i s well endowed with adequate rainfall, and there i s a lot to be gained by bringing actual yields closer to their potential, under rain fed conditions before committing to capital investments for irrigation. 7 D. Environmental Management 22. The PRSP-I1 recognizes the importance of environmental management as a key challenge to reducing poverty in Sierra Leone. The multi-sectoral nature o f the environmental issues creates the need to develop and implement strategies that address environment at the national level, and to mainstream them during implementation. To help achieve the Government's agenda o n the environment, the staffs recommend that the role o f the Environmental Protection Agency (EPA) vis-&vis other government institutions responsible for management o f forests, fisheries, mining, energy, infrastructure, and biodiversity be more clearly defined during the implementation stage. Additionally, while the initiatives detailed in the PRSP would adequately address the country's environmental challenges, staffs encourage the Government to improve due diligence o n and capacity for the enforcement o f environmental standards. E. H u m a n Development 23. The education strategy i s consistent with the recent Education Sector Plan. It puts forward a vision emphasizing access to basic education quality o f teaching and learning, and strengthening capacity to manage the education system. Staffs agree that impressive gains have been made o n increasing access to basic education and that the need is to focus o n teaching and learning materials, and strengthening management capacity. 24. Staffs, however, note that much effort i s required to increase the number of qualified teachers, especially in deprived areas. For this, pre-service training would need t o target more teachers and in-service training be designed to count towards credits for teacher certification. Expanding the distance education program would also need to be vigorously implemented, since distance education has been observed to be more cost effective and capable o f reaching larger numbers o f trainees. Providing incentives for teachers deployed t o deprived local councils will require the determination o f clear and justifiable criteria for those deployed. Currently, a significant proportion o f teachers teaching in deprived areas is unqualified and untrained and, in addition, i s not even o n government payroll. A comprehensive teacher recruitment, deployment and pay policy i s required to address these issues. 25. Staffs also note that additional effort i s required to sustain the gains made in setting up a n Education Management Information System (EMIS). Two education censuses were undertaken for 2006 and 2007 and there is the need t o fund and support continued education data collection and analysis. There is also a need to build capacity for planning, data collection and analysis into the E M I S activities from the school level to the central level o f education administration. Staffs observe that, in the last two EMIS, data was collected and analyzed but was only used for policy decision making mostly at local council and school levels. T o ensure that data is used at all levels, staffs recommend that it be disseminated comprehensively. 8 26. The PRSP-I1 aptly notes the important links between population health, poverty, and economic growth. It emphasizes the need to prioritize the most cost effective interventions that the public sector should support within the available resources and stresses the importance o f community participation in the management o f health services and the need for improved coordination o f donor support. Staffs concur that inadequate health financing by the public sector and high out o f pocket expenditures by the population are key constraints. However, it is unlikely that public sector spending will increase substantially in the current economic climate. The proposal to introduce health insurance is welcome, but staffs encourage the Government to proceed gradually, recognizing the financial risk and implementation challenges. Given the l o w rates o f formal employment, any scheme will need to focus o n community based insurance. Staffs also encourage the Government to improve the effectiveness and efficiency o f existing resources by: (i) focusing the PRSP-I1 implementation o n encouraging healthy behavior o f the population; (ii) enhancing the productivity o f existing personnel by improving their geographical distribution and introducing performance incentives; and (iii)strengthening logistics management t o ensure that drugs and supplies actually reach the intended beneficiaries. 27. The PRSP-I1 presents a variety o f programs geared towards social protection, prevention, promotion and transformation. However, there i s a need to clearly identify sources o f vulnerability and target populations and the required priority actions in the Government's social protection agenda. While the PRSP-I1 provides a good framework and an overview o f existing programs, staffs recommend that the Government finalize the social protection strategy (currently under preparation) and prioritize key programs to address short-term and systemic vulnerability (Le. economic and climactic shocks and access to basic services and employment). In view o f resource constraints and the nature o f vulnerability in Sierra Leone, it would be advisable to focus the Government's strategy on prevention and promotion activities to support: (a) the structural poor, namely those who will need continued social assistance, and (b) those who do not have adequate means to improve their livelihoods. A thorough analysis o f the existing, already dispersed safety net programs would be very beneficial to determine the exact magnitude of resources spent, impact o n the targeted populations and gaps. Based o n this kind o f analysis, staffs also recommend that the strategy define specific outcomes and prioritize interventions to achieve those outcomes in order to maximize the impact o f existing limited resources. V. Cross-CuttingIssues A. Private Sector Development 28. The Government's strategy for private sector development focuses on the maintenance o f an enabling environment provided by a facilitating state. The main elements o f the private sector development strategy include: (i) improving access to finance; (ii)improving the legal and regulatory framework; ( i ) i i promoting and supporting entrepreneurship; (iv) making markets work better; and (v) improving physical infrastructure. In addition, the authorities intend to promote investments in 9 productivity and competitiveness, improve access to land with stronger property rights, and harness international linkages in trade and foreign investment. 29. T h e staffs concur that these elements f o r m a viable and credible strategy. The staffs welcome the emphasis o n enterprise and skills development in the strategy, including the focus o n youth employment. The staffs note in particular that the sustained distribution o f affordable electricity, reduction o f post-harvest agricultural losses, and improved road maintenance will make significant contributions t o productivity. Going forward, the authorities may want to take active steps to encourage the formalization o f Sierra Leone's predominantly informal economy. Staffs believe that it will be important to ensure that the legal and regulatory framework is not undermined by interventions that respond mainly to vested interests rather than fully addressing weaknesses faced by all participants in the private sector. B. Governance and Decentralization 30. T h e PRSP-I1 recognizes that achieving progress on good governance i s a precondition f o r realizing i t s strategic priorities. As correctly identified, governance matters for the quality and quantity o f public and private investment through its impact o n the business climate and regulatory environment. In addition, in staffs' view, governance deficits have significant negative effects across the broad field o f the management o f public funds and organizations, the delivery o f services and the establishment o f positive norms for c i v i l service operations. Performance across sectors i s impacted by weak transparency in terms o f h o w decisions o n public service provision and resource allocations are made. Similarly, accountability arrangements and the framework for checks and balances remain underdeveloped, while corruption continues t o affect transactions in the country. Weak parliamentary oversight and l o w public participation in public policy making and implementation is also a bottleneck for improving the quality o f governance. Furthermore, it is critically important to recognize that a successful effort to strengthen good governance requires (particularly in c i v i l society) both the supply and demand sides o f intervention. Thus, staffs recommend that the Government systematically address issues o f transparency, accountability, and participation in each strategic priority area, as well as different levels o f governance, i.e. institutional, organizational, and technical. 3 1. T h e PRSP-I1 identifies decentralization as a k e y cross-cutting theme critical f o r economic development. The PRSP-I1 i s consistent with the draft decentralization policy framework and details key steps aimed to advance the decentralization reform agenda and decentralized service delivery. K e y areas o f focus are: deepening the national democratic process, supporting community participation in the decentralization process, and fostering transparency and accountability o f decentralized basic service delivery. In this context, staffs recommend that these interventions be accompanied by efforts to strengthen capacity at the local level (which remains limited) t o mitigate the risk o f creating regional imbalances and marginalization in terms o f political and economic development. Staffs recommend that the regulatory framework be further strengthened to ensure effective devolution o f responsibilities from the central to the local government (in 10 particular on human resource management), provide clear guidelines on the intergovernmental fiscal transfers, and delineate the roles and responsibilities o f the Chiefdoms. 32. T h e PRSP-I1 recognizes and staffs agree that building an effective and accountable public service i s critical for achieving the strategy's objectives. In this regard, staffs note that an ambitious public sector reform program i s envisaged during the PRSP-I1 implementation period. The reforms include planned improvements in pay and incentives, training, and human resource management. Staffing levels in the lower grades are to be reduced, with measures included to mitigate the social cost o f retrenchment. Local councils are to be empowered to better lead and implement human resource management decisions at the local level, including `management o f central staff seconded to local governments. 33. I n addition to these useful policies, the authorities may wish to consider a p r o g r a m o f active recruitment for technically skilled staff. There i s a pronounced deficit in the mid-level grades and an impending deficit in the upper grades as many senior staff come close to (or pass) retirement age. The first steps in creating an accountable civil service have been taken by requiring performance contracts for each minister. The next step would include performance- and merit-based promotions for most civil servants. Successful decentralization o f public service delivery will require improvements in capacity, incentives, managerial authority, and accountability. It i s recommended that the steering committee for this reform (established by the President) set up robust mechanisms to monitor the implementation o f the program and translation o f program inputdactivities into effective service delivery outcomes. C. Y o u t h Employment 34. Staffs welcome the PRSP-11's focus on employment creation as a critical element o f a poverty reduction strategy, particularly for the youth. Staffs note that the proposed plan relies o n the Government to either create jobs or subsidize their creation. Such j o b programs can play a useful short-term role but they are, by their nature, unsustainable. Staffs recommend that the Government focus o n a select number o f key programs, building o n lessons learned from existing programs. Going forward, the authorities may wish to consider more fundamental reforms. O n the one hand, Sierra Leone is one o f a very few countries with a growing dependency ratio, meaning the youth population is growing faster than the adult population. This places undue pressure on the j o b market, pushing down wages for the younger members o f the workforce. This problem is best addressed through sustained interventions in the health and education sector, for girls and women in particular. On the other hand, the private sector has far more potential than government to generate jobs (due to its sheer size). Thus, the authorities may wish to leverage their private sector development strategy in support o f private sector j o b creation. 11 VI. Implementation Risks, Monitoring and Evaluation of PRSP-I1 35. The results monitoring framework o f the PRSP-I1 i s being finalized. Staffs recommend that the outcome indicators be further streamlined, their number be reduced to focus on critical ones, and baselines and realistic targets established. Also, it i s recommended that the selection o f outcome indicators be determined according to their l i n k s with the PRSP-I1 priority actions and the availability o f the required data on a regular basis, and be supported by a detailed M&E plan. 36. Staffs recommend that the monitoring o f the PRSP-I1 be anchored onto a national M&E system developed around these core indicators. The development of the national M&E system rests on (i) implementation o f the National Strategy for the the Development o f Statistics (NSDS) for 2008-20 12 including the Integrated Household i) Survey, Labor Force Survey and National Agricultural Census; ( ithe strengthening o f M&E efforts and capacities o f Local Councils, districts and MDAs, notably by developing M&E training manuals for the national and local levels, undertaking an extensive capacity building program and establishing an incentive and reward system; i ithe and ( i ) alignment with reform initiatives in the public sector and greater emphasis on social accountability in basic services delivery. Staffs recommend that the tracking o f core indicators be costed and incorporated into the MTEF and a clear communication strategy for the PRSP-I1 and i t s results be formulated. 37. There are several risks factors which could affect the successful implementation o f the PRSP-11. The projected fiscal resources may not be achieved as a result o f exogenous shocks-stemming from a prolonged global recession or rapid rise in international commodity prices for food or fuel, the emergence o f unexpected and unavoidable expenditure obligations, or a reduction in official aid flows. The authorities intend to mitigate these risks through continuous dialogue with the IMF and the World Bank and prudent fiscal and monetary policies. The authorities also intend to continue working closely with donor partners which include the AfDB, the World Bank Group, and the UN agencies (including the United Nations Peace Building Fund) to mobilize the resources required to maintain macroeconomic stability and government priority expenditures. The authorities also intend to gain additional resources by broadening the donor base, both for budget and project financing. 38. Political instability could constrain effective PRSP-I1 implementation. Political tensions between two leading political parties led to a limited outbreak o f violence in March 2009. This was followed by an agreement between the two parties in April 2009 to seek consensus on the role o f ruling and opposition parties, reject violence, and resolve the ongoing tensions. To avoid such risks in the future, the authorities intend to work closely with the UN Peace Building Commission and other agencies on programs related to consolidation o f the peace established in 2002 and strengthening o f democratic institutions and the judicial system. 39. Lack o f skilled staff o r issues o f accountability may also affect PRSP-I1 implementation at the central o r local: levels. This risk will be mitigated by the 12 planned strengthening o f key human resource management offices, notably the Public Service Reform Unit under the Office o f the President and the Human Resource Management Office. Given the wide range o f ministries and agencies with roles and stakes in the outcome o f public service reform, the authorities may wish to further reduce risks by clarifying roles and quickly establishing a wide coalition in support o f necessary reforms. VII. Conclusions and Issues for Discussion 40. The PRSP-I1 presents a comprehensive medium-term strategy for economic growth and poverty reduction in Sierra Leone. Economic growth and poverty reduction will be substantially advanced if the four PRSP-I1 priorities are achieved. The sustained provision o f affordable power, support to agriculture (particularly for the reduction o f post-harvest losses), and a more usable national transportation network will all contribute to higher private sector productivity, growth, and poverty reduction. Achievement o f the fourth priority, the continued provision o f health and education services on an increasingly decentralized basis, will help improve outcomes through increased local access and accountability. The concurrent emphasis on good governance and macroeconomic stability i s appropriate since these are prerequisites for broad-based growth. 41. Looking ahead, the staffs identified several areas for strengthening the PRSP-I1during its implementation: reassessing the expenditure path presented in the PRSP-I1 to ensure budget sustainability over the medium term, evaluating risks from contingent liabilities accumulated over past years and adopting regulatory reforms that would prevent their further accumulation. establishing an adequate legal framework to ensure adequate protection and equitable burden sharing for all parties entering into public-private partnerships. accelerating implementation o f structural reforms in the power sector, particularly to streamline existing institutional arrangements and develop a sector wide legal and regulatory mechanism. Among these, staffs recommend that a cost-driven, formula- based tariff structure be adopted and effectively implemented to ensure the sector's financial viability, while ensuring that safety nets are provided for low-income consumers. placing more emphasis on road maintenance, with adequate backing from an independent Roads Maintenance Fund, outside o f the road authority. sequencing and better integrating the agricultural reform program with the overall rural development and pro-poor growth strategy, with a focus on encouraging greater private sector participation in the provision o f agricultural inputs, equipment and extension services, transformation o f the land tenure system, interventions for tree 13 crops and diversification o f food sources outside o f rice, and enhancing the role o f rural credit and micro-credit programs in improving agriculture productivity. strengthening the ability to enforce legal and regulatory compliance o f mining operations with social and environmental obligations. adopting a comprehensive teacher recruitment, deployment and pay policy in order to resolve issues o f unqualified teachers and payroll management. proceeding gradually with the proposal to introduce health insurance and focusing initially on community based insurance. providing further legal and regulatory guidance on the devolution o f responsibilities from the central to the local government (particularly with respect to the devolution of human resource management responsibilities), on the intergovernmental fiscal transfer system, and the delineation o f the roles and responsibilities o f the Chiefdoms. increasing government capacity to implement the PRSP-11, recruiting technically skilled staff and gradually extending performance and merit-based promotions for most civil servants. costing the tracking o f the core PRSP-I1 monitoring indicators, incorporating it into the MTEF, and formulating a clear communication strategy for the PRSP-I1 and i t s results. 42. I n considering the PRSP-I1 and associated JSAN, Executive Directors' views are sought on whether they agree with the main areas identified by staffs as priorities for strengthening the strategy and i t s implementation, and areas identified as key implementation risks. 14 THE REPUBLIC OF SIERRA LEONE OUR AGENDA FOR CHANGE In the course o f implementing our first Poverty Reduction Strategy, considerable progress was made in key areas, especially in consolidating peace and security after a decade long civil conflict. Relatively high economic growth rates were also achieved as well a low inflation and s inacroeconoinic stability. However, Sierra Leone's main economic indicators continue to lag behind sub-Saharan Africa, h h i l c cxtrcme poverty remains pervasive. Consequently, over 60% of our people are unable to afford one decent meal a day. This abject poverty is compounded by significant problems in the health and educational sectors. As a result Sierra Leone has consistently ranked at the very bottom o f the UN Human Development Index. Since my Government took office in 2007, we have strived to chart a bold new path for accelerating the advancement o f our country on all fronts. Our vision and strategies are articulated in my "Agenda for Change", which together with the outcomes o f other consultative processes form the basis o f our medium term Second Poverty Reduction Strategy. The Agenda for Change reflects our people's belief that the government they elected in a free and fair election will work in partnership with them to improve their social and economic conditions. Sierra Leoneans have on many occasions demonstrated a deep commitment to building a democratic, prosperous and tolerant nation, in which the ties o f friendship, citizenship and kinship triumph over divisive efforts o f extremists. There is no better way to acknowledge this commitment than to work i n partnership with every stakeholder to address widespread poverty, hunger, unemployment, as well as high infant and maternal mortality. As a Government, and i n partnership with our people and international friends, we believe that only an economic transformation o f the country over the coming years will enable us to address these challenges. Broad-based economic growth i s the primary route out o f poverty. Our current economic growth rate is around 6.5% per annum and if we maintain this growth rate, by 2018, Sierra Leone's GDP will reach $350 per capita, meaning that the majority o f Sierra Leoneans w i l l still live on less than $1 per day. Therefore to reduce poverty significantly and improve the lives o f the majority o f Sierra Leoneans we need to achieve an annual growth rate o f 10% or more. Our strategy to achieve this is based on a complete transformation o f our economy. But this will require substantive investment in supportive infrastructure, improved delivery o f social services, and private sector dcvclopment. Sierra Leone Povert) Reduction Strateg) I 2008-20 12 ii Siena h o n e Povem Reduction Strateg! I 2008-2012 iii In health, our major focus will be on reducing mortality rates, especially for infants and pregnant women. We will scale up the minimum package o f essential services, including immunization, utilization o f treated bed nets, promotion o f early and exclusive breastfeeding, and promotion of hygiene practices as well as making available minimum maternal and neonatal health care systems. Given the clear links between health and access to safe drinking water, we will continue to invest in wells and gravity fed water systems throughout the country. In addition, the prevention o f HIV/AIDS and mitigating its effects will remain a priority o f the Government. We w i l l utilize the various levels o f leadership to play an active role in combating HIV/AIDS. In the medium term we will develop and implement a health insurance scheme that would improve the quality o f our health facilities and increase access to these facilities. These strategic priorities will be underpinned by measures to consolidate peace, ensure good governance and develop an enabling environment for economic growth. I t i s our conviction that no economic transformation i s possible without a transparent, accountable and effective public sector dedicated to providing supportive policics and actions. I n this respect, our plan i s to reform the public sector, support the private sector, modernize the financial sector, and take robust action on corruption. Accordingly, the Government will continue to work in the following areas: Good Governance: Rule o f law, human rights, and peace and security are cssential prc-requisites for sustainable growth and economic development. We are committed to ensuring peace building and consolidation, improving national security, reforming the public sector, enforcing the National Anti-Corruption Strategy, improving access to justice and human rights, and promoting positive attitudinal change. Macroeconomic Stability: The main challenges to achieving macroeconomic stability are the unprcdictability o f budget support, weak revenue performance, external shocks and the high domestic debt burden. We will mitigate these challenges by instituting measures to increase domestic revenue collection. limit domestic borrowing, enhance budget and public expenditure management, and Strengthen the process of fiscal decentralisation. Financial Sector and Private Sector Development: M y Government i s convinced that greater private sector participation in the economy will raise productivity and employment in all productive sectors. To encourage increased private sector participation, we will endeavour to remove barriers to investment through improving the physical infiastructure, strengthening the legal and regulatory framework, promoting business support services and improving access to finance, especially for Sinal I and Medium Enterprises. A n efficient and effective financial system will be crucial for financing private sector activities. The over-riding priorities in this area are to Strengthen the commercial banking system and improve i t s competitiveness, enhance rural financial access through microfinance institutions and community banks, and strengthen the enabling environment through the legislative, regulatory and policy infrastructure. Managing Natural Resources: Sierra Leone i s endowed with a wide varicty o f natural resources, including large deposits o f minerals, abundant fertile agricultural land, and a dcep natural harbour. Poverty in Sierra Leone can only be ovcrcomc by harnessing these advantages to create an economic transformation o f the nation, while ensuring that the benefits o f this growth are shared widely and lead to the betterment o f the lives o f thc people. Mining, tourism and land management are three kcy areas which have a significant impact on economic growth. In the mining scctor we will focus on strcngthening the lcgal and regulatory framework to cnsurc that returns benefit the population, while in tourism we will focus on improving the public image o f Sierra Leone and building the necessary infrastructurc. Land management will concentrate on ensuring clear ownership and use o f land through the development o f land management systems. Corruption: In order to secure our futurc, we must overcome a permissive attitude towards corruption. My Governincnt remains committed to rooting out corruption. Parliament recently approved a new and more stringcnt anti-corruption law and provided substantial powers to the Anti-Corruption Commission. I will continuc to put in place nieasures for a more transparent Illicit Drugs: The recent surge in illicit drug trafficking from Latin America through Western Africa to Europe poses a great danger for the security and stability o f Sierra Leone. M y Government remains cominittzd to fighting all forms o f illicit drug trafficking and Icall on the international community to stand shoulder to shoulder with Sierra Leone in this fight. Youth Unemulovment: About 70% o f our young pcoplc are unemployed. This situation not only deprives the country o f its most valuable human resource but if not checked, could also result in social unrcst and threaten the country's peace and security. My Government remains coininittcd to providing opportunities to our young pcople in order to integrate them into the economy. I call on the international coininunity to support Sierra Leone in this endeavour. Afoiritoring irrtd Evulimtiott To effectively inonitor and evaluate the Agcnda for Change, we will develop and implement a comprehensive framework that i s results-focused, transparent. efficient, and has local relevance. We have started with the introduction o f Ministerial Performance Contracts, which set the annual targets for each Minister and are reviewed on a quarterly basis. Sierra Leone Povzm Reduction Strategy - I 700s-2012 vi Leone P m e q Reduct1011Strateg? S~erra I 2008-2012 TABLE OF CONTENTS PARTONE: POVERTY. EMPLOYMENT GROWTH AND .......................................................................... 1 1 ACHIEVEMENTS. LESSONS AND REMAININGCHALLENGES ........................................ PRSP-I . 2 1.1 Progress and Achievements ..................................................... ............................................ 3 1.2 Remaining Challenges ......................... ............................................................................................. 5 1.3 Lessons Learned............................................................................ ......................................... 7 1.4 The Preparatory Process for PRSP-I1................................................................................... .........8 1.5 Structure o f PRSp -11 ............................................................................................................................ 10 2 POVERTY TRENDS AND EMPLOYMENT 2003-2007 ...................................................................... 11 2.1 Trends in Poverty between 2003 and 2007 .......................................................................................... 11 2.2 Trends in Human Development Indicators........................................................................................... 16 2.3 Conclusion .................................................................................. ..................................... 19 3 SOURCES OF AND CONSTRAINTSON GROWTH ............................................................................ 20 3.1 Growth and Poverty Nexus .................................................................................................................. 20 3.2 A Strategy for a Step-Change in Growth ............................................................................................. 22 PART TWO: STRATEGIC PRIORITIES ................................................................................................... 24 4 ENHANCING NATIONAL ELECTRICITY ........................................................................................ 25 4.1 Overview: Energy in Sierra Leone ...... ........................................................................................... 25 4.2 Economic and Social Impact o f Adequate and Affordable Energy ............... .............................. 25 4.3 Constraints and Opportunities in the Energy Sector ............................................................................ 27 4.4 Strategies for developing national electricity ..................................................................... . 28 5 TRANSPORTATION DEVELOPING THE NATIONAL NETWORK .................................................... 35 5.1 Overview: National Transport Systems ............................................................................................... 35 5.2 Improving the Road Network ........................................................ ...................................... 35 5.3 Improving River Transportation........................................................................................................... 40 5.4 Upgrading Lungi International Airport ............................................................................. 5.5 Developing the Freetown Ports .................. ................................................................................ 41 5.6 Reintroducing Rail Transportation .................................................................................... 6 ENHANCING PRODUCTIVITY IN AGRICULTURE AND FISHERlES ................................................ 42 6.1 Agriculture .................................................................................................................... 6.2 Marine Resources.......................................................................................................... 7 SUSTAINING HUMAN DEVELOPMENT ........................................................................................... 53 7.1 Education ..................................................................... ...................................... 53 7.2 Healthcare ............................................................................................................................................ 57 7.3 Water and Sanitation ............................................................................................................................ 63 7.4 Social Protection ....... ................................................................................................................ 67 7.5 Gender ............................................................................................ ........................................ 7.6 Promoting Employment ................................... ............................................................................... 71 PART THREE:SELECTED PRECONDITIONS FOR ACHIEVING THE STRATEGIC PRIORITIES ...........75 8 ........................................................ 76 SUSTAINING PEACE, SECURITY AND GOOD GOVERNANCE 8.1 Peace Building Commission and Peace Building Fund ................................................... .........76 8.2 Ensuring National Security ............................. .............................................................................. 77 vi i Sierra Leone Po\ert\, Reduction Strategy I 2008-2012 8.3 Local Governance and Decentralisation............................................................................................... 79 8.4 The Agenda for Fighting Corruption,................................................................................................... 80 8.5 Equitable and Affordable Justice and Human Rights......... ...... ...... 82 8.6 Attitudinal Change ............................................................................................................................... 84 9 SUSTAINING MACROECONOMIC STABILITY ................................................................................ 87 9.1 Medium Term Macroeconomic Forecasts............................................................................................ 87 9.2 Fiscal Policy and management ............................................................................................................. 88 9.3 Public Financial Management................................................................................ 9.4 Monetary Policy .................... ......................................................................................................... 93 9.5 External Sector Policies .......................................... 9.6 Exchange Rate Policy ............................................................................................ 9.7 Export Promotion and Diversification .................... .................................. 94 9.8 Public Debt Management Strategy....................................................................................................... 95 10 GROWING THE PRIVATE SECTOR ................................................................................................. 99 10.1 Private Sector Development During PRSP-I........................................................................................ 99 10.2 A Framework for Private Sector Development During PRSP.11 . 10.3 Improving Access to Finance by Building and Sustaining a Responsive Financial Sector................ 102 10.4 Improving the Legal and Regulatory Framework .............................................................................. 108 10.5 Promoting and Supporting Entrepreneurship ..................................................................................... 109 10.6 Making Markets Work Better ............................................................................................................ 110 10.7 Improving the Physical Infrastructure ................................................................................................ 110 11 FRAMEWORK FOR EFFECTIVE MANAGEMENT OF NATURAL RESOURCES ............................. 112 11.1 Tourism and Economic Development ................................................................................................ 112 11.2 Enhancing the Contribution o f Mining to Economic and Social Development ................................. 114 11.3 Land Management and the Environment ........................................................................................... 116 11.4 Enhancing the Contribution o f Forestry to Economic and Social Development ................................ 119 PART FOUR: FINANCING, IMPLEMENTATION, MONITORING AND EVALUATION OF THE PRSP .................................................................................................................................................... 121 12 PRSP-I1FINANCING REQUIREMENTS: A SUSTAINABLE FISCAL ENVELOPE .......................... 122 12.1 Sources ofFunds ................................................................................................................................ 122 12.2 A Sustainable Fiscal Envelope for Implementing PRSP-I1................................................................ 123 12.3 Strategies For Resource Mobilisation ................................................................................................ 128 13 IMPLEMENTATION, MONITORING AND EVALUATION ............................................................... 131 13.1 Strategy to Disseminate Information .................................................................................................. 131 13.2 Building Capacities to Implement. Monitor and Evaluate the PRSP-I1............................................. 133 13.3 Monitoring and Evaluation o f PRSP-I1.............................................................................................. 137 13.4 Key M&E Agencies ....... ................................................................................... 13.5 M&E Tools .................... ............................................................................................................... 139 13.6 Implementation. Monitoring and Evaluation Requirements .................................. 13.7 PRSP-I1 Information Flows ................................................................................................................ 142 13.8 PRSP-I1 as a Broader GoSL Monitoring and Evaluation Framework ............................ 14 MAINSTREAMING STATISTICS INTO PRSP .................................................................... 145 14.1 Introduction ........................................................................................................................................ 145 14.2 The National Strategy for the Development o f Statistics (NSDS) ..................................................... 145 14.3 Data Dissemination ............................................................................................................................ 148 viii % e r a Leone Po\ert) Reduction Strategq I 2008-2012 15 R I S K ASSESSMENT ....................................................................................................................... 149 15.1 Endogenous Risks .............................................................................................................................. 149 15.2 Exogenous Risks ................................................................................................................................ 150 ANNEX 1: COSTED ACTIVITY MATRIX .............................................................................................. 152 ix Siena Leone Povem Reduction Strategi I 2008-2012 LIST OF TABLES Table 1: Donor Disbursement for PRSP ................................................................................................... 5 Table 2: Percentage o f Households Owning Certain Assets in 2007.. ........................................... 12 Table 3: Likely Trend in Headcount Index o f Poverty between 2003 007 .................................... 13 Table 4: Labour Force Participation Rate (15-64) by Gender, Area and Quintile, 2003 and 2007 ........14 Table 5 : Share of Employment by Sector and Region, 2003 and 2007 (%) ........................................... 15 Table 6: Employment Shares by Type o f Employer, 2003 and 2007 (%) ........................................ Table 7: Trends in Human Development Indicators (2000 and 2005 MICS surveys) ...................... Table 8 : Generation Capacity by Region................................................................................................ 31 Table 9: Current State ofthe Road Network ................................................................. Table 10: Regional Distribution o f Road Network ........................................................... Table 13: Inland Waterways ................................................................................ Table 15: Value of Agricultural Export (US$) ... ............................................ 45 Table 17: Stock o f Medical Personnel in the Ministry o f Health and Sanitation.................................... 59 Table 18: Sierra Leone: Medium Term Macroeconomic Framework, 2006- 2012 ................................ 91 Table 19: External Debt in Million (US$ 2005-June 2008) .................................................................... 96 Table 20: PSD Activities Implemented During PRSP-I ....................................................................... 100 Table 21: Ease o f Doing Business Ranking 2009 ................................................................................. 109 Table 22: Mining Potential o f Sierra Leone .................................................................... Table 23: Baseline Scenario- MTEF Poverty Estimates (US$ '000) ...................... Table 24: Accelerated Poverty Reduction Scenario ........................................................ Table 25: Estimated financing gap ......................................................................... LIST OF FIGURES Figure 1: Results of the Nationwide Consultations ......................................................................... Figure 2: Sierra Leone GDP Growth ..................................................................................... Figure 3: Investment in Sierra Leone (% o f GDP) .......... ........................................................... Figure 4: Percentage Distribution o f Households by Fuel Used for Lighting ................................. Figure 5: Percentage Distribution of Households by Fuel Used for Cooking ........................................ 29 Figure 6: Generating Capacity 200 1-2008 (GWh) ................ Figure 7: Trend in Crop Production (thousand metric tonnes Figure 8: Trend in Livestock Production (head) .................... Figure 9: Value of Agricultural Export (US$) ....................... Figure 10: Sierra Leone Fisheries Production Trend, 1991-2 Figure 11: Potential Yields for the Sierra Leone Fishery ...... Figure 12: Sierra Leone Fisheries Revenue, 1997-2007........ ........................................ 50 Figure 13: A Framework for Pro-Poor Private Sector Development.................................................... 101 Figure 14: WTTC Projection o f Tourism Receipts in Sierra Leone ..................................................... 113 X Sierra Leone Po\ erty Reduction Strategy I 2008-2012 ACRONYMS ACC Anti-Corruption HRMO Human Resource Commission Management Office AML Anti-Money Laundering ICT Information, BADEA Arab Bank for Economic Communications Development in Africa Technology BKPS Bo-Kenema Power System IDA International Development BOT Build, Operate and Transfer Association Project Financing IFMIS Integrated Financial Arrangements Management Information BSL Bank of Sierra Leone System CFT Combating Financing o f IMF International Monetary Terrorism Fund CG Consultative Group IPT Intermittent Preventive CPIA Country Policy and Malaria Treatment O f Institutional Assessment Pregnant Women (IDA) IPPS Independent Power cso Civil Society Providers Organisations ITN Insecticide-Treated Bed CWIQ Core Welfare Indicator Nets Questionnaire Survey JCC Joint Coordinating DACO Development Assistance Committee Co-ordination Office TC .I Joint Intelligence DEPAC Development Partnership Committee Committee JICA Japan International DISEC District Security Corporation Agency Committee MCH Maternal & Child Health DSA Debt Sustainability MDAs Ministries, Departments Analyses and Agencies DTIS Diagnostic Trade MDBS Multi-Donor Budgetary Integrated Study support DWG District Working Group MDGs Millennium Development ECCE Early Childhood Care and Goals Education MDRI Multilateral Debt Relief ECOWAS Economic Community o f Initiative West African States MFMR Ministry o f Fisheries and EIA Environmental Impact Marine Resources Assessment MICS Multi Indicator Cluster EPA Environmental Protection Survey Agency MoFED Ministry o f Finance and ESP Education Sector Plan Economic Development ETLS ECOWAS Trade MSME Micro, Small and Medium- Liberalization Scheme sized Enterprises EU European Union MTEF Medium-Term Expenditure FPA Fisheries Partnership Framework Agreement (EU) NACS National Anti-Corruption FSAP Financial Sector Action Strategy Plan NaCSA National Commission for GDP Gross Domestic Product Social Action GoSL Government o f Sierra NASSIT National Social Security Leone and Insurance Trust GST Goods and Services Tax NCCT National Coordinating HIPC Heavily Indebted Poor Committee on Trade Countries xi Sierra Leone P o ~ e Reduction Strategy e I 2008-2012 NCP National Commission for PSD Private Sector Privatisation Development NEC National Election REP0 Repurchase Agreements Commission SALW Small Arms and Light NGO's Non-Governmental Weapons Organisations SLEDIC Sierra Leone Export NPA National Power Authority Development and R N A National Revenue Investment Corporation Authority SLETFUND Sierra Leone NSC National Security Council Enterprise and Skills NSCCG National Security Development and Coordinating Group Training Fund NSDS National Strategy for the SLIEPA Sierra Leone Investment Development o f Statistics and Export Promotion NTC National Technical Agency Committee SLIHS Sierra Leone Integrated NWRB National Water Resources Household Survey Management Board SLRA Sierra Leone Roads ONS Office o f National Security Authority PETS Public Expenditure SME Small and Medium Sized Tracking Survey Enterprises PFM Public Financial SP Social Protection Management SRN State RegisteredNurse PHU Peripheral Health Unit SSA Sub-Saharan Africa (Primary Health Care) SSG Security Sector Group PMC Performance Management SSL Statistics Sierra Leone Contract SSR Security Sector Review PMTCT Prevent Mother to Child STI Sexually Transmitted Transmission Disease PPA Participatory Poverty VCCT Voluntary Counselling and Assessment Confidential Testing PRGF Poverty Reduction and UNDP United Nations Growth Facility Development Programme PROSEC Provincial Security UNICEF United Nations Children's Committee Fund PRS Poverty Reduction UNIDO United Nations Industrial Strategy Development Organisation PRSP Poverty Reduction VCCT Voluntary and Confidential Strategy Paper Counselling and Testing PRSP-I First Poverty Reduction WFP World Food Program Strategy Paper WTTC World Tourism and Travel PRSP-I1 Second Poverty Reduction Council Strategy Paper xii Sierra Leone Poverty Reduction Strdteg) I 2008-2012 1 Sierra Leone Poveit) Reduction Strategy I 2008-2012 Sierra Leone developed i t s first Poverty Reduction Strategy in the form o f an Interim Poverty Reduction Strategy in 2001. This was designed to address the challenges o f transition from war to peace by focusing o n three key areas: restoring national security and good governance; re- launching the economy; and providing basic services t o the most vulnerable groups. This was complemented in 2002 by a National Recovery Strategy based o n district and local recovery plans that emphasised the consolidation o f state authority, peace-building, promotion o f reconciliation, enforcement o f human rights, resettlement, reintegration and the rebuilding o f communities. Subsequently, a long-term sustainable development plan entitled "Sierra Leone Vision 2025" was published in 2003, and it provided a long-term framework for development planning and management. This was followed by the first full Poverty Reduction Strategy Paper (PRSP-I), which was developed for the 2005-2007 period. PRSP-I reflected a move away from immediate post-conflict concerns and was constructed around three pillars: the first pillar focused o n good governance, peace and security; the second o n food security and j o b creation; and the third o n growth and human development. U p o n embarking o n the second PRSP process, a review was undertaken o f PRSP-I t o highlight the achievements and lessons learned from i t s planning and implementation. Furthermore, a diagnostic study was conducted t o identify drivers o f growth in Sierra Leone. Based upon these findings, it was clear that only economic growth could provide the basis for poverty reduction in Sierra Leone, and consequently the focus o f the second PRSP (PRSP-11) should be o n the promotion o f transformational economic growth. The diagnostic study and analysis o f the poverty profile has helped to identify the key sectors which will form the strategic priorities for PRSP-11. Also, in order to generate a sustainable rate o f economic growth, PRSP-I1 emphasises the need t o develop an enabling environment t o support the private and productive sectors o f the economy, and identifies four key enablers and drivers o f growth. Finally, PRSP-I1 has sought t o strengthen the implementation process t o ensure that strategies are rolled out and implemented effectively by line ministries, departments and agencies. This chapter provides an overview o f the experience o f PRSP-I and the lessons learned from that process. It reviews macroeconomic performance from 2005-2007 t o give the economic background, outlines the preparatory process for PRSP-11, and lays out the structure o f this document. 2 Sierra Leone Poverty Reduction Strategy I 2008-2012 PRSP-I was prepared through extensive consultations involving open dialogue between key stakeholders including Ministers, Parliamentarians, local authorities, non-state actors and development partners. An assessment o f the achievements o f each pillar follows below. 1.1.1 PILLAR 1: P R O M O T I N G GOODGOVERNANCE,E A C E A N D SECURITY P Public sector governance - Efforts to reform the public sector have not been very successful and the lack o f a comprehensive c i v i l service reform programme continues to pose a serious challenge to government, as the required capacity to implement, monitor and evaluate programmes i s s t i l l lacking in line ministries. Management and functional reviews were undertaken for several Ministries, Departments and Agencies (MDAs), but the recommendations were not implemented. A Senior Executive Service Programme was also developed, but Government and development partners could not agree o n an implementation strategy and therefore the funds required for implementation were not provided. On a more positive note, a 90-day review o f the architecture o f the C i v i l Service was conducted and preliminary efforts started t o convert the Establishment Secretary Office into a Human Resource Management Office (HRMO). Public financial management - Public financial management has improved significantly over the years as the Medium-Term Expenditure Framework (MTEF) budget process has been strengthened. All MDAs n o w prepare strategic plans that are aligned to the PRSP objectives. An Integrated Financial Management Information System (IFMIS) has been installed and implemented in key MDAs. Internal Audit Units have been established in 14 MDAs. In the area o f procurement, the National Public Procurement Authority secretariat i s n o w fully operational with an Independent Review. Panel, and Procurement Units have been established in all procuring entities. The Public Expenditure Tracking Survey and related public perception surveys are conducted regularly and plans o f actions developed and recommendations implemented. Decentralisation - In the area o f decentralisation, implementation o f the devolution plan i s on- going. 19 out o f the 34 functions have been devolved to local councils and 14 out o f the 19 elected councils have met the transparency and financial management accountability requirements. A Chiefdom Governance A c t has been developed and approved by Parliament. The Anti-Corruption Agenda - The fight against corruption also continues to be a key component in promoting transparency and accountability. Anti-corruption cases were fast-tracked through a fiat mechanism but the arrangement has been repealed. The National Anti Corruption Strategy (NACS) has been revised and i s n o w being implemented. Peace and Security - Consolidating peace i s critical for Sierra Leone, and the Truth and Reconciliation Commission's recommendations have been gradually implemented along with the Government's White Paper o n the recommendations, while a Human Rights Commission has been established. Peace education programmes were implemented by the National Commission for Democracy. The National Election Commission (NEC) was strengthened and as a result was able t o conduct peaceful and credible general and parliamentary elections in 2007. To facilitate the 3 Sierra Lzone Po\em/ Reduction Strategy I 2008-2012 judicial reform process, a comprehensive and integrated Justice Sector Strategy was developed and implemented. This strategy promotes capacity building initiatives that ensure that justice i s delivered to the less fortunate and the vulnerable. In promoting security, the Police and Military were restructured and retrained to improve their efficiency. Security intelligence was also strengthened through the Office o f National Security (ONS) which i s mandated to coordinate all security related issues. 1.1.2 PILLAR 2 : P R O M O T I N G PRO-POOR S U S T A I N A B L E GROWTH Macroeconomic stability - With support from the development partners, Sierra Leone has made significant progress in the pursuit o f macroeconomic stability in recent years. Following the successful implementation o f the first Poverty Reduction and Growth Facility (PRGF I ) arrangement (200 1-2005), the Government entered into negotiations for a successor PRGF arrangement with the IMF. Based on the track record o f economic performance, the Executive Board o f the I M F approved the PRGF I1 in M a y 2006. With continued donor support, during the implementation o f PRSP-I, Sierra Leone achieved a relatively stable macroeconomic environment with strong economic growth, moderate inflation, declining current and fiscal account balances, increased level o f foreign reserves, a broadly stable exchange rate, positive real interest rates and a lower external debt burden. Sierra Leone reached the completion point under the Heavily Indebted Poor Countries (HIPC) initiative in December 2006, and qualified for debt r e l i e f under the Multilateral Debt Relief Initiative (MDRI). Promoting food security and job creation - This i s centred on increasing domestic food production, in particular the production o f rice and other food crops like cassava and potato. Production o f cash crops l i k e coffee and cocoa, and o f livestock (cattle, goats and sheep), increased in all cases, although in some instances not significantly. Similarly domestic fish production also increased during the period. Investment in Supportive Infrastructure - Attempts to improve electricity supply were not successful as the Bumbuna Hydroelectric Project did not come online as expected, and arrangements to provide a short term electricity supply for Freetown were only implemented in late 2007. The road network was improved slightly with approximately 500 km o f gravel roads rehabilitated and over 1,200km o f trunk roads constructed and maintained. Access to I C T products improved significantly after the liberalisation o f the telecommunications industry, which also led to the establishment o f five mobile communications companies. The mobile network was extended to 80% o f the country with investments estimated at over US$125 million. Private Sector Development (PSD) - Improving the climate for PSD i s the cornerstone o f growth and job creation. To facilitate PSD, a Diagnostic Trade Integrated Study (DTIS) was conducted and an action matrix developed to implement the recommendations. To simplify administrative procedures, and reduce the cost o f doing business in Sierra Leone, legislation on business registration was enacted. Public-Private Partnership schemes were also promoted, and agro- businesses were supported through the establishment o f skills and food-processing centres. Youth employment and empowerment was promoted through the establishment o f agricultural farms for youth, Youth Enterprise Development Schemes, and employment in public works. 4 Sierra Leone Po\ert). Reduction Strategy I 2008-2012 1.1.3 PILLAR 3: P R O M O T I N G H U M A N D E V E L O P M E N T - Education and Training Access to education increased over the period as the N e t Enrolment Rate increased, although the ratio o f girls to boys remained constant. Due to the focus on girls in education, the number o f girls accessing secondary schools increased significantly. The pupil- teacher ratio target was not achieved largely due to the ceiling placed on recruitment o f teachers. Health and Nutrition Services - Similarly, access to health facilities increased, as a total o f 867 public health units were made fully operational. lnfant and child mortality ratios reduced slightly, but s t i l l remain amongst the worst in the world. Malaria treatment and prevention was intensified with the supply o f over 300,000 treated bed-nets and the provision o f affordable treatment drugs. The HIV/AIDS pandemic continued to be addressed through the continuous provision o f condoms, establishment o f Voluntary Counselling and Confidential Testing (VCCT) sites and provision o f anti-retroviral drugs and other support to people living with HIViAIDS. Access to safe drinking water and sanitation improved slightly at 49 % and 35 % respectively. 1.1.4 F I N A N C I N G PRSP-I The cost o f implementing PRSP-I was originally estimated at US$1.62 billion while the total government funds available were estimated to be US$683 million. Thus the additional amount required to fully implement the PRSP was estimated at US$941 million. Development partners requested that the Government re-prioritise activities in the PRSP to reduce the funding requirement by US$368 million, creating an actual funding gap o f US$573 million. 1 Year 1 2005 1 2006 1 2007 I Total 1 I 1 Amount (US$ millions) 1 336.6 1 361.3 1 277.2 I 975.1 At the CG meeting held in London in November 2005, pledges made in support o f PRSP-I amounted to US$S74 million. However, most o f these pledges were reconfirmations o f commitments already reflected in the government budget, with a real addition o f only US$246 million. In essence, out o f the US$1.62 billion required to fund the PRSP, commitments totalled US$929 million creating a funding gap o f US$695 million. However, Table 1 shows that total donor disbursements for the period 2005-2007 amounted to US$975 million, which exceeded the CG commitment by US$lO 1 million. The following challenges remain for Pillar 1: 5 Sierra Leone P o w t ) Reduction Strateg) I 2008-2012 Public service reforms in the Civil Service were not implemented - the lack o f capacity in all MDAs needs to be addressed in order to achieve the successful implementation o f all development programmes. Further improvement in public financial management is still required the preparatory - process o f the budget needs to be strengthened to ensure that it i s presented to Parliament as per the provisions o f the Government Budgeting and Accountability Act. Also IFMIS needs to be installed and operationalised in all MDAs. Procurement rules need to be adhered to - procurement awards are to be made public on a regular basis through publication in accordance with national procurement law. Ensure adequate funding for the National Anti-Corruption Strategy (NACS) the NACS - should be endorsed b y Parliament and adequate funds provided to ensure i t s effective implementation. Implementation o f the devolution plan needs to be intensified and the capacity o f local councils should be developed so they can effectively coordinate and supervise programmes at the district level. The following challenges remain for Pillar 2: Signijcant challenges to maintaining macroeconomic stabiliQ - challenges include weak revenue performance, unpredictability o f budget support, external shocks and a high domestic debt burden. There were no programmes developed or implemented to promote the tourism sector - despite the sector showing tremendous potential to provide employment and enhance investments. This sector should be supported and through the PRSP. Youth employment programmes - these need to be clearly articulated, coordinated and integrated into a single strategic framework. Efforts to promote private sector development need to be strengthened - through the provision o f the requisite infrastructure, particularly the energy supply, road network, and s k i l l s development. The cost o f doing business in Sierra Leone s t i l l remains high relative to other countries. - Better policy framework for mining although diamond exports increased between 2005 and 2007, the mining sector needs to be guided by a better policy framework. This w i l l ensure that activities in the sector w i l l provide maximum possible benefits to the Government in terms o f revenue generation, community development and environmental protection in the mining areas. The following challenges remain for Pillar 3: Environmental management - Although the National Commission for Environment and Forestry was established, it has no legal basis as there was no enabling Act o f Parliament to support it, and i t s impact has been limited due to a lack o f basic logistics and funds to operate. Access to safe drinking water and health facilities needs to be improved within an integrated framework. 6 Sierra Leone Povert) Reduction Strategq I 2008-2012 The quality o education needs attention with the capacity o f higher education institutions f strengthened, international standard postgraduate programmes introduced, and education for those with special needs provided. Affordable housing for the poor, Children First policy and gender empowerment were highlighted in the PRSP-I, but n o meaningful efforts were made to address these issues. Overall, PRSP-I did not clearly prioritise an agenda for driving high sustainable growth, employment and poverty reduction. I t also failed to adequately focus o n achievement o f meaningful human resource and institutional development which are the basic prerequisite for driving national development. There were a variety o f lessons learned over the course o f the implementation o f PRSP-I. The issues and constraints are outlined below: Targets too ambitious relative to available resources - PRSP targets were not revised after the re- prioritisation process and consequently, Government was monitoring progress o n the implementation o f programmes which were not funded. Targets should have been revised based o n the available resources. Weak intersectoral linkages - although the PRSP-I underscored the need for strong inter-sectoral linkages between the programmes identified, during implementation the sectors tended to focus primarily o n activities that fell within their respective sectors. N o strong collaboration or synergy was realised between the various units in the different sectors. Implementation was not dictated by national priorities - there was a tendency for donor funding t o be directed to programmes that reflected donor preferences rather than national priorities. For example, funds were quickly mobilised to support C i v i l Society Organisations (CSOs) and related activities but were not adequately provided t o support the energy sector. Need for a resource mobilisation strategy and an Aid Policy - mobilising resources was primarily undertaken at C G meetings and bilateral ad hoc meetings with partners. There was n o clear strategy as t o h o w and when resources would be mobilised to close the funding gap. There i s a need t o develop and adopt a Resource Mobilisation Strategy and an Aid Policy that will assist the Government to expand the number o f development partners that are actively involved in Sierra Leone, but also to provide clear guidelines o n all aid management issues. Lack o required capacity - the effective implementation o f PRSP-I depended largely o n the f capacity o f the line Ministries t o develop, implement and monitor programmes within their respective Ministries. Weak capacity in line Ministries affected the implementation o f programmes. Additionally, CSOs and the Parliament are supposed t o monitor progress and provide the checks and balances required for effective implementation o f programmes. However, due to capacity constraints, Parliamentarians as well as CSOs were unable t o provide effective monitoring o f PRSP-I. Finally, the PRSP promotes the development o f the private sector as a 7 Sierra Leone Povertj Reduction Strategy I 2008-2012 prerequisite for growth. Diagnostic studies were carried out but there was insufficient know-how or capital to support significant levels o f private sector activity. Internalising PRSP-I - in most cases, MDAs and local councils did not implement the PRSP as it was largely viewed as separate from their routine work. This had a fundamental detrimental impact o n PRSP-I implementation. Lack o timely and reliable statistics - the lack o f timely and reliable statistics made the f determination o f the baseline for monitoring difficult and as a result, targets set were unrealistic. It also made it difficult to adhere t o the monitoring and reporting requirements o f the PRSP. I 1.4 THE PKEYARA'I'OHY FOR PRSP-I1 PKOCE:SS The second Poverty Reduction Strategy Paper was prepared based o n four elements: lessons learnt f t o m implementing PRSP-I; the President's Agenda for Change; nationwide consultations and priority-setting exercise; and the growth diagnostic analysis for Sierra Leone. The process was started with two independent firms contracted to validate the Progress Report o n the implementation o f the first PRSP, and to set priorities for the development o f the Second PRSP. The sample size used for these exercises covered all 149 chiefdoms and the Western Area. The reports from these two consulting f i r m s were presented in January 2008. In February 2008, the President articulated the Agenda for Change which clearly identified the priorities o f the Government for the next 3-5 years. The institutional mechanism for developing the Second PRSP included central and local government, c i v i l society groups, development partners, parliamentarians and national consultants. Ownership and leadership o f the process was provided by the Government. In particular, a Core Committee was appointed by the President comprising the Office o f the President (Chair), the Bank o f Sierra Leone, the Ministry o f Finance and Economic Development, Statistics Sierra Leone, and the Development Assistance Co-ordination Office (DACO) serving as the technical secretariat. The Core Committee met regularly throughout the development o f the document. The Core Committee developed an outline o f the document in March and circulated this outline to all key stakeholders for consultation. The Core Committee met with seven umbrella organisations o f c i v i l society groups t o discuss the outline and the process. At this meeting the CSO umbrella organisations reiterated their commitment to working closely with Government in the preparation o f this document. 8 Sierra Leone Povert) Reduction Strategq - I '008-201 2 Figure 1 : Results o f t h e Nationwide Consultations Transportation Transportation was highlighted as the major challenge to the development o f agriculture. Therefore, Government was urged to improve the road network by improving and maintaining all weather trunk In the areas o f education, the people acknowledge the existence o f schools even in the remote areas but expressed the need to improve the conditions o f services for teachers to ensure that these schools are properly managed. Government was urged to continue to pay attention to the girl-child. The issue o f teenage pregnancy was highlighted as a serious and growing problem in the rural communities. The The need for a fair and equitable distribution o f electricity was underscored. The Government's effort to improve electricity supply to Freetown was lauded. However, Government i s urged to do the same for the rural areas. Thermal generation o f power was considered expensive and therefore Government was urged to explore alternative sources o f generating power, for example solar and bio-diesel. Government was also urged to explore the mini-hydro potential in the various districts. To complement ored that Bikongo in Kono district, Masumuneh in In all regions, agriculture was identified as the number one priority o f the people. Other than the road network, challenges facing the sector are access to credit, access to market, post harvest storage facilities, equipment and seedlings. The Government was urged to provide the above facilities and equipment through a fair and transparent process. I t was suggested that agricultural banks should be The need to address the proliferation o f unqualified doctors was underscored as this contributed to the mortality rate especially for pregnant women. The issue o f condition o f service for health workers, increase sensitisation on HIV/AIDS and the stigmatisation o f infected persons were also highlighted. Clinics and other health care providers who are not recognised by the Medical and Dental Association should cease to oDerate. Government was urned to increase investment for safe drinkinn water. d Y Furthermore, as the implementation o f the Second PRSP i s largely the responsibility o f the MDAs, a l l MDAs were given the opportunity t o make input o n the outline and timeline for the preparation 9 Sierra Leone Po\ e@ Reduction Strategy I 2008-20 12 o f the document. The MDAs then developed their respective sections for input into the PRSP. To ensure inclusiveness in the preparation o f PRSP-11, the outline was also discussed with development partners, CSOs and parliamentarians. The comments and suggestions from these various discussions were incorporated into the outline. In particular, for the first time in Sierra Leone, Parliament was consulted even before the drafting o f a national document started. Previously the practice has been t o send the final product to parliament for ratification. However, to ensure the active involvement o f parliamentarians in the process, parliament was consulted o n the outline and process o f developing the second PRSP. A half-day workshop was held and suggestions were imputed before developing the f i r s t draft of the document. Drafting o f the document started with a two-day consultative workshop where each MDA was requested to make a presentation o n the priorities, challenges and recommendations o n h o w to address existing constraints within the PRSP-I1 period. After the consultative workshop, the Core Committee developed a PRSP-I1 draft, and this document was subsequently circulated to development partners for comments and inputs. - Validation and Consultation At the regional level, each meeting was attended by traditional leaders and elders, religious leaders, women groups, local councils, CSOs, c i v i l servants, farmers association and youth groups. This gave all Sierra Leoneans the opportunity to contribute to the development o f the Second PRSP. After a series o f consultations with MDAs and development partners, PRSP-I1 was then validated at a national stakeholder meeting. The document was then sent t o Parliament and Cabinet for ratification and endorsement. The document i s organised into four parts. Part One (Chapters 2-3) provides an overview o f the growth diagnostics and poverty profile which has been used to develop the poverty reduction strategy and identifying key themes. Part T w o (Chapters 4-7) focuses o n the four strategic priorities identified for PRSP-11, namely energy, transport, agriculture and human development. Part Three (Chapters 8-12) lays out strategies in key sectors to enable and drive growth, which includes good governance, macroeconomic stability, private sector development, financial sector reform and natural resource management. Part Four (Chapters 13-15) completes the PRSP by presenting the financial requirements, implementation modalities, and the monitoring and evaluation architecture. 10 Sierra Leone Polerty Reductm Stratzgy I 2008-2012 The poverty profile established for the first Poverty Reduction Strategy was based on the Sierra Leone Integrated Household Survey (SLIHS) conducted in 2003/2004. Poverty was defined with respect to two poverty lines: foodiextreme poverty, and full poverty. The food/extreme poverty l i n e was translated into an expenditure o f Le.1,033 per day and the full poverty l i n e to L e . 2 , l l l per day. Based on these thresholds, the estimate showed that 70% o f the population were living below the full poverty line in Sierra Leone. Further analysis o f the levels o f consumption, the estimates o f poverty lines and poverty measures suggest that 66.4% o f the population could be defined as 'poor' (47% in urban areas versus 79% in rural areas). Rural areas accounted for the largest proportion o f the poor (73%, versus 61% o f the population). The average person's total consumption falls short o f the minimum consumption level necessary in order not to be poor, by 27.5% o f the poverty line. Given a population o f 4.96 million, this implies that the resources necessary to eradicate poverty under a perfectly targeted transfer would amount to L e l . 1 trillion (about U S $ 361 million) per year'. O f course, since a perfect transfer i s not feasible, the resources required to eradicate poverty are significantly higher than that. For all poverty measures, the Eastern Region records the highest poverty, followed by the Northern Region. The Western Region has the lowest poverty measures. The five poorest districts according to poverty incidence are Kailahun, Kenema, Bonthe, Tonkolili and Port Loko. Though Bombali ranks sixth in poverty incidence, it ranks second in terms o f the poverty gap, followed by Kenema and Bonthe. The same holds for the severity o f poverty, with Kailahun, Bombali, Kenema and Bonthe recording the highest squared poverty gaps2. It i s worth noting that rural areas in the Western Region tended to have high levels o f poverty in comparison to Freetown. This may be because as in other poor countries, provincial people are eager to go to the capital city area with the hope o f enhancing their livelihoods. Yet a majority o f migrants are unskilled, and find themselves in the periphery o f the capital city o f Freetown, often living in slums and in some instances in rural areas. In some cases their socio-economic condition may then be worse than that o f those who remained in rural areas. In the case o f Sierra Leone, this situation may have been aggravated by the civil war, as the Western area including Freetown witnessed an unprecedented influx o f upcountry dwellers during the war. Notwithstanding ongoing efforts to resettle internally displaced persons, many are reluctant to go back to their original homes. Yet, for a good proportion o f them, it may well be that continuing to dwell in Western slums/periphery i s no better than living in the countryside. ' Assumes an exchange rate o f L e 3000 per U S $ * The Squared Poverty Gap Index measures the severity o f poverty for each area. By squaring the poverty gap for each householdindividual, this measure gives greater weight to those that fall far below the poverty line than those that are closer to it. 11 Sierra Leone Povem Reduction Strateg) I 2008-2012 As part o f the analysis for the second PRSP, changes in poverty since 2003 were assessed. While there i s no new household survey with consumption data comparable to the 2003 SLIHS, the 2007 Core Welfare Indicator Questionnaire (CWIQ) survey provides information on a range o f household characteristics including household assets which can be compared to the assets owned by households in 2003. It i s therefore feasible to conduct an analysis o f the asset-based poverty trend among households. In addition, by making certain assumptions regarding the relationship between per capita GDP and the likely level o f household consumption per equivalent adult, it i s possible to determine poverty trends in per capita GDP. 2.1.1 ASSET-BASED POVERTY Trends in asset-based poverty suggest that there may have been a significant reduction in poverty between 2003 and 2007. Research by Filmer and Pritchett (1998) and Sahn et al. (2000) has shown that asset indices can be good proxies for household consumption, so that analyzing trends in asset based poverty can provide insights on how standards o f living change over time. The asset index takes into account ownership o f household equipments (phone, TV, radio, etc), the availability and access to utility services (water and electricity for example), access to sanitation (toilets) as well as characteristics o f the building materials o f the household dwelling (type o f roof, Source 2007 CWIQ Survey The estimates in Table 3 suggest that the national asset-based headcount o f poverty decreased from 67.5 % in 2003 to 61.6 % in 2007. This decrease o f about 6 percentage points shows a significant reduction in poverty. The decrease in asset-based poverty seems to have been much larger in urban 12 Sierra Leone Poyert) Reduction Strategj I 2008-2012 than in rural areas, which i s expected, given the common perception that post-conflict growth since 2003 has benefited urban areas the most. 2.1.2 GDP PER C A P I T A GROWTH The impact o f GDP per capita growth on poverty suggests an even larger decrease in poverty between 2003 and 2007, but this i s likely to be overestimated as it i s based on the assumption that GDP per capita growth i s perfectly correlated with average growth in consumption per adult at the household level. It i s possible to simulate poverty levels in 2007 by scaling up the adult equivalent consumption aggregate for all households in the 2003 survey by a factor equal to the ratio o f per capita GDP in 2007 to per capita GDP in 2003. As shown in Table 3 , the simulation suggests that growth could have led to a reduction in consumption poverty o f up to 9.8 percentage points. This i s a very large reduction in only four years, but it comes from the fact that GDP growth was exceptional. However, given the fact that part o f GDP growth i s not likely to have trickled down rapidly to large segments o f the population (for example, the resumption o f mining activities i s not likely to quickly result in improvements in standards o f living for most o f the population), we can assume that the decrease in poverty simulated using GDP growth i s overestimated. National 67.5% 61.6% -5.9% 66.4% 56.6% -9.8% Rural 78.6% 77.1 % -1.5% 78.6% 69.9% -8.6% In addition, the suggested reduction o f 6 percentage points in asset-based poverty i s large for a short period o f time, but even i f it has indeed taken place, much more progress i s s t i l l needed given that the share o f the population in poverty remains very high. Also, it should be noted that measurement errors are possible (for example GDP data i s relatively weak in Sierra Leone, with GDP data by sector showing trends that do not appear to match events on the ground for the war years). Thirdly, the estimated reduction in poverty i s not generally evident at the street level, as there i s a perception that while living standards may have indeed been improving, this w i l l probably remain a very slow process. It w i l l not be possible to confirm if poverty has been significantly reduced until the new household survey i s completed in 2009. 2.1.3 TRENDS EMPLOYMENT BETWEEN 2003 AND 2007 ~~ Employment trends also suggest likely improvements in standards o f living between 2003 and 2007 as labour force participation rates have increased much faster than unemployment rates. Limited comparable data are available between the 2003 S L I H S and the 2007 CWIQ, and a thorough analysis o f trends in employment would need to be much more detailed than what i s 13 Sierra Leone Povert) Reduction Strateg I 200s-20 13 presented here. Nevertheless there are some clear and useful trends in basic employment variables worth highlighting. As shown in Table 4, labour force participation rates have increased substantially between 2003 and 2007 (by about 7 percentage points). The increase has been largest among the poorest quintiles (in the fifth quintile, the much lower labour force participation rate i s due in part to the statistics being calculated to include all individuals aged 15 to 64, with many o f the younger group s t i l l enrolled in school or at the university among better o f f households). There has also been an increase in unemployment between 2003 and 2007, but this increase i s much lower than the increase in labour force participation. Therefore, presumably, households have been able to benefit from higher incomes as more household members were willing and able to find work in 2007 than was the case in 2003. Note that a separate analysis on youth employment based in large part on the 2003 S L H I S data and a Sierra Leone Employers' Survey for 2006 are available in a separate report (World Bank, 2007). Residence A r e a Data on shifts in employment patterns also point to an improvement in standards o f living. Table 5 shows employment shares by sector as well as by type o f employer. According to the data in Table 5, there has apparently been a substantial shift away from agriculture to better paying jobs in industry and services, and to some extent in community services and government. The shifts seem to be large for four years, but they may be related to the resumption o f industrial and service- oriented activities after the conflict. 14 Sierra L e o n e Poi ert) Reduction Strateg) I 2008-2012 Table 6 shows that the share o f jobs provided by family farms and businesses h s decreased. a Overall, these shifts are consistent with the improvement in standards o f living expected from growth as well as with the gains in terms of assets owned by households between the two survey years. ,,, ,, - Nation South East North [ - West 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 +- 71.8 61.3 78.9 68.1 84.7 71.7 84.2 75.7 2.3 1.7 Livestocklpoultry 0.3 0.4 0.1 0.1 0.8 0.6 0.1 0.1 Forestry/logging 0.1 0.4 0.1 0.3 0.2 0.1 0.0 0.2 0.0 1.3 Fishing 0.2 1.7 0.1 0.4 2.0 0.3 1.5 0.4 3.4 Agriculture total 72.3 63.8 79.0 69.0 85.0 74.6 85.1 77.6 2.7 6.5 Miningiquarr ying 1.1 2.6 1.o 7.1 3.9 0.4 0.0 2.0 0.1 0.9 ~ Manufacturing/processing 1.8 1.9 1.3 I 1.0 I 1.4 1 1.0 1 0.6 1 1.6 I 7.1 I 6.0 1 Electricity/gas/water 0.1 0.8 0.0 1 0.6 I - 1 0.5 1 - 1 0.2 I 0.6 1 2.8 1 /Construction 1.2 1.9 4.2 7.1 14.4 19.8 0.6 1.6 0.5 15.6 4.1 3.8 100.0 15 Sierra Leone Po\ e r h Reduction Stiategx - I 3008-2012 Data o n trends in human development available from the Multiple Indicator Cluster Survey (MICS) conducted in 2000 and 2005 suggested limited improvements over the period, which s t i l l includes several years o f the conflict. As Table 7 shows, the under-five mortality rate i s estimated at 286 deaths per 1,000 live births, which i s far above the average for West and Central Africa. The methodology used to calculate this indicator means that the estimates relate t o 1997 for the 2000 MICS2, and to 2002 for the 2005 MICS3 estimate. 2002 was the year when the conflict ended. The infant mortality rate, which i s also very high, did not decrease between the 2000 and 2005 surveys. Malnutrition affects up t o one third o f children, and shows an increase over time, but again, since this indicator i s calculated for children up to five years o f age, it does not include much o f the potential impact o f the post-conflict recovery. There are clear signs o f progress in t e r m s o f immunization rates. While vaccination rates are n o w better in Sierra Leone than in West and Central Africa, they are still short o f the U N I C E F goal o f go%, or the Millennium Development Goal (MDG) for measles vaccination o f 100%. Access to improved water sources does not appear t o have increased much, but school enrolment has dramatically increased, and the gap between vulnerable children such as orphans and other children has been reduced. Progress has also been achieved in terms o f knowledge about HIV/AIDS. On the other hand, a comparison o f selected indicators from the 2003 SLIHS and the 2007 CWIQ suggests progress for both school enrolment and health status. There are large differences between net and gross enrolment rates due to the fact that many older children have returned t o school since the end o f the conflict. This also explains why at the primary level, between 2003 and 2007, net enrolment rates have increased while gross rates have not. But overall, both at the primary and secondary levels, there have been substantial gains in enrolment between 2003 and 2007. Also, there seems to have been an important reduction in the share o f individuals suffering from a n illness or an injury between 2003 and 2007, as w e l l as an increase in the proportion o f injured or 16 Sierra Leone POI en) Reduction Strateg) I 2008-2012 sick individuals seeking care. While part o f the gain may represent measurement error, the data still points to an improvement in the health status o f the population, or at least in the subjective perceptions o f health status, and the demand for care (or the ability t o seek care). N e t primary school attendance ratee?) 42 69 55 Gender parity index: ratio o f girls to boys (primary; secondary) ~ 0.99; 0.78 0.86; 0.80 Comprehensive knowledge about HIV prevention among young people I 18 18 Knowledge o f 3 ways o f prevention 21 I 35 Rejection o f 3 misconceptions 19 24 I 2.2.1 U R B A N POVERTY Urban poverty i s a major concern in Sierra Leone. I t i s multi-faceted, overlapping, infectious, and compounded by high levels o f immigration in the urban centres. I t s markers are intermittent power outages; erratic water supply; poor sanitation; endless traffic jams; garbage left uncollected for 17 Sierra Leone Poverty Reduction Strategy I 2008-2012 days; and environmental degradation. The latter forms part o f the everyday landscape and i s visible on the coast and the hilltops overlooking the capital city Freetown. The overcrowded city, the dilapidated structures, the new settlement patterns, the ghettoization o f the city, and the endless migration to Freetown puts the city above the one million mark recorded in the 2004 census. Contemporary Freetown i s a city bursting at the seams with close to two million people crowded into a land space that has not seen any new network o f roads for more than half a century. The lack o f affordable housing and intense overcrowding has opened up other avenues for illegal structures, dubbed informal settlements. More people entered Freetown during the late 1980s, especially during the war years in the 1990s and 2000s, than in any other period in i t s two hundred year history. Unable to find a place they could call their own in an already overcrowded city, Freetown's poor began to illegally acquire hill tops in the east and central parts o f the city. Informal settlements on state and private property have emerged on the city's hilltops. Corrugated iron sheets-pan bohdi-held together by wooden pillars serve the housing needs o f Freetown's teeming population3. These dwellings are extremely hot in the dry season when temperatures are high, and very uncomfortable in the rainy season when it i s wet and cold. Some inhabitants in these new settlements access power supply through illegal channels or the purchase o f the ubiquitous Tiger generator, but in most cases these dwellings go without power or clean water. The struggle over space i s so intense that Freetown's poor have encroached on land reserved for the dead: cemeteries! Whole new mini-cities have sprung up within the city o f Freetown. The Central Business District i s ringed with shanties: from the much visible Kroo Bay to the less conspicuous "Afghanistan". These cities o f the urban poor are expanding the frontiers o f the ghetto from the east end to the west and central areas. Every space in the city i s under siege from Freetown's urban poor: from open spaces in cemeteries to dangerously inaccessible areas under the city's numerous bridges, and in valleys and surrounding hill tops. This settlement pattern in Freetown i s being reproduced in the other major urban centres in the country: B o in the South, Makeni in the North, Kenema and Koidu in the East. Peri-urban settlements in these areas mirror the informal settlements in Freetown. Peopled predominantly by young migrants from elsewhere, they bunch together in spaces away from the prying eyes o f officialdom. Other congested neighbourhoods in these urban centres have been transformed to youth enclaves peopled by new `city-zens'. I t i s in these sites that veritable mini-cities are created with criminals, and pose security threats. Also, ever present are unregulated video leisure centres and the popular if unhygienic ataya bases to serve the needs o f i t s ghetto population4. Uncontrolled urbanization without industrialization reproduces mass poverty on a large scale. Young people bunched in the city are cramped into the informal sector. This constitutes a net loss to agriculture. The major challenge i s how to stem the tide o f increasing migration to the major urban centres. This aspect o f social engineering w i l l involve rethinking the urban sans industrialization-housing, sanitation, access to land-youth livelihoods and social citizenship. Therefore, there i s need for an integrated urban policy that provides housing, livelihoods, social amenities and above all, access to the wherewithal for an active citizenry. I t w i l l require waste management as well as the clearing o f slums and relocation o f slum dwellers. 3 A pan bohdi dwelling consists o f corrugated iron sheets held together by narrow wooden poles. These are the most numerous dwellings among Freetown's urban poor. The materials are cheap and affordable but they are extremely uncomfortable during high temperatures and often not well waterproofed. 4 Ataya bases are rickety structures where Chinese green tea i s served. 18 Sierra Leone POI e t t j Reductioii Strateg) - I 7008-2012 2.3 Coucr.r:slON As this chapter has shown, poverty i s widespread in Sierra Leone and as a result, poverty reduction remains the key objective o f Government, and as such, i s also the overriding objective o f this second PRSP. I t i s clear from the analysis above that several issues need to be addressed in order to reduce the levels o f both income and non-income poverty. These include the following: Poverty i s more o f a rural phenomenon than an urban one, although poverty remains high in urban as well as in rural regions due to the large number o f people living in urban slums. Focusing o n providing resources t o rural areas and supporting the decentralisation process through funding and capacity building i s key to the poverty reduction process in rural areas. There are large variations in income poverty and non-income poverty between the different regions. Access t o medical services and educational facilities vary, while significant differences in basic infrastructure such as roads exist between the regions. O n average, the Western region, which contains the capital city, has better indicators o f well- being than a l l other areas, and the Northern region i s the worst off. Addressing the issue o f regional disparities will assist in providing a more equitable distribution o f resources. Employment i s a key factor in poverty reduction and expanding employment opportunities i s central in the second PRSP given the large proportion o f the population that i s either underemployed or unemployed. Youth unemployment remains a difficult issue, particularly in urban areas; this needs t o be addressed with the provision o f increased educational and employment opportunities in order t o raise the level o f economic development and reduce the possibility o f social unrest. Educational attainment i s highly correlated with income. Therefore, increasing school attendance i s likely t o contribute towards poverty reduction. Significant improvements have been made in school enrolment particularly at primary level, but secondary level attendance i s still relatively low, especially for girls. This suggests a need t o establish measures t o encourage girls to continue their education and prevent students from dropping out at secondary level. Attention needs to be paid to the gender dimensions o f poverty. Although some indicators discussed showed parity between men and women, in some crucial areas such as access t o formal employment, educational attainment and literacy, there were significantly lower levels for women than men. This shows the importance o f ensuring that issues o f gender equity are mainstreamed throughout the implementation o f the second PRSP. 19 Sierra Leone PoTert) Reduction Strategy I 2008-2012 N o economy has reduced poverty for any length o f time without sustained growth. Economic growth i s the single most powerful way o f pulling people out o f poverty. I t creates the resources to fund social goods such as health and education, but more importantly and more directly, it creates demand for labour, the main - often the sole - asset o f the poor. Growth creates jobs. Despite initial concerns to the contrary, strong growth in the global economy over the past fifteen years has created over 400 million jobs in developing countries and raised the real incomes o f the poorest5. Notwithstanding the recent global downturn, positive growth and employment trends are set to continue. Growth i s now possible in ways it was not before. The world economy i s now more open and integrated. I t offers developing countries deep elastic markets, with effectively unlimited potential for exports. It allows ideas, technology, people and finance to move between countries as never before, to find the locations where they can combine in new ways and be most productive. Sierra Leone has a great deal o f catching up to do in terms o f growth. In 2006, Sierra Leone ranked 177 out o f 177 in the UN Human Development Index. It i s one o f nine countries in Africa whose income per capita has actually fallen compared to 1960s levels6. Sierra Leone has great untapped potential to participate in the world economy and to share in that growth: it has unexploited fertile lands on which to grow and harvest food and abundant seas; it has mineral resources that the world wants; and it has a coast and deep rivers with which to connect people and their produce to the outside world. Post-war growth performance to date has indeed been robust - averaging 7.5% per year over the last 5 years. If this rate i s sustained, the economy w i l l double in size every 10 years. Even with the population growing at 2.8% a year, this would mean that by 2018 GDP per capita would rise to $450: s t i l l on low-income country status, but an improvement in per capita income o f 80%. However, if Sierra Leone were to be more ambitious and aimed to become a middle-income country in ten years, it would have to attain a per capita income o f $900 - something that could only be achieved with sustained growth o f 15% a year. However, the growth rate i s declining: after a very strong post-war rebound and settled at around 7.5% since 2003. It i s projected to continue a downward path from 7% in 2007 to 6.3% in 2008 and 6.5% in 2009. This i s despite a steady increase in recorded investment o f 8% o f GDP in 2000 to an estimated 18% in 2007. The key concern i s that investment in Sierra Leone i s not generating the growth that it should. The consequences o f this failure to turn investment into growth are clear: Job creation is not fast enough - one in four young men in Sierra Leone i s jobless-neither working nor in school. By ages 9-14, one out o f ten young men i s either unemployed or inactive in the labour market. By age 20-24, three out o f ten young men are not working or in school. O f 5 World Bank 6 Benno Ndulu et al, "Challenges o f African Growth", World Bank, 2007 20 Sierra Leone Poverty Reduction Strategy I 2008-2012 these, a high number are "discouraged workers", people who would like to work but are not looking anymore because they think there are no jobs available. As in other sub-Saharan African countries, many people are too poor to be unemployed and must take up work regardless o f i t s quality or level o f remuneration. Formal sector employment i s small in Sierra Leone at less than 10 YO f the overall population. Levels o f unpaid labour are very high in Sierra Leone with more than o 50 % o f urban youth and 70 % o f rural youth in unpaid work'. Domestic revenues available to Government to provide services are not high enough - Government i s projected t o have raised 14% o f GDP in taxes in 2007 - equivalent to only $40 per capita per year. Even if achieved, this i s inadequate to cover necessary social services, l e t alone make up a backlog o f infrastructure spending. For example, the World Health Organisation recommends low income country governments spend a minimum o f $34 per head o n health services alone. 7 Improving Opportunities for Sustainable Youth Employment m Sierra Leone, World Bank, September 30th, 2007 21 Sierra Leone Povcm Reduction Strateg) I 2008-20 12 The total level o investment in Sierra Leone must be increased - With 20% o f GDP dedicated to f investment, Sierra Leone i s s t i l l below the average for Sub-Saharan Africa (22%) and below the 25%+ achieved by those rapidly developing countries that have recently succeeded in sustaining growth'. Government investment must also rise - Government investment currently accounts for 5% of GDP. This needs to rise to at least 7%9 on infrastructure alone, i f Sierra Leone i s to match other fast growing economies. This does not take into account the backlog o f investment to date. Employment needs to rise - Employment i s both a means to and an end for economic growth. With the right policies and institutions, having more people in work raises total output. For developing countries such as Sierra Leone, with rapidly growing populations, there i s a potential "population dividend" to be won in terms o f a lower dependency ratio" and accelerated growth if the barriers to getting young and growing populations into productive work can be removed. Private sector investment needs to increase and diversify - From a situation o f disinvestment at the end o f the war, private sector investment has risen rapidly, reaching over 10% o f GDP. However, much o f this has been concentrated in a few sectors, such as minerals; this concentration has limited i t s direct impact on growth or employment. Private sector investment needs to diversify into a broader range o f sectors, where the majority o f people work. This will only happen if the returns to investment in these sectors improve. Growth CommissionReport, May 2008. Growth Commission report, May 2008. p35 loThe size o f the working population relative to total population 22 Sieria Leone Poi ert) Reduction Strateg? I 2008-2012 The productivity o investment must be improved -Improved productivity i s necessary to ensure f an increase in growth and jobs per $ o investment. Unravelling exactly why Sierra Leone's f capital-output ratio i s declining i s a challenging exercise, but it i s clear that it i s related to conditions in the sectors in which investment i s currently concentrated, and the determinants o f the total social - i.e. private and public - returns to that investment. Government resources and capacity are severely limited - An effective growth strategy must therefore be strictly prioritised and focused on those few key actions - "enablers" - which require government (rather than private) action, and w i l l have greatest impact on the largest part o f the economy. Taking all these considerations into account and based on fbrther examination o f the evidence, we have designed a growth strategy for Sierra Leone which targets the following four areas: 0 Closing the infrastructure gap; Enabling private sector development and ensuring returns to productive sectors; 0 Managing natural resource wealth; 0 Sustaining growth through stability and social service delivery. Government has identified these particular four areas because the evidence suggests that they are the most important for achieving high sustainable economic growth in the short to medium term and are likely to have the most immediate and widest impact on poverty reduction across the country. They are not intended to pick "winning" sectors or to purposefully push growth into a chosen direction. Instead, they are intended to help natural winners to emerge by addressing the sharpest constraints they are currently up against. If, as we expect, this strategy i s successful and strong growth sectors emerge, it i s likely that Government w i l l be required to assist the development o f specific markets and institutions necessary for them to sustain their momentum. Currently, re-establishing the normal practices and capacities o f government, concentrating on opening up, levelling and securing the playing field for all, i s the best strategy. Concentrating on these most immediate constraints to growth does not imply that other activities and sectors crucial to growth in the longer term should be sidelined. Rather, we aim to prioritise, highlight and select key actions amongst the raft o f short-term growth measures that are possible. Trade-offs between these actions and those in other sectors are not always necessary, but where choices do have to be made, they w i l l be done by balancing development targets with fiscal constraints in the context o f the MTEF, agreed with the International Monetary Fund. 23 Sierra Leone Po\ e@ Reductio11 Strateg! I 2008-20 12 24 Sierra Leone Poverty Reduction Strategy I 2008-2012 1 4.1 OVERVIEW: E s p G v I S SlEKRA LEONE Sierra Leone i s endowed with substantial renewable energy resources, including biomass, solar and hydroelectricity. Biomass i s the main source o f energy for households and an estimated 87% o f the total energy use in Sierra Leone i s biomass in the form o f firewood and charcoal. Although there are significant agricultural and crop residues estimated at 2 million tomes, the productive use o f this waste i s limited. Also, given the country's location, there i s an abundance o f sunlight for solar energy, but an obstacle to solar-powered electricity generation i s i t s high cost (see the Power Sector Plan o f 1996), while poor nationwide awareness o f the potential o f solar power has made exploitation o f this power source difficult. There are over 20 hydropower sites that can potentially produce over 1,200 M W o f electricity in the country". Hydroelectricity power supply currently constitutes around 3-6 M W o f total power generation. It i s however the main available source o f commercial energy that can play a significant role in socioeconomic development if h l l y exploited. The country i s also currently undertaking rudimentary exploration activities for crude o i l and gas within i t s territorial boundaries. Though grossly inadequate and expensive, thermal energy remains the main source o f total installed electric power in Sierra Leone. The energy sector i s the lifeline in the development o f any nation and therefore, access to reliable and affordable energy supply on a sustainable basis, particularly by industry, agriculture, and the commercial sectors, i s an important catalyst for achieving high economic growth and hence poverty reduction. However, less than 10% o f Sierra Leone's total population has access to electricity, compared to 49% in Ghana, 46% in Nigeria, 96% in North Africa, 73% in Asia, 99% in China and 76% global average. Only around 1% o f the total rural population in Sierra Leone has access to electricity. As a catalyst for growth, the Government i s convinced that reliable energy supplies will increase investor confidence and industrial activities in the country, thereby creating productive employment opportunities for youth and lowering poverty levels, while supporting national social and macroeconomic stability. In addition, lowering or stabilization o f the price o f commodities due to reduced expenditure on private generators for power generation in the production, service and commercial industries, w i l l also drive growth. Energy's role as a fundamental security must also be adequately addressed to promote growth. The Government i s further strongly convinced that providing adequate and affordable energy will, in the Sierra Leone context, greatly facilitate the achievement o f the MDGs as follows: Reducing poverty by stimulating economic growth (MDG 1, target 1); " Energy Master Plan Study, Lahmeyer, 1996 25 Sierra Leone Poverty Reduction Strategy I 2008-2012 Improving healthcare through the provision o f reliable energy supply t o hospitals, clinics and community health centres (MDG 4, target 5, and MDG 5, target 6); Improving education through the provision o f reliable energy supply to nurseries, schools and colleges (MDG 2, target 3); Improving water supply through the provision o f reliable energy for water pumping and treatment (MDG 7, target 10); Improving environmental quality due to reduced emissions from power plants, through efficiency improvement and through displacing inefficient, small auto-generation with central generation (MDG 7, target 9). This conviction has thus compelled the Government to set i t s e l f the goal o f attaining energy independence by optimizing the nation's full potential for power generation through higher investment in the sector by both public and private sectors as well as by i t s development partners. The transformation o f the energy sector along these lines i s therefore one o f the key priorities o f PRSP-11. The main elements o f this transformation include defining a clear energy policy and implementation strategy based o n the circumstances o f the country, including the need to: (i) significantly broaden electricity supply coverage through out the country including rural electrification; and (ii)address the severe constraints in transmission, market structure, regulation, and pricing. Against this background, the Government's m a i n power generation mix during the PRSP-I1 period will be thermal and hydro. B o t h components in the generation mix have very high financial implications for the country. This i s worsened by the very poor transmission lines especially t o final consumers, and the high cost o f improvements involved. Total national power generation demand i s estimated at 200 MW, o f which 125 M W i s targeted during PRSP-I1period. This comprises lOOMW for Freetown and the western area and at least 1-2 M W each for the provincial and district headquarter towns. The rest o f this section focuses o n the transformation challenges and policy initiatives in the following k e y areas, with each area considered in terms o f short, medium and long term perspectives. . Significantly enhance power generation while reducing the cost o f thermal power generation (electricity sub-sector); Develop and significantly enhance hydro power generation; Eliminate/significantly reduce technical and transmission l i n e losses; Significantly improve the trajectory o f energy sector governance including N P A management. 26 Sieria Leone Poverty Reduction Strateg) I 2008-2012 Despite these endowments in potential energy resources, governance, financial, technical and environmental challenges have restricted the pace at which they have been developed. The profile o f the energy sector i s characterised by the involvement o f multiple institutions, without clear roles and responsibilities, thus making accountability and coordination o f energy sector activities difficult. The Ministry o f Energy and Power (MEP) has the responsibility for developing and implementing energy sector policy and coordination in all matters relating to exploitation o f renewable energy resources. The Ministry o f Lands, Country Planning and Environment handles biomass issues relating to environmental degradation in collaboration with the Ministry o f Agriculture and Forestry. The Ministry o f Trade and Industry i s responsible for marketing and sale o f petroleum products in close collaboration with the Ministry o f Finance and Economic Development. The Ministry also operates the country's strategic reserve o f petroleum products. The Petroleum Resources Unit (PRU) in the Office o f the President i s responsible for petroleum exploration and extraction. The National Power Authority (NPA), governed by a Board o f Directors appointed by the Head o f State through the National Commission for Privatisation (NCP), runs the power system in Sierra Leone. It i s responsible for generation, transmission and distribution o f electricity throughout the country. It supervises the Bo-Kenema Power System (BKPS) which i s entrusted with the zonal responsibility for the generation, distribution and sale o f electricity in B o and Kenema in the Southern and Eastern provinces o f the country. The N C P has oversight responsibility for the NPA and i s responsible for i t s restructuring and eventual privatisation. Furthermore, by virtue o f the N C P A c t (2002), N C P also a direct role in developing the regulation and corporate governance principles o f the sector as well as in policy making issues, in so far as they may impact o n NPA's efficient role in the sector. The Petroleum Unit advises the Ministry o f Trade o n petroleum products stocks and pricing. The Bumbuna Project Implementation Unit coordinates and supervises the operations o f the ongoing Bumbuna Hydroelectric Project. The Unit provides a technical link between Bumbuna contractors and the ministry o f Energy and Power. There are also significant financial, technical and environmental constraints for energy sector transformation, and the most obvious o f these include: H i g h cost o f power generation relative to available budgetary resources. High energy subsidies and the negative impact o n the budget and sustainable development. Weak financial viability and human technical capacity o f the NPA. 27 Sierra Leone Poveri). Reduction Strateg, I 2008-2012 Huge technical losses in power generation and transmission. While the energy sector faces significant constraints, there are a number o f opportunities which could provide a strong basis for growth o f the sector in the short, medium and long term. These opportunities include: Strong growth in the national economy will require increased production and efficient transmission o f electricity, thus facilitating further development o f the sector. This will open up the market for effective participation o f Independent Power Providers (IPPs). Significant progress in private sector development will in turn provide an incentive for private sector investment in the energy sector. Significant growth in the sector can only come about through involving private sector resources especially in improving the necessary power sector infrastructure. Establishing a strong, favourable and equitable regulatory environment in the energy sector will provide significant trust, confidence and incentive for private sector participation. The establishment o f strong sub-regional cooperation in energy, in particular within the Mano River Union, will open up sub-regional electricity generation and marketing, especially in hydroelectricity through expansion o f the Bumbuna hydro project. 1 4.4 STktTECiES FOR-DEVELOPING NATIONAL ELECTRICIT\' 4.4.1 I M P R O V I N G THERMAL POWER GENERATION The present active customer base o f N P A and BKPS i s 44,000 and 9,600 respectively. This means only 7% o f the population have access to electricity, a figure that i s very l o w by both regional and international standards. However increasing access to electricity must be predicated o n it being reliable, clean and affordable. Some o f the barriers to a change in the energy use pattern, especially by the poor, include the replacement cost o f electrically operated devices and in a number o f cases the relatively high connection cost o f electricity. 28 Sierra Leone PoLem Reduction Strateg) I 2008-2012 Figure 4 and Figure 5 show the distribution o f households by fuel used for cooking and for lighting. The graphs show that 91.2% o f households use kerosene for lighting whereas only 2.7% use mains electricity. In the case of cooking, 84.9% use firewood as f u e l and 13.8% use charcoal. The number using electricity i s under 0.1%, while 0.7% uses kerosene for cooking. Therefore any further switch to firewood will have attendant consequences o f health impairment and other environmental hazards. Currently, the country faces difficulties with commercial energy supplies, particularly electricity. Freetown i s supplied with electricity fiom oil-fired thermal plants at Kingtom power station, while 29 Sierra Leone P o ~ e r t y Reduction Strateg) I 2008-2012 most areas in the interior, except for Bo and Kenema, are largely without power supplies. Bo, Kenema and their environs are supplied with electricity from a combination o f oil-fired thermal power plants and a small hydropower plant. Emergency Power Initiative Between 2002 and 2007, and contrary t o expectations under PRSP-I, electricity generation in Sierra Leone (i.e., Freetown, Bo and Kenema) experienced progressive deterioration, largely on account o f weak investment and poor management o f the sub-sector. The graph below shows the deteriorating trend in energy generation since 200 1. Total electricity generated by N P A in Freetown declined from 117 GWH in 2002, to 29 GWH and 28 GWH in 2006 and 2007 respectively, while that in B o and Kenema came to near collapse. By 200512006 the established power was 30-35 MW, but only 15-20 M W available o n a regular basis. This situation deteriorated, with brief sparks o f improvement, continuously until by mid 2007 no electricity was being generated for the N P A grid. There was n o investment t o rehabilitate electricity supplies in the other provincial headquarter towns after the massive destruction o f physical facilities during the c i v i l war. 160 140 120 100 80 -GWh 60 40 I 2o O I I 2001 2002 2003 2004 2005 2006 2007 2008 Consequently, with the change in Government in September 2007, an Emergency Power Generation initiative was launched by the new President in December 2007 aimed at significantly increasing electricity generation in Freetown in order to minimise the protracted power outages and help improve security in Freetown. The programme had substantial economic justifications based o n the catalytic role o f energy to revive and stimulate economic activity. 30 Sierra Leone Poi erty Reduction Strateg) I 2008-2012 Available ' The President's Emergency Power Programme implemented by the Global Trading Group (GTG), re-established power at 15MW at Kingtom continuously. The Government also entered into another agreement with Income Electrix Limited for an additional 25MW for generation in the eastern parts o f Freetown. IEL has installed a lOMW machine but due to the non-availability o f bel, only 2-4MW i s being distributed from Blackhall Road. Clearly, the emergency power programme led t o a sharp increase in power generation for Freetown from 5 M W to 20 M W by December 2007. However, this has been mainly in the western parts o f Freetown. The city s t i l l faces problems with load shedding, as the available electricity generation capacity i s s t i l l inadequate. Against this setting and as shown in Table 8, the current combined electricity generation capacity o f Government i s 24MW against an installed capacity o f 75 M W and a total requirement o f between 60-100MW for Freetown. Apart from B o and Kenema, and to some extent Pujehun, the rest o f the country i s without electricity. The national electricity gap i s therefore filled by highly expensive private generators, some o f which have had widespread fatal consequences. From emergency power to sustainable affordable electricity . Despite the sharp improvement in electricity generation during the emergency phase (2007-2008), implementation o f the programme demonstrated several operational difficulties and hard lessons going forward. These include: Lack o f domestic resources t o adequately support or complement donor funding to meet the cost o f power generation; Violation, in some cases, o f procurement rules and processes under the National Public Procurement Act; Difficulty o f mobilising and realising continuous donor support based o n adherence to donor conditionality frameworks; 0 Weak national capacity both to negotiate and monitor IPP contracts as well as to design and implement equitable public and private partnerships in sectoral investments. 31 em Sierra Leone POT Reduction Strateg? I 2008-20 12 Because o f NPA's weak financial capacity, Government had t o provide huge subsidies to support the emergency phase. These subsidies were largely extra budgetary and were therefore destabilising for the national budget. They also undermined donor confidence, and affected direct budget support under the Multi-Donor Budget Support (MDBS) framework. Electricity i s s t i l l only available mainly in the Western parts o f Freetown. The city s t i l l faces problems with load shedding, as the available electricity generation capacity i s still inadequate. The use o f diesel a engines h s become increasingly expensive and uneconomical. Petroleum imports, the bulk o f which are for electricity generation, account for 26% o f total imports in Sierra Leone. The biggest single challenge however, i s making the transition from relatively costly emergency electricity generation to much cheaper, commercially viable and affordable electricity generation in the medium t o long t e r m through (i) shift t o low-cost thermal power generation (Le. Heavy the Fuel Oil-based, which i s cheaper than diesel) including installation o f projects funded by JICA (10MW) and BADEA (17MW); and (ii) making strategic exits from the existing high cost IPP arrangements. This transition i s crucial as thermal power generation will continue to complement hydro systems. Until the mini-hydro potential and the indicative Bumbuna capacity are fully exploited, much o f rural electrification will be thermal. 4.4.2 EXPLOITING HYDRO POTENTIAL The combined capacity o f hydro potential in the country, covering 20 sites, i s currently estimated at 1,200 MW, o f which the five phases o f the Bumbuna hydro project when fully exploited will provide up to 250 M W at around 50 M W o n average per incremental phase. Other potential mini- hydro project outputs range between 2 and 85 MW. The completion o f phase Io f the Bumbuna Hydroelectric Project (2009) and the enhanced Dodo hydro for B o and Kenema (2009), and early exploitation o f mini-hydros, are critical to ending the relatively expensive thermal generation o f electricity and transiting t o a more reliable, cheaper and sustainable hydropower supply. In order t o maximise the benefits o f the country's hydro potential, significantly large investment i s required, especially through public-private partnerships and/or BOTs 12, as well as strong management systems for generation, transmission and distribution. The structural deficiency in the hydros means that there i s an expected decline in energy generation during the dry season (November-April) when the water table drops significantly. As a result o f this, plants can only supply effective energy for 6-7 months during the year; energy supply from the Bumbuna project will drop by 32 M W from a peak o f 50 M W to around 18 MW. 4.4.3 E X P L O R I N G OTHER ENERGY O T E N T I A L P ~ While much o f the Government's focus in the energy generation m i x i s o n thermal and hydro, Sierra Leone also has enormous potential for exploiting other renewable sources o f energy that are less environmentally damaging. Biomass resources have been estimated at 656,000 tonnes o f crop wastes per year, w i t h a total annual energy potential o f 2,700 GWH, or 308 MW. 12 BOTs: Build-Operate-Transferproject financing arrangements 32 Sierra Leone Poiert) Reduction Strateg! I 2008-20 12. Solar radiation has been estimated at 1,460-1,800 G W H per annum, allowing the potential to utilise solar photovoltaic solutions in a decentralised configuration across the country for lighting, water pumping, etc. Average wind speed i s recorded as between 3-5 mis, whilst its application may be limited to small scale water pumping applications, etc. 4.4.4 U P G R A D I N G AND EXPANDING THE N A T I O N A L TRANSMISSION A N D E)ISTRIBUTION NETWORK The transmission and distribution network in Freetown was constructed in the 1960s and it i s over forty years old. It i s very inefficient and has outlived i t s economic useful life. I t i s also unsafe: incidences o f fallen poles, punctured cables and cut wires are common occurrences. In 2008 alone, ten transformers blew up due to age and overloading. Technical l i n e losses as a result o f poor transmission are estimated at 40% o f power generated. Getting the network o f transmission and distribution lines modernised, and ready to deliver the increased power that i s expected when Bumbuna i s completed, i s one o f the Government's top priorities. There i s an urgent need to overhaul and upgrade the entire network in Freetown, as this will reduce technical losses, decrease outages, and improve quality and reliability o f power supply; above all it w i l l increase transmission and distribution capacity from 15 M W to around 100MW. New transmission and distribution lines w i l l also need to be installed for rural electrification. 4.4.5 I M P R O V I N G ENERGY SECTOR GOVERNANCE Energy Sector governance i s central to reducing significant operating risks in the energy sector. A clearly defined trajectory o f improving governance w i l l therefore be concluded and implemented during the transition from the emergency power supply to sustainable affordable power supply. This i s also important in the context o f broadening the energy outreach nationwide. Some major structural reforms will therefore be undertaken in the following areas: Streamlining the existing institutional arrangements as outlined above. The leadership and oversight roles as well as accountabilities and responsibilities, including the specific roles o f the Ministry o f Energy and Power, the NCP and NPA, w i l l be addressed. Government fully recognises the apparent duplication o f roles, especially in respect o f coordination o f government and donor support operations as well as oversight and authority over the operational activities o f NPA, including procurement and contracting. 0 The Ministry o f Energy and Power w i l l specifically guide the design, implementation and monitoring and evaluation o f the national energy policy and implementation strategies including tariff setting. Developing a sector wide legal, regulatory and supervisory mechanism to cover power generation, transmission, distribution and tariffs. Establishment o f a high level Energy Task Force to provide strategic oversight in the sector including donor coordination, private sector participation (IPPs) and Public-Private partnership arrangements. 33 Sierra Leone Poverty Reduction Strategy I 2008-2012 0 Restructure and modernise NPA to improve significantly on i t s management, operations, analytic capacity and financial viability. Some o f the key areas o f consideration w i l l include recruitment o f management and staff, Board governance, financial engineering to improve revenue collection, wastage, transparency and accountability, etc. 4.4.6 ENERGY INTEGRATEDPOLICY APPROACH The Government w i l l take a more strategic approach to managing the energy sector in Sierra Leone in the context o f an integrated policy and operational framework, focussing largely on promoting widespread public and private sector participation in power generation, transmission, and distribution as well as in integrating the energy sector into activities o f other sectors with related synergies, especially water, roads, communications, etc. Best practice also dictates the need to set up a regulatory commission for the energy sector. Additionally, the integrated energy policy fiamework w i l l also focus on the urgent need to reduce the health and environmental costs associated with the production, distribution and use o f energy. The Government w i l l therefore regulate and enforce pollution abatement from thermal plants and conduct Environment Impact Assessments whose findings w i l l be used as a basis for approval for implementation, reformulation and non approval for all energy projects. W h i l e exploring the potential o f a coordinated energy framework within the Mano River Union (MRU), Sierra Leone w i l l also, under the integrated energy policy framework, seek to become a fully active member o f the West African Power Pool (WAPP) task force led b y the ECOWAS Secretariat. This will provide access to regional inter-connector transmission facilities as well as access to funding for developing regional supply initiatives; a link to the proposed WAPP should be completed in 2009. 34 Sierra Leone Povert). Reduction Strategq I 2008-2012 Poverty reduction requires an adequate means o f moving people and goods: therefore a developed transportation network i s critical to growth and development. A good road network shortens the travel distance to and from school thereby assisting in the achievement o f universal primary education. It will help reduce mortality rates as it will reduce the distances travelled to access basic health care, especially for people living in remote areas. A good transportation network i s a prerequisite for growth in key sectors such as agriculture. Along with the energy sector, transport development i s a crucial factor in poverty alleviation. The Government i s focusing on improving transport infrastructure, especially in road, air and river transportation. I5.1 O\'ERVIEW: NATIOSAL. TRANSPORT S l ' S l EMS Currently, the transport system in Sierra Leone includes the following: 1 1,300 km o f classified roads o f which approximately: o 780km are paved; o 3,264km are gravel; o 4,152km are feeder roads. 0 One harbour (The Queen Elizabeth I1 Quay) which i s the main entry point by sea. 0 One international airport at Lungi, accessible to Freetown by ferry and by road; Smaller airports (rated as faidpoor) for inland transportation, and several inland river waterways. 5.2.1 SITUATION ANALYSIS O f the 11,300km o f classified roads in the country, 8,148 km are classified in the national road system. The remaining roads consist o f urban roads, community roads, local roads and farm tracks. With respect to the regional distribution o f roads, the Northern Province accounts for 41% o f the roads followed by the Southern Province with 33% and the Eastern Province with 23%. The Western Area accounts for only 3%. Table 9 and Table 10 below show the current state o f the road network and i t s regional distribution. The basis o f classification o f the national road network i s as follows: Class A, Primary Roads, connect Freetown with the three provincial capitals, as well as with the district centres, and also include international routes. 35 Sierra Leone Pave@ Reduction Strategy I 2008-20 12 Class B, Secondary Roads, connect the district centres, serve as regional main roads and are connectors between primary roads and other secondary roads between centres of production and distribution. Class F, Feeder Roads, provide basic means o f communication serving several villages or small towns or connecting minor centres o f population to a higher class road. They are classified as either gravel or earth roads and carry a maximum o f 50 vehicles per day (gravel roads carry 20 to 50 VPD, while earth roads carry l e s s than 20 VPD). Road NetworWClass Road transport accounts for the majority o f freight and passenger movements in Sierra Leone. Poor rural roads and a lack o f regular transport services for personal travel and evacuation o f agricultural products s t i l l pose serious problems. The country faces two major gaps in rural transport development. The first i s the existence o f inadequate and poorly maintained rural and feeder roads connecting villages and farming areas to market centres. The second gap i s the poor and unreliable rural services caused by lack o f intermediate means o f transport and appropriate infrastructure for use, leaving the carrying o f goods almost entirely to commuters, mostly women. Urban transport plays a very important role in the economy o f Sierra Leone, due to the fact that a significant proportion o f economic activities takes place in the major cities. However urban 36 Sierra Leone P o \ e a Reduction StrategS I 2008-2012 transport i s characterized by an inadequate supply o f public services (both in quality and quantity), a lack o f non-motorized travel, intermediate modes of transport and heavy traffic congestion. Although road transport i s the dominant mode in the country, most o f the fleet consists o f second hand vehicles, and i s unable t o meet current demands. Taxis and mini buses are expensive despite operating o n a shared ride basis, and these form the only way to travel for many commuters. In rural areas, passengers need considerable luggage space since they carry their produce (i.e. fish, agricultural products etc) to towns. Despite the inadequacy o f the public transport system the public tend to accept the situation as there i s little immediate alternative. 5.2.2 STRATEGIES FOR DEVELOPING THE ROAD SYSTEM The next five-year road network improvement plan targets the outcomes listed in Table 11 for the existing road network, with the indicated minimum cash outlay in Table 12. 37 Sierra Leone Po\ ert) Reduction Strateg! I 2008-2012 Specifically, developing road transportation w i l l focus on the following: Construct, rehabilitate and maintain the road network, through enhanced local capacity, both in the public and private sector; Expand the national road system for the enhancement o f socio-economic development; Ensure a free flow o f traffic through the provision o f additional public transportation and improved vehicle examination, enforce tariff regulations; Design, develop and administer rules and regulations regarding the registration and licensing o f motor vehicles; Develop manpower needs to service the transport industry, including training and motivating transport personnel in the private sector; Promote road safety through the establishment and dissemination o f a code o f conduct to be known as the Highway Code for drivers and other users o f roads and highways; Development o f local contractors and consultants for the transport industry; Development o f vehicle weight regulations on highway. Specific activities that will be undertaken are summarized as follows: Construction o f the Freetown Ring Roads. The outer ring w i l l include Spur Road, Wilkinson Road, Coastal Road, Grafton to Cline Town Road, and Regent to Grafton Road. The inner ring road w i l l include Hillside Bypass Road, Jomo Kenyatta Road, Hill Cot Road, Spur Road, Wilkinson Road and Freetown Coastal Road. The African Development Bank has provided the funds required for the feasibility studies and preparation o f tender documents for the project. Construction o f Tokeh-Lumley Road. This involves the construction o f a two lane road from Tokeh village to Wallace Johnson Bridge at Lumley and a four lane road from the bridge to the Lumley Police station. In addition, 8 k m o f village access roads; two off- street parks at Lumley, and a monument w i l l also be constructed. Rehabilitation o f Bo-Masiaka Highway. This w i l l ensure an all weather trunk road that connects to the Trans-West African highway; about 48% i s complete. 0 Rehabilitation o f Songo-Moyamba Junction Road. This w i l l provide access to reasonable means o f transportation o f agricultural produce to the nearest market centres and to link the bauxite and rutile mines to the national harbour. Construction work i s in progress; about 13% i s complete. Reconstruction o f Freetown Conakry highway. This w i l l provide an all weather highway as part o f the Trans-West African Highway connecting Sierra Leone to Guinea. This w i l l foster regional cohesion with other West African States that w i l l enhance social and economic integration. The contract for the first phase has been terminated but bidding documents for the second phase are being prepared. Reconstruction o f Kenema-Koindu Road. This road w i l l connect the eastern provincial headquarter town o f Kenema to Koindu which i s the trading border town with Liberia. It w i l l also link Freetown with the eastern parts o f the country vital for the production o f Sierra Lzone Pave@ Reduction Strategy I 2008-2012 cocoa, coffee and timber. The road w i l l also link Sierra Leone, Guinea and Liberia, thus acting as an integral link to the Trans-West African Highway. Prequalification o f both contractors and consultants have been completed and the project w i l l be put to tender soon. Reconstruction o f Freetown-Monrovia Road (BwBandajuma-MRU Bridge). This road will provide a first class highway as part o f the Trans-West African Highway. It will also provide a major link between the district headquarter town o f Pujehun and the rest o f the country. Prequalification o f both contractors and consultants has been completed and the project i s awaiting hnding to be implemented. 0 Construction o f the New Lungi Airport Road. This also involves a mass transit facility between Freetown and Lungi. Feasibility studies have been completed and the project i s awaiting funding to carry out detailed design. Construction o f Access Road in Freetown. The main purpose i s to rehabilitate the core o f the road network outside the business district o f the city. Detailed design and preparation o f contract documents are in progress. Rehabilitation o f main roads in major provincial towns and cities. This project w i l l rehabilitate the main roads in some o f the major provincial towns, thereby improving on the socioeconomic status o f the people. Rehabilitation o f the Matotoka-Masingbe-Kono Road. This w i l l involve rehabilitating the main roads in some o f the provincial towns and villages with agricultural and mining potential. Feasibility study and detailed engineering design are in progress. 0 Rehabilitation o f the Port Loko-Lungi Road. The project w i l l construct an all weather road linking Lungi to the rest o f the country thereby facilitating movement o f goods and services from the international airport. Detailed design and preparation o f contract documents have been completed, and once hnds are committed the tender documents will be prepared. 0 Construction o f storm drains in Freetown. This w i l l reduce flooding in the city. The project i s awaiting funding in order to carry out detailed engineering design. 5.2.3 ADDRESSING TRANSPORT-RELATED PROBLEMS I FREETOWN N In addition to the above activities, there i s an urgent need to address the transportation problems in Freetown, which i s experiencing a rapid population growth accompanied by a fast growing vehicle fleet. The existing limited transport infrastructure in Freetown creates serious transport related problems including serious traffic congestion, traffic accidents, parking problems, environmental and extremely serious social problems. Government w i l l therefore focus on enhancing the capacity o f the Freetown City Council to enable them to develop and implement a City Master Plan and a road traffic plan as a prerequisite for addressing the socio-economic conditions o f the city. 39 * Sierra Leone Pox e Reduction Strategy - I 7008-2012 The country has seven principal rivers, five o f which are presently being used for transportation as shown in Table 13. River transportation has the potential o f capturing 10% o f the total market share o f goods and services transported in Sierra Leone; however the sector i s constrained by high transportation costs, inadequate boat construction, and a lack o f safety gear and navigational lights for night travel. Improving river transportation will lead to increased access to safe and affordable transport facilities, which will facilitate the movement o f food across the country and thus provide cash income for farmers. I t will also increase the export potential for food crops, fruits and vegetables. Government's overall objective in this sub-sector i s to develop an efficient, safe, reliable and competitive maritime, coastal and inland waterways system. To achieve this, the Government w i l l focus on: Improving the regulatory capacity o f the Sierra Leone Maritime Administration Promoting safety at sea; Constructing jetties; Dredging o f some o f the rivers to increase capacity. Lungi International Airport, which serves as the gateway to the country, needs to be upgraded to allow the arrival and departure o f all sizes o f international carriers. The Government w i l l focus on the following: Reconstruct, expand and upgrade existing Lungi airport infrastructure. Design and promote aviation safety. 40 Sierra Leone Po\ e@ Reductio11Strategl I 2008-2012 Facilitate international and domestic movement o f people and goods through the effective management o f the airport. Provide efficient passenger and cargo handling facilities. Address the problem of linking the Lungi International Airport with Freetown through public-private partnership arrangements that will provide additional ferries and other safe means o f sea transportation. . The Freetown Seaport acts as the gateway to seafaring vessels serving the country's import and export trade by sea. The Freetown port, managed by the Sierra Leone Ports Authority (SLPA), i s presently a service port responsible mainly for cargo handling and pilotage. The Government wants to make the port o f Freetown the least-cost port in the sub-region in the medium term, and a full transhipment hub in the longer term. However, there i s an urgent need for the upgrading o f the port, as well as improvements in its management to ensure that appropriate and adequate facilities for international trade are readily available. In the short to medium term, the Government will attempt to transform the Sierra Leone Ports Authority from a service port to a landlord port, in which the core activities of stevedoring and shore handling will be relinquished to private sector operators. The privatisation o f the port will be financed through the World Bank-funded Infrastructural Development project. Also, all non- core operations and the marine slipway are in the process of being privatised through the National Commission for Privatisation. Additional activities will include: provision o f handling and security equipment; rehabilitation of the Kissy Oil and the Government Wharf jetties; provision of pilot, tug and mooring workboats and the dredging o f the Lighterage Quay. Rail transportation was dismantled in 1975 and replaced with new roads as i t was not considered viable due to low traffic and volumes. The current Government policy i s to re-introduce the railway system: as a result feasibility studies of rail transportation system will be undertaken. The reintroduction of railway transportation will enhance the development o f agriculture and mining activities as well as complementingthe existing waterways and roads. The Government has started discussions with a private company on the development o f the rail infrastructure associated with the iron ore industry serving Tonkolili, Marampa and the Pepel Port. It i s also envisaged that this railway can be expanded in future to service other parts o f the country to enhance transportation of passengers and goods. 41 Sierra Leone Poverty Reduction Strateg? I 2008-2012 1 6.1 AGKICULTl'RE . . 6.1.1 OVERVIEW: AGRICULTURE N D A DEVELOPMENT Agriculture i s the largest economic sector in the country. Nearly two-thirds o f the population depend on it for i t s livelihood and it i s responsible for almost half o f the country's GDP. Therefore economic growth and poverty reduction in Sierra Leone will only be sustained with developments in the agricultural sector. As the sector expands, it w i l l stimulate growth in other sectors through increased demand for tools and chemicals, as well as providing raw materials for agro-based industries. Also, it will generate employment along the agricultural value chain o f input supply, production, agro-processing and marketing, including exportation. 6.1.2 PRODUCTION TRENDS There has been a general steady increase in agricultural production although fish imports have also continued to increase. Sub-sectorally, livestock was very resilient and sustained an increase in population throughout, whilst crops and fisheries staggered during the period 2005-2007. In fact, by 2007, the production o f rice, cassava and sweet potato fell. There has been a steady increase in domestic food production and it i s estimated that the share o f households with adequate food consumption h s increased from 56% in 2005 to 71% in the 2007. a With regards to production o f specific crops, the level o f rice self-sufficiency in the country increased from 57.4% to 71% between 2002 and 2007. The production o f roots and tubers (mainly cassava and sweet potato) i s currently far in excess o f the national requirement for fresh consumption and the livestock population i s showing a gradual increase. In general, the production o f the country's major food crops (rice, cassava, sweet potato and groundnut), livestock (cattle, goat and sheep) and domestic fish rose from 2002 to 2007. The fisheries subsector i s dealt with below in section 6.2. Rice production and self-sufficiency The production o f rice, the country's staple food crop, increased by 27.5% in 2007. Progress in terms o f expansion in the area cultivated i s partly as a result o f an increase in the number o f farm families that cultivated rice in 2007 compared to 2005, and partly due to continuing government and donor input assistance to farmers, including mechanical cultivation services.l3However, rice production remains insufficient to meet the total consumption requirements at the national level. The overall national self-sufficiency level o f rice i s estimated at 69%14, the same figure as in 2005/200615. Hence, meeting food needs depends on the production o f other crops such as tubers (including cassava and sweet potatoes) and import o f rice. 13 See the Vulnerability Analysis and Mapping Report, Ministry of Agriculture and Food Security, 2008 14 See the Vulnerability Analysis and Mapping Report. Ministry of Agriculture and Food Security, 2008 15 See Sierra Leone Poverty Reduction Strategy Annual Progress 2005/2006 42 Sierra Leone P o w t y Reduction Strategi I 2008-2012 Table 14: Trends in Major Poverty Reduction Strategy (PRS) Agricultural Indicators M a i n PRS indicator 2002 2003 2004 2005 I 2006 ~ 2007 ~ Annual %age increase I Source: Ministry of Agriculture and Food Security Figure 7 : 'l'rend in Crop Production (tlrousand metric toritits) -Rice -Cassava -Sweet Potato -Groundnut 2002 2003 2004 2005 2006 2007 43 Sierra Leone Po,ert> Reduction Strateg I 2008-2012 Production o cassava, sweet potato and groundnut f Cassava and sweet potato are among the key substitutes for rice for many households in Sierra Leone16, especially in the rural settlements. Although cassava production increased between 2005 and 2006 (Table 14), on the whole i t s production decreased by 46% during 2005-2007; production o f sweet potato and groundnut increased respectively by 3% and 110% from 2005 to 2007. It i s important to note that all reported crops above declined in production between 2006 and 2007 with the exception o f groundnut, which continues to register an increase from 2005. This suggests that efforts to promote the agricultural sector should be sustained to ensure continued positive trends in the sector's performance. 2007 i s reported to have met a number o f constraints including the decline o f government budgetary allocation to the agricultural Ministry. Although acreage in these crops increased in 2007 due to the introduction o f tractors, it appears the effect o f the reported fall in the use o f fertiliser, herbicides and other important farm chemicals, and the decline in extension packages, may have outweighed the effect o f the application o f mechanised farming. I t i s also noted that farm holdings reduced significantly in 2007 compared to 2006. Livestock a Generally, there h s been continuous increase in the production o f livestock (cattle, goats and sheep) from 2002 to 2007 Over the PRSP-I period, cattle production increased by 9.3% in 2007 from 2005; goat and sheep increased by 13.0% and 13.2% in 2007 from 2005 respectively. This increase could be partly explained by the government's sustained effort at promoting the livestock restocking programme after the war. 16 From the Vulnerability Analysis and Mapping Report 2008, while on average households eat rice 5.7 days a week, cassava products and other tubers are eaten 4.7 days a week; this shows the level of substitutability and importance of the latter crops for rice as staple. 44 Sierra Leone Povert) Reduction Strateg? I 2008-2012 6.1.3 PERFORMANCE AGRICULTURAL EXPORT Modest increases were recorded from agricultural export earnings as total earnings from the agricultural sector increased by 7.09 % to US$13.7million in 2007 from US$12.8million in 2006l'. Receipts from exports o f coffee, cocoa, fish and shrimps mainly accounted for this increase. Export earnings from coffee increased by 268% in 2007 from 2005; export earnings from cocoa increased by 101% in 2007 from 2005; and export earnings fiom fish and shrimps increased by 484% in 2007 from 2005. Sustained increase in coffee exports from 2005 to 2007 was attributed to favourable world market prices, which encouraged local production. Export earnings from cocoa were recorded to have marginally fallen by 1.8% in 2007 from 2006 due to a slight decrease in the volume o f production from 13.9 thousand metric tons in 2006 to 13.7 thousand metric tons in 2007.18 I I I I I YOchangetrom f Progress i s also being made in the production o f cash crops and agricultural export earnings are on the increase. This has especially been so in the case o f cocoa, whose farmers have benefited from a policy o f quality improvement that has allowed them to access a favourable price for organic cocoa in the world market. In general, support to agriculture has been focused on reducing poverty and food insecurity, which i s in accordance with Millennium Development Goal Number 1. Therefore, there has been a concentration on small-holder farmers, and less attention has been paid to commercial farming. 17 Bank of Sierra Leone Annual Report and Statement of Accounts 2007 18 Bank of Sierra Leone Annual Report and Statement of Accounts 2007 45 Sierra Leone Pobert) Reduction Strateg! I 2008-2012 14,000,000 12,000,000 10,000,000 8,000,000 - -Coffee Export 6,000,000 -Cocoa Export 4,000,000 -Fish and Shrimps 2,000,000 0 2005 2006 2007 6.1.4 CHALLENGES IN T H E A G R I C U L T U R A L SECTOR The sector faces the following challenges: Inadequate budgetary support: Agriculture currently receives less than 3% o f the national budget allocation and considering that nearly two thirds o f the population depend on it, there i s significant under-funding o f activities in the sector. Inadequate rural financial services: Access to financial services such as credit and savings facilities i s extremely limited. This makes it difficult for farmers to access loans for the purchase o f inputs and also to save money for consumption in the `hungry period'. Heavy reliance on rain-fed agriculture: Limited irrigation facilities in the country mean that farmers are reliant on rain-fed agriculture and are therefore limited in the number o f crops they can plant in a year. Labour drudgery: The unavailability o f mechanized equipment forces farmers to be dependent on manual labour. This limits productivity in the sector. Weak rural infrastructure: The poor quality o f rural roads, transport, markets; energy and power hinder the productivity o f farming, particularly commercial farming, and so act as a disincentive to the private sector. Weak extension system: The limited capacity o f the current extension system hinders the delivery o f training, information and advice to farmers. Absence o a sector databasefor policy, planning, monitoring, evaluation and reporting: f Until the database i s established, activities in the sector are hindered by a lack o f quick and 46 Sierra Leone Po! erty Keduction Stt ateg! I 2008-2012 easy access to necessary information. This can restrict the efficiency o f activities, as well as the lack o f co-ordination between stakeholders and a duplication o f activities. Poor coordination among sector stakeholders: As described above, the poor co- ordination between stakeholders can sometimes lead to different stakeholders tackling the same problems but totally missing out others. Long-term concentration on subsistence farming: The sector has traditionally been dominated by subsistence farming and so if commercial farming i s to be successful, a significant change in the mindset o f the farming population may be needed. It w i l l be important to ensure that the farmers are provided with sufficient incentives to make commercial farming attractive enough for them. Low and limited research activities: The low level o f current research activities restricts advances in technology, efficient farming practices and productivity. Very weak sector institutions, especially the MAFFS the l o w capacity o f sector institutions restricts their ability to carry out the necessary activities for the development o f the sector. 6.1.5 STRATEGIES FOR DEVELOPING THE AGRICULTURAL SECTOR To address these challenges, the Government w i l l focus on: Increasing agricultural productivity (intensification and diversification) : The use o f agricultural machinery such as tractors, power tillers and harvesters will be intensified, as w i l l the establishment o f supply chains for inputs such as fertilizers, pesticides and high yielding seed varieties such as NERICA and Roks. In addition, irrigation facilities w i l l be increased to expand the cropping cycle year round and to raise production levels. Agro- processing marketing and distribution w i l l be enhanced. To increase food s e l f sufficiency, farmers w i l l be encouraged to increase the cultivation o f food crops such as cassava, sweet potatoes, water yam, coco yam and maize. Promoting commercial agriculture through private sector participation: Commercial agriculture will be promoted by creating an enabling environment that i s attractive for the private sector to invest. Post harvest storage facilities w i l l be provided in the form o f storage, drying floors, rice mills, threshers, animal feed mills and abattoirs. Access to rural credit w i l l be improved through establishment o f community banks and financial services associations. Feeder roads and community markets w i l l be rehabilitated and or constructed to facilitate movement o f goods to market places. Farmer-based organizations are to be reformed and trained in order to build their capacity to engage in commercial agriculture. Improving agricultural research and extension delivery systems: National Agricultural Research and Extension policies, strategies and programmes are to be formulated within one year. Implementation o f these w i l l improve the quality o f extension services provided to farmers and therefore allow them to improve their productivity. Information, Education and Communication strategy i s also to be developed and implemented. Research and extension w i l l promote appropriate technologies for packaging, handling, processing, and storage quality and capacity, even at the village level. 47 Sierra Leone Povert) Reduction Strateg) I 2008-20 I 2 Promoting efficient and effective sector resource management systems: A National Agricultural Development Plan will be developed and implemented. The strategy will promote the establishment o f a database for agricultural statistics as well as creating a sector coordination mechanism. This will strengthen sector policy formulation, planning, monitoring and evaluation, and resource management. Mainstream cross-cutting issues in agriculture: Workshops and sensitization campaigns will be held in order to educate farmers about important issues such as gender, youth employment, farmer health (including HIV/AIDS) and environmental sustainability. 6.2 MARINE RESOURCES 6.2.1 OVERVIEW OF THE FISHERIES SECTOR The fisheries sub sector contributes 8.0% o f GDP, and fish i s the largest single source o f animal protein for the majority o f Sierra Leoneans, supplying about 80 % o f the total animal protein for consumption. Small-scale artisanal fishery i s a significant source o f employment, rural income and fish protein t o a vast majority o f Sierra Leoneans The industrial fishery subsector i s highly capital intensive and foreign-dominated, but constitutes the mainstay for revenue generation from fisheries. It i s estimated that the industrial fisheries activity currently employs about 1000 people and contributes between 15-20 % o f total fish production in the country. Total estimated fish production i s about 20,000 Mt and this principally comprises shrimps, other shellfish (mainly cuttlefish and snails) and demersal fish. The l o w employment rate in this sector i s largely due to inadequate land based fisheries infrastructures and support services. The sector has a potential t o contribute significantly to economic growth and development through major investment and an effective fisheries surveillance system. 6.2.2 PRODUCTION TRENDS The general trend o f fish production i s shown in Figure 10. The biomass - "how much i s there" - and potential yields - "how much we can take annually" - are illustrated in Figure 11. The biomass indicates a healthy resource base. Revenue generation from fisheries increased after the end o f the c i v i l war (Figure 12), but this i s s t i l l far below the potential. Responsible fishing practices and strong surveillance capability will enhance the contribution o f the sector to fiscal revenues. The estimated total dollar value o f Sierra Leone's standing stock biomass and annual potential yields (Table 16) using prices quoted in latest editions o f INFOPECHE Trade News, African Edition i s estimated at U S $ 271.3-499.Xm and U S $ 92.3-144.8m, respectively. Estimates suggest higher economic values for our pelagic resources. 48 Sierra Leoiie Poverty Reduction Strategy I 2008-2012 140000 ~ 120000 ' I I Year Source: MFMR, 2009 An economic value o f yields i s estimated at more than U S $ 100 m i l l i o n per annum, which can indeed contribute significantly towards poverty reduction in Sierra Leone. Government will therefore endeavour to manage the resources sustainably in order t o derive maximum benefits, which will contribute towards food security for a l l Sierra Leoneans, and the reduction o f poverty. 6.2.3 CHALLENGES The fishery sector has recorded appreciable performance in both artisanal and industrial fisheries. This has led t o a sustained increase in domestic fish production. The sector has been providing substantial livelihoods for a good proportion o f the households. However, post-harvest loss in the artisanal fishery sector was estimated at 15% in 2005, largely attributed to inadequate capacity in fish handling and processing. In response, Government has been embarking o n a massive training programme in fish processing, where up t o 2,500 people were trained in 2007 compared with 125 trained in 2005. This covered the entire country. Government also increased the refrigerated containers for fish preservation from 6 in 2005 to 23 in 2007 countrywide. However, recent reports from artisanal fishermen raise concerns o n the depletion o f the coastal fishery resources, particularly in the Northern continental shelf areas o f the country. This observation was also confirmed by marine stock assessments during the f i r s t quarter o f 2008. 49 Sierra Leone Po\ e@ Reduction Strategq I 2008-2012 50 Sierra Leone Povert) Reduction Strateg! I 2008-20 12 Estimates by the Ministry o f Fisheries and Marine Resources (MFMR) underline that Sierra Leone currently loses the value o f approx. US$29 million per year due to illegal, unreported and unregulated fishing activities. This implies the urgent need for better Monitoring, Control and Surveillance (MCS) mechanisms in the country and the entire region. All o f this underlines also the need for an improved sector policy and respective legislations, as to ensure the sustainable management and development o f the fisheries sector in Sierra Leone. There i s also the need for reform with regards to fishing licences and concessions, which should be based o n quota systems, in the future. In order t o increase i t s national revenue base and t o stimulate economic development, Sierra Leone i s committed t o making the necessary investments to ensure that the current export ban for fishery products t o European markets will be eventually lified. Further to this, the Government will look into the possibility o f negotiating a Fisheries Partnership Agreement with the EU. 6.2.4 STRATEGIES FOR THE FISHERIES SECTOR To ensure that maximum benefit i s derived from the sector, the Government will focus on: Providing adequate fisheries surveillance capability: Inadequate fisheries surveillance mechanisms continue to undermine the potential contribution o f the fisheries sub-sector to economic development and poverty reduction. Between 1997 and 2001, surveys o f Sierra Leone territorial waters established levels o f illegal fishing at 24% o f 947 vessels. Sierra Leone therefore loses about US$29 million t o illegal fishing every year (Greenpeace, 2006). Licensed vessels also continue to leave Sierra Leone t o fish in other countries, as a result of piracy. Government will seek support from development partners for the establishment o f effective fisheries surveillance mechanisms t o protect our waters from 51 Sierra Leone Povert). Keduction Strategy - I 7008-2012 poaching, piracy and other forms o f illegal fishing. Government w i l l also introduce community surveillance and accelerate the fimctioning o f a Joint Maritime Authority. Facilitate the lifting o the export ban on fish exports to the EU market: The poor f sanitary conditions in the processing o f fish have led to the imposition o f a ban on fish exports by the European Union. Fish produced in Sierra Leone i s therefore exported through a third country, which adversely affects the export earnings from the sector, and discourages fishing vessels from obtaining licenses from Sierra Leone, thereby reducing the sector's employment-creating potential. Endeavours are under way to fulfil the sanitary requirements for accessing international markets including the EU, through establishing a laboratory testing centre for fish products, and improving sanitary conditions o f fishing establishments. In addition, Government plans to enter into a Fishing Partnership Agreement with the European Union for the exploitation o f offshore deepwater resources: small pelagics, tuna and shrimp. Improving the infrastructure and support servicesfor commercialfishing: Sierra Leone lacks a fishing harbour to support commercial fishing activities. Therefore artisanal- landing jetties serve as fish receiving stations. Government will seek donor support for the construction o f a fishing harbour to support commercial fishing activities. Landing jetties for artisanal fisher folk w i l l be constructed and or rehabilitated. Providing adequate extension supportfor artisanalfisher folk: Government w i l l develop inland fisheries and aquaculture through the provision o f appropriate fishing gear, and training on seafood preservation, processing and packaging. Strengthening capacity in the ministry o marine resources: The Ministry o f Marine f Resources i s characterized by a shortage o f trained and qualified professional staff, inadequate MCS and lack o f research facilities. Government w i l l focus on strengthening the capacity o f MFMR through the recruitment o f trained and qualified professional staff, and provision o f training opportunities for professional staff. In addition, Government w i l l establish a training school for middle-level technical manpower in the industry. Government w i l l also facilitate the development o f an updated sector policy statement, which i s to be based on actual marine stock assessments, leading to sustainable fishery management plans and adequate new sector legislation. Sustainablefinancing: Government renews i t s commitment to enter into negotiations for a Fishery Partnership Agreement (FPA) with the EU and/or with other appropriate export market outlets. Such a FPA should not only be seen as a means to increase the national revenue base, but also as an opportunity to secure sustainable financing for much needed investment for the mid and longer-term development o f the Sierra Leonean fisheries sector. 52 Sierra Leone Po\erty Reduction Strateg) I 2008-2012 W h i l e some progress was made in the implementation o f the first PRSP, Sierra Leone continues to face huge challenges towards reducing poverty and meeting the Millennium Development Goals N (MDGs). The adoption o f the MDGs by the U reinforced the conviction that a highly skilled and healthy society has greater chances o f increasing household incomes and reducing poverty. There i s abundant empirical and theoretical justification to support the assertion that human resource accumulation i s one o f the main engines o f economic growth and poverty reduction. Among the key determining factors o f human resource accumulation are the level o f educational attainment and the health status o f the population. The government's effort to improve on the social indicators and well-being o f citizens i s determined by lessons learnt in the implementation o f programmes in the first PRSP, together with assessment o f current needs based on consultations with the population at large. Thus, the following areas have been prioritized for improvement in the social sector: education, health and HIV/AIDS, youth employment, and gender empowerment. This section w i l l outline measures that w i l l be undertaken in order to achieve visible results in these sectors. 7.1 EDUCATION The Sierra Leone Integrated Household Study shows a clear and unambiguous linkage between education and poverty. In the 2005 Multi-Indicator Cluster Survey, the poorest quintile o f the population has the least access to primary education as compared with the richest quintile in the country. The recent out-of-school-study'9 suggests that most o f the children who drop out o f school are fiom poor families. In July 2007, the Government o f Sierra Leone launched the Education Sector Plan which outlined i t s mission to provide basic education o f quality for all in a phased manner, starting with the realisation o f the right o f all children to quality primary education, whilst at the same time providing marketable skills training and the relevant and appropriate tertiary education needed for the advancement o f the society and poverty reduction. The Plan mapped out clear goals and priorities that w i l l ensure that Sierra Leone meets the two education related MDGs. These priorities are summarized as follows: Achieving universal primary education and completion Improving the quality o f education; Meeting our human resource needs through higher education, skills training and literacy; Providing early childhood care and pre-school opportunities for more children; Providing improved governance, planning, management and leadership (including capacity building at all levels). '' The Out-of-school Sbdy, 2008, Ministry o f Education, Youth & SportiLTNICEF 53 Sierra Leone Povert) Reduction Strategy I 2008-2012 7.1.1 P R O G R E S S AND ACHIEVEMENTS Access to formal education improved considerably over the years. Primary school enrolment increased from approximately 1,13 5,000 in 2003/2004 to 1,322,000 in 2006/2007, an increase o f 16.5%. Gender parity in primary education has s t i l l not been achieved although progress towards it has been made. In 200312004 there were 618,747 boys compared with 516,068 girls enrolled in school (1.2: 1). In 2006/2007, the comparable enrolment figures were 693,730 for boys and 628,508 for girls (1.1 :1). To assist in enrolment and school attendance o f pupils, school feeding and de-worming programmes were undertaken. Approximately 300,000 children were provided with meals at school, and more than double this number were de-wormed. Reducing the cost o f education to parents by waiving tuition and examination fees has improved access. As o f 2004, 7,421 teachers had received in-service training, and over 2,000 teachers had been enrolled in the distance education programme. Although the target o f 75% passes at the national primary school examination was not achieved, there was an annual increase o f passes over the period 2005-2007, partly explained by increased primary school enrolment. The percentage passes over this period were 72%, 73%, and 69% in 2005, 2006, and 2007 respectively. O f the total number o f girls who took the examinations in 2006, 69.2% passed. Since 2004, 290 primary schools were constructedlrehabilitated by the Government and i t s partners. Over 1 million sets o f core textbooks were supplied to primary schools. School Management Committees were established in all primary schools, and trained on their roles and responsibilities. As part o f the implementation o f the Local Government Act, basic education was devolved to local councils, thereby increasing community involvement in school management. Since the Education Act, 2004, 102 junior secondary schools have been established. The implementation o f the Education Sector Plan started in 2007 and action plans including funding modalities have been developed. 7.1.2 CHALLENGES Some 30%" o f children o f primary school-going age are s t i l l out o f school. Many o f those who eventually access schooling do not complete. Getting all children to access and finish schooling are phenomenal challenges which should be addressed effectively. Below are specific challenges faced by the education sector in providing universal access to primary education: e Inadequate enforcement o f the Education and Child Rights Acts Over-aged children s t i l l in schools thus clogging the system 2o The Country Status Report for Sierra Leone, 2006; Population Census, 2004 54 Sierra Leone Poveity Reduction Strateg) I 2008-2012 Inadequate and inappropriate schools to especially address special needs o f many children L o w primary school completion rates Poor internal efficiency o f the system High repetition and drop-out rates Weak management information systems Weak management and delivery systems Poor accountability and transparency Sexual harassment and gross child abuse, exploitation and violence in schools Over crowded classrooms High pupil-teacher ratios in schools Shortage o f teaching and learning material The curriculum not adequate t o address the emerging issues in education L o w human resource capacity at a l l levels (national, district, communities and schools) Hidden costs o f education. 7.1.3 STRATEGIC PRIORITIES Increasing access to and completion o primary schooling, especially for girls and out-of-school f children The Government o f Sierra Leone has taken strides t o ensure that all children, regardless o f gender and physical condition, access quality primary schooling. These areas include fiee tuition, provision o f per capita fee subsidies, provision o f teaching and learning materials, adoption o f the 2004 Education A c t and 2007 Child Rights Act, and payment o f the examination fees. Nevertheless, there are 30% o f children o f primary school-going age s t i l l out o f school. Causes o f non-attendance include hidden and indirect costs, cultural barriers to girl-child education, child labour, and lack o f nearby schools2'. School feeding i s one o f the interventions that can be used t o ensure retention and completion. Although efforts are being made by WFP in eight provincial districts, the programme only covers 300,000 primary school-going children. Thus, in the medium term, the Government will extend school feeding programmes t o other schools in all districts. In addition take-home rations for girls will be promoted, as an incentive for increasing attendance. Schools located in the most vulnerable settlements would be targeted as a matter o f priority. The extension o f the School Feeding Programme for Sierra Leone will improve the health o f the children and have a positive impact o n access, retention and eventually the overall quality o f education in the country. In response to the global food crisis, WFP is developing a programme that will provide food for 100,000 pupils in the Western Area. '' The Out-of-school Study, 2008, Ministry o f Education, Youth & SportLJNICEF 55 Sierra Leone Poverty Reduction Strategy I 2008-20 12 Improving quality and relevance ofprimary education The provision o f teaching and learning materials o f adequate quality i s an issue that could not be dispensed with as we strive towards accomplishment o f quality primary education. The provision o f core text books at a 1:2 ratio i s the aim o f the Ministry o f Education, Youth and Sport, but i s yet to be realized nationwide. The intention i s t o provide books in sufficient quantities that children can read both at school and at home. I t i s noteworthy that in the Moyamba district, the core textbook-pupil ratio i s 1:l. In order to address emerging issues and t o update course materials to ensure quality and relevance o f the content, the curriculum needs regular review. Recognising and addressing violence against children in schools i s vital in improving the present educational system in Sierra Leone. There are few reporting mechanisms or referral systems in place for victims o f abuse and exploitation or harassment within the schools structure. A code o f conduct for teachers and other education personnel and a reporting mechanism will be developed and enforced especially for sexual harassment o f the girl child. These reporting mechanisms will be widely publicised. Alleged criminal acts committed by teachers and other education personnel, such as child abuse, sexual violence and other illegal activities will be referred to the appropriate authorities for legal action. The Government also intends t o improve on the school environment for girls by enforcing the policy o f providing separate toilet facilities for boys and girls. Currently, the number o f fully equipped and adequately furnished post-primary schools i s inadequate. This problem will become worse as universal primary education and completion are successfully implemented. Schools are being constructed or rehabilitated by Government and i t s partners. The Ministry endeavours to ensure there are enough fully functional schools to meet increased demand. The quality o f post-primary schools will also be improved by ensuring that adequate teaching and learning materials are provided in a timely manner. The Government will also provide library facilities for schools, and ensure that the curriculum meets the needs both o f learners and society. Education o f high quality i s essential for the achievement o f poverty reduction. Trained and qualified teachers in schools have a crucial role to play in the provision o f quality education. Currently, 40% o f primary school teachers are untrained and unqualified". Some secondary school teachers are academically qualified but lack professional training. Also, there i s acute shortage o f qualified and trained teachers in Mathematics, Science, English, French, Creative Practical A r t s , Physical and Health Education, and Social Studies. This problem is compounded by the fact that most qualified teachers prefer working in urban areas, creating a paucity o f qualified teachers in rural communities. In addition to the shortage o f qualified teachers, there i s gender imbalance in the teaching force (approximately 30% and 20% o f primary and secondary teachers are female respectively). N o t much progress has been made in improving the qualified teacherlpupil ratio. I t can be argued that as enrolment increases the number o f teachers should increase, but the ceiling on recruitment o f teachers prevents Government from recruiting more qualified teachers. However the Government has successfully concluded a teacher verification exercise, the result o f which will allow for the review o f the payroll. 22 Education Sector Plan, 2007, Ministry of Education, Youth & Sport 56 Sierra Leone Poverty Reduction Strateg} I 2008-2012 The working environment for teachers i s not very attractive. The lack o f staff quarters especially in rural communities i s a disincentive for qualified teachers t o seek employment in those localities. To ensure that teachers are paid on time and well enough t o motivate them, terms and conditions o f service for teachers will be improved and incentives provided for remote areas. Special recruitment drives for female teachers will be carried out t o attract them into rural areas. Improve capacity to effectively and efficiently deliver education The Government o f Sierra Leone prioritizes both institutional and individual capacity building. Capacity i s needed at the central level so that appropriate policies are established and education programmes can be planned, coordinated and properly budgeted. Capacity i s needed at the district level so that funds can be effectively utilised, monitored and evaluated. Capacity i s needed at school level to ensure that schools are well managed, learning takes place and resources are used efficiently. Priority areas for capacity building will include recruitment for vacant positions, training o f Ministry o f Education officials at national and district level for improved and increased monitoring and supervision; providing teacher guides and other reference materials, training o n management skills and accountability. In recruitment o f teachers, focus will be o n increased admission into teacher training colleges while ensuring that teacher training i s affordable. The policy o n teacher recruitment will be reviewed. The distance education in-service programme will be expanded for unqualified primary teachers, so that they will have the opportunity to be trained in their communities. Strengthen Education Management Information System (EMIS) and management o education f records Good quality data i s essential for all the planned education priorities mentioned above. Although data exists from a variety o f sources they are often inconsistent and o f variable quality. Since reliable data i s key to educational planning, monitoring and accounting functions, the Ministry prioritises the ongoing establishment o f an EMIS Unit, which should organise the collection o f credible and reliable data o n all aspects o f education, and be responsible for its analysis and dissemination. The training o f inspectors and supervisors who in turn will pass on their knowledge to school heads and teachers i s necessary. The Ministry sees monitoring, accounting and data collection as a responsibility o f all stakeholders. The community can play an important role in monitoring school attendance, identifjiing out-of-school children and raising the alarm bell when necessary. In a decentralized system the districts will be expected to provide timely accurate information o n the core education indicators. Health i s a major component o f the human development priority o f the PRSP. Economic development i s expected t o improve the health status o f the general population, but at the same time, better health contributes to economic development by increasing worker productivity and lengthening the expected working life o f human beings. Better maternal health, child health, and 57 Sierra Leone Povem Reduction Strategy I 2008-2012 nutrition promote k t u r e productivity growth, by ensuring children have a better start to l i f e to develop into healthier and more productive adults. Health care in Sierra Leone i s provided by government institutions, faith-based organisations, NGOs, private clinics, and traditional healers. The health services run by the Government comprise: Peripheral Health Units (PHUs), variously categorised as community health centres, community health posts, and maternal and child health posts. PHUs are the first level o f health delivery. District hospitals support the PHUs. They serve as referral points and manage more complicated clinical services that are outside the competency o f the PHUs. The third level o f service delivery i s at the tertiary level, to support district hospitals and address conditions requiring specialised care. Under the 2004 Decentralisation Act, District Councils now play a key role in the financing and management o f district hospitals and PHUs. Most o f the primary health care services have been devolved to them, requiring district health teams to only provide technical support. Prior to PRSP-I, the quality o f health service delivery had deteriorated, mainly due to the ravages o f the ten-year civil war, and the chronic under-financing o f the sector even after the war. As a result the Government was unable to provide adequate medical supplies, equipment or infrastructure for optimal basic health care services. In an effort to improve the quality and provision o f health care delivery, the Government prioritised interventions in the PRSP-I in 2004 focusing on the reduction o f child and maternal mortality rates in the health sector. The specific areas o f interventions were the revitalisation o f health services for quality care and the rehabilitation and reconstruction o f health facilities. Currently the introduction o f an "Essential Health Care Package", in the health care delivery system defines key interventions that the public health system should provide within the available resources. To ensure the sustainability and uptake o f the health services, focus i s put on the importance o f community participation in the management o f health services and coordination o f donor support. 7.2.1 AND ACHIEVEMENTS PROGRESS During implementation o f PRSP-I, focus in curative care was put on rehabilitation and reconstruction o f dilapidated facilities. By end o f December 2007 some o f the main curative care achievements included rehabilitation o f 867 PHUs and three tertiary hospitals (Connaught, Princess Christian Maternity, and Ola During Children's). Maternity warddhospitals were also constructed in Kenema, Koinadugu and Kono. Quality control laboratories for pharmaceutical products were established at Jenner Wright clinic in Freetown and a Lassa fever laboratory constructed in Kenema. Construction o f five district hospitals (Moyamba, Makeni, Kambia, Kailahun and Kono) was started and i s ongoing. A reference HIV/Aids laboratory was constructed at Lakika in Western area. Concerning service quality, training o f health workers was prioritised. About 550 M C H Aides were trained to provide skilled delivery, immunisation, growth monitoring and promotion, and treatment o f minor ailments. Twenty nurse-anaesthetists were trained and posted to hospitals; State Enrolled Community Health Nurses and Nurse Midwives were trained to provide basic emergency 58 Sierra Leone Poveri) Reduction Strategy I 2008-2012 obstetric care. In order to provide quality services at district hospitals, laboratory technicians and assistants were trained in basic laboratory techniques. Series o f refresher trainings were also done for all categories o f PHUs and district staff on different packages o f health interventions. The table below summarises the progress and challenges in providing adequate human resources in health, including the gaps between numbers available and estimated needs at the end o f 2008. In the area o f heath promotion and prevention, progress was made in a number o f areas despite the challenges. Childhood immunisation showed great signs o f improvement; immunisation coverage for infants against DPT3 rose from 56% in 2004 to 64% in 2007. Similarly, measles immunisation coverage rose from 62% in 2000 to 76% in 2007. During implementation of PRSP-I, new vaccines like pentavalent and yellow fever were introduced in the health system. Following the solarisation o f the cold chain and the training o f staff on cold chain management, vaccine potency in PHUs has greatly improved in the EPI programme. Malnutrition i s one o f the major causes o f infant and under-five mortality and morbidity in Sierra Leone. According to several studies it accounts for about 46% o f under-five mortality. The 2005 MICS estimated that 31% o f under-fives were underweight, 40% stunted and 9% wasted. The rapid assessment survey conducted in 2007 by the Ministry o f Health and Sanitation indicated 25% were underweight, 29% stunted and 9% wasted, signifying possible improvement. High Vitamin A coverage among under fives and deworming was continued through integrated campaigns maintaining coverage o f over 80%. Malaria remains the commonest cause o f illness and death in the country. Over 35% o f children under five had malaria in the last two weeks o f the 2005 MICS-3. This i s another area where commendable progress was made to address the problem. In the area o f prevention, about 1.5 million insecticide-treated bed nets (ITNs) were distributed to under-fives and pregnant women in 2006. The most recent survey undertaken in 2007 shows that 56% o f under-fives and 48% o f pregnant women slept under I T N s . To stem drug resistance, the programme introduced ACT in the PHUs. W h i l s t less than 2% o f under-fives received the drug within 24 hours in 2005, by March 2007, 12% received prompt and appropriate treatment for malaria at PHUs. From 2005 to 2007 pregnant women receiving a second dose o f Intermittent Preventive Treatment (IPT) rose from zero to 42%. 59 Sierra Leone PoveQ Reduction Strateg) - I 7008-2012 There was marked improvement in the HIV/AIDS programme implementation. By the end o f 2005 there were only 20 VCCT sites in the country but by the end o f 2007 a total o f 82 sites had been established. With regard to Prevent-Mother-to-Child-Transmission (PMTCT) sites, there were only 18 nationwide in 2005, but by the end o f 2007 PMTCT sites had increased to 163. The prevalence among women attending antenatal clinics had risen from 3.5% in 2005 to 4.4% in 2007. Service delivery points that provide STI services according to national guidelines were 765 in 2005. By end o f 2007, STI services had increased to 850. Furthermore by 2007, the number o f people receiving anti-retroviral treatment had increased to 2,649 and condom distribution stood at 950,000. L i t t l e progress was made in the area o f water supply and sanitation. Coverage remained at 47% for water and 30% for sanitation. The situation i s worse in rural areas as compared to urban communities: rural communities had 32% clean water coverage, compared to 84% for urban communities. Similarly, sanitation coverage in rural areas was 17%, compared to 64% for urban communities. Access to water and sanitation facilities varies considerably between the rich and poorest segments o f society; water access for the poorest i s 11% compared to 91% for the richest. Access to sanitation also shows similar trends: 1% versus 79%, for the poorest and richest respectively. Financing health care remains a big challenge in Sierra Leone; the MOHS and development partners commissioned a review o f policy options in 2007. Health care costs remain very high in Sierra Leone leading to poor utilization (on average 0.5 visits per person per year). Out o f pocket expenses remain among the highest in Africa (about 70% o f people attending clinics pay from their own resources), while most o f the population remains below the poverty line. The review established that even modest charges tended to exclude over 50% o f the population from seeking health care, and exemption systems in current use do not seem to work. Based on analysis o f 50 developing countries, the health financing group recommends that Government increase i t s per capita expenditure on Health to US$15, and also reverse i t s declining per-capita expenditure on health. Implementation o f free health care in all PHUs and district hospitals i s recommended as the practical policy option that w i l l address the health o f the poor majority. In this regard, investment in improving the quality o f services i s critical. 7.2.2 CHALLENGES The provision o f quality health care that especially addresses the needs o f vulnerable groups in the country faces the following challenges: Limited geographical access because o f inadequate numbers and inequitable distribution o f facilities; Limited financial access since over 70% o f the population are under the poverty line and payment for services i s mainly out o f pocket; Inadequate access to free health care for vulnerable population; Limited availability o f high impact and cost effective interventions; Inadequate transport and referral services; Chronic shortages o f drugs, equipment and essential supplies and logistics; 60 Sierra Leone PoverQ, Reduction Strategv I 2008-20 12 Inadequate participation o f communities in health care delivery; Weak coordination and communication among programmes and partners; Inadequate support and supervision at all levels; Shortage o f critical health professionals, especially midwives and medical officers; L o w staff remuneration and weak personnel management resulting in low motivation and morale; Non-communicable diseases and mental health are becoming emerging priority problems. 7.2.3 STRATEGIC PRIORITIES In view o f the foregoing situation and challenges confronting the provision o f quality health services in the country, the goal i s to contribute to health improvement and subsequent poverty reduction in the country through the following priorities: Provision O Zntegrated Reproductive and Child Health Services - To address the f unacceptable high child and maternal mortality and morbidity in Sierra Leone, the current strategy i s designed to address both reproductive and child health issues, taking into account an integrated approach and continuum o f care. The programme w i l l include a holistic approach to service delivery that includes family planning to address problems o f teenage pregnancies and child marriage, essential and emergency obstetric care including prenatal, delivery and post natal services, integrated management o f neonatal and childhood illnesses, preventive services including immunisation and school health. Nutrition - Good maternal and childhood nutrition i s designed to contribute to the reduction o f under-five morbidity and mortality. Nutritional services w i l l focus on promotion o f early and exclusive breastfeeding, infant and young child feeding, promotion o f local salt iodation, provision and distribution o f micro-nutrients to both pregnant women and children, and periodic provision o f de-worming treatment. Community identification and management o f acute malnutrition w i l l be strengthened. Where appropriate, communities w i l l be sensitised to identify and refer severe cases o f malnutrition for proper management at the health facilities. Malaria Control - In recognition o f the fact that malaria i s the most common cause o f illness and death, especially o f children, emphasis will be placed on preventive services which include provision o f ITNs, IPTs, and promotion o f environmental sanitation. For curative services, access to prompt ACT and quinine treatment w i l l be guaranteed. STZs/HIV/AIDS and Tuberculosis - Whilst the prevalence o f HIV remains low (at 1.5%), existing conditions could contribute to the population becoming more vulnerable and at risk o f increasing transmission o f infection. The focus therefore w i l l be on prevention o f new infections including treatment o f sexually transmitted infections, condom promotion and distribution, VCCT and PMTCT. Care, treatment and support w i l l also be provided to people living with HIV/AIDS, including orphans and vulnerable children. Non-Communicable Diseases and Mental Health - There i s a noticeable increase in conditions affecting the health o f a larger segment o f the population including 61 Sierra Leone POI ert) Kzduction Strategj I 2008-2012 hypertension, diabetes, cancers and sickle cell anaemia. These are high risk conditions especially in pregnancy. Screening services w i l l be provided at the health facilities for the identification o f these conditions through appropriate training o f staff and provision o f screening tools. Free treatment w i l l be provided to the vulnerable groups including under- five children. Recent surveys are showing increasing incidences o f mental health problems, especially among youth. This i s generally attributed to post-war effects and substance abuse. There i s gross understaffing in mental health; there i s only one specialist in the country and health staff even at the PHUs are not trained to deal with these cases. In the short term, consultant trainers w i l l be recruited to provide middle-level training o f staff. Community based rehabilitation services w i l l be provided or strengthened. Water, Sanitation and Hygiene Promotion - Safe water and sanitation to communities i s considered crucial for healthy living. The prevention o f diarrhoeal diseases i s dependent on access to safe sanitation facilities and the use o f safe drinking water. Mothers and caretakers o f children w i l l be sensitised on the importance o f general hygiene practices including hand washing with soap at critical times (before eating, during food preparation, after using the toilet and after handling stools o f children). Scaling up and promotion o f the Community Led Total Sanitation programme w i l l be prioritised, as w i l l improving household storage and treatment o f drinking water using affordable and appropriate technologies. Provision o Infrastructure for Primary, Secondary and Tertiary Institutions - A well- f designed physical infrastructure o f health facilities enhances the provision o f quality services. Even though many facilities have been rehabilitated, this process i s ongoing. In many districts geographical access to health facilities i s s t i l l a major challenge. There i s need for adequate provision o f essential supplies, drugs, health equipment, water and electricity to provide quality services and referrals. The supply chain management remains extremely weak. More resources w i l l be required to rehabilitate, construct and expand infrastructure at the various levels to provide the basic package o f services, and to strengthen the supply chain. Human Resource Development and Management - Human resource development and management i s the kingpin to quality health care provision. The current number o f trained and qualified health and medical personnel i s inadequate to address the health needs o f the population. There i s a high attrition rate o f staff due to poor conditions o f service, including very low packages o f remuneration and other appropriate benefits, which does not encourage prompt and quality service. There i s an urgent need to train and recruit essential staff, especially midwives, to provide reproductive health services Strengthening Health System Financing - The financing o f healthcare remains a big challenge in Sierra Leone. The high out-of-pocket expenses on health i s a contributing factor to poor utilization o f health services, as most o f the population i s under the poverty line. To address this issue, the Government w i l l set up a National Social Health Insurance Scheme that w i l l ensure access and affordability o f quality health care service to all Sierra Leoneans. The financing o f such a scheme i s a key challenge to the Government. Development o Information management system - The present status o f health f information management system i s not efficient to provide timely and accurate data for informed decision making. Staff are not adequately trained, there i s no coordination and harmonisation o f health information tools in the health institutions. There i s a dearth o f 62 Sierra Leone Poi e@ Reduction Strategy I 2008-2012 information o n logistic and supply chain management. Therefore there i s need to develop a reliable management information system capable o f providing evidence to planners and policy makers o n the provision o f quality health services in the country, and monitoring PRSP health outcomes. 7.3.1 OVERVIEW Despite Sierra Leone's favourable climate, high rainfall, good natural vegetation, and numerous rivers and creeks, harnessing water resources i s a serious challenge, making access to basic water and sanitation facilities for the majority o f Sierra Leoneans extremely limited. This i s compounded by the limited functional infrastructure for water supply as well as the exponential increase in population in Freetown and provincial cities over the past decade as a result o f civil conflict. During the drinking water decade in the 1980s, numerous external support agencies assisted the government to provide safe drinking water in the country. These agencies include UNDP, EU, JICA, UNICEF, WHO, WaterAid, ActionAid, C A R E and P L A N . However, the ten- year c i v i l war essentially reversed these efforts as most installations, particularly those in the provinces, were damaged beyond repair. It has also been revealed, including from the Truth and Reconciliation Commission, that copses were dumped into some o f the water wells. Consequently, less than 50 percent o f the population in the Western Area, and less than 32 percent o f the rural population, have access to reliable water supply. The consequence o f the acute water supply situation i s that people develop extremely unhealthy and burdensome coping mechanisms, such as fetching water from inappropriate sources including unprotected surface water and wells. Water from these sources i s neither treated nor i s i t s quality monitored. The result i s a high presence o f E-coli, faecal coliforms and other pathogens unfit for l human consumption. Drinking water with a high presence o f pathogens results in i l health. In addition, fetching water from far away sources i s a burden t o women and children, who normally carry this responsibility. For the children in particular, their increasing deployment for fetching water seriously undermines their fragile health and education prospects, while for the women, it reduces farm productivity and other income generating performance levels. Sierra Leone i s blessed as most o f i t s towns and villages are located by rivers or streams. One of the major constraints i s the lack o f adequate financing to exploit these natural water sources and to provide energy and chemicals to transport and clean the water to be fit and available for human consumption. Another constraint i s the non availability o f qualified manpower that could be recruited and retained. 7.3.2 POLICY OBJECTIVE Government's overarching aim in the long term i s to make available bulk potable safe water t o as many people as possible, targeting high population density areas, such as urban, peri-urban and large villages. Pipe borne water supply will be the preference. 63 Sierra Leone Pove~QReduction Strategy I 2008-2012 T o achieve the above, the Government prioritises, in the short t o medium term, increasing access to safe water both in the western area and selected large provincial settlements including district headquarter towns. In addition, the Government will ensure that a l l catchment areas are properly demarcated and protected. The significance o f water in the fight against poverty necessitates the need for effective and efficient management o f the resource. As a first step to achieving this goal, a Water and Sanitation Policy has been developed with the following objectives: T o develop a comprehensive framework for management o f water resources and sustainable development o f water supply and sanitation services within an effective legal and institutional framework. T o address cross-sectoral interests in water resources through integrated and participatory approaches in the planning, development and management o f the water resources. To improve the provision o f sustainable safe water supplies and sanitation facilities in urban and rural areas through a coordinated approach. T o ensure stakeholders participate in the management o f water resources and in the planning, construction, ownership, operation and maintenance o f community-based domestic water supply schemes in rural areas. T o put in place implementation strategies for sustainable development and management o f water resources, including gradually changing the Government role from a major service provider to those o f coordinator, and policy and guideline formulator. Promotion and scaling up o f the Community L e d Total Sanitation concept and promotion o f the Open Defecation-Free communities concept. Against this background, the Government objective i s t o ensure increased access to basic water and sanitation services, within an integrated and effective management framework. The Government will address water issues in phases: (a) Emergency, (b) Short to Medium term; and (c) L o n g term. 7.3.3 EMERGENCY TO SHORT-TERM STRATEGIES In the immediate to short terms, the Government will focus o n increasing access to safe drinking water in Freetown and i t s environs, the district head quarter towns and large provincial settlements. Improving access to water in the western area - Water from the Guma Treatment Works i s supplied t o communities in Freetown and i t s immediate environs through two transmission pipes. These pipes run through the peninsular road t o the Spur Road reservoir, which was designed as a holding facility for distribution in the city including to subsidiary reservoirs at Tower Hill, Dan Street and Wellington. Unfortunately, the Spur Road reservoir has functioned only o n one transmission pipe (550mm diameter) and therefore receives only about 30% o f i t s capacity, making it difficult to supply water and t o transmit water t o other reservoirs in the city. Additionally there are 10 off-takes along this pipeline for distribution to coastal villages up to Lumley. Overall, although Guma i s currently producing an estimated 16.5 million gallons a day, it cannot meet the current daily demand in Freetown, which i s estimated at 30-35 million gallons. This has led to a 64 Sierra Leone Po\em Reduction Strategq I 2008-2012 situation where residents without water supply frequently cut water pipes running through their locality creating significant wastage in the system. In densely populated areas, there i s inadequate safe drinking water, leading to rising water borne diseases. Furthermore, given the age and out-datedness o f a substantial part o f the current water supply network, there are significant leakages in most o f the pipelines, leading to an estimated infrastructure loss o f 4 million gallons a day. To complement Guma's capacity, a number o f potential water sources have been identified for increasing water availability and supply in the western area within a reasonable period. These include enhancing borehole water systems (including well-fields) and minor water schemes. Improving Access to Water in Provincial Headquarters Towns & Large Settlements - There are four major water supply sources in the provinces: rivers, streams, ground and springs. Although 42 water schemes were installed in various parts o f the country, most o f the facilities are dysfunctional and the population in the various settlements h s also a outgrown the systems. Consequently, the supply capacity i s far below the current demand. The project w i l l aim to develop these sources into sustainable water supply schemes thereby providing improved access to adequate and safe water. However, because o f limited resources and the severity o f the water situation especially in those settlements with high security risk, the Government w i l l focus on increasing access to water in all district head quarter towns and selected large rural settlements. Demarcation and Protection o f Water Catchment Areas - The Western Area peninsular receives some o f the highest rainfall in sub-Saharan Africa. The exponential growth in population o f Freetown in recent times, coupled with the massive and uncontrolled deforestation and expansion o f settlements on the ecologically fragile slopes o f the peninsular mountains, has had a negative and devastating impact on harvesting water to supply Freetown and i t s environs. The holding capacities o f the existing reservoirs at M i l e 13, Congo and Sugar Loaf fall far below the estimated 35 million gallons a day demand for water in Freetown. The situation i s further compounded by erratic rainfall and siltation thus causing huge problems both in terms o f quantity and quality o f water discharge at the dams. Improvements in the water supply situation thus necessitate the demarcation and protection o f catchment areas o f the existing dams and o f the catchments o f the proposed gravity schemes. This project will survey, demarcate, manage and protect catchment areas around the peninsular. I t w i l l not only guarantee sustained availability o f safe and clean drinking water to the western area, but also restore the hitherto pristine nature o f the Freetown peninsular. 7.3.4 MEDIUM LONG T E R M STRATEGIES TO The challenges in water supply and sanitation service delivery in the country are enormous. The 4-year l i f e span o f Sierra Leone's second PRSP i s not likely to meet all the demand in the sector, but i s expected to lay the foundation for future interventions. All o f the towns in the country need to considerably improve their water supply and sanitation facilities. Considerable efforts would be made to mobilize resources, and to develop programs towards rehabilitation, reconstruction or expansion o f water supply and sanitation facilities in various small and urban towns. In the 65 Sierra Leone Po\ ZQ Reduction Strategy I 2008-20 12 medium to long term, the Government w i l l focus on increasing the volume o f water supplied nationwide, well as reforming the sector to address structural issues that inhibit effective sector management. This will focus on the following: Improving Access to Water in District Headquarter Towns - The Government w i l l rehabilitate and operationalise existing water schemes in all 12 district headquarter towns. The intake works and distribution networks w i l l have scope reserved for future expansion as additional funding becomes available. In addition, the Government w i l l provide water bowsers for each o f the district head quarter towns. Improving Access to Water in Large Provincial Settlements - The Government will construct weirs, gravity systems, bore holes and well-fields in the following communities: Mile 91, Blama, Segbwema, Lunsar, Masiaka, Waterloo, Mattru Jong, Njala, Tongo, and Kamakwie. This w i l l significantly increase access to safe drinking water in these communities, reducing infant and child mortality as the use o f unsafe water w i l l be drastically reduced. - Construction o Orogu Dam The construction o f another dam at Orogu, providing a f capacity that i s twice Guma, w i l l give a more sustainable supply for the western area for residential, commercial, industrial and agricultural use. The Orogu catchment area i s by far the most significant new resource available for Freetown. The existing project document23Orogu recommends a two stage rock f i l l dam, with usable storage capacities o f 14,500 million litres and 36,000 million litres for first and second stages respectively. The stage one dam i s capable o f yielding around 75Mlld. The Orogu dam has high water resource value with l o w operation and maintenance costs meaning high reliability. Being at a lower elevation, there are benefits arising from pressure zoning, and some security o f supply benefits by providing a bulk transfer system through Freetown. To address structural issues and promote effective management in the sector, the Government will focus on: Integrated Water Resources Management - It will promote and support an integrated water resources management approach through developing concepts, principles and tools that will ensure greater benefits in water resources utilization. Capacity w i l l be developed to support effective co-ordination and collaboration amongst stakeholders. Focus w i l l be on activities that w i l l support an efficient, sustainable water resources information management system. - Water Resources Mapping for Sierra Leone Sierra Leone lacks sufficient scientific knowledge o f i t s water resources base. Accordingly, assessment o f and planning for optimal use o f water resources continues to be severely constrained. Steps w i l l be undertaken to determine the country's overall water resources, both surface and groundwater, and for systematic monitoring o f their utilization and quality. Establishment o a National Water Resources Management Board4 - In l i n e with the f country's Water Supply and Sanitation Policy, Government w i l l establish a National Water Resources Management Board (NWRB) with functions ranging from water resources exploration, water resources assessment both in quantity and quality, monitoring and evaluation, water allocation, pollution control, and other cross-sector activities such as '' The project document was prepared by COMPLANT Ltd ofChina in 2007 z4 Recommendations k o m Draft Water Supply and Sanitation Policy, Jan 2008 66 Sierra Leone Povert) Reduction Strateg) I 2008-2012 catchments management, planning and development. In collaboration with neighbouring countries Guinea and Liberia, the NWRB w i l l explore river basin projects for trans- boundary water resource use, including technical collaboration on research, data collection and planning o f the utilization o f trans-boundary water resources. - Establishment o a Utility Regulate?' In line with Government's new Water Supply and f Sanitation Policy, a regulator for the sector would be established to regulate water and sewerage services. It would support and protect the interest o f consumers; protect the financial viability o f efficient water supply entities; promote the availability o f regulated services to all consumers including l o w income and disadvantaged consumers; enhance public knowledge, awareness and understanding o f the regulated services in the sector; establish standards for water supply services; regulate rates and charges for the services; and monitor the performance o f regulated entities in relation to investments, quality and quantity o f services, cost o f services and efficiencies o f production and distribution. 1 7.4 SOCIAL PHO`IECI'ION A national policy objective on Social Protection (SP) i s absent in Sierra Leone. As a result, there i s lack o f a clear and coordinated national approach to social protection. Equally so, the SP role in poverty reduction, promoting equity o f access to social services, reducing discrimination, strengthening capacity o f vulnerable groups in managing risk, promoting social cohesion and stimulating growth has been largely latent (not highlighted in previous PRSP). Generally, Social Protection involves providing Social Insurance and Social Assistance to a country's population using various instruments. Social Insurance i s the contributory part o f SP, which requires beneficiaries to contribute a proportion o f their earnings to the scheme, while Social Assistance i s the non-contributory aspect o f SP: beneficiaries do not contribute to the proceeds. Social Protection, Health, Education and other social service interventions make up a nation's social policy. Annual budgetary allocation to SP i s estimated at less than 1% o f GDP, which i s relatively l ow compared to other sectors. When this picture i s juxtaposed on the poverty profile o f Sierra Leone, the need for greater focus on SP becomes very apparent. 7.4.1 EXISTING EFFORTS SP i s provided by governmental and non-governmental organisations in varying areas. The Government o f Sierra Leone has put together a number o f initiatives geared towards providing SP and alleviating poverty especially amongst the vulnerable groups. The most prominent o f these include the Social Security and Pension Scheme implemented by the National Social Security and Insurance Trust (NASSIT) , and Pro-poor Social Action Projects implemented by the National Commission for Social Action (NaCSA). ~~ ~~ 25 Recommendations from Draft Water Supply and Sanitaaon Policy, Jan 2008 67 Sierra Leone Povert) Reduction Strategq I 2008-2012 The Social Insurance Trust (managed by NASSIT) operates a contributory scheme that caters for the security o f contributors at old age or in the case o f disability. I t mainly attracts people in formal employment in both the public and private sectors. Through NaCSA's operations, a significant number o f community social and economic infrastructures have been provided and temporary employment created, especially in the rural, peri-urban and slum settlements o f the urban areas. More recently, some focus h s been re- a directed to productive assets and economic empowerment activities aimed at addressing poverty amongst the extreme poor at the individual and household levels. Other governmental interventions include safety-nets such as tuition-free primary education and support to the girl-child pioneered by the Ministry o f Education, and cash transfer to the elderly managed by the Ministry o f Labour and Employment. Other initiatives are being delivered by NGOs and the UN, mainly in the health and education sectors. These initiatives include: School Feeding Programme sponsored by World Food Programme and other food pipeline agencies (Catholic Relief Services and World Vision); Provision o f school materials by UNICEF in collaboration with the Ministry o f Education; Support to the disabled through the provision o f prosthetics, housing and s k i l l s training for gainhl employment. However, safety net interventions in Sierra Leone are fragmented, with weak institutional arrangements for delivery and coordination. Due to the lack o f synergy from weak coordination, there i s a paucity o f empirical evidence o f the impact o f social safety net schemes. Also, the overall investment in such schemes i s hard to determine. Government has also commenced implementation o f a reparation programme for amputees, the war wounded and the sexually assaulted during the war. Benefits range from individual to group and community interventions, which also cater for children o f victi ms. In addition to the above efforts, Government through Parliament has enacted the Child Rights Act and the Gender Bill to provide the legal foundation for ensuring the protection and elimination o f discrimination and exclusion o f children and women. 7.4.2 W A Y FORWARD Given the status o f Social Protection in Sierra Leone vis-&vis the country's poverty profile, Government w i l l build 'on existing efforts and broaden the prospects for reducing risks, vulnerability, exclusion and discrimination and hunger for those who are unable to provide for themselves; seek to prevent households from being devastated by shocks, and increasing opportunities for vulnerable groups to l i f t themselves out o f poverty. SP w i l l adopt the following approaches: - Protection This will focus on Social Assistance including a broad range o f actions such as cash transfers, food aid, affordable health charges, child protection services and responses to l i f e threatening emergencies to enhance coping mechanisms o f vulnerable groups including amputees and the war-wounded. 68 Sierra Leone Poverty Reduction Strategy I 2008-2012 Prevention - This w i l l focus on Social Insurance schemes such as pension systems, health insurance, unemployment benefits, and services to support communities and other subsidised risk-mitigation mechanisms to prevent deprivation or destitution. Promotion - This will focus on livelihood and productivity enhancing interventions, such as conditional cash transfers, public works, and school feeding programs in order to reduce susceptibility to social risks. Micro and area-based schemes such as community-driven- development initiatives at community level w i l l be part o f this approach. Transformative - This will focus on promoting the formulation o f policies and the enactment o f legislations and regulations such as the development o f an evidence-based policy on Social Protection, statutory minimum wage, maternity benefits, inheritance rights, anti discrimination legislation, anti stigma campaigns, anti-corruption legislation, policies on fee-free education, and regulations on safe classroom environments (to avoid exclusion o f vulnerable children and girls). Gender determines what i s expected, allowed and valued in a woman or a man in a given context. Women have experienced political oppression and are greatly affected by laws and customs having to do with sexuality, marriage, divorce, child custody, and family l i f e as a whole. Often, through patriarchal and traditional practices, women, especially young women, become vulnerable to teenage pregnancy, child marriage, sexual harassment in school by peers and teachers, in the workplace by male co-workers, to HIIV/Aids, other STIs and sexual and gender-based violence. The main goal o f the MDG3 i s to eliminate gender disparity at all levels, with specific focus on the following: secondary education for girls; sexual and reproductive health and rights; time-saving infrastructure for women; effective property and inheritance rights for women; formal employment and equal employment opportunities; participation and representation o f women in politics and public administration; and stopping violence against women. Education - There i s a commitment by Government to ensuring that education i s accessible to every child, that it i s o f high quality, and that it provides the knowledge and skills that children and young people need to secure their future. Such efforts can be seen through the Sababu project, which in part aims to meet MDG2 - ensuring that all boys and girls are able to complete a full course o f primary schooling. A gendered approach with special focus on the girl child h s also a made this goal achievable, though much s t i l l needs to be done to make schools safe for girls. The Out-of-School-Children in Sierra Leone study shows that sexual harassment and abuse in schools by teachers and peers i s a reason for girls to drop out or be taken out o f school by their parents. Sexual and Reproductive Health and Rights - Sierra Leone struggles to meet the reproductive and health needs o f i t s people. Considerable progress has been made in bringing healthcare closer to the people through the construction o f at least one healthcare centre in each o f the chiefdoms in the country. However, even though 81% o f pregnant women surveyed by the MICS3 said they had received care from a skilled health professional (doctor, nurse, or midwife), and 43% said they had given birth with the assistance o f a skilled professional, Sierra Leone has the worst maternal and child morbidity and mortality indicators worldwide: 457 maternal deaths per 100,000 live births. 69 Sierra Leone Povem; Reduction Strateg) I 2008-2012 Effective Property and Inheritance Rights - Women in Sierra Leone had for a long time been, and in many instances continue t o be, oppressed and marginalized by customary, constitutional and religious laws that relegate them to second-class citizenship in the acquisition and inheritance o f property. The Intestate Succession A c t o f 2005, which came into law in 2007 and provides for intestate succession and other inheritance related matters, if used effectively, could be a tool for rectifying the injustices meted o n women by past property and inheritance laws. Participation and Representation in PoliticdPublic Institutions - One o f the most salient political issues in contemporary Sierra Leone has been women's participation in politics and the public sphere. Women's groups continue to draw attention to the fact that even though women constitute over 50% o f the population, they continue to be grossly under-represented in elective and appointed offices. Between 2002-2007, women constituted 14.5% o f people in parliament, 14.3% in cabinet positions, 9.6% in top c i v i l service positions and 13.3% in ambassadorial positions. Violence against Women - Violence may take the form o f emotional, psychological, physical, sexual, or economic abuse and i s defined as one person in an intimate relationship using any means t o control the other. The Domestic Violence A c t 2005 which came into law in 2007 has led to the criminalization o f domestic violence and other forms o f gender-based violence. I f used effectively, it can help deter the practice Violence against Women. In response to these challenges, the Government will: Introduce a temporary affirmative action plan that stipulates a 30% quota for women in elective and appointed positions as recommended by the Beijing Platform for Action and the Truth and Reconciliation Commission. Mainstream gender and establish mechanisms and tools for monitoring and assessing the impact o f gender policies, projects, plans, and programs o n beneficiaries. Set up an Independent Gender Commission to promote gender equitable development, undertake focused, evidence-based, action-oriented research and advocacy. Review all laws, customs, rituals and practices that contribute to the subordination o f women in society. Domesticate C E D A W - the Convention o n the Elimination o f all forms o f Discrimination Against Women - into Sierra Leonean law. Devise a national action plan for the implementation o f the three Gender laws. Implement the r o l l out plan o f the Child Rights Act, which includes 18 years o f age as the minimum age for marriage. A separate l a w on Gender Based Violence should be enacted and a national agenddstrategy formulated. Increase micro-credit facilities for women, and provide training in budgetary and implementation matters. Build the capacity o f women through education, training and access t o capital. 70 Sierra Leone Po\ e Reduction Strategy m I 2008-2012 Macroeconomic and financial policies, investment policies and business climate, trade policies, and labour mobility are a l l key factors that influence market expansion, effective aggregate demand, as w e l l as the corresponding dynamism o f the private sector, and i t s propensity to create more and decent jobs. Therefore, t o achieve an employment-intensive growth requires a policy m i x that promotes and enhances growth and investment in productive sectors under conditions o f monetary and fiscal stability. In the light o f the above, promoting employment requires ensuring strength in the following: Flexible macroeconomic policy regime, with access t o credit for productive investment; Financial sector structure and policies; Budgetary policy and public investment; Investment policies and business climate; 0 Trade policy; Capacity building in Policy Analysis and Advocacy. These issues have been adequately addressed in Part Three. However, there i s need to complement the policy mix identified above with specific programmes and related activities as outlined below: 7.6.1 STRENGTHENING MARKET ACTIVE LABOUR POLICIES A N D I N S T I T U T I O N A L REFORMS Labour market policies and institutions play a crucial role in matching the supply and demand sides o f the labour market. Active labour market policies will create the enabling environment for active j o b search, training for the unemployed, temporary j o b creation and enterprise creation scheme to address inequities and rationalization o f the labour market. In addition, timely, reliable and detailed data o n the skills profile o f the work force or new entrants in the labour market o n the supply side, and the type o f skills and competencies required o n the demand side, are critical for optimal utilization o f the country's human resources. As Sierra Leone has a dearth o f timely and reliable data on the work force, it i s difficult to properly plan fiture needs and provide training and skills development t o meet demand. The Government i s therefore going to focus on: Timely conducted surveys (household, living standards, labour force, etc. etc) on generally agreed upon survey tools, such as content o f questionnaires, methodology o f surveys and yardstick for analysis; Ensure the collection and dissemination o f gender and age disaggregated employment statistics and other labour market information needs; Establish a Labour Market Information System in the Ministry o f Employment and Social Security t o monitor the regular collection, analysis and appropriate dissemination o f required information; 71 Sierra Leone Poverty Reduction Strateg! I 2008-2012 Formulation o f a National Employment Policy that w i l l form the basis for the effective regulation o f labour laws which should be revised t o meet international standards. The above activities w i l l be complemented with structural reforms o f the Ministry o f Employment and Social Security and other relevant institutions in the area o f labour administration. Legislations will be passed to harmonize national labour laws with international labour standards. Also, employment service centres w i l l be established nationwide. 7.6.2 ESTABLISHMENT OF A NATIONALENTERPRISE AND SKILLS DEVELOPMENT AND T R A I N I N G FUND As skills and employability are critical for individuals and the labour force and define their competencies and capacity to take a job and/or create wealth, and adapt to the changes in the labour market dictated by technology and globalisation, investing in knowledge and skills i s one o f the most effective means o f enhancing the employability o f the poor to participate in growth and create wealth. The Sierra Leone Enterprise and Skills Development and Training Fund (SLETFUND) i s proposed to complement current efforts as well as address the need to effectively link the provisioning and acquisition o f skills and training to the availability and/ access o f financial resources for self-employment and creation o f enterprises. The SLETFUND will: Promote decent employment through entrepreneurship and development o f Micro, Small and Medium-sized Enterprises (MSMEs) in the formal and informal economy; Promote employability by improving knowledge and skills in vocational/technical institutions linking these with the requirements o f the labour market; 0 Promote equity and gender equality in access to financial resources (grants/credit/loans) and services to target beneficiaries: women, youths, the disabled and other vulnerable groups; Promote the capitalization o f M S M E s and start-up o f community businesses; Support the formulation and implementation o f the SME Policy. The SLETFUND i s also intended to promote and strengthen employability by improving knowledge and skills and providing equal access to financial services to employ the knowledge and skills acquired for creation o f job opportunities. Specifically, the SLETFUND w i l l be used to support: 0 Vocational training policy review and development Improve management o f training institutions and systems Investing in entrepreneurship/businessmanagement training Development o f core work skills 0 Workplace learning and the on-the-job training schemes Apprenticeship Improving training delivery through ICTs 0 Improving the capacity to innovate 72 Sierra Leone Poi e q Reduction Strateg? I 2005-2012 Improving access t o I C T t o reduce the skills gap Reform o f employment service agencies, career guidance and counselling. 7.6.3 YOUTH EMPLOYMENT AND EMPOWERMENT Sierra Leone has a young population. According to the 2004 Census, young people between the ages o f 15 and 35 make up 33.3% o f the total population. Those between the ages o f 0 and 35 years constitute 79% o f the total population. About 70% o f youths are unemployed; 53% illiterate; and the majority reside in urban areas. Youth constitutes a vital component o f the country's human resource base, and i s therefore central to any employment promotion strategy. Youth employment i s visible in agricultural activities, in the ballooned informal sector and among the self-employed. Agricultural activities represent 70% o f employment, with similar levels for youth and adults. Many youth, especially males, do not want to become farmers due t o l o w returns through labour intensive methods. Consequently, large numbers o f young people are engaged in self-employment in petty trading, carpentry, masonry, gara-tie dying and diamond mining. Most young people lack the necessary skills t o operate a viable enterprise. Public perceptions o f youth act as a barrier t o youth employment. Thus youths have been characterised as lazy, undisciplined, unskilled, and unreliable. Youths have fewer opportunities for salaried employment compared with those older than thirty-five; and formal employment opportunities are significantly lower for youths regardless o f their qualification. Public sector employment opportunities tend to exclude young people o n the basis o f age and experience. The desire t o change jobs i s highest among the 25-35 year olds who always look for improved employment opportunities. As outlined in previous sections, the private sector has limited capacity to provide employment facilities for youths. Youth unemployment i s therefore particularly visible in Freetown and other urban centres where the war attracted large numbers o f young people. In these towns, city life in the peri-urban areas has become a nightmare o f poverty, misery, despondency, and unhlfilled dreams. Informality, criminality and marginality characterised the majority o f youth in the urban areas. The major challenge i s to promote the overall development o f young people through the establishment o f youth empowerment initiatives. This w i l l lead t o their incorporation into government planning, policies, and legislations. Government legislation o f youth-friendly initiatives would provide an enabling context for the development o f youth structures that would foster representation. This will improve youth participation in national initiatives and development o f a responsible citizenry. Therefore, promoting youth employment and empowerment will focus on the following: Support to Youths in Agriculture - This will include continued support to individuals and youth groups with skills, or those currently engaged in agricultural production and processing. I t will involve activities such as IVS rice cultivation, groundnut and vegetable production, cassava cultivation, processing and preservation and activities in livestock restocking. A Youth Agricultural Farm Scheme that will provide support for production centres for young people to receive training for a specific period will be implemented. The production centres will be equipped with basic recreation and other relevant facilities. 73 Sierra Leone Poverp Reduction Strateg) I 2008-20 I 2 Support Viable Youth Enterprise - The major objective o f this programme i s to empower youths, alleviate poverty, stimulate economic activity and provide immediate employment opportunities. Providing skills and opportunities for earning i s the most basic aspect o f ` economic development. Young people are excessively represented among the ranks o f the poor. Young men and women w i l l be equipped t o take control o f their o w n lives and create sustainable and healthy money making options. This will help t o reduce poverty and raise living standards in their communities. Individuals and youth groups with business interest and marketable talents w i l l be targeted and empowered through appropriate vocational -training, apprenticeship; and I C T skills to reduce poverty and enhance their socio-economic status. There will be linkages t o activities in the agricultural sector through inputs t o young farmers, or adding value to their production for self- sustaining local markets. Labour Intensive Public Works Schemes - Inadequate or battered infrastructure i s a major impediment to economic development in contemporary Sierra Leone's development; it increases the cost o f producing goods and services to levels that make them less competitive. Improving the country's infrastructure through labour-intensive public works schemes, self- employed programmes, and private sector development, could both create numerous j o b opportunities and also remove this impediment to economic growth. Infrastructure projects with social benefits such as roads, maintenance and rehabilitation o f roads and culverts, roads in towns and municipalities, and environmental sanitation: a l l can be supported to create jobs for the army o f unemployed youths in the urban centres. Waste Management and Disposal Project - Solid waste collection, disposal and recycling can be outsourced to youth enterprises in collaboration with the Freetown City Council for a fee. Target area o f coverage will be Bo, Kenema, K o i d u and Makeni C i t y Councils. Handy Corps Scheme - The scheme will target unemployed youths, organizing themselves into micro-enterprises, after short-term training in the repair and maintenance o f basic services (telephone, electricity and water), and provision o f other services in the community where they live. Collaboration with public utility companies i s necessary for the scheme t o be effective. Skills development and training in the provision o f repairs and maintenance o f basic services will be required. After graduation, the youths will be able to access financial resources from the SLETFUND (as grants and/or loans) as start-up capital, for registration as a micro business, acquisition o f tools and equipments and office space, as w e l l as a hotline telephone number. Job Centres (Employment service centres) - Job centres or employment service centres are modernized local exchanges, which act as labour market intermediation to match demand and supply. Job centres provide assistance in j o b searching, guidance in planning a career, or support for transition from school or college t o the world o f work. Although a major function o f j o b centres i s j o b placement, another important function i s skills training for employability. Skills that improve employability include business management, financial management, information processing, project planning, use o f computers, and communication skills. 74 Sierra Leone Po\ ert) Reductlon Strateg! I 2008-2012 75 Sierra Leone Poverty Reduction Strateg) i 2008-2012 Good governance, r u l e o f law, human rights, and peace and security are essential pre-requisites for sustainable growth and economic development and indeed for successful implementation o f the second PRSP. Progress within the Governance sector in PRSP-I was mixed, as there were significant steps forward in some areas such as local government, decentralization, and public procurement, but little improvement in the justice sector and in anti-corruption initiatives. Political instability h s the potential to undermine progress i n economic growth and so it i s a important in the PRSP-I1 to continue to strengthen governance and rule o f law. This will mean implementing measures to ensure peace building and consolidation, strengthen national security, reform the public sector, enforce an anti-corruption agenda, strengthen efforts at fighting money laundering and financial crime, provide access to justice and improve human rights. Other issues that will need to be addressed are supporting local governance, the process o f decentralisation, parliamentary and civic oversight and attitudinal change. 1 8.1 PEACE BUILDIKZ; cosxwwsxorti AND PEACE BUILDING FUSD Consolidating peace i s s t i l l a paramount consideration o f the Government o f Sierra Leone. To do this effectively, the Government i s addressing, among other things, the root causes o f the conflict and undertake efforts to ensure that the country does not slide back into conflict. It i s in this regard that Sierra Leone requested to be included on the agenda of the UN Peace Building Commission (PBC) in June 2006. In December 2007, the GoSL and the Peace Building Commission adopted a Peace Building Cooperation Framework. The Framework i s subject to a semi-annual review process to monitor progress on i t s implementation. The December 2008 review o f the Framework recommended that h t u r e activities of the PBC should be undertaken in support of the implementation o f the current PRS. I t further noted that semi-annual review meetings o f the Commission should be coordinated with and draw on the annual progress reports on the implementation o f the PRS. The Government will continue its engagement with the Peace Building Commission in order to bolster its peace building efforts, broaden i t s donor base and strengthen i t s partnership with the existing donors. In recognition o f the fact that consolidating the hard-earned peace in Sierra Leone i s a necessary condition for inclusive development and stability, the PBC recommended Sierra Leone to be eligible to receive support from the U Peace Building Fund. An allocation o f $35 million from N the Fund was used to support Government peace consolidation efforts in the following priority areas: Youth empowerment and employment 0 Democracy and Good Governance 0 Justice and security Capacity building o f public administration 0 Support to energy sector. 76 Sierra Leone Po\erty Reduction Strateg) I 2008-2012 These five areas were seen as critical to ensuring that Sierra Leone did not fall back into instability particularly in an election year. Support was therefore provided to the National Electoral Commission, the national security forces, Ministry o f Youth and Sports and the judiciary. At the sub-regional level, the security environment for Sierra Leone has improved considerably, with peace in Liberia, and CBte d'Ivoire o n the verge o f having elections in November 2008. However, corruption, organised crime, including state-corporate crimes, money laundering, smuggling, human trafficking, and weak regulatory and government policies have emerged as serious threats during the Security Sector Review (SSR). The ability to anticipate and mitigate these threats requires a forward-looking national security strategy backed by an effective partnership arrangement. This in turn requires a high degree o f integration o f resources among security sector institutions, l i n e ministries and departments which i s not yet present. In addition, it i s clear from the review that some important MinistriedDepartments are grossly understaffed and ill-equipped with serious limitations in their capacity to deliver the services for which they are responsible. These include the Ministry o f Internal Affairs, with less than a tenth o f the required staff, the L a w Officers Department which has only a handful o f legal practitioners handling an ever-increasing workload, and the National Registry Office o f Administrator and Registrar General whose record keeping i s inadequate. The main goal t o be achieved during PRSP-I1 i s for the security forces to be able to prevent and respond t o external and internal security threats and provide an enabling environment for poverty reduction. The programme objective is t o strengthen the ability o f the security forces and agencies t o deal with threats and create a safe and secure environment for poverty reduction and conflict prevention. Specific objectives are to: 0 Enhance the capacities o f all security sector institutions to create a safe and enabling environment for economic growth and poverty reduction. Strengthen partnerships already established between security sector institutions and MDAs to prevent and combat trans-national organised crimes such as international terrorism, smuggling, money-laundering, mercenaries and dissidents, drugs and humadchild trafficking, and proliferation o f Small A r m s and Light Weapons (SALW). 0 Mainstream disaster risk reduction into the PRSP framework to help prepare, mitigate and respond t o natural or man-made disasters. To meet a l l international obligations in the above-mentioned areas, particularly with respect t o international treaties and conventions which Sierra Leone has signed and ratified. This can be achieved by improving legislative and regulatory frameworks, and building capacity among officials responsible for implementation. Core programme activities will evolve around four main challenges: capacity building, institutional reform, effective partnership, and democratic oversight o f the security sector. A summary o f activities for each o f the objectives i s as follows: 77 Sierra Leone Povert) Reduction Strategy I 2008-2012 Enhancing the capabilities o the security forces, institutions and agencies - Specific activities f will include recruitment, training, improvement o f terms and conditions o f service, and provision o f adequate logistics t o the security forces and related agencies. The need to rehabilitate andlor reconstruct infrastructure including barracks, family accommodation and interagency border posts for the forces and security agencies cannot be overemphasised. This i s critical for efficient performance o f the sector. There i s a need for Government t o strengthen the Immigration Department t o be able t o deal with illegal immigration and related problems. The capacity o f the security forces will also be enhanced t o enable Sierra Leone to meet i t s international obligations pursuant to the UN Security Council Resolutions and the International Convention for the Suppression o f Terrorist Financing. These international obligations require each country to take reasonable measures to prevent i t s territory and financial system t o be used by terrorist groups or those engaged in terrorist financing. Strengthening interagency partnership and coordination - Strengthening o f the security system to prevent and combat trans-national organised crime in Sierra Leone will occur through a well- coordinated and integrated framework such as the National Security Coordinating Group (NSCCG), the Security Sector Group (SSG), ProvincialDistrict Security Committees (PROSEC/DISEC), Joint Co-ordinating Committee (JCC), Joint Intelligence Committee (JIC), Joint Maritime Authority, and interagency border meetings. The effectiveness o f t h i s work will not only depend heavily o n close inter-agency cooperation, but also o n the degree to which relevant ministries and agencies enlist support o f financial institutions, private sector entities and independent professionals, and even local NGOs which offer productslservices typically used by organized criminal and terrorist groups. The programme will: Improve efficiency in the security system by supporting NSCCG, SSG, JCC, and JIC joint training and capacity building activities and policy meetings Support the enactment and enforcement o f legislative and regulatory frameworks which meet international obligations and standards dealing with trans-national organised crime. This includes creating a financial intelligence unit; and ensuring that sanctions, fines and penalties for engaging in money laundering, terrorism, terrorist financing or other kinds o f organized or cross-border criminal activities are sufficient under relevant legislation. Support the implementation o f a comprehensive National Disaster Management Programme, border-strengthening initiatives and the S A L W Programme Build synergies with domestic and foreign counterpart institutions and coordinate efforts among institutions concerned with civil aviation, maritime security and national intelligence management measures and regulations Support the Disaster Management Department to enhance i t s performance in disaster risk reduction, mitigation and response. Strengthening civilian oversight o the security sector - The SSR has identified the need to focus f o n capacity building through consultative meetings, seminars, logistical support and continuous dialogue to ensure that three critical aspects o f democratic governance are achieved, namely; transparency, accountability, and responsiveness. T o meet these critical challenges, the SSR Programme will seek to ensure that security agencies are accountable to elected c i v i l authorities, such as the National Security Council (NSC), Parliamentary oversight committees and c i v i l society involvement. Also, that information about security sector planning and budgeting i s widely available both within government and to the public. Activities proposed include: 78 Sierra Leone Poyerty Reduction Strateg) I 2008-2012 0 Redefining the composition o f oversight structures such as the NSC, NSCCG, the Police Council, JIC, JCC, and the Defence Council, to function effectively and provide the appropriate policy direction. Strengthening the Parliamentary Oversight Committee o n Security and Defence matters by conducting awareness meetings and workshops with coordinating institutions to ensure democratic governance o f the sector. Strengthening the security sector decentralisation process by providing adequate support to PROSECs and DISECs under the guidance o f the ONS. It i s envisaged that strengthened ONSPROSEC and DISEC structures would not only provide an enabling environment for sustaining the intended local governance decentralisation process, but would also serve as a deterrent to unscrupulous local governance activities. The Local Governance and Decentralization Reform programme commenced with the 2004 local council elections which ushered in the first democratically elected local councils in Sierra Leone since 1972. The Local Government Act which provides the legal and regulatory framework in support o f the implementation o f decentralization in Sierra Leone was also passed in 2004. Since this time, the GoSL has established 19 local councils in Sierra Leone which are fully functional and effective, albeit at varying degrees o f performance across the country. The programme i s being supported at the ministerial level by the Ministry o f Internal Affairs, Local Government and Rural Development with both GoSL and Development Partners co-financing. Since 2005, in support o f devolved functions, the MoFED has provided funding through a grants distribution formula system to all local councils. The principal objective o f activities related to governance and decentralisation i s to enhance service delivery and support development in Sierra Leone. The decentralization draft policy framework supports the following strategic directions which w i l l be addressed during PRSP-11: Opening up the national democratic process by facilitating inclusion and participation o f citizens in national governance 0 Supporting citizen and community ownership o f the national decentralization process Fostering transparency and especially demand-side accountability in governance and service delivery. To strengthen local governance and decentralization GoSL will: 0 Facilitate the implementation o f the on-going national decentralization programme Support and ensure full and effective devolution o f functions with accompanying financial resources in accordance with the statutory instrument Provide requisite support to the creation o f an appropriate human resource base to support both central and local governments for effective and efficient devolution 0 Work with local councils to improve on the collection and management o f 1ocaWdomesticIownsource revenues 79 Sierra Leone P o x m i Reductlon Strateg! I 2008-2012 Facilitate the harmonization o f various sector and MDA policies Ensure, through support to local councils, improvement on a consistently increasing basis in provision and delivery o f basic, essential services in the social, human and economic sectors. To achieve this, the Government w i l l undertake the following: Revision and reformulation o the decentralization policy - A revision and reformulation of f decentralization policy i s needed in order to fast track and facilitate the implementation of the decentralization programme b y putting forward options for responding to the current implementation challenges. Revision o the current legal framework - The Local Government Act 2004 w i l l be revised, to f make it more robust and effective to support devolution and regulate stakeholder relationships and interactions in fiscal, administrative and political matters. f Preparation o National Chiefdom Policy and National Chiefdom Act - This w i l l facilitate revenue collection through mobilization, as well as enhancing financial management relationships between local councils and Chiefdoms. Support further devolvement o government functions - Ensure that all outstanding functions f identified by MDAs are fully and effectively devolved during the period 2008-2010. Streamline legislation that is inconsistent with the Local Government Act - Embark on the revision o f all identified legislation which either conflicts with or i s inconsistent with major provisions o f the Local Government Act 2004, with special attention given to the Education Boards Act, the Hospital Boards Act and Sierra Leone Water Company Act in aid o f improved service delivery. Preparation o a National Decentralisation Coordination Policy - A national decentralization f coordination policy will enhance coordination among critical stakeholders at all levels o f the decentralization process. Preparation o regulations and guidelines to support the decentralisation process - Guidelines f w i l l be developed in core areas o f critical challenges in decentralization such as human resources management, fiscal decentralization, investment promotion and environmental safeguards for projects. Support to the planning process - In the period under focus, support w i l l be given to major planning and strategy interventions such as the revision o f Local Council Development Plans and the conduct o f annual Comprehensive Local Government Performance Assessments. Empowering Rural Communities - Empowering Rural Communities i s key to ensuring that the majority o f Sierra Leoneans are not marginalised and that Peace i s consolidated at the grassroots level. There i s need to provide basic infrastructure that w i l l enable rural communities to have access to financial services and market opportunities. Government i s firmly committed to the fight against corruption. The Anti-Corruption Commission (ACC) was established through an Act o f Parliament in February 2000 with a mandate to prevent 80 Sierra Leone Pouert) Reduction Strateg! I 2008-2012 all forms o f corruption in Sierra Leone. Notably, Sierra Leone was the eighth country in the world to sign and fully ratify the U.N. Convention Against Corruption.26 The ACC i s a crucial part o f the process o f consolidating peace and good governance, but the Commission cannot, as a stand-alone institution, effectively fight corruption without the support o f other pillars o f the state. This requires a broad stakeholder coalition through systemic changes rather than through isolated events. The ACC faced considerable difficulties during the implementation period o f the PRSP-I in undertaking i t s role: It had to contend with a lack o f capacity within its investigations department, which hampered i t s ability to successfully investigate and prosecute cases of corruption. This was due to a shortage o f trained staff and basic equipment needed to undertake investigations. It was not an autonomous prosecuting body and required the consent o f the Attorney General in order to initiate prosecutions, which proved to be a problem. The ACC only had offices in Freetown and Bo, but would like to establish offices in other parts o f the country as well. Only limited funding for the formation o f these offices i s being provided by the Government o f Sierra Leone and external assistance will be sought to cover the funding gap. There was and still i s lack o f public awareness as to what cases and kinds o f corruption allegations the ACC can investigate and as such, there i s therefore an urgent need for public education. a Funding for the operation o f the Commission h s been subjected to delays and sometimes hampered by the non-availability o f funds to undertake planned activities. The Government will therefore be focussed on improving the capacity o f the ACC to implement the NACS, expansion o f service delivery, enhancing public awareness on corruption issues, and improving the ACC's image. One o f the key strategic outcomes for PRSP-I1 i s a strengthened fight against corruption through the following initiatives: Strengthen ACC's autonomy: Government will fully implement the provisions o f the amended ACC Act 2008 which has given the Commission full powers to prosecute corruption cases without seeking the approval of the Attorney General. Improving ACC's capacity for NACS implementation: For the ACC to implement and monitor effectively the NACS, the capacity o f the institution needs to be strengthened through provision o f adequate training for ACC staff, development o f a database and a web-based reporting system, and provision o f basic equipment to enhance the work of the Commission. Improving and expanding service delivery: This will be undertaken through the examination o f systems and procedures o f MDAs and other public bodies, with the aim o f developing a system to decentralise the operations o f the ACC to other institutions. As part o f this process, a decentralised operations manual and a case profiling/management fiamework will be drafted. There will also be a revival o f the in-house case review committee and a stakeholder workshop on the decentralization plan, while a system for 26 Signed on 3 Dec. 2003; Ratified 30 Sept. 2004 81 Sierra Leone Po\7erty Reduction Stratep I 2008-20 12 monitoring o f field office performance will be developed, as well as the monitoring and enforcement services, which will also be expanded and improved. Enhancing public awareness on corruption and the image o the ACC: The A C C will f embark o n a public perception survey to understand h o w it i s perceived t o be functioning by staff and the general public o n generic issues relating t o the ACC, in order to develop a strategy for moving forward successfully. The goal o f this survey w i l l be to achieve a positive public perception o f the A C C as the importance o f public trust in the government and the A C C i s critical. Without a certain level o f public trust, the complaints mechanisms would not function effectively and people will not come forward as witnesses in the prosecution o f anti corruption cases. Regular Assessment o fhe implementation o the ACC Strategy: In order to monitor f f progress and take remedial actions necessary, the implementation o f the A C C strategy w i l l be done within the overall monitoring and evaluation framework o f the PRSP. Strengthening Prevention and Deterrence Mechanisms: Because proceeds from corruption in most cases are `laundered' in some way (either by depositing in a foreign or domestic financial institution, or using the proceeds to purchase assets or goods), mechanisms used for prevention and detection o f money laundering and terrorist financing are also useful in preventing and detecting corruption. Therefore, enhancing implementation o f systems for Anti-Money Laundering and Countering the Financing o f Terrorism (AML/CFT) can substantially strengthen the fight against corruption. Sierra Leone has made some progress by adopting, in 2005, an A M L / C F T law, which contemplates establishment o f a financial intelligence unit, but implementation has stalled due t o lack o f resources and capacity challenges. However, the July 2008 l a w enforcement operation which resulted in the seizure o f 700 k g o f cocaine at the Lungi airport has awakened political interest and will to progress further in implementation o f international A M L i C F T obligations. The justice sector in Sierra Leone has been subject to close public scrutiny, and Government i s aware that an efficient and effective justice system i s important to ensure that the human rights o f all citizens are upheld. Consequently, since the end o f the war, the justice sector has initiated comprehensive reforms to make it more responsive t o both national and global demands, to ensure citizens rights and access to the justice system. Among the most basic elements missing i s the lack o f access by citizens and even government officials to the laws and regulations o f Sierra Leone. This significantly prevents citizens from knowing their rights and obligations, government officials from understanding their mission and duties, and in particular, hinders anti-corruption work, impedes enforcement o f c i v i l and contractual rights. The overall mission o f the justice sector i s t o develop an efficient, effective, impartial and accountable justice sector that meets the needs o f all communities in Sierra Leone. The immediate priority for the justice sector i s the delivery o f justice at the community level to the people o f Sierra Leone. Although the focus o f the strategy i s o n primary justice, the Government recognises 82 Sierra Leone Poverty Reduction Strateg! I 2008-20 12 that a modern state requires a well-functioning formal justice system. Serious crimes require the intervention o f the State and a well-functioning commercial dispute resolution system, while a pro- business legal framework i s vital for economic growth. The twin policy concerns at the formal level ofjustice provision are to enhance both the quality ofjustice provided and i t s accessibility. This process will be guided over the medium to long-term by the newly developed Justice Sector Reform Strategy and Action Plan (2008-2010). This provides a single framework for all significant funding for the sector to be aligned to support a single sector policy and coordinated expenditure framework, under Government leadership. The main issues o f concern relating to the formal justice system include27: A lack o f motivation among staff due to low remuneration and few incentives for promotion; Insufficient case deposition creating high backlogs o f pending cases in all institutions including the police, prosecution services and the courts; A lack o f comprehensive and systematic statistics available at the institutional level impeding case tracking; Prevalence o f corruption within all sections and at all levels o f the justice sector; Few, and expensive, private lawyers available; The use o f legal assistance and representation from paralegals and legal technicians i s prohibited, although some paralegal schemes exist; N o provision for pro bono services for private attorneys; N o public defence has been created by law, depriving defendants o f their constitutional rights to be defended. To address the issues facing both the primary and formal justice systems, the strategy focuses effort and resources on four broad goals and six targets. In summary, the main goals, related activities and targets to be achieved during PRSP-I1 are: - Providing safe communities This activity will focus on strengthening community engagement and involvement through local needs policing and local policing partnership boards. Investment w i l l be made in improving the investigation capacity o f the police. Activities to strengthen the performance and supervision o f chiefdom police w i l l also be undertaken. The strategy emphasizes the key role o f the Sierra Leone police as core players in the justice sector. The target for this activity w i l l be a reduced fear o f crime. - Increasing access to justice Activities w i l l be undertaken to strengthen the quality o f justice provide by local courts, and by paramount and local chiefs. In the formal justice system, the processing o f criminal cases will be addressed with best practice being disseminated through the recently developed Criminal Case Best Practice Handbook. An initiative to provide criminal legal aid through paralegals to defendants w i l l be piloted, and consideration w i l l be given to the establishment o f an independent prosecution service. At the local level, a low cost pilot project to improve cooperation, coordination and communication between the actors in the criminal justice system w i l l be initiated. '' UNDP Advisory Note, Joint Mission for Crisis, Prevention and Recovery / Bureau for Development Policy Sept 11-19, 2005; "Contributing to the Consolidation of Peace in Sierra Leone through support to Justice, Rule o f Law and Human Rights" 83 Sierra Leone P o v e a Reduction Strateg) I 2008-2012 Juveniles in conflict with the law have particular needs, and activities w i l l be designed in accordance with the recently enacted Child Rights Act with appropriate procedures for handling facilities for juveniles. The targets for this activity w i l l be improved satisfaction levels with community based justice, quicker resolution o f criminal cases, improved handling o f cases involving juveniles and faster processing o f civil disputes. Strengthened rule o law - Corruption and maladministration w i l l be addressed through f improved and more accessible administrative justice remedies and strengthening the office o f the Ombudsman and the Anti Corruption Commission. Priority human rights issues will also be addressed by working with the Sierra Leone Human Rights Commission to ensure compliance with international human rights reporting obligations, and within the sector to improve prison conditions. The target for this goal w i l l be the strengthened rule o f law. Improved justice service delivery - Improving the performance o f institutions in the sector within the current resource envelope will be addressed. Capacity w i l l be built for Performance and change management, and critically to improve planning and budgeting through strengthening institutional budget committees and planning and policy making across the sector. There w i l l be a drive to achieve efficiency savings in the sector through minimizing waste in the system, and using available assets to best effect. Improved use o f prison farms w i l l be a key area o f attention in this respect. The target for this goal w i l l be improved human rights outcomes and accountability. Strengthening the Democratic Process - The successful conduct o f the 2007 Presidential and Parliamentary elections and the 208 local government elections proved that with adequate support to democratic institutions, credible elections could be peacefully held in Post Conflict countries l i k e Sierra Leone. These successes not withstanding, there i s a need for continued support to the National Electoral Commission and the Political Parties Registration Commission. This support w i l l ensure that NEC has the requisite capacity to conduct the 20 12 elections while PPRC w i l l maintain regular dialogue amongst political parties in the months leading to the election. 18.6 ATTITUDINAL CHAKGE The state o f backwardness o f Sierra Leone i s a clear indication that we have not been doing things in a manner that would move our country forward. The call for a change o f attitudes among Sierra Leoneans i s not new but i s being given added impetus. There i s a need for change in attitudes towards one another, change in attitudes to work and responsibilities and change in attitudes towards the nation. All o f these changes should translate positively into progress and development for Sierra Leone. There are challenges the country needs to overcome in order to achieve this goal. Principal among these challenges i s the "fear o f change" manifested by the tendency for Sierra Leoneans to continue to do things in the particular way they have been used to doing, even i f that way i s not in the best interest o f the country. 84 Sierra Leone PoveQ Reduction Strateg? I 2008-2012 The attitudinal change campaign has already been launched and i s operating under the supervision o f an Attitudinal Change Committee set up with the Ministers o f Presidential and Public Affairs and Information and Communication as Co-chairs. The main goal o f the Attitudinal Change Campaign i s to get Sierra Leoneans to change their attitudes to enable them to transform their country from a failed state to a peaceful, progressive and united nation. To achieve this, the Government will develop a comprehensive national plan o f action on Attitudinal Change. This plan of action will clearly define roles and responsibilities of the various institutions involved in the implementation of the Attitudinal Change agenda and identify key targets groups. Regular radio and TV programmes will be developed to ensure that t h e message i s widely disseminated; promotion materials will also be developed. An incentive and sanction system will also be developed to reward those groups and individuals that are promoting the positive change o f attitudes whilst penalties will be levied on those trying to prevent change. The following activities will be undertaken to promote Attitudinal Change: Familiarization with the contents o f the programme; Development o f messages for general Attitudinal Change and specific messages for Attitudinal Change relevant to each particular group e.g. taxi/podapoda driver, butcher, market woman; Identification o f appropriate channels for the delivery o f messages; Determination o f the role each group should play in formulating and delivery o f messages; Determination o f the strategies each group will employ in disseminating attitudinal messages for change; Production o f samples o f Attitudinal Change materials for the literate and illiterate audience; Production o f sample Attitudinal Change campaign materials to be pre-tested for possible national production and dissemination. Expected Outputs: Increased debate and awareness about the issue o f Attitudinal Change and the need for it; Recommendations for appropriate materials for the Attitudinal Change campaign obtained; Practical and realistic objectives and targets defined; National programme for Attitudinal Change understood and accepted for implementation; Collaborating partners identified; Sample attitudinal change campaign materials produced, appraised and approved; Commitment o f individuals, groups and institutions involved in the preparation o f the campaign achieved; Attitudinal Change campaign re-launched. Key activities: 85 Sierra Leone PoveiQ Reduction Strategy I 2008-2012 Regular RadioIT Programmes with slots for feature and panel discussions; Seminars, Workshops, Conferences with targeted groups and stakeholders; Community sensitization campaign with selected groups o f youths, women and elders; Establishment o f collegehchool clubs to promote the ideas o f Attitudinal Change; Mount special annual celebrations, special days or weeks designated as Attitudinal Change events; Production o f information materials, leaflets, brochures, banners, bulletins on Attitudinal Change; Organize competitions for the production o f songs, jingles, poems promoting Attitudinal Change in the country; Disseminate "Youth Messages" in Syndicated weekly radio shows produced by radio stations in cooperation with youth organizations and youth leaders. Key Outcomes Greater compliance with traffic regulations from podapodd t a i l okada riders; Increased care in the use o f government property; Greater respect for state symbols and state authority; Larger numbers o f law-abiding citizens; Greater punctuality at work; Greater tolerance o f differences in opinions, party, political, ethnic and regional affiliations; Improved disposition to pay taxes and perform civic obligations. 86 Sierra Leone Poverty Rzduction Strategy I 2008-2012 Since the end o f the c i v i l war in 2002, Sierra Leone has maintained macroeconomic stability, aided by fiscal discipline and average aid inflows o f 12% o f Gross Domestic Product (GDP). The successful implementation o f the first IMF-supported Poverty Reduction and Growth Facility (PRGF I arrangement from 2001 t o 2005, and the strong macroeconomic performance during the ) interim period resulted in a new arrangement agreed in M a y 2006. With continued donor support, during the course o f PRSP-I, Sierra Leone achieved a relatively stable macroeconomic environment with strong economic growth, moderate inflation, an improved current account balance, a comfortable level o f foreign reserves, and a relatively stable exchange rate. A sustainable external debt level was attained after completing and accessing debt relief under the HIPC and MDRI Initiatives. This chapter outlines the set o f programs and policies t o ensure macroeconomic stability throughout the PRSP-I1 period. I 9.1 MEDlt'hf TERM'MACROECONOIL1IC FORECASTS Government i s committed t o maintaining macroeconomic stability, promoting sustained and broad-based growth and pursuing structural reforms. The medium-term macroeconomic objectives are t o sustain broad-based growth, reduce average inflation to single digits and maintain gross foreign reserves at a minimum o f 3.5 months o f import cover. Economic growth over the medium term will continue t o be broad-based, with output increasing in all major sectors. Increasing public and private investment and more reliable electricity supply are expected to sustain these activities. Table 18 below presents the medium-term macroeconomic framework - a detailed outline o f how government projects the economy t o develop over the period o f the PRSP-II(2009-12). The macroeconomic framework agreed with the IMF projects that real GDP will grow in the range o f 5.5%-6.5% during the period 2009-12. Agriculture will remain Sierra Leone's major economic activity, and i s expected t o record robust growth during PRSP-11, due to planned support to the sector by Government and donors and the full implementation o f the ongoing World Bank funded Private Sector and Rural Development Project. The services sector i s also expected to expand during the period as the benefits o f efforts t o improve the national power supply, road network and business regulatory environment exert their influence o n private sector investment. Manufacturing output is also expected to benefit from improvements in infrastructure and the business environment. Taking into consideration the lingering effect o f the surge in o i l and food prices, annual average inflation i s projected t o remain in the lower double digits 2009 before returning to single digits in 2010. End period inflation i s expected to return to a single digit o f 9.7% in 20 10 and remain at single digit levels throughout the period. 87 Sierra Leone Po\em Reduction Strateg) I 2008-2012 Domestic revenue i s projected to increase in the medium-term, from 11.8 % of GDP in 2008 to 12.3% in 2009 and h r t h e r to 13.8% in 2012.This will be due to the positive revenue implications in 2008 and beyond of the implementation o f the five year National Revenue Authority (NRA) Modernization Plan, and the introduction of the Goods and Services Tax. Total expenditures and net lending are programmed to increase slightly from 21.2% of GDP to an average 22.1% o f GDP during 2009-2012. Capital expenditures are programmed to increase from 6.0% o f GDP in 2008 and to an average o f 7.4% o f GDP during 2009 to 2012 as spending on infrastructure i s scaled up. Recurrent expenditure will decline slightly from 14.9% in 2008 to 14.6%. The overall budget deficit (excluding grants and MDRI), i s projected to narrow from 9.9% in 2009 to 8.3% in 2012. Including grants and MDRI, the overall deficit i s projected to decline from 3.5% o f GDP in 2009 to 3.1% o f GDP in 2012. The domestic primary budget balance i s programmed to decline from 1.7% o f GDP in 2009 to 0.9% in 2012. Domestic financing ofthe budget i s projected to decline from 1.3% o f GDP to less than 1.O% o f GDP over the same period. Exports are expected to continue to grow in the medium term. In 2008, the collapse o f the second dredge o f the Rutile Mine and suspension o f operations o f Koidu Holdings slowed down the anticipated increase in mineral exports. Exports are projected to recover strongly in 2009 with the resumption o f the Kimberlite, reaching a peak growth rate o f 21.4% in 2010 before slowing to 14.9% through 2012 as rutile and bauxite reach their maximum capacity. Imports are also projected to contract by nearly 2% in 2009, reflecting the impact of the global economic slow down. Imports are expected to recover strongly in 2010, and continue to grow though at a decreasing rate (average growth rate o f 10%) during 2011 and 2012. Reflecting these trends, the current account balance (excluding official transfers) i s projected to narrow from 8.1% of GDP in 2009 to 6.3% in 2012. Including official transfers, the current account balance i s projected to narrow to 3.3% GDP in 2012 from 5.2% in 2009. These developments will allow gross foreign reserves to increase from 3.9 months o f imports in 2008 to 4.5 months o f imports in 2012. The following sections provide a detailed presentation o f the policy measures which will be undertaken during PRSP-I1to ensure that the Government's vision o f a stable macroeconomic environment, which i s key to economic growth and poverty reduction, becomes a reality. 1 9.2 FISCAL POLICY 'AND hlANAGERlENT Fiscal policy in the medium term will seek to ensure fiscal sustainability by enhancing domestic revenue mobilization and improving expenditure management, with the aim o f reducing domestic debt financing o f the budget. Government expenditure will be re-oriented to step up investment in infrastructure and other priority areas. 88 Sierra Leone Poierty Reduction Strategy I 2008-2012 Domestic Revenue Mobilization - The mobilization o f domestic revenues through the broadening o f the tax base i s a top priority o f Government. Government will aim both t o broaden the tax base, and t o maximize compliance and collection efficiency o f existing taxes. As a result, domestic revenue i s projected to increase from 113%o f GDP in 2008 to 13.8% o f GDP in 2012. Broadening the Tax Base - A variety o f measures are planned to broaden the tax base. Government will introduce a broad-based consumption tax, the Goods & Services Tax (GST), in early 2009. The GST will replace the existing sales tax, and five other indirect taxes. The NRA will also collaborate with the Local Councils t o design and implement modalities for incorporating the informal sector in the tax net. Furthermore, Government will undertake a comprehensive review o f a l l bilateral agreements entered into by MDAs, particularly in the mining sector, with a view t o eliminating a variety o f company specific discretionary tax breaks. Improving Efficiency and Compliance - To improve collection efficiency and tax enforcement, Government will implement the policy measures highlighted in the NRA Modernization Plan. The NRA Large Tax Payers and Enforcement and Debt Management units will be provided with appropriate staffing, training and logistics capacity. The N A will prepare an audit policy and a R comprehensive audit plan to facilitate the conduct o f regular field audits o n a time-bound basis. A Tax Compliance Unit and a Post-Clearance Audit unit will be established in the Income Tax and Customs and Excise departments to enhance tax compliance. Government will seek technical R assistance t o build N A capacity t o undertake destination inspection o f imported goods. In addition, with the aim o f improving tax compliance, large-scale tax education campaigns will be carried out by a reformed Tax Education Unit, to inform the public about the objectives and benefits o f complying with the tax laws. With support from DFID, a computerised system (ASYCUDAtt-) will be installed in the Customs and Excise department o f the NRA t o improve customs valuation and clearing procedures. The implementation o f ASYCUDA++ will commence in April 2008 and completed in M a y 2010. A computerized Taxpayer Identification Number system i s o n target t o be introduced during the third quarter 2008, which i s expected t o increase administration efficiency in the collection o f all taxes. In the Income Tax Department, major procedural and organizational changes will be instituted in the next 18-24 months and these will be supported by a computerized system. In addition, to enhance tax policy and revenue forecasts, a comprehensive database o n domestic revenue sources will be created by MoFED, and a Central Monitoring Unit will be set up in M o F E D t o monitor collection o f overdue arrears o n permits, Pay-As-You Earn, and withholding tax. 9.2.1 PUBLIC EXPENDITURE MANAGEMENT In line with the challenges to macroeconomic stability outlined above, the objective o f Government's medium-tern expenditure policy i s t o ensure expenditure i s directed t o meet the poverty-reducing goals o f PRSP-11, while maintaining prudent expenditure controls and avoiding domestic borrowing t o finance the budget. Major constraints in budget and MTEF preparation during PRSP-I were the unrealistic projections that were made o f Government's resource envelope, and the weak capacity o f the MTEF process to provide a framework for the strategic allocation o f budgetary funds. In 2008, the Government commenced the preparation o f Medium-Term Fiscal Frameworks, incorporating realistic medium term resource projections. As part o f this initiative, M o F E D introduced rigorous and evidence- 89 Sierra Leone Poverty Reduction Strategq I 2008-2012 based macroeconomic and revenue forecasting and planning systems. Moreover, resource allocation will be enhanced by the integration o f the recurrent and development budgets from the 2009-2011 MTEF and budgets onwards. T o better integrate implementing MDAs into the MTEF process, M o F E D will develop new guidelines for the preparation o f strategic plans by MDAs, and ensure that the strategic plans adequately reflect resource allocations to these MDAs. Capacity building assistance will be provided t o all MDAs t o improve the quality o f their strategic plans. Budget Committees w i l l occupy a central role in the preparation and implementation o f MDA budgets, and will be responsible for the preparation o f the MDA strategic plans, monitoring expenditure and results. M o F E D w i l l also initiate sector level meetings t o harmonize strategic plans within sectors. MDAs will need to develop measurable and achievable performance indicators for each outcome specified in their strategic plans, with reference to the indicators stipulated in the Results Framework Matrix o f the PRSP-11. Government will make use o f these key performance indicators to monitor and evaluate the performance o f each MDA over the MTEF period. The Performance Budgeting Module in IFMIS will also be used for budget planning and execution. M o F E D will continue t o expand stakeholders' participation in the MTEF process. MDAs will collaborate with C i v i l Society Organisations and the District Budget Oversight Committees in the planning, monitoring and implementation phases o f their programs. 90 Sierra Leone Povei- Reduction Strateg) I 2008-2012 91 Sierra Leone Po\ erty Reduction Strateg) I 2008-2012 To address the issue o f commitment control, the Accountant General's Department w i l l continue to roll-out the Integrated Financial Management Information System (IFMIS), which allows processing o f transactions relating to specific MDA's from their respective locations. At least 6 additional MDAs w i l l be connected to IFMIS during PRSP-11. Only commitments with prior approval o f MoFED can be processed by the Budget Bureau. I t i s expected that these procedures w i l l reduce, if not eliminate, the build-up o f unapproved arrears. Finally, to address the issue o f i t s poor cash flow planning, MoFED w i l l establish a Cash Management Unit during PRSP-I1 which w i l l prepare consolidated cash flow plans for consideration and approval by a formalized Cash Management Committee. 1 9.3 PiiBLlC FINAKCIAL MANAGEMENT The goal o f the Government i s to ensure the continuous operation o f a sound Public Financial Management (PFM) system which supports fiscal discipline; the strategic, efficient and effective allocation o f resources, and value for money and probity in the use o f public funds. In this regard, there have been several reform programmes which include: Enactment o f the Government Budgeting and Accountability Act in May 2005 and adoption o f Financial Management Regulations in June 2007; Enactment o f the National Public Procurement Act 2004, followed by the establishment o f a central regulatory authority for procurement and a complaints review panel. This led to the establishment o f Procurement Committees in all procuring agencies and initiation o f training o f procurement personnel; Bringing the publication o f the Annual Public Accounts, Audit reports and quarterly publication o f un-audited accounts up to date; Introduction o f IFMIS and i t s roll out to key institutions; Formulating a National Action Plan for PFM reform, internal and external assessments of the state o f P F M using standard PEFA methodology; Drafting o f Financial Administration Regulation for Local Councils. Not withstanding the progress made, there are key challenges ahead; therefore, the next phase of the P F M reform for the period 2009-12 w i l l be implemented within the Integrated Public Financial Management Reform Programme. This programme i s designed to ensure sustainability and consolidation o f the PFM reforms within a single and harmonised framework. Specifically, the programme i s going to focus on the following: Budget Formulation- refining and deepening the MTEF process; Macro fiscal analysis and management; Extend the roll out o f IFMIS to include all MDAs. This will also involve the roll out of IFMIS Performance Budgeting Modules; Improve Human Resource and Payroll Management; 92 Sierra Leone Po~ert).Reduction Strateg) I 2008-2012 Improve audit and oversight through providing logistics and training for internal audit units as well as Parliamentarians; Strengthening debt management by ensuring that all institutions involved in debt management have clear mandates; Review the legal and regulatory framework for a sound P F M system; Developing the capacity o f local councils in terms o f Financial Management by providing training and the development o f an interim financial management system for local councils. 19.4 MONETARY POLICY Monetary policy during PRSP-I1 will continue to be conducted using indirect instruments o f monetary policy operation, mainly Open Market Operations, and will focus o n attaining a single digit rate o f inflation. A s noted in the challenges to macroeconomic stability, the emerging U S recession and increasing costs o f Sierra Leone's major imports (food and petroleum products) will likely stoke inflationary pressure during the PRSP-11. T o enhance the ability o f monetary policy to contain inflationary pressures, the following measures will be implemented during the period o f the PRSP-11: The Government will further recapitalize the Bank o f Sierra Leone (BSL). B S L will seek to remove the need for Parliamentary approval t o adjust the reserve requirement for commercial banks. This requirement creates a lag between the perceived need for the change and the actual change, during which liquidity conditions may have altered. This renders the reserve requirement ineffective as a monetary policy tool. Furthermore, the Bank intends to place the same reserve requirement o n foreign currency deposits (which at the moment attract n o reserve requirement) as o n domestic deposits. Consideration i s being given towards introducing a long-term security, with a period of three to five years, t o reduce the debt service burden o f government in the short end, and fiee up resources for monetary operations. The Bank hopes to direct institutions with long term funds (insurance companies, NASSIT, etc.) t o utilize these longer term instruments. In addition, a wholesale auction t o promote an effective secondary market will be introduced. With the aim o f fine-tuning fulfilment o f liquidity needs, a fully operational inter-bank market and Repurchase Agreements (REPO) will replace the current rediscount window in the secondary market for securities. This window i s a reason for the slow pace o f inter- bank transactions. Transactions in this window currently are unrelated to end day liquidity requirement o f the banking system. Opening the rediscount window for a shorter period, and progressively limiting the value o f transactions carried out in it, will slowly phase out . the discount window, opening the way for i t s replacement with REPO. Transparency o f open market operations will be enhanced by instituting a strict line o f demarcation between securities for open market operations and those servicing the Public 93 Sierra Leone Povert) Reduction Strateg\ I 2008-20 I 2 Sector Borrowing Requirement, so the amount o f securities at primary auction i s in line with the liquidity-forecasting framework against the programmed monetary targets. Dealership status will be expanded t o other financial institutions t o broaden the market for securities. 9.5 EXTERNAL SEC'ZOR POLICIES I Government remains committed t o a freely floating currency and a liberal trade regime. During PRSP-I, trade policy concentrated o n agreeing an Economic Partnership Agreement with the European Union, and implementing the ECOWAS Common External Tariff as part o f the ECOWAS Trade Liberalization Scheme (ETLS). Issues remain in both areas, which will be addressed during the PRSP-11. Sierra Leone temporarily seceded from the E T L S in M a y 2007. However, Sierra Leone remains committed to the E T L S and will work with the ECOWAS commission to put in place efficient mechanisms for E T L S implementation. On the Partnership Agreement with the European Union, like i t s ECOWAS neighbours, Sierra Leone has imposed upon i t s e l f a number o f conditions which must be met in order t o ensure that local industries and fledgling exporters are not overwhelmed by free trade with larger and more advanced competitors. These include stimulating and expanding domestic production and investment structures, and negotiating tariff phase-down schedules with the EU. 1 9.6 c ~ POLICY E x c i r a ~ RATE: Sierra Leone i s a small open economy and needs to maintain a competitive exchange rate. To allow flexibility in response to internal and external shocks, exchange rates in Sierra Leone will continue t o be market-driven. The exchange rate w i l l remain free from restrictions o n payments and transfers for current international transactions. The B S L will continue the weekly foreign exchange auction. The Central Bank will seek to maintain foreign exchange reserves to provide a cushion against external shocks and will also increase exchange rate flexibility to allow for appropriate exchange rate responses t o these shocks. However, t o ensure that this can be done while maintaining exchange rate stability, efforts must be directed towards encouraging export development and diversification. During PRSP-I, Government developed an action matrix for export promotion and diversification, informed by the Integrated Framework Diagnostic Trade Integration Study (DTIS). Two major 94 Sierra Leone Poverty Reduction Strategy I 2008-2012 elements o f this strategy w i l l be the promotion o f exports in the cocoa and fisheries industries. Government w i l l continue to implement the recommendations in the action matrix. The Trade and Agriculture Ministries w i l l develop a strategy for the promotion o f cocoa exports, informed by DTIS recommendations. To promote fisheries exports, Government w i l l finalise legislation for compliance with EU requirements, complete i t s fish stock assessment, and create an authority for monitoring and control o f fisheries activity. With the support o f the EU, Government w i l l also establish an authority to ensure compliance o f fisheries products with the standards o f potential a trading partners. Finally, Government h s already restructured the Sierra Leone Export Development & Investment Corporation (SLEDIC) into the Sierra Leone Investment and Export Promotion Agency (SLIEPA). This new agency has a narrower focus o f promoting exports and investment activities. Government w i l l continue to support the activities o f SLIEPA during PRSP- 1 1 . With support from development partners, SLIEPA i s developing an export strategy for Sierra Leone I 9.8 PIJBLIC: DEBT I ~ N A C E Q ~ E ~ C T STRATEGY Public debt comprises public and publicly guaranteed external debt amounting to about US$580.1 million in June 2008, and domestic debt, including arrears owed to private domestic creditors and utility arrears, totalling Le1.2 trillion by end September 2008. Prior to reaching HIPC Completion point in December 2006, the external debt burden accounted for about 58%of total public debt, but this structure has changed significantly. Domestic debt now accounts for 70% o f the total public debt; it poses a more serious challenge to macroeconomic management. 9.8.1 EXTERNAL E B T STRATEGY D Sierra Leone reached completion point under the enhanced HIPC Initiative in December 2006. In line with the arrangements under the Initiative, the country benefited from substantial debt cancellations from the Paris Club, non-Paris Club, and Multilateral creditors. The total estimated debt r e l i e f under the enhanced HIPC Initiative worth nearly US$904 million. Added to this, the country also benefited from MDRI debt cancellation amounting to about US$609.9mn from the IMF, IDA and ADF creditors. This brings total debt relief cancellation to about US$1.6 billion; assuming that external commercial creditors w i l l deliver their share o f debt relief. Table 19 summarizes the composition o f external debt from 2005 to end June 2008. The delivery o f debt relief by both multilateral and bilateral creditors i s reflected in the significant reduction in the debt stock from around US$1.7 billion in 2006 to US$580.1 million by June 2008. Post-HIPC debt management i s an integral part o f the overall macroeconomic management in Sierra Leone. The thrust o f the management strategy i s to maintain debt sustainability and avoid relapse into huge debt overhang that w i l l constrain future development o f the economy. The external debt management i s o f two-fold: (i)how to obtain the full debt relief as calculated at the HIPC completion point, and (ii) how to ensure prudent external borrowing relative to the capacity to meet future debt service obligations. 95 Sierra Leone Poverty Reduction Strategy I 2008-20 12 I I 2005 I 2006 I 2007 1 June2008 I Multilateral 1,100.7 1,100.7 I 258.6 288.7 I Bilateral (Paris Club) 353.7 350.8 I Bilateral (Non-Paris Club) 55.0 54.5 I 29.4 37.4 I Commercial 1 254.0 1 237.8 ~ 235.8 1 254.0 1 Regarding the first, all multilateral and Paris Club bilateral creditors have delivered fully their share o f debt relief. A good number o f the non-PC creditors have either delivered fully or demonstrated the commitment to deliver the relief. Government will continue t o engage these creditors t o live up to the commitment as stated in the HIPC completion point document. The serious challenge that faces Government i s h o w to secure full debt relief from commercial creditors. Commercial creditors are often resistant t o delivery o f debt relief. To secure this, Government has approached the World Bank t o utilize the IDA-Debt Reduction facility to address commercial debt which is estimated at around US$254 m i l l i o n as at June 2008. The Bank i s n o w processing the facility and it is expected to be implemented by end o f 2009 t o early 2010. In implementation o f the IDA-supported second Debt Buy-back programme, Government will urge a l l creditors t o participate in the exercise. However, an alternative to non-participation would be restructuring the debt by lengthening amortization to the extent o f a creditor delivering a share o f PV reduction o f required debt relief. T o maintain future debt sustainability, Government in April 2008, conducted Debt Sustainability Analysis (DSA) to assess the medium t o long term outlook o f Sierra Leone's external debt situation over a 20 year time horizon. The D S A shows that Sierra Leone's external debt situation remains sustainable in the medium t o long term period, although it i s faced with a moderate risk o f debt distress. With this rating, Sierra Leone i s n o w eligible to access financing o f i t s IDA and ADB allocation o n the basis o f 50% grants and 50% highly concessional loan, with grant element over 70%. Therefore, to maintain external debt sustainability, Government will: Prioritise grant financing over loans, particularly for social sector investments; Borrow o n concessional terms with grant element o f at least 35% with sufficient grace period consistent with the gestation period o f any funded project; Prioritise sectors to which loan resources are to be directed. Given the present vision o f Government, borrowed funds will target infrastructure development and economic sectors; Strengthen legal framework and institutional capacity that will clearly define procedures for external borrowing. In this regard, Government will formulate a comprehensive post- HIPC borrowing and debt management act for central and local government, parastatal borrowing including contingent liabilities as well as reporting requirement for private sector debt. 96 Sierra Lzone Po\em Reduction Strategy I 2008-2012 9.8.2 DOMESTIC DEBT T R A T E G Y S Over the years, while Government has made enormous progress in addressing the external debt overhang, domestic debt poses serious challenge to Government, particularly in the execution o f the budget. Domestic debt", comprising short term government papers, domestic suppliersicontractor arrears and outstanding obligations for utility bills. The domestic debt stock as at June 2008 amounted to Le1,271 billion compared to Le835 billion in 2000, representing a 52.3% increase. Domestic interest rates have remained considerably high and interest payments averaged 18-19% o f domestic budget revenue over the last five years. The non-discretionary payment o f huge interest h s crowded out Government investment in both the infrastructure and in a poverty related sectors. To map out a strategy in the treatment o f the debt, domestic debt was part o f the April 2008 DSA. The results o f the DSA show that Sierra Leone's domestic debt i s highly unsustainable owing to a combination o f factors: shortfall in domestic budget revenue, shortfall or delayed disbursement in external budgetary support, and continuous rollover of debt instruments at high interest rates. The stock o f securitized domestic debt i s skewed towards the short term. The debt market i s characterised by a limited range of debt instruments and participants. In view o f this, reforms are needed to the debt and subsequently debt service burden on Government. Overall, Government will take measures that lead to: Clearing truly verified domestic debt arrears owed to the private sector and state-owned enterprises within the medium term expenditure framework; Lengthening the maturity structure of government securities thereby creating cash flow relief on the budget, and introducing 182-day, 273-day, and gradually longer dated instruments o f 2,3 and 5 years; Restricting central bank financing o f the budget; 0 Enhancing the liquidity-forecasting framework, in a bid to improve Government cash management functions, so as to minimise build-up o f domestic arrears Facilitating the development of a vibrant secondary market by reviewing the current system o f discount houses and considering improvements in the distribution channels in the market place. 9.8.3 CONTINGENT LIABILITIESSTRATEGY Over the years, a number o f quasi-fiscal agencies, especially parastatals, have undertaken varied financial activities leading to the accumulation o f large contingent liabilities with ultimate impact on the national budget. Government policy stance i s to discourage MDAs from taking on large financial obligations outside the national budget through the enactment o f public debt law that clearly states the procedures for acquisition o f such liabilities. "Domestic debt in Sierra Leone includes Government 91-day Treasury Bills, 365-Treasury Bearer Bonds, arrears owed to state owned enterprises and to private contractors for goods and services delivered or rendered to MDAs. It does not take into account wage axears and pension hnds (as there are no recorded outstanding pension arrears), with the exception o f arrears owed to ex-diplomats amounting to about Le1 1.2 billion as at end June 2008. 97 Sierra Leone Poverty Reduction Strateg) I 2008-2012 9.8.4 DEBTRECO RDING A N D REPORTING SYSTEM One o f the key requirements for debt management i s to provide accurate and reliable debt data to various stakeholders, particularly to policy makers. Currently the entire external debt data i s recorded and reported through the use o f the Commonwealth Secretariat Debt Recording System, as part o f the medium term activities to capture domestic debt data o n software, and to fully integrate both external and domestic debt into the I F M I S system t o enhance transparency in the management o f the debt. To achieve this, Government will have t o develop and establish wide area network connectivity between M o F E D (Public Debt Unit and Budget Bureau), the Accountant General's Department and the Bank o f Sierra Leone, with specific access level to the software, which will enhance timely reporting o f transactions as and when they are made. 98 Sierra Leone Povert) Reduction Strateg\ I 2008-2012 As approximately 80% o f economic activity i s in private hands: an essential precondition for achieving high and sustainable economic growth, employment and poverty reduction will be a strong and vibrant private sector. Growing the private sector i s conceptualizedas deriving from the interrelated influence o f five factors, namely, entrepreneurship, investment, productivity, access and functioning, and international linkages. The development o f all of these factors i s currently constrained by Sierra Leone's poor investment climate. Thus, the core focus of the Private Sector Development (PSD) strategy during PRSP-I1 will be the following: (i)improving access to i) finance; ( i improving the legal and regulatory framework, ( i ) i i promoting and supporting entrepreneurship; (iv) making markets work better; and (v) improving physical infrastructure. These five inputs will significantly improve the investment climate. This chapter draws from the unaccomplished PRSP-I private sector development agenda and presents strategies to be implemented during the PRSP-I1 period to promote pro-poor private sector-led growth. During PRSP-I, Government recognized the centrality o f private sector growth & job creation to i t s poverty reduction efforts. Goals for economic growth and the promotion o f private sector development were set out in Pillar 2 o f PRSP-I, and a longer t e r m framework in Government's policy document Vision 2025. Although a comprehensive PSD strategy was not fully formulated during PRSP-I, the desire to create an environment conducive for business in Sierra Leone has found expression in policy initiatives, development o f strategies, the proposed restructuring and strengthening o f SLEDIC, and the privatization strategy o f the NCP. In addition, Government commissioned an Administrative Barriers to Trade and Investments Study, which i s ongoing at the beginning o f PRSP-11, to address all administrative impediments to investment in Sierra Leone. The progress made in implementing actions for promoting PSD during PRSP-I i s shown in Table 20. Implementation o f PSD reforms has been reasonably satisfactory during the PRSP-I. Unfortunately, the PRSP-I targets were not set high enough to address the twin challenges facing the country with regards to pro-poor growth which were: Achieving h4DG 1, which requires maintaining rates of real GDP growth which would be unprecedented in the country's history. Establishing a pro-poor pattern o f growth required for rapid poverty reduction which will be difficult as the lead sectors o f the economy (mining, construction, telecommunications, etc.) have limited linkages with the rest o f the economy and which (with the exception of construction), do not provide large numbers o f jobs. 99 Sieria Leone Poverty Reduction Strategl I 2008-2012 Indicators Implementation of the Action Matrix under the M T I building for the Ministry o f Trade & Industry - M T I -respectively) were approved by Integrated Framework (IF) the Local Project Appraisal Committee in July 2007. Funds have been committed by the I F Trust Fund Manager and implementation o f the tourism project by the National Tourist Board has commenced. In addition, four priority projects (Aquaculture, Cultural Heritage Ginger, Chilli and Cashew Nuts) are currently being considered by I the Appraisal Committee, with a view to submitting them for funding under the Enhanced Integrated Framework for implementation. I DTIS was conducted by end June 2006. Action Matrix for the DTIS was developed in June 2006 to be validated by September 2006. Formulation of appropriate laws Cabinet Paper has been approved. A National Policy Document on intellectual property on intellectual property rights rights was produced and approved by the relevant stakeholders.A Legal Clinic has and competition policy been conducted for members of the Bench, Bar and other key enforcement agencies like the Police, Pharmacy Board and the National Revenue Authority. Sierra Leone has submitted its intellectual property rights needs assessment and financial cooperation document to the TRIPS Council of the WTO. Drafting o f the appropriate IPR legislation on copyright, trademark, patent and industrial designs i s ongoing. A draft repared and validated by the core group dealing with Simplification of administrative procedures and reduction o f cost o f doing business Restructuring o f SLEDIC into SLIEPA Fully functional National Coordinating Committee on Trade (NCCT) Strengthening Policy, Planning and Research Division o f M T I one i s T A provided by donor partners. The Director's term o f office has come to an 1 end. The Ministry's website i s fully functional. Projects, aimed at development o f the II trade data base, and capacity building, have been developed and are awaiting approval from the LPAC. Reform o f trade-related laws The PSD project has produced a detailed "Inception Report", which has been circulated and policy to promote private to stakeholders.A national project steering committee has been constituted and has sector development held several meetings. Two recent seminars on financial sector and land use reforms were held. Drafting o f IPR legislation i s ongoing. Work on reform o f Sierra Leone's municipal and sectoral licensing regime has commenced. Development of a Competition Law and Policy i s currently constrained by lack o f funding. 100 Sierra Leone Povert) Reduction Strategy I 2008-2012 .-. . - ._. - . - 1 1 ~ Action Matrix-implementation: Priority actions have been identified b) the relevant stakeholders. The preparation o f bankable project documents has commenced development strategy same time coordinate the activities o f private sector operators The five factors underpinning the PSD strategy during PRSP-I1 and their pro-poor interrelationships are graphically shown in Figure 13 below. 101 Sierra Leone Poverty ReductionStrategy I 2008-2012 - A Culture o Entrepreneurship Entrepreneurial risk-taking in the production o f goods and f services to earn profit, i s the driving force for the private sector. Sierra Leone lacks a culture that recognises and rewards entrepreneurship. The level and quality o f entrepreneurship i s low, which hinders the pace o f growth and the speed with which the economy diversifies and grows. Investment - The rate o f investment in Sierra Leone i s l o w and insufficient t o sustain rapid economic growth. Private investment i s confined t o a few sectors. There i s a need t o increase and broaden the scope o f investment to cover a wider range o f sectors o f the economy t o make growth more inclusive. This will require building and sustaining a responsive financial sector. High Productivity and Competitiveness - Currently productivity i s low, especially in the agriculture and agribusiness sectors from which the majority o f the poor earn their livelihoods. This makes the country internationally uncompetitive. Gains in productivity and competitiveness are needed for faster growth. Market Access and Functioning - Government and market failures are pervasive in Sierra Leone. The markets that are particularly important for pro-poor growth are land, labour and capital. The efficient operation o f these markets and access to them by the poor are important for pro-poor growth t o be encouraged. Harnessing International Linkages in Trade and Foreign Investment - Although greater trade integration and foreign investment have the potential to accelerate growth and benefit the poor, they need wider enabling conditions to deliver these benefits. Although Sierra Leone i s a relatively open economy and i s attempting t o encourage foreign investment, the potential benefits from greater international integration are yet t o be realised. The quality o f anti-corruption work will play an important role in encouraging international linkages and therefore foreign investment and trade. 10.3 IMPKOVlNG ACCESS 'IO FINANCE B Y BCILDING AND S I ' S T A I S I K C A RESPONSIVE FINAP$CIA& SECTOR There i s general consensus that the financial system plays a pivotal role in economic development, by mobilising funds for investment projects with the highest probability o f success. Consequently, a w e l l functioning financial system will promote wealth creation, economic growth and pro-poor development by positively influencing the rate o f capital accumulation, efficiency o f capital and redistribution o f wealth. Efforts have been made t o develop a capital market within the last two years: a stock exchange has been established and the appropriate regulatory framework developed. Unfortunately, but understandably, the financial system in Sierra Leone has been unable to provide adequate support to the private sector. It i s currently dominated by a retail banking system that i s grossly rudimentary and therefore seriously inadequate to support meaningful investment in growth and poverty reducing activities. Outside Freetown, access to finance among small businesses, the poor, and in agriculture i s very limited. Physical barriers to financial sector development posed by weak infrastructure are exacerbated by institutional, administrative, and legal obstacles involved in conducting banking and financial transactions. An even bigger obstacle to the creation o f a deeper, more efficient financial sector with wider outreach i s the acute shortage o f skilled professionals, insufficient technological resources, and a general public that i s not well- educated in the products and procedures o f a modern financial system. 102 Sierra Leone Povert) Reduction Strateg) I 2008-20 12 As retail consumer banking services dominate the sector, other non-bank financial services (such as mortgage, leasing and insurance) remain insignificant. The rural banking network, though nascent, was destroyed during the war, and therefore the institutional infrastructure most suited to addressing rural population needs i s poorly equipped to do so. In addition, the capital base o f the banks and other financial institutions i s also generally small and thus severely constrains their operating capacity. The banks are also unable to mobilise long-term savings that w i l l allow them to provide long-term, larger loans. With these limitations, it i s therefore not surprising that even though Sierra Leone experienced strong economic growth in the last five years, the financial sector played a limited role in the process. Government recognizes the importance o f the finance-growth nexus, and has therefore placed financial sector development as a major component o f the national development agenda. The Government therefore aims to build and sustain robust, responsive, and proper functioning financial institutions over the PRSP-I1 period. The Financial Sector Development Plan outlines the strategy for achieving this objective. 10.3.1 FINANCIAL SECTOR DEVELOPMENT PLAN The Financial Sector Development Plan has three overriding priorities: The commercial banking system and NASSIT account for the vast majority o f the short and long term funds within the financial sector. Their efficient operation and investment o f funds i s critical to national economic development. Microfinance institutions, community banks, and other such institutions provide financial services to rural areas, and for small and informal business activities. Their efficient operation and investment o f funds i s critical to the objectives o f outreach and poverty reduction 4 Efficient design and operation o f the financial sector environment, and o f laws, regulations, national policies, and oversight institutions which constitute the enabling environment for i t s activity, are essential to facilitate the sector's satisfactory functioning and i t s contribution to the national goals. ,........................................................................................ ................................ ..................................................... .................................................................................................... ................................ / 10.3. I . 7 COMMERCIAL BANKINGSYSTEM AND NASSlT (a) Commercial Banks As o f December 2007, the 10 licensed banks controlled Le1060 billion in assets (about 10% on average o f financial sector assets), Le798 billion in deposits and Le279 billion in loans. W h i l e deposits have grown by 31% annually over the past 2 years, loans have grown by only 24%, largely because o f high real interest rates driven by Government domestic debt accumulation, high running costs at commercial banks and a lack o f effective credit-risk rating facilities. While new banks have enhanced competitiveness significantly, the system i s s t i l l inadequately competitive and inefficient. Appropriate measures should be taken to strengthen banking supervision, improve the competitive environment, reduce credit risk and encourage more lending. It i s also important to address other risks to the financial system, including risk o f organised crime and terrorist groups utilising the financial system, or that those connected with organised crime might obtain control o f a bank or other financial institution. 103 Sierra Leone Po\ert). Reduction Strategy I 2008-2012 Strengthening banking supervision is a top priority - given the recent sharp increases in the number o f banks and the variety o f new banking products. Moreover, supervision i s compliance- oriented at a time when risks within the sector are high, with the bulk o f the new banks being small in size with relatively inexperienced staff, and with the high level o f non-performing loans within the sector. The community banks, in particular, need more intensive, risk-oriented supervision. Enhancing banking competition - i s already taking place with the entry o f new banks which are aggressively attempting to expand market share. There i s currently a schedule for increasing capital requirements to U S $ 5 million equivalent in 2009 to ensure banks are sufficiently strong to compete. Further additional capital increase requirements may be deemed necessary t o strengthen a l l banks. Facilitating increased commercial bank lending - i s the third major strategic initiative to strengthen the banking sector, as there i s a concern that at a time o f macro-economic stability, peaceful conditions, and improvements in infrastructure, lending i s low. The overall banking system loan to deposit ratio was approximately 35% in December 2007, and gross loans have grown considerably slower than deposits over the past three years. Steps will be taken to reduce risk by establishing acceptable instruments to securitize bank loans, and to conduct a feasibility study for a credit reference bureau followed by the introduction o f a credit reporting system. The strategy will encompass additional actions t o ensure more bank lending, as well as financial sector deepening. Anti Money Laundering and Combating Financing o Terrorism- Money laundering and f terrorist financing are growing concerns for the Government o f Sierra Leone. The Financial Sector Plan will develop a strategy and activities t o address various loopholes including the abuse in international money transfers and remittances and also trade based money laundering. The role, structure and operations o f the Financial Intelligence Unit will be broadened. There is a further strategic priority in two areas that indirectly strengthen the banking system: Strengthening short-term financial markets and monetary policy will contribute to macro- economic stability and to efficiency in the banking system by creating more robust short term investment, liquidity management, and inter-bank market activities. Strengthening payments systems t o facilitate inter-bank transactions will increase the use o f electronic payments, credit cards, and ATM machines, and reduce the costly dominance o f cash transactions in the economy. In 3 to 5 years, the Bank o f Sierra Leone's capacity will be developed t o provide payments system oversight and facilitate utilisation o f new electronic payments instruments, such as credit cards and ATMs for retail transactions. With anticipated assistance from the ADB there will be participation in a regionally oriented program to design and introduce a harmonized Real Time Gross Settlements system t o facilitate eventual regional integration. An automatic clearing house may be introduced when the volume o f transactions make it cost effective. As improvement and implementation o f more efficient payment systems utilising electronic systems increases, there i s a risk that such systems can be utilised by organised criminal groups or terrorist organisations. Therefore the risks that these new technologies raise need t o be reasonably controlled by appropriate systems and procedures. 104 Sierra Leone Povert) Reduction Strategy I 2008-2012 b ( ) National Social Security and Znsurance Trust NASSIT holds the vast bulk o f the long-term funds mobilized by the financial sector, and i s critical to longer-term economic development. The importance o f using these funds prudently and productively can not be over-emphasized. Unfortunately, while private pensions can be approved by the tax authorities, there i s little private pension fund activity and no regulatory or legislative framework to underpin it. NASSIT has important social safety net objectives, while serving about 140,000 members that go far beyond the financial sector. However, it i s also already the country's second largest financial institution with total assets o f about Le240 billion, an investment portfolio o f Le200 billion, and new cash inflows from contributions and investments o f about Le90 billion annually. I t s size, relative to the economy, places significant constraints on NASSIT's flexibility in terms o f i t s investments, and it i s necessarily engaging in substantial reverse t e r m transformation, Le., turning long-term resources suitable for development investment into short term resources. Due to inadequate support from other venture partners and the capital market, it sometimes takes majority ownership positions in companies which impose management responsibilities outside i t s primary area o f competence. NASSIT has, to date, been reasonably managed and i s in better financial condition than many other national pension entities in Africa. However, it i s largely s e l f regulated and supervised and, as for virtually every financial institution, there i s probably opportunity, through review by investment experts, to improve investment strategy. The Financial Sector Action Plan (FSAP) recommendations call for reviewing and strengthening NASSIT's strategic planning and investment policy and developing a framework for regulation and supervision o f NASSIT. The NASSIT Act would be reviewed. Technical assistance w i l l also be sought to assist NASSIT in accomplishing these actions. i 10.3.1.2 STRENGTHENING OUTREACH: MICROFINANCE, COMMUNITY BANKS AND RURALC R E D l J DELIVERY With up to 75% o f the population engaged in economic activities, particularly agriculture in rural areas, rural financial intermediation plays an important role in economic development. Unfortunately, the commercial banks have shied away from providing credit to the agricultural sector, and especially to small farmers, because o f the perceived risk and high operating costs o f lending to a very large number o f small customers. ' According to the FSAP, there are approximately 197,000 bank accounts in commercial banks. Sierra Leone had one o f the lowest bank branch penetrations in Africa, with one branch serving an average o f 200,000 people.'' Credit to the private sector i s 5% o f GDP, far below the sub-Saharan Africa average o f 17%. In addition, agricultural loans account for only 2% o f total loans, although agriculture accounts for 75% o f current employment and 50% o f GDP. The previous rural bank network was destroyed by the war. The present institutional infrastructure i s poorly equipped. Although the recent entry o f Pro Credit Bank (which already constitutes 43% o f MFI-type deposits and 31% o f MFI loans) and, to some extent the new Nigerian banks, may 29 The number of bmnches has increased significantly since then, and 10 o f them are n o w located outside Freetown 105 Sierra Leone Paveit\, Reduction Strategy I 2008-20 12 contribute to addressing this deficiency, commercial banks are not expected to contribute much directly to MFI in the foreseeable future. The microfinance sector i s dominated by 5 large MFIs, which have a 60% market share, and are all owned by donors. They have grown steadily and now have a total loan portfolio o f U S 4 . 8 million dollars and 49,000 customers. However, there i s relatively l i t t l e presence outside the capital city, Freetown, and the number o f clients grew by only 14% in 2007. Moreover, the MFIs are not licensed, not yet subject to agreed regulations, not allowed to offer savings products, and may not even be moving much closer to sustainability as they are almost totally dependent on donor financing. The Post Office Savings Bank, which had deposit taking operations in 17 branches, o f which 10 were outside o f Freetown, has been suspended since March 2007. Deposits (mostly in Freetown) totalled about US$523,000, which have not been repaid. Outside o f Freetown it had only 343 depositors and total deposits o f only Le45 million (US$l5,000). Primary assets are loans to the post office and staff which, if repaid, would amount to about half the total value o f deposits. Four community banks, initially funded largely with loans from BSL, have total loans of US$737,000 equivalent 30 (a 9% market share within the MFI industry), total deposits o f about $1.1 million (a 57% market share), and 5,400 active customers. W h i l e the performance o f individual community banks differs significantly, as a group, they have non-performing loans adding to 42% o f their portfolio and one community bank has 90% o f i t s portfolio nonperforming. Efforts are being made to raise capital from small local contributors, and local Boards o f Directors have a strong sense o f ownership. Much o f the Le5 billion lent to the community banks from BSL on IDA terms i s construed by some as defacto capital, although it has been invested primarily in buildings and equipment. Unfortunately, prospects for eventually raising Le80 million per bank to meet requirements o f the Other Financial Services Act (OFSA) appear challenging. Other institutions with outreach objectives include the government-owned National Development Bank, which has ceased to operate as it has no funds; the S L Housing Corporation, which engages in limited housing development and finance; and, o f course, the informal "osusu" sector which plays an important but largely unquantified role. Strategyfor Microfinance, Community and Rural Credit Sierra Leone places a high priority on addressing needs in the microfinance, community bank and rural credit sub sector, and Government has designed a three pronged strategy as follows: Improving the legislative and regulatory infrastructure Improving supervision Addressing problems o f specific institutions. Improving the legislative and regulatory infrastructure i s an important and urgent strategic objective. Considerable progress has already been made toward drafting prudential and non- prudential regulations for deposit-taking and non-deposit-taking MFIs, and there i s the highest priority to finalizing and implementing these regulations. When completed, they w i l l be reviewed in the context o f the OFSA. As appropriate, that Act would be amended, or if that would prove inadequate, a separate Microfinance Act drafted and enacted. Recognizing that credit cooperatives 30 MITAF keeps many o f its MFI industiy statistics in U S dollars 106 Sierra Leone PoveQ Reduction Strategy I 2008-2012 can play a potentially significant role in rural and micro credit, action will be taken to update the Cooperative Societies A c t o f 1977. Strengthening MFI and community bank supervision will be a strategic follow-through, concurrent with, and immediately after, finalizing the regulations. B S L does not have a separate MFI supervisory group at this juncture and anticipates directly supervising only those MFIs that will be taking deposits. However, there i s intent to encourage some o f the stronger existing or future MFIs that meet sound criteria to provide savings services, because there i s such a vacuum o f services for their target group. B S L welcomes anticipated decisions by the broader financial sector working group to address strengthening o f the microfinance association, and considerable effort should be devoted t o that. Action will also be taken to review and, as appropriate, refine MFI reporting requirements for both deposit and non-deposit taking MFIs. Addressing challengesposed by specific institutions i s the third major prong in the strategy in this area. Actions will be taken to review the status o f the Post Office Savings Bank, vis-&vis i t s l i n k s w i t h the Post Office. Decisive steps will be taken t o either restructure o r dissolve it. The National Development Bank has not been under direct B S L supervision and has stopped business operations. Addressing issues associated with the community banks is, perhaps, the biggest challenge. Rural banks played a critical strategic role in pursuing financial services outreach goals, and their collapse as a result o f the war left a serious vacuum. The effort t o replace them with community banks i s an extremely important initiative. However, there i s awareness that B S L cannot continue to establish community banks utilizing i t s funding and involving i t s staff directly in governance. An action plan and timetable will be considered for B S L financial and governance exit from these banks and t o improve their governance. While looking at other alternatives, there i s strong preference to accomplish this through encouraging the respective communities t o participate in community bank capitalization and management. / ,............. ........... .................. .......... .......... ... .,. ,......... .....,.... ...................... ........................................... .................................... ....................._._.............,...,..,......................_.._.. _ ..... j 70.3.7.3 s JRENG JHENlNG THE ENABLlNG ENVlRONMENJ Strengthening the enabling environment, i.e., the legislative, regulatory, and policy infrastructure in which the financial sector operates, i s the third major priority. Most o f these factors are within the control o f the Government and Central Bank, and represent a critically important foundation for facilitating effective functioning o f all financial sector players, which i s necessary to meet national financial deepening and outreach objectives. The B S L strategy for strengthening the enabling environment focuses on: Strengthening the Central Bank infrastructure. Establishing preconditions in the broader enabling environment. Strengthening the supervision o f licensing, prudential controls, and implementation of internal controls in financial institutions risks related to money laundering and terrorist financing, including establishment o f a Financial Intelligence Unit within BSL. Strengthening the Central Bank infrastructure i s already underway. The first action i s to recapitalize the Central Bank t o satisfactory levels within 3 years. This will be accomplished, in part, by payment o f some o f the non-interest bearing debt owed by government that i s presently o n 107 Sierra Leone Povert! Reduction Strateg) I 2008-20 12 the B S L balance sheet in the form o f interest bearing securities. These securities will also be utilised to augment open market operations. In addition, the Government will recommit itself to ensuring B S L operational independence. As reforming the legal infrastructure i s a critical contribution to strengthening the Central Bank and its role, there will be steps t o ensure that a thorough review i s undertaken o f the key legislation, Le., the Bank o f Sierra Leone Act, the Banking Act, Other Financial Services Act, and the Anti-Monetary Laundering A c t o f 2005. Pursuant t o the OFSA, regulatory guidelines will be prepared and issued o n permissible activities for commercially oriented nonbank financial institutions with separate regulations for deposit-taking and non-deposit taking institutions. Implementation o f the AML A c t will include CFT and regulations. Preconditions for effectivefinancial sector functioning within the broader environment are being addressed in greater depth by the Financial Sector Working Group which hopes t o finalize a broader financial sector strategy within the next several months. I t i s recognized, o f course, that the financial sector i s hndamentally dependent o n a supportive and facilitating enabling environment in a myriad o f areas. BSL's capacity within the financial sector to affect outcomes in these other areas i s constrained. Therefore, the strategy focuses o n preconditions in only three areas that have particularly high impact o n financial sector soundness, diversity, efficiency, and outreach. These are: Land law reforms: With respect to land, there will be focus o n (i) finalizing and enacting a L a w o n Commercial U s e o f Land; and (ii) helping t o address the need to carry out cadastral mapping, strengthen titling systems, and foster formalizing property rights. Strengthening the credit disciplinary environment to reduce credit risk: In this area the priorities are to help establish an enhanced, effective, commercial court system for contract enforcement, as wells as introduce limited non court self-enforcement mechanism for mortgages and other secured transactions Strengthening the company legal infrastructure: Finally, there i s a need t o help strengthen companies and, hence, their ability to raise funds from the markets and banks by assisting in (i) finalizing and amending the Companies Act; (ii) strengthening company registrar, valuator and real estate regulator capacity; and (iii) developing an action plan for enforcement o f International Financial Reporting Standards and improved accountancy training. The objective o f the GoSL is to ensure that a regulatory framework is in place which facilitates the establishment o f private business, allows for the effective enforcement o f contracts, safeguards the profits o f entrepreneurs, and protects the rights o f consumers. The ease o f doing business in Sierra Leone has improved significantly over the last year according to the W o r l d Bank Survey o f Doing Business 2009. Sierra Leone moved up the overall rankings to 156 f r o m 163 in 2007. From Table 2 1 below, out o f the 10 categories ranked, Sierra Leone improved o n 4 but declined in 5, while there was no change in one o f the categories. The Private 108 Sierra Leone Poverty Reduction Strategy - I 7008-2012 Sector Strategy and PRSP-I1 will focus o n measures that will significantly lift Sierra Leone from the bottom rankings. Table 21: Ease o f D o i n g Business Ranking 2009 Source: Doing Business survey 2009 Government will continue to make starting a business relatively easy through activities including: Providing a legal environment that ensures Intellectual Property Rights law i s upgraded to international standards. Improving the company, bankruptcy and licensing laws by finalizing the new Companies and Bankruptcy Acts, and addressing the regulatory constraints t o entrepreneurship utilizing the ongoing Administrative Barriers Project. Increasing security o f title t o land by establishing the regulatory framework for an effective land titling system. Streamlining customs procedures to reduce the cost and time o f trading across borders. Establishing competition and consumer protection regimes. Improving contract enforcement by establishing the legal framework for a set o f commercial courts. The limited level and quality o f entrepreneurship in Sierra Leone i s a critical constraint in promoting pro-poor growth. There are few innovative entrepreneurs who are able and willing to diversify and invest in the productive sectors o f the economy. The productivity o f resources i s further undermined by a lack o f investment in complementary capital, and the l o w scale o f operations in most sectors. The Government will therefore focus o n the following in order to relieve these constraints: 109 Sierra Leone Povert). Reduction Strategy I 2008-2012 0 Facilitating the establishment o f a Private Sector Development Foundation as an umbrella organisation for all the major private sector organisations in Sierra Leone. A similar umbrella organisation will be established for micro- and small and medium scale enterprises. 0 Providing support for programmes that improve business skills and deepen the market for business development services, such as accounting, business planning, legal, and development o f businesses. Implementing the UNIDO/Agricultural Fund Enterprise Development and Investment Promotion Programme. Instituting an effective image building promotional campaign abroad that would project Sierra Leone as an attractive location for investment. Developing the capacity o f the Chamber o f Commerce, Sierra Leone Association o f Manufacturers, and other relevant business associations. Improving the provision o f Business, Technical & Vocational Education and Training, and investigating including "entrepreneurship" in the education system. Utilising the ongoing "Opportunities for Sustainable Youth Employment in Sierra Leone" project to examine h o w labour market access for young people can be expanded. I 10.6 MARKETS MAKENG WORK BE`I'~'EH Several markets in Sierra Leone are constrained by both market and government failures that limit their efficiency and competitiveness. In several o f these markets, Sierra Leone has international competitive advantage. GoSL has already identified some markets in such a situation, such as o i l and palm oil, whereas other potential markets could be tourism and fisheries. GoSL will focus on: Implementing "Making Markets Work Better for the Poor" schemes for identified markets with potential. Promoting increased efficiency o f agricultural value chains in food crops including an increase in value addition and produce quality as w e l l as increased efficiency o f agriculture value chains through research. Current rates o f national investment o f 10-15% o f GDP need to increase by a large amount to sustain rapid growth. Unfortunately, the lack o f physical infrastructure i s an impediment t o growth. Improvements in the transportation network will reduce the cost o f transport for private business, while improvement in the public electricity supply will lower private sector operating costs. 110 Sierra Leone Poverty Reduction Strateg! I 2008-2012 A further feature o f this investment which i s particularly salient for PSD i s investment in market centres, i.e. markets and bazaars for local goods, which are major centres o f economic activity in the urban centres. Poor market infrastructure leads to inefficiency in the wholesale and retail trades. An objective for PRSP-I1 i s for Government to enable dialogue between the municipalities, which have oversight responsibility for local markets and business associations, o n h o w to improve this infrastructure, and provide the necessary funding. 111 Sierra Leone Poverty Reduction Strateg? I 2008-2012 Sierra Leone needs to effectively manage i t s natural resources to ensure that revenue generated can be invested in human capital and infrastructure. Findings show that some countries with abundant natural resources have tended to have relatively low rates o f economic growth, social development and political stability, ultimately undermining their ability to reduce poverty. This i s primarily due to inadequate and ineffective management o f their natural resources. This chapter will therefore focus on how Sierra Leone will ensure that the framework for development of the tourism, mining and forestry sectors will complement the Government's effort to reduce poverty. 1 11.1 TOtrRISht AND ECONOMIC DEVELOPMENT Sierra Leone i s characterized by sea, mountains, islands, lush vegetation, fascinating wildlife, and a rather peculiar cultural melange and history that link it to the African Diaspora. This topography and the history, which shapes it, constitute the bedrock for a vibrant tourist industry. Building on this foundation, from the 1970s Sierra Leone developed a thriving, but small, tourism industry. However, the conflict in the 1990s brought all leisure tourism to a halt. Many o f the facilities were destroyed or badly damaged. In the world tourist markets, peaceful Sierra Leone was transformed into a war zone. The current challenge facing the nation, and indeed the burgeoning but flagging tourism industry, i s how to rebrand and repackage Sierra Leone as a peaceful haven for tourists. a Although the tourism industry h s partially recovered from the devastating effects o f the war, it i s s t i l l largely limited to business, `official' tourism, and `Visiting Friends and Relatives' (VFR). What needs to be revived i s holidaylleisure tourism-a universal growth booster-not business or official tourism. 1 1.1.1 P O T E N T I A L FOR D E V E L O P I N G T O U R I S M The major asset for the development o f the tourism industry in Sierra Leone i s the country's natural beauty, particularly the unique setting o f the Western Peninsula, with i t s pristine beaches, mangroves and lagoons, against the backdrop o f the natural rainforest along the mountains. Further to this, the biodiversity o f the forest reserves and protected areas within the country bear potential for development, which remains untapped. Finally, there i s a potential for the development o f a niche market, by attracting tourists to historic places, such as Bunce Island. Tourism has the potential to offer a substantial contribution to the economy through foreign exchange earnings, contributions to GDP, and Government tax revenues. In addition, at both the personal and household levels, tourism can contribute through increased income and employment (jobs involving both genders that are full-time and part-time) for those who participate both directly and indirectly in the industry. 112 Sierra Leone Po\ erty Reduction Strateg, I 2008-20 12 An illustration o f the potential for tourism in Sierra Leone i s provided by the World Tourism and Travel Council's (WTTC) report on `Sierra Leone Travel and Tourism - Sowing the Seeds o f Growth', which was prepared in 2005. Using economic modelling, the WTTC presents a possible forecast o f tourism receipts (visitor exports) through 2015. Tourism Receipts 60 50 40 E 8 30 3 20 10 0 The above projection i s not based on concrete available data. Even so, the chart indicates what might happen through to 2015 with steady growth in tourism. The WTTC projections, which are based on 2005 data, suggest that tourism receipts (visitor exports) could approach US$50 million by 20 15. Put differently, leisure tourism would experience a boom by the year 20 15. ~______ ~______ 1 1.1.2 CONTRIBUTION TO POVERTY ALLEVIATION The development o f tourism w i l l contribute to pro-poor economic growth by facilitating diversification and encouraging the potential for private sector development and employment generation. The sector can contribute to the country's capacity to generate foreign exchange, government revenue and employment. A vibrant tourist sector would directly stimulate the economy through job creation-skilled as well as unskilled-in the construction industry, fishing, agriculture, fashion, arts and culture. The bulk o f the employment opportunities w i l l be in the informal sector where the majority o f those classified as poor make their living. 113 Sierra Leone Poverty Reduction Strategy I 2008-2012 1 1.1.3 CHALLENGES TO BE ADDRESSED Given the recent history o f conflict in Sierra Leone, there are multiple challenges t o be addressed in re-launching the tourism sector. The principal challenges are: 0 Perception in the source markets o f Sierra Leone as a conflict zone; 0 The undeveloped nature o f tourism; Installing Sierra Leone as an attractive destination on the global `tourism map'; Mismatch between quality o f available accommodation and likely demands f i o m the source markets; 0 Inadequate infrastructure and public services; 0 Conservation o f the remaining natural rainforests, mangroves and pristine beaches; 0 Improved management o f current and future protected areas. 11.2 ENHANCING TU CONTRlBUTlON OF M I X I K G T O ECOXOMIC A.ND SOCIAL DEVELOPMENT M i n i n g i s currently Sierra Leone's second most important sector, after agriculture, in terms o f employment and income generation, with an estimated 300,000 people directly employed in the sector. The sector contributes to economic development through export earnings and public revenue. The export o f minerals contributes around 80% o f the total value o f domestic exports, with diamonds alone contributing more than 60%. The sector contributes to revenues o f the government through taxes o n the mining companies, export duty o n diamonds, royalties and license fees. Large mining companies pay surface rent, annual lease rent, shipping/port charges, and royalties. Additionally, with an improvement in the environment for artisanal mining, alluvial diamond and gold production could increase due t o higher resource recovery and processing efficiency. The mineral sector in Sierra Leone i s made up o f three sub-sectors: a) large-scale production o f non-precious and precious minerals - rutile, bauxite, and diamonds, with the potential for Sierra Leone t o once again be a major global producer in rutile; b) mechanized small-scale mines, mostly diamonds; and c) artisanal production o f precious minerals - diamonds and, to a much lesser extent, gold. Large-scale mining operations in Sierra Leone are foreign-owned: Sierra Rutile Ltd. in rutile, Sierra Minerals Ltd. in bauxite and K o i d u Holdings Ltd. in diamonds. There are very few Sierra Leoneans who have the financial capacity t o fund prospecting and exploration activities. T o assist mining communities, some proportion o f mining revenues from the diamond export levy i s given t o the mining areas and communities for their development through the Diamond Area Community Development Fund (DACDF). The amounts distributed to various chiefdoms have been very welcome and are being used for various development projects. 114 Sierra Leone Povem Reduction Strateg) I 2008-2012 Artisanal mining operations are usually small in scale and are carried out by miners w i t h very little capital using rudimentary equipment. Artisanal miners are mostly poor people who receive support from various sources usually in the form o f mining tools and food to miners and their families. Health, environmental and a multiplicity o f social problems abound in mining areas. The Government policy i s t o ensure that optimal benefits are secured from mineral wealth to support national economic and social development, and the local community from which minerals are extracted. In this regard, mining laws and regulations are being reviewed with the objective o f maximising benefits to the Sierra Leone economy and to mining communities. This would also include changes in the institutional structure o f the Ministry o f Mines. Sierra Leone has good potential for mining and expectations o f additional discoveries o f mineral deposits. Table 22 below provides a summary o f the current potential. The sector faces several challenges ranging from the legal and regulatory framework t o capacity constraints. The fiscal regime in the sector i s also weak and there are serious capacity gaps in the Ministry o f Mineral Resources. Although miners in large scale mining receive welfare benefits from their employers, artisanal miners are left uncatered for and usually have t o resort to trade union action for securing minimum benefits. The situation i s made worse by the poor relationship between mining companies and the local communities. Child labour and youth conscription are common in mining areas. Due to the influx o f people into mining areas, the H I V / A I D S pandemic i s more prevalent in these areas. In the medium term, the Government's objective i s to address these various issues in order t o ensure that revenue from the sector i s maximized, whilst at the same time providing significant socio economic benefits to mining communities. The broad objectives will be to address stakeholder priorities for the sector, which include: land compensation and village relocation; attending to deforestation and solid degradation, sanitation and water pollution; provision o f infrastructure; community development and participation; regulations t o mitigate the negative impact o f blasting; and employment in the mines. As a first step the Core Minerals policy i s being revised and will be incorporated into the revised mining l a w t o be enacted by Parliament. The key objectives o f this policy are: Minerals are t o provide optimal benefits to the country over time, generating a stream o f benefits for succeeding generations. 115 Sierra Leone Poierty Reduction Strateg) I 2008-2012 Exploitation o f minerals i s to be done transparently and equitably, minimizing damage to the environment, so as to ensure that benefits w i l l accrue fairly to both the communities from which specific minerals are mined as well to the rest o f the country. The revenues generated from mining are translated into productive assets - both physical and human capital -to fuel long-term growth and development. Attract private investment into the minerals sector. Encourage private investment to use the implementation o f the Kimberley Process as a positive at the forefront o f selling diamonds for peace and development, properly registered by the Kimberley Process. Develop and strengthen human resources in the minerals sector. Improve the regulation and efficiency o f artisanal and small-scale mines. Promote improved employment practices, encourage participation o f women in the mineral sector, and prevent the employment o f children in mines. Add value to mineral products, and facilitate trading opportunities for mined products. Adopt the principles o f the Extractive Industries Transparency Initiative in the mining sector. The implementation o f the new Core Mineral Policy will increase output, employment, fiscal revenues and foreign exchange through (a) revitalising existing rutile, bauxite, iron ore, and diamond mines; (b) promoting the development o f an existing pipeline o f identified promising deposits; and (c) promoting the exploration o f favourable geological target areas to develop and maintain an adequate pipeline o f promising prospects that can be proposed to potential investors. In the more extensive small scale and artisanal sectors the goals are to (a) improve the overall standards o f living o f the involved communities; (b) to modernise the licensing o f all mineral rights with rapid and transparent processing, incorporating an integrated cadastral system, supported by satisfactory monitoring, administration and enforcement o f rights; (c) to facilitate mechanisation through establishment o f various schemes, addressing financing requirements, cooperatives, and revolving equipment schemes; (d) providing extension services to miners for more selective mining, addressing environmental concerns; (e) providing a training scheme for miners to improve their capability. LANDMANAGEMENT 1 1.3.1 IMPROVING Ownership of, and access to, land i s crucial for effective exploitation o f natural resources; it very often paves the way to reach out to other productive resources such as credit, technology, information and energy, because very often land i s used as collateral. Historically, Sierra Leone has had a dual land tenure system, wherein Freetown and surrounding areas are governed under a system o f freehold, while the provincial areas are considered common property distributed under the purview o f the Paramount Chiefs, who are the traditional leaders. The Paramount Chiefs operate a customary land tenure system in a patron-client relationship, whereas the system in 116 Sierra Leone Povem Reduction Strategy I 2008-2012 Freetown i s ostensibly based on modem contract law and i s thereby considered to promote "arm's length" transactions more amenable to equitable markets. The fieehold system does seem to legitimise property tenure, create the opportunities for market transactions, and permit development through outside investment in ways that the Paramount Chief system does not allow. However, the patron-client system offers certain other benefits such as durability in times o f state transition. Since the war ended in 2002, there has been no accurate record o f the total damage inflicted on human settlements countrywide. However, various assessments indicate that as at that date around 300,000 houses had been destroyed countrywide. Out o f the total population of 4.5 million, the war uprooted approximately 1.2 million people who became either internally displaced persons or refugees in neighbouring countries. Government has the enormous task o f meeting a huge backlog o f housing needs, which does not include the recurrent housing requirement. This has been compounded by the erection of new unplanned settlements all over the country. Nonetheless, Government has also carried out regulatory reforms including amending the Town and Country Planning Act to allow the declaration o f the whole country as a planning area. To ensure effective environmental management, the Environmental Protection Act has also been passed into law. This law will address issues relating to resource extraction rates and methods. In addition, the National Housing Policy has been revised to re-define the role o f Government as 'facilitator' and 'enabler'. This means that Government's role will be to create a conducive environment for full mobilization o f the potential resources o f the public, private and community sectors in the housing delivery process. However, a number o f constraints for land management have been identified, including the following: Inadequate enforcement o f the laws, rules and regulations pertaining to transforming the present chaotic state o f development in Freetown into a well ordered and efficiently serviced modern city; Land grabbing and issuing o f land titles within the Western Area Peninsula Forest Reserve, without consensus with other line ministries, while not complying with basis rules o f environmental governance; Inadequate capacity within the Ministry o f Lands, Country Planning and the Environment to carry out i t s scope o f responsibility and meet set objectives; Lack o f coordination and collaboration between sectors, departments, ministries, donor community and NGOs involved in land use and management; Bye-Laws, regulations and standards required for the implementation o f the National Environmental Act, 2000 have not been developed; Lack o f a clear mandate, terms o f reference and adequate logistics in the decentralized/ regional planning offices to effectively carry out functions o f surveying, environmental management and physical, planning in their areas o f jurisdiction. Government will address these as follows: Develop and implement a Land Management Information System and establish ground control points with aerial sensors for proper mapping and triangulation; Develop and implement a Land Use Plan at national, regional and local levels; 117 Sierra Leone Poverty Reduction Strategy I 2008-2012 Monitor physical development and construction to ensure conformity with planning schemes and take enforcement actions for any contravention thereof; Ensure coordination and collaboration between the Ministry o f Lands, Country Planning and the Environment and other MDAs to monitor the management o f natural resources. 11.3.2 MANAGING THE E N V I R O N M E N T Economies are highly dependent on the exploitation o f their natural resources - forests, wildlife, biodiversity, soil, water, land, fisheries and mineral resources. The exploitation o f these resources when not managed properly eventually leads to degradation o f the environment. As the environment degrades the poor people are the most affected. Deforestation has become a major national environment problem threatening the very survival o f the country. This i s in addition to the environmental degradation caused by increases in coastal population, urbanisation, tourism, commercial activities and resource exploitation. The prospect o f o i l would hrther increase the need for proper structures for managing coastal and marine resources. Additionally, climate change related issues and pollution from various activities and sources are gradually becoming a serious problem that would need to be urgently tackled. There i s the compelling need for Sierra Leone to establish proper structures to handle environmental issues countrywide. Environmental management in Sierra Leone has evolved as series o f fragmented institutions over the years both at the national and regional levels; the present institutional framework has proved inadequate as a result o f the absence o f appropriate structures that w i l l enhance the communication and application o f policy issues by the Government. There i s also the institutional problem, where several entities interface over environmental management and it i s sometimes very difficult to see the synergies and inter-relationships o f these institutions. In order to ensure environmental sustainability, as outlined in the MDG 7, Sierra Leone will take steps to address the following: 0 Integrate the principles o f sustainable development into country policies and programmes and reverse the loss o f environmental resources. 0 Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate o f loss. Halve, by 2015, the proportion o f the population without sustainable access to safe drinking water and basic sanitation. 0 By 2020, to have achieved a significant improvement in the lives o f at least 100 million slum dwellers. A key challenge to reducing poverty in Sierra Leone i s to strengthen the linkages between poverty reduction and management o f the environment. In the medium term, the Government i s focusing on land degradation, deforestation and biodiversity loss, mined-out lands, urban degradation, and pollution and erosion from road construction and urbanisation. The multi-sectoral nature o f environmental issues creates the need to develop and implement strategies that address environment at the national level, and to mainstream them into implementation. The risks o f environmental degradation should be limited through the enactment o f laws that ensure that the environment i s properly managed. As a first step, the Government has established an Environmental Protection Agency (EPA) housed in the Ministry o f Lands, Country 118 Sierra Leone Poverty Reduction Strategy I 2008-2012 Planning and Environment. This agency i s mandated to harmonise the legislative, policy and institutional framework for natural resource management. According to the EPA Act 2008, the EPA will specifically: 0 Advise the Minister on the formulation o f policies on all aspects o f the environment and in particular make recommendation for the protection o f the environment; Prescribe standards and guidelines relating to ambient air, water and soil quality, the pollution o f air, water, and other forms of environmental pollution, including the discharge o f waste and control o f toxic substances; 0 Ensure compliance with any laid down environmental impact assessment procedures in the planning and execution of development projects, including compliance in respect o f existing projects; 0 Act in liaison and cooperation with Government agencies, local councils and other bodies and institutions to control pollution and generally protect the environment; Promote studies, research, surveys and analyses for the improvement and protection o f the environment and the maintenance o f a sound ecological system; Initiate and pursue formal and non formal educational programmes for the creation o f public awareness o f the environment; Promote effective planning in the management o f the environment; Establish a data bank on natural resources management and utilization; Impose and collect environmental protection levies in accordance with EPA Act; Coordinate the monitoring and implementation o f national environmental policies; Promote the establishment o f national environment standards; Conduct Annual Environment Impact Assessments. Further to the above, the government through EPA will make a concerted effort in complying with the obligations given through i t s signature to Multilateral Environmental Agreements, including the Convention on Biological Diversity, the United Nations Framework Convention on Climate Change (UNFCCC), the United Nations Convention to Combat Desertification (UNCCD), the Convention on International Trade in Endangered Species o f Wild Fauna and Flora (CITES) and the Ramsar Convention on Wetlands o f International Importance. I t i s often forgotten that apart from the provision o f timber and fuel wood, forests provide key ecological services to the people, including the provision o f clean water and air. They have important functions in regulating the water cycle and the climate (e.g. rainfall generation) while producing the oxygen we are breathing. Forests further mitigate environmental hazards, such as floods, droughts and heavy storms, while stabilizing and controlling the erosion o f the soils. As 119 Sierra Leone Poverty Reduction Strategy I 2008-2012 such and through their contributions to soil formation, seed dispersal, the pollination o f crops and to pest and disease control, natural forests are also key to the country's agricultural production. Last but not least, forests contribute to Sierra Leone's cultural diversity and heritage, while having spiritual and religious values. They are also a major asset for the development o f ecotourism. Sierra Leone's natural rainforest once covered more than 60% o f the country. Total current coverage has been reduced to about 3%, mainly in the most remote places. Deforestation has taken place over decades due to illegal logging and timber extraction, fuel wood and charcoal production, land claims for construction, as well as through unsustainable agricultural practices, such as shifting cultivation. Illegal logging and timber trading also contributed to the fuelling o f the c i v i l wars in Sierra Leone and in neighbouring Liberia. In order t o secure the forests there i s an urgent need to map and make an inventory o f the remaining natural high forests in Sierra Leone. The results o f these activities, which will be undertaken by a restructured forestry division, will eventually feed into the formulation o f a new forest policy and legislation, based o n the principles o f Sustainable Forest Management. Successively, a clear distinction will be made between Conservation areas, Community forests, and Commercial forests. While there i s an urgent need to conserve the remaining natural rainforests, the Government will also explore possibilities for investment in sustainable financing mechanisms, for example through carbon markets and trading schemes, under the current and future Climate Change protocols, as well as by signing up to future Reducing Emissions from Deforestation and Degradation (REDD) programmes. Experience from other countries shows that the mid- and long-term revenues made through carbon markets clearly outweigh the short-term benefits for the country and i t s people by giving licences and logging concessions t o conventional logging firms. While seeing the conservation o f the remaining natural rainforest as a long-term investment in the livelihoods o f current and future generations, the Government will give incentives t o stimulate economic and social development through the establishment o f community woodlots and investment in sustainable forest management schemes. It i s expected that the communities will then not only be able t o satisfy their local demand for timber, but also be in a position to trade their timber for commercial purposes. The future for the commercialization o f the Sierra Leonean timber in selective production forest reserves lies in the application o f sustainable extraction technologies, while following the principles o f the rule o f law, governance and sustainable trading, through certified timber markets. 120 Sierra Leone Pow@ Reduction Strategy I 2008-2012 PRSP-I and PRSP-I1 represent the overarching development framework t o guide Sierra Leone's development process in the short, medium and long terms. One o f the key challenges accounting for the partial accomplishment o f PRSP-I was the inability by Government t o garner the resources needed for public investment in social and physical infrastructure that have positive effects o n economic growth and poverty reduction. As the gains and shortcomings under PRSP-I are consolidated along with the new priorities set in PRSP-11, it i s recognised that Sierra Leone will continue to face serious challenges in mobilising both domestic and international resources for generating high sustainable growth and poverty reduction. These challenges include attracting sustained capital inflows, including remittances, and ensuring that they are in sectors with high added-valued and strong quality employment impact; improving domestic resource mobilisation through increased savings, higher tax revenue and reduction o f capital flight; .effective and efficient debt management; and improving trade, market access and aid effectiveness. The financing o f PRSP-I1 will thus be considered in terms o f taking appropriate policy actions in the following areas: Mobilising domestic financial resources; Attracting private capital flows; Sustainable debt financing and external debt relief; Promoting international trade; Increasing international aid flows and technical cooperation for development; Improving public expenditure management. Government recognises the serious lack o f progress in these areas. B o l d reforms and policy prescriptions have therefore been articulated in the relevant sections o f PRSP-11. In summary however, there i s increasing recognition that Sierra Leone, like several other African countries, will need t o rely more o n domestic resources to finance i t s development agenda. At below 12% per annum o n average, Sierra Leone's performance in mobilising domestic revenue, especially since 2006, i s extremely modest and, despite the projected increase from 10.8% o f GDP in 2007 to 13.4% by 2010 and 13.7% by 2012, predicated o n an improvement in the tax and customs administration and broadening the tax base, this level o f domestic revenue effort will be grossly inadequate relative to the country's investment requirements for the achievement o f the MDGs. Improvement in domestic revenue mobilisation will therefore remain a key objective o f fiscal policy while also recognising the need to stimulate private sector investments by providing incentives including tax breaks. In the current environment also, with personal and corporate incomes s t i l l at historic lows, creating fiscal space through increased taxes and/or fees may be problematic. 122 Sierra Leone Poverty Reduction StrategS I 2008-2012 With the private sector expected to play a larger role in economic development, PRSP-11's reform agenda w i l l be directed at strengthening the financial sector, re-establishing the financial viability and operational performance o f public utilities, reinforcing governance and the judicial system, and privatisation o f other public enterprises. The poor performance, weak management and lack o f financial accountability in most o f the state-owned enterprises have been major sources o f fiscal vulnerability. Successive governments have felt compelled to bail out these enterprises through implicit subsidies and credits below market rates. Hence, to ensure fiscal sustainability during the implementation o f PRSP-11, this potential source o f fiscal vulnerability w i l l be eliminated by expediting privatization and/or improving the financial position and corporate governance in these enterprises. The Government remains committed to a liberal trade regime, largely consistent with the alignment o f external tariffs to the ECOWAS common external tariff, and export-oriented sectors w i l l be reformed to improve foreign exchange earnings. The Government w i l l continue to improve external debt financing and management capacity, including conclusion o f another IDA-supported debt buyback operation to extinguish long outstanding commercial and pipeline debts, and will avoid non-concessional external borrowing. Government w i l l continue negotiations with non-Paris Club creditors to reach debt relief agreements consistent with the enhanced HIPC Initiative framework and on comparable terms to those granted by the Paris Club. Expenditure rationalization, including reprioritization from consumption to productive spending, reduction in wasteful spending, and ensuring value-for-money, also represents a promising path to creating the necessary fiscal space for PRSP-11. During the implementation o f PRSP-11, fiscal space w i l l be created by continuously reprioritising the government's participation in the provision o f key services as may be warranted. As indicated elsewhere in this document, a comprehensive legal and policy advisory framework for engaging the private sector w i l l be crucial, including laws and institutions for BOTS,concessions, guarantees and PPPs. Furthermore, given past experience, Government also recognizes the importance o f having a framework for managing unsolicited proposals, an issue that has brought high transaction costs on public investment. Looking at Sierra Leone's circumstances as outlined above, it i s evident that PRSP-I1 financing will mostly have to rely on donor support i f i t s objectives are to be realised. In this context, a potentially sustainable fiscal profile for PRSP-I1 i s defined in the next section. Ideally, a broader public sector fiscal profile incorporating the accounts o f all quasi-fiscal enterprises provides a more realistic assessment o f PRSP-I1 financing estimates, given that these enterprises are the implementing agencies for the strategy. However, as in PRSP-I, obtaining comprehensive data on their operations s t i l l remains a serious challenge and thus inhibits the presentation o f a public sector deficit, as opposed to the treasurylbudget deficit. More remains to be done in this area. Consequently, gross financing estimates for PRSP-I1 are therefore presented in two broad scenarios: a Baseline Scenario consistent with the PRGF fiscal profile for 2008 and i t s medium t e r m perspective, and an Enhanced Scenario/High Case Scenario/Accelerated Poverty Reduction 123 Sierra Leone Poverty Reduction Strategy I 2008-2012 Scenario, consistent with the total financing requirements o f PRSP-11. These include costs o f programmes and projects that are not covered in the current PRGF medium term fiscal framework but are an integral part o f PRSP-11, including active off-budget and anticipated portfolios for filling infrastructure and MDG financing gaps. Table 24 below represents the baseline scenario that assumes that current trends in donor aid flows (both programme and project loans and grants) will continue in line with the Government's PRGF programme with the IMF. In line with these trends, partners are expected t o provide about U S 4 4 5 million to support the PRSP-11. According to the medium-term macroeconomic and fiscal framework agreed under the PRGF arrangement with the IMF, the economy i s projected t o grow annually in the range o f 5.5-6.5% during 2008-2012. As noted in the growth diagnostics, at this rate o f economic growth, Sierra Leone will remain a very l o w income country even after 10 years. To substantially reduce poverty, Sierra Leone needs t o grow at much higher rates. This in turn requires a substantial increase in investment spending in infrastructure and MDG related activities. The accelerated poverty reduction scenario i s presented in Table 24 below. The accelerated poverty reduction scenario assumes that Sierra Leone will receive additional external assistance in the form o f highly concessional loans and grants beyond the current MTEF estimates, t o fund the additional Poverty Reduction Expenditures. This will enable the economy to grow at a much higher rate than the current projections under the PRGF during the PRSP period. Consequently, Sierra Leone will require almost US$2 billion for the next three years. 12.2.1 FUNDING GAP After netting o f f the resource envelope projected under the PRGF medium term fiscal framework, Sierra Leone requires an additional US$850 million to fund the programmes and projects articulated in PRSP-I1 (Table 25). The mobilisation o f these additional resources requires a coherent and comprehensive resource mobilisation strategy. 124 0 2 a m 2 i z . .. . Sierra Leone Poverty Reduction Strategy I 2005-20 12 12.2.2 MACROECONOMIC I C A T I O N S OF T H E ACCELERATED POVERTY R ED U C TION SCENARIO IMPL Assuming that donors honour their pledges at the Gleneagles Summit, foreign aid to Sierra Leone will triple in the next three years. Aid inflows are estimated at 7.4% o f GDP in 2008 equivalent to US$29 per person. According to the Gleneagles Scenario, foreign assistance will increase to 22% o f GDP by 2010, which i s the amount o f resources required to move Sierra Leone out o f poverty. A recent study by the IMF on the macroeconomic implications o f scaling up aid under the Gleneagles Scenario indicated that the increase in aid inflows will have a significant positive impact on growth and poverty reduction without major and lasting negative effects on macroeconomic stability. However, the absorptive and administrative capacity building challenges will have to be addressed. 126 -..... . 8 m 0 W * ,2 pi e, f P '5 8 ... . . .-.. . ... . .. _ .. . . . . . - Sierra Leone Povem Reduction Strategy I 2008-2012 Ensuring that adequate financing i s available for the implementation o f the programmes identified in the PRSP-I1 period will be crucial for achieving the envisaged growth and poverty reduction objectives. Therefore to finance the funding gap based on the accelerated poverty reduction scenario, the following matrix outlines key strategies for resource mobilisation. 12.3.1 D O M E S T I C RESOURCE MOBILISATION Fiscal policy in the medium term will seek to ensure fiscal sustainability by enhancing domestic revenue mobilization and improving expenditure management. Domestic revenue will be mobilised through expanding the tax base, transferring all off-budget revenues by MDAs to the Consolidated Revenue Fund (CRF), improving efficiency in both tax and non-tax collection and enforcing compliance. Domestic revenue i s projected to increase progressively from 10.8% of GDP in 2007 to 13.7% of GDP by 2012. Scaled-up investment spending in infrastructure, agriculture and energy will boost the economy's growth prospects and hence the tax base. R The N A modernisation Plan will be fully implemented drawing on recommendations of R IMF/DFID technical assistance reports and assessments. N A will be strengthened to improve on field audits, tax payment enforcement, collection o f tax arrears, and stepping up anti-smuggling activities. Government will fully implement the new Goods and Services Tax. Government will seek to minimise tax incentives and holidays that narrow the tax base, notably by reviewing existing mining agreements. Government will assess the extent to which Sierra Leone i s deriving optimal benefits from exploitation o f natural resources. 12.3.2 EXTERNAL RESOURCES - Traditional Sources Government w i l l focus on mobilising resources through traditional and non- traditional sources. Mobilising external resources will be done through Consultative Group (CG) meetings, Donor Round Tables for specific sectors, and bilateral contacts . The strategy will focus on expanding the existing donor base and developing the capacity to negotiate donor agreements. CG Meetings and Round Tables: A CG meeting will be held to present PRSP-I1 to partners for funding the gaps identified. Annual CG meetings will be held to review progress made in implementation of the PRSP, as well as to follow up on commitments and disbursements. To fast tract the implementation o f the strategic priorities, biannual Round Table discussions will be held for Energy, Roads and Agriculture. This will afford Government the opportunity to mobilise additional resources where funding gaps exist. 0 Multi Donor Trust Fund: To facilitate the harmonisation of donor activities and alignment to the Government's priorities, the Government has encouraged the United 128 Sierra Leone Poverty Reduction Strategy I 2008-2012 Nations Country Team t o establish a multi-donor trust fund to support the PRSP. The trust fund will streamline procedures that will improve o n the delivery o f support especially for basic services. In addition, the trust fund will serve as a funding channel for potential non- resident donors. This will however not preclude other funding sources. Vertical Funds: Government will explore the possibilities o f attracting support from foundations and global funding initiatives. Currently Sierra Leone receives support from the Global Funds for HIV/AIDS and Malaria, the Education Fast Track Initiative, and the Peace Building Fund. The Government will maintain good relations with these institutions while intensifying efforts to mobilise funds from other vertical sources. In the event that a gap i s identified within a specific sector, global funding initiatives that support activities within those sectors will be targeted as potential sources t o fill those gaps. - Non Traditional Sources Given the recent global financial crisis, Government will explore non traditional avenues to mobilise resources for finding the PRSP. Specifically, the Government will explore the following: Maximizing the benefits o f Private Sector Participation: Despite the progress made in improving the climate for doing business, Sierra Leone has a poor record o f involving the private sector, especially in financing, operating and maintaining the key drivers o f growth and poverty reduction. This i s especially the case in infrastructure. The shift in government policy t o rely o n the private sector for financing development i s therefore central to expanding the resource base to adequately support PRSP-I1 activities. As a result o f the Government's sustained drive to attract the private sector, various options o f engagement must be explored and large private sector projects encouraged, including Build-Operate-Transfer, which will certainly require a special BOT Law, and Public Private Partnership projects. There are opportunities for realising these options in the power, water, road, port, airport and telecommunications sub-sectors; projects range from green-field to concessions and divestitures. Arguably, involving the private sector can have many benefits, including stronger incentives for more efficient performance, access t o capital and external markets, and an improvement in skills, management and technologies. 0 Policy and regulatory framework: As Government takes steps t o increase meaningful private involvement, it i s acutely aware that private sector participation without a good policy and regulatory framework will not improve sector performance. Effective private sector participation therefore poses a number o f challenges for the government as it seeks to transform i t s role from exclusive financier, owner, and operator to that o f a facilitator and regulator o f services provided by private enterprises. Another challenge i s ensuring that implicit contingent liabilities o f the government in partnering with the private sector are not translated into actual expenditures and bailouts o f unsatisfactory projects. Improving Sierra Leone's Country Policy and Institutional Assessment: To access increased financial resources from the World Bank and African Development Bank, Sierra Leone will implement measures that will improve i t s rating o n the World Bank Country Policy and Institutional Assessment (CPIA). Currently, the overall C P I A score for Sierra Leone i s 3.1 out o f a total o f 6.0; as a result, Sierra Leone i s classified as a Weak Performer. O f the 16 clusters graded, Sierra Leone receives a score o f 3.5 and above o n five clusters (macro-economic management, fiscal policy, debt policy, trade, and quality o f budget management). Government will continue to put mechanisms in place that will 129 Sierra Leone Po\erty Reduction Strategj I 2008-2012 improve performance in those clusters. However, more effort will be placed in improving the scores for the clusters where the country's score i s 3.0 or below. Government i s committed to improving the CPIA scores as an increase in CPIA ratings will exponentially increase the resource allocated to Sierra Leone by the World Bank and African Development Bank. Similar efforts will be made to access resources under the United States MillenniumChallenge Account. Exploring Carbon Trading Potential: Carbon sequestration will be explored as a means o f mobilising resources as well as cutting back on emissions. Currently, with over 2.7 million hectares o f tropical forest, deforestation rate i s estimated at 19,400 hectares per annum. The potential fiscal space accruing from halting deforestation at the rates o f 10 to 50% i s estimated at US$3.9 to 19.4 million3'. The Government will therefore explore the possibilities o f carbon trading that will provide economic benefits as well as meet the country's obligations in terms o f protecting the national forest. 12.3.3 RE-PRIORITISING PUBLIC EXPENDITURES Fiscal policy over the PRSP period will aim at limiting debt-creating domestic financing while stepping up investments in infrastructure (energy and roads) and agriculture. The Government will aim to make gradual increase in poverty-related expenditures from 3% o f GDP in 2007 to 6% by 2010, targeting improved access to basic social services (health, education), and public utilities (water, electricity, feeder roads). " "Is Carbon Trading a Potential source of DevelopmentFinance in Africa?" UNDP Regional Bureau for Africa, Abdulai Sireh-Jallow. 130 Sierra Leone Poverty Reduction Strateg) I 2008-2012 The Government o f Sierra Leone i s committed to the decentralised implementation o f PRSP-11, enabling each District to engage closely with i t s population and serve specific local needs to achieve poverty reduction. PRSP-I1 enables District Councils, along with other important local organisations, to tangibly impact local delivery o f policy objectives. This will be achieved through District Working Groups (DWGs) where representatives from the District Council, the Paramount Chiefs, local representatives o f MDAs, CSOs and other selected parties will meet to debate local cross-sector issues. Local monitoring and evaluation o f the PRSP-I1 Results Framework will empower districts to influence local delivery and provide transparency on the progress towards poverty reduction for both local and national decision-makers. Coordination will be a key challenge to the decentralised implementation o f PRSP-11. At the policy level, coordination across Ministries i s led by Cabinet, and coordination between GoSL and development partners i s led by the Office o f the President through quarterly meetings o f the Development Partnership Committee (DEPAC). At the operational level monthly meetings of the National Technical Committee (NTC) will be led by MoFED. At the implementation level, national cross-sector coordination i s led by Cluster Working Groups (PWGs), and local cross- sector coordination i s led by DWGs. The PRSP Working Groups include representatives from GoSL MDAs, development partners, and CSOs and are facilitated by the Ministry o f Finance and Economic Development. A key lesson learned during the implementation o f PRSP-I was the general public's lack o f adequate understanding o f the PRSP's contents, processes and impacts. Quite often ordinary citizens viewed the PRSP-I as a separate project, distinct from other on-going initiatives within their localities. Even though the majority o f the population was aware o f the Government's efforts to reduce poverty, the linkages between sectoral projects and the overall PRSP framework was not clear. In this regard, and to improve knowledge and understanding of PRSP-11, the Government will embark on an intensive sensitisation o f the PRSP-I1 processes and outcomes. To this end and in l i n e with the Government's overall strategy o f inclusion, under the leadership o f the Ministry o f Information and Communication, the Government will develop and implement a National Communication Strategy. This strategic framework will do the following: Strengthen national communication capacity within Government and other key stakeholders for long term effective dissemination o f public information for sustainable development; Improve citizens' access to information and free exchange o f public information; Promote the active involvement of Civil Society in the dissemination o f public information. 131 Sierra Leone Poveny Reduction Strategy I 2008-2012 Specifically within the PRSP-I1 framework, information will be continuously disseminated through regular monthly discussions related to the PRSP. In addition, PRSP school clubs that have been established in some schools w i l l be expanded to cover all districts. These clubs w i l l conduct quarterly debates on PRSP related issues. 13.1.1 DEVELOPING I N F O R M A T I O N C O M M U N I C A T I O N TECHNOLOGY There i s increasing recognition o f the linkage between poverty reduction and Information Communication Technology (ICT) especially in post conflict countries like Sierra Leone. I C T i s a strategic economic resource in the emerging e-economy and globalisation. As societies become more interconnected and integrated, the availability and accessibility o f quality, modern and affordable communications i s crucial to eradicating poverty, sustaining economic growth and development o f vibrant and dynamic private and public sectors. In Sierra Leone, the extensive use o f the mobile phone has facilitated the integration o f rural areas into the global economy. Mobile companies were estimated to have invested over US$125 million in the country, creating thousands o f jobs and facilitating development activities in commerce, education, agriculture, health and security. Through the use o f solar panels, the Ministry o f Information and Communication intends to expand internet services throughout the country, including the rural areas. A pilot programme has been implemented in the Bombali District, and this w i l l be extended to all districts during this PRSPII period. These progress not withstanding, there are enormous challenges facing I C T development i s Sierra Leone. These include: 0 Lack o f comprehensive policy and regulatory framework 0 Inadequate ICT and supporting infrastructure 0 Insufficient skilled human resources 0 The application o f e-commerce and e-government. In response to the above challenges, the GoSL, in the medium term, intends to focus o f the following: Develop and implement a National I C T policy that w i l l create the enabling environment for ICT development. Introduce Code Division Multiple Access Telephone system that w i l l ensure telephone and Internet coverage for most parts o f the country. Strengthen the Directorate o f Communication in the Ministry o f Information and Communication. Putting in place a proper mechanism to construct Fibre-Optic infrastructure. Integrate the Post Office's traditional services with I C T in urban and rural areas. Strengthening e-Government in public service delivery. Strengthening Open Government Initiative (OGI) to enhance the accountability and transparency o f the three key state institutions: the Executive, the Judiciary, and Parliament. Supporting regional I C T initiatives within the frameworks o f ECOWAS, UNECA, etc. Implement the second phase o f the National Communication Strategy. 132 Sierra Leone P o v e n Reduction Strateg!, I 2008-2012 Weak capacity in public sector institutions will be a major challenge t o the implementation, monitoring and evaluation o f PRSP-11. The capacity o f government institutions has been in serious decline for decades, and has further degraded as a result o f the c i v i l conflict. Consequently, acute shortages o f required expertise and poor motivation are pervasive in government institutions. Therefore, to ensure that government institutions can carry out their mandates, post conflict reconstruction relied heavily o n commissions and PIUs that bypassed the public service. The current situation now requires the gradual phasing out o f these arrangements and replacement by longer-term support that strengthens the ability o f government t o formulate and coordinate development policies as well as deliver basic services o n a sustained basis. The Government will therefore develop a comprehensive capacity building programme that will address these issues. The programme i s based o n the areas discussed in the following sections. 13.2.1 STRENGTHENING THE CIVIL SERVICE Strengthening capacity across government, including local government, i s extremely important as decades o f poor governance and socio-economic collapse, exacerbated by the war, have led t o a public service with weak capacity that hinders effective service delivery. Although some initiatives have attempted t o build capacity through public sector reform and decentralization, more effort i s required t o maintain the momentum and provide proper coordination o f the public sector reform agenda. During the past four years, significant work has been undertaken t o lay the foundations for effective reform o f the public sector. This has entailed a governance and c i v i l service reform programme geared towards revitalising the civil service, including management and functional reviews to rationalize structures, functions, procedures and staffing in MDAs. Activities have included the introduction o f new regulations and rules and a C i v i l Service Code, a comprehensive pay and grading reform, and the development o f a Public Sector Reform Strategy. Cabinet approved a Public Sector Pay Policy Framework in January 2007 and work i s progressing o n development o f a revised grading system and a revised pay structure for the entire public service. Recently the President took over leadership o f the reform process by creating within his office the Public Sector Reform Unit t o spearhead the reform agenda. H e also delegated responsibility for fast-tracking the reform o f the public sector to a number o f senior c i v i l servants. The overall objective o f public sector reform i s to build sustainable institutional capacity to strengthen and improve the public sector's ability to deliver efficient, effective and accountable services, in order t o improve the socio-economic status o f the poor. Government's priorities for public sector reform during PRSP-I1 are as follows: e Pay and incentives: The issue o f pay represents a fundamental obstacle t o promoting effective reform and capacity development across government. Assistance i s needed to create the enabling environment t o attract and retain good personnel through an incentive- based remuneration system and improvement o f c i v i l service conditions. 133 Sierra Leone Po\ art, Reduction Stratep I 2008-2012 Records management improvement programme: Government in 2005 launched a records management improvement programme. Significant progress has been made to improve record management procedures and build capacity within pilot ministries. Government will seek further assistance to complete the work on personnel records improvement and payroll verification and expand the programme to cover the entire public service. Training and human resource development: The revival o f the Civil Service Training College and promotion o f cooperation with key external service providers, especially in important capacity areas like procurement, financial management, strategic management and policy development, are urgent Government priorities. The objective i s to promote manpower planning, development and staff utilisation in a coordinated and cost effective manner. Reducing staffing levels and introducing measures to mitigate the social cost o f retrenchment: The civil service i s over-staffed, particularly at lower levels, where staff often lack basic education, skills and expertise. The size and cost o f the civil service w i l l be reduced through various mechanisms including laying-off temporary and casual workers, privatising departments and outsourcing services. The GoSL w i l l therefore seek financial assistance to pursue initiatives that would mitigate the social cost o f retrenchment, such as setting up an Enterprise Development and Training Programme, and a Counselling, Training and Information Programme for retrenched workers, and pre- retirement advice. Empowering local councils: In order to revamp the human resource management system in local government, technical support by way o f advice and guidance w i l l be provided to develop capacity in local councils following the lead from the H M O . The objective i s to provide common systems and procedures to those in the central civil service and provide equity. There i s also a need to rationalise the use o f human resources across MDAs and local councils by ensuring the transfer o f existing competent or trainable staff to local government. e Strengthening the capacity o the Public Sector Reform Unit: The new Public Sector f Reform Unit, located in the Office o f the President, w i l l be strengthened to provide leadership and technical coordination for various reform agendas across government. The Public Sector Reform Unit w i l l also take the lead in preparing a long-term framework, which w i l l provide the basis for coordination and integration o f reform programmes within a coherent, dynamic and holistic strategy for public sector reform. Such a strategic framework will establish the linkage between public sector reform and the broader framework o f economic and social development, particularly Government's role and responsibilities in poverty reduction. 13.2.2 E N H A N C E THE C A P A C I T Y OF P A R L I A M E N T In the past, the role o f Parliament in relation to the PRSP has been limited to validating the formulation o f pro-poor policies and the overall consultative process. Integrating Parliament into the good governance objective o f effective civic monitoring and oversight implies the development o f Parliament's capacity for oversight and scrutiny. The Parliamentary Service Commission Act, already in place, provides a legal framework for improving the efficiency o f Parliament in carrying 134 Sierra Leone Poverty Reduction Strateg) I 2008-2012 out this function. The Government supports its implementation and will also support the following: Involving Parliament in the formulation and implementation o f policy rather than operating as a `rubber stamp' institution; 0 Supporting Parliament in improving the capacity o f the Parliament Secretariat, by exposing them to modern management practices; Enhancing the capability o f newly elected Parliamentarians to engage in better representation, outreach, oversight, and legislative enactment. Parliament will undertake steps to improve i t s operational capabilities and effectiveness to strengthen parliamentary oversight o f PRSP efforts to create an environment for poverty reduction and to facilitate growth for national development. Strategic activities in PRSP-I1 which will support this include: 0 Training o Parliamentarians: With support from various stakeholders and development f partners, it i s proposed that programmes are designed to familiarise Members o f Parliament with Parliamentary operations and procedures. Also, training will be given in skills such as advocacy, debating, lobbying and research for Members o f Parliament and parliamentary staff. 0 Strengthening o Parliamentary Committees: A programme o f strengthening o f f Parliamentary standing and oversight committees will be undertaken through training and relevant capacity building measures, to assist them in effectively carrying out their oversight functions. Developing a Parliamentary research capability: Introduce measures which will identify the needs, degree and level o f support required for the establishment o f an effective research capability within Parliament. The necessary architecture and equipment to support research in technical and administrative areas requiring monitoring and oversight will be identified and provided to Members of Parliament and Parliamentary staff. Supporting the Citizen-Parliament Interface: Reintroduce and reinforce constituency, community outreach and consultation programmes for Members o f Parliament, to facilitate contact and dialogue as a mechanism for promoting a Citizen-Parliament interface and interaction. 0 Developing a Public Information Strategy: Develop and implement a communications and public information strategy for Parliament in order to take parliament and i t s work and operations closer to the populace (including improved dissemination o f texts o f laws and improved public accessibility) though information sharing and exchanges. 13.2.3 ATTRACTINGEXPERTISE FROM THE D I A S P O R A In order to address current capacity gaps in the public sector, the Government i s looking to the Diaspora to mobilize expertise in priority areas. To this end, the Government has established a Directorate o f Diaspora Affairs in the Office o f the Presidency to lead the process. The Directoratewill be supported by a newly created Public Sector Reform Unit. 135 Sierra Leone Poverty Reduction Strategs I 2008-2012 The aim o f the Diaspora initiative i s to lay the foundation for productive and mutually beneficial partnership between Government o f Sierra and Sierra Leoneans in the Diaspora. This w i l l be done through: Working with the Government to address critical capacity gaps: The Directorate w i l l make available the services o f at least thirty-five experts from 2009-2011 using the "Trust Fund for Diaspora and Experts in the South", which provides incentives for experts in priority sectors and programmes identified by the President. Incentives include salaries for those already in public service positions, and full salaries for secondments and other ad-hoc advisory positions, as well as travel and living allowances. Where appropriate, on- line gap filling will also be explored, in order to utilise increased internet access in the country. Significant attention w i l l be paid to ensuring a gender balance in Diaspora professionals and experts from the South. The first year will serve as a pilot, and a thorough review o f the Directorate's outputs will be undertaken by implementing partners at the end o f the year. To consolidate the Diaspora human and economic resources to enhance investment capacity, and strengthen central and commercial banks foreign reserves: The directorate will facilitate the buying o f state-owned enterprises, stocks, bonds and mortgages through the Diaspora Trust Fund. Formalisation o f remittances w i l l also be promoted through (a) remitting funds through the formal banking system (b) leveraging remitted funds to generate income for SMEs and micro finance initiatives, (c) opening foreign currency accounts to enable Sierra Leoneans in the Diaspora to save in-country. 13.2.4 RESEARCH AND DEVELOPMENT To promote sustainable development and ensure that the requisite technology i s available to meet changing world demand, the Government w i l l focus on research and development especially for innovation and technological learning in Sierra Leone. Effective policy to promote technological progress requires a good understanding o f how technological change occurs. For a country like Sierra Leone, technological change occurs primarily through learning - i.e. the acquisition, diffusion and upgrading o f technologies that already exist in more technologically advanced countries - and not by pushing the global knowledge frontier further. As in the case o f the East Asian countries, the Government w i l l focus on technological progress as a source o f economic growth. Therefore, Government w i l l focus on Research and Development to promote science, technology and innovation through: A shift in the science and technological priorities o f the public agencies from basic research to the provision and commercialisation o f technological services, mainly oriented towards supporting production process management and quality control. 0 Establishment o f technology funds to subsidise technological development projects o f private f i r m s and training; to promote the development o f private-sector technological service providers, thus facilitating the emergence o f a technological services market. The development o f a "national innovation system" that comprises institutions which jointly and individually contribute to the development and diffusion o f new technologies, 136 Sierra Lzone Poverty Reduction Strateg) I 2008-20 12 and which provides a framework within which Government can form and implement policies t o influence the innovation process. Such policies may cover areas such as: Access to finance; Human resource development; Adequate basic physical infrastructure; Capabilities within firms; Inter-firm linkages and collaboration; General business services; Demand conditions; Investment climate; Entrepreneurship; and Literacy levels. As a first step towards developing a national innovation system, GoSL will focus o n the following: H u m a n resource development: general education systems, universities and polytechnics, technical and vocation institutes, education and training, apprenticeship schemes Science and technology infrastructure: public research laboratories, research associations, research grants, technology centres Information: networks, advisor centres, consultancy services, specialist libraries, databases Technology import policy: Foreign direct investment policy; licences. The implicit science and technology measures include: public physical infrastructure investment; financial and fiscal policies which increase the incentive for investment and innovation; trade and competition policies; public enterprises and public procurement; and regulation notably in relation to intellectual property rights. Monitoring and Evaluation o f this medium-term programme will be focused o n improving current programmes, increasing efficiency and ensuring effectiveness among MDAs. T o this end the focus will be o n results. The PRSP-I1 targets are outlined in the Results Framework and will be part o f a comprehensive monitoring system led by GoSL across the country. The Results Framework will inform annual Performance Contracts between the President and MDAs, which will include more detailed in-year targets for quarterly reporting. These targets will cascade downwards to the district level, where most o f the collection and reporting o f information will take place, thus ensuring targets at a l l levels are clearly focused o n achieving PRSP-I1 priorities. 13.3.1 M O N I T O R I N G A N D E V A L U A T I O N FRAMEWORK Monitoring and evaluation o f PRSP-I were hampered by weak or non-existent M&E capacity at central and district level. Although nascent structures exist at both levels, there i s a need to strengthen and build o n these foundations. PRSP-I1 monitoring and evaluation will be guided by five principles: 1. Development: promoting success, by recognising strengths and solving weaknesses that will have an impact o n the general development o f the country. 2. Results-focus: emphasizing tangible results towards achieving critical objectives, both strategic and technical. 137 Sierra Leone Poverty Reduction Strateg) I 2008-2012 3. Transparency: encouraging full disclosure on activities undertaken and enabling informed decision-making across the country. 4. Efficiency and effectiveness: encouraging a value for money approach, co-ordinated into a regular process with timely, non-duplicative deliverables. 5. Local relevance: informed by knowledge of localities and delivery organisations, in accordance with decentralised implementation. PRSP-I1 will be monitored and evaluated according to these guiding principles, with the PRSP-I1 Working Groups responsible for ensuring that these principles are adhered to at all stages (see 13.3. l),utilising carefully designed information flows (see 13.7), with monitoring and evaluation tools to enable the process (see 13.5). Progress will be evaluated according to the Results Framework, supplemented by annual Performance Management Contracts for MDAs and up-to- date strategic plans for the delivery organisations. 13.4.1 M I N I S T R Y OF FINANCE AND ECONOMIC DEVELOPMENT Monitoring and evaluation o f PRSP-I1 will be facilitated by MoFED. The Ministry will: Facilitate the activities o f the PRSP-I1 Working Groups Set up and coordinate the requisite information flows Support capacity building for the monitoring and evaluation o f the PRSP 0 Develop a communication strategy to facilitate greater dissemination o f development assistance as well as the activities o f the PRSP to the public 13.4.2 CABINET OVERSIGHT AND MONITORINGU N I T The Oversight and Monitoring Unit i s responsible for monitoring the implementation o f all Cabinet decisions, highlighting constraints that impede implementation, and preparing reports for the attention o f the President and Cabinet. I t also undertakes periodic assessment o f government programmes and projects countrywide. 13.4.3 OFFICE OF THE PRESIDENT: STRATEGY AND POLICY UNIT Strategy and Policy Unit advisors will represent the Office of the President at Cluster Working Groups and the National Technical Committee, to ensure that the President i s h l l y up-to-date with the progress o f PRSP-I1 implementation, for discussions in the Development Partnership 138 Sierra Leone PoJerh. Reduction Strateg) I 2008-20 12 Committee and other critical forums. The Unit w i l l also manage the quarterly reviews o f Performance Management Contracts by the President. 13.4.4 STATISTICS SIERRA L E O N E Statistics Sierra Leone w i l l continue to play the lead role in the production o f reliable data for poverty analysis and monitoring. S S L conducted the Integrated Household Survey o f 2003104 which was used in the preparation o f PRSP-I. It carried out the Core Welfare Indicator Questionnaire Survey in 2007, which provided useful statistics on progress made in implementation o f the PRSP. A Demographic Health Survey was also conducted in 2008. To ensure the effective discharge o f data production and coordination role, S S L would need sustained support to increase i t s capacity in the process. To improve the National Statistical System, a National Strategy for the Development o f Statistics (NSDS) has been recently launched, covering 2008-2012. Implementation o f the activities identified in the NSDS i s expected to boost the system's capacity, and so SSL's role in poverty monitoring and evaluation. The NSDS articulates the need to improve routine data systems in key service delivery Ministries. It i s crucial to support efforts in this direction especially as related to Health, Education and Agricultural statistics, which form the main functions devolved to District Councils. SSL i s working to develop strategies to establish Statistical Units in Ministries that have not got one. This i s important for strengthening the overall national M&E system and for monitoring poverty and development. I t i s the responsibility o f the statistics system, in which S S L plays a coordinating role, to generate official statistical data through the M&E Unit to monitor poverty. For the purpose o f better PRSP coordination and more timely supply o f statistical data, a Memorandum o f Understanding has been established between S S L and the Line Ministries. FRAMEWORK 13.5.1 RESULTS The Results Framework will be used to track and monitor progress o f a m i x o f intermediate and final indicators. In general the MDAs and District Councils w i l l provide information on the intermediate indicators to measure progress in the various sectors and districts. A number o f indicators have been developed for the key sectors and these w i l l be reviewed annually. The outcome or final indicators w i l l be assessed through periodic surveys. MANAGEMENT CONTRACTS 13.5.2 PERFORMANCE ~~ ~~ ~ Performance Management Contracts (PMC) are annual agreements signed between the President and Ministers specifying results to be achieved by the Ministry during the reporting period. With the adoption o f PRSP-11, the targets in the Contracts will include the key results areas o f the current document. They are signed in January and include quarterly progress indicators. Each 139 Sierra Leone Poverty Reduction Strategy I 2008-20 12 PMC i s reviewed quarterly using returns submitted by each Ministry on the progress achieved in each result area. The data provided are verified and analysed at the central level and a summary assessment i s then presented to the President for discussion with the Ministry involved. PMCs were initiated in 2008 with all Ministries, and will be developed to include other key MDAs from January 2009 in full alignment with PRSP-I1priorities. 13.5.3 TRACKING SURVEY THE PUBLIC EXPENDITURE The Public Expenditure Tracking Survey (PETS) Secretariat in the Ministry o f Finance and Economic Development will be strengthened. PETS Surveys have been a useful source o f information on the distribution and utilisation of public resources since 2001. The Surveys have been tracking the flow o f public resources from the point o f budget allocation to their end use. This exercise has the potential to improve transparency and accountability in the use o f public resources provided the recommendations from the surveys are implemented on time. 13.5.4 PARTICIPATORY POVERTY ASSESSMENTS F O C U S GROUP AND DISCUSSIONS Participatory Poverty Assessments (PPAs) will be used to ascertain qualitative progress in the implementation of the PRSP. The PPAs have proved useful in determining people's perceptions o f government service delivery in a broad manner, which may include attitudes o f government service providers and assessments o f their capacity. Focus Group Discussions will be used during implementation to monitor Government service delivery at the grassroots level. They will also be used to facilitate participatory monitoring and evaluation o f programmes as the information collected will be used to assess people's perception o f progress made in the delivery o f priority service delivery areas. 13.5.5 SURVEYS The review o f the implementation o f PRSP-I underlined the need for accurate and reliable statistics. To address this, NSDS will be implemented (see 13.4.4). Under NSDS, the following surveys will be conducted: Sierra Leone Household Integrated Survey in 2010; Labour Force Survey in 2009; National Agriculture Census in 2011; Demographic Health Survey in 2008; National Survey on HIV/AIDS in 2010; survey on Foreign Direct Investments in 2009. In addition, periodic data on essential commodities; tourism statistics, education statistics, and fisheries data will be collected. S S L will support Line Ministries in establishing sector data banks. 13.5.6 ROUTINE DATASYSTEMS ~ District level information and administrative data collection will play a key role in monitoring and evaluation o f PRSP-11. The compilation o f data by Ministries and District Councils regularly will 140 Sierra Leone Poverty Reduction Strateg) I 2008-20I 2 form the basis for assessing progress by the D W G s and the CWGs. Standard formats will be developed and agreed upon for the data that should be generated regularly at a District level. 1 3 . 6 . 1 DISTRICTWORKING GROUPS Each district will have a working group comprising representatives from the District Council, the Paramount Chiefs, local MDA branches, CSOs, SSL, and the Decentralisation Secretariat. The DWGs will meet monthly t o collect and collate administrative data at district level, discuss implementation issues relating t o the implementation o f programmes in the district, and prepare and submit monthly progress report t o CWGs. 13.6.2 CLUSTER WORKING GROUPS(PWGs) CWGs will meet monthly to review the updates from the DWG for their respective sectors, and make recommendations to address the challenges highlighted in the reports. C W G discussions will be based on the four clusters o f PRSP-11: Cluster 1 Governance: P F M reforms, Anti Corruption Agenda, Justice and Human Rights, Decentralisation, Parliamentary and Civic Oversight and Security. Cluster 2 Infiastructure: Energy, Transportation and Telecommunication. 0 Cluster 3 Productive Sectors: Agriculture, Private Sector Development, Mineral Resources, Marine Resources, Land management, Urbanisation and Migration. Cluster 4 Social: Education, Health, HIV/AIDS, Water and Sanitation, Youth and Gender empowerment. Each C W G comprises representatives from the various institutions that implement programmes within the group as well as the development partners that provide support for these programmes. CSOs and NGOs are co-opted into these working groups as appropriate. The work o f each C W G feeds into the bimonthly meeting o f the National Technical Committee. 13.6.3 N A T I O N A L TECHNICAL COMMITTEE The National Technical Committee comprises representatives from GoSL and selected development partners. The N T C will meet bi-monthly t o discuss the issues emanating f r o m the reports fiom the DWGs and the CWGs and determines the issues to be brought to the attention o f the broader Development Partnership Committee between GoSL and development partners. GoSL i s represented at the N T C by the Office o f the President, the Ministry o f Finance and Economic Development, Statistics Sierra Leone, Bank o f Sierra Leone, and other MDAs co-opted o n a need basis. Development partners are represented by the M D B S donors, IMF and UNDP. 141 Sierra Leone Poverty Reduction Strateg? I 2008-20 12 13.6.4 DEVEL O PM ENT PARTNERSHIP C O M M I TTE E The Development Partnership Committee provides the forum for frank and continuous dialogue between GoSL and development partners on a quarterly basis. DEPAC comprises all MDAs and all development partners. CSOs and other key stakeholders are invited based on the agenda under discussion. The agenda for DEPAC i s developed by the NTC. At DEPAC meetings, the progress o f PRSP-I1 implementation i s reviewed, and challenges are addressed through consensus-building between the various stakeholders involved in reducing poverty. I 13.7 PRSP-li fNFORMATION FLOWS PRSP-I1 seeks to enhance the flow o f information across GoSL, donors, and the general public. Local implementing organisations, both governmental and non-governmental, will contribute critical information to the District Working Group for review. These groups will supply information to CWGs, who will in turn facilitate the national coordination o f activities by supplying information to NTC and DEPAC. This will require a co-ordinated effort to strengthen information systems within the country by SSL. The general public will also be encouraged to participate throughout (see 13.7.5). To enable decision-making and evaluate progress in achieving the PRSP-I1 objectives, there will be a dynamic and rigorous flow o f information between the PRSP-I1 Working Groups. To ensure that PRSP-I1 i s implemented, monitored and the desired results are achieved, there are five priority requirements: 1. Institutionalising PRSP-I1 Working Groups 2. Clarifying roles o f M&E practitioners and enabling requisite information flow 3. Strengthening capacity of M&E practitioners 4. Developing M&E tools 5. Enhancing participation o f the general public. 13.7.1 INST IT UT IO NAL ISING PRSP-11 W O R K I N G GROUPS Working Groups are pivotal to the successful decentralised implementation o f PRSP-11. Central GoSL, MDAs, District Councils, CSOs and development partners need to work together to achieve targets, with clarity o f roles and deliverables for all parties. The following are planned to address this component: Developing or renewing TORSfor all Working Groups Training for DWG and CWG participants. 142 Sierra Leone Povert) Reduction Strategy I 2008-20 12 13.7.2 C L A R I F Y I N G ROLES OF M&E PRACTITIONERS AND ENABLING REQUISITE INFORMATION FLOWS Clarifying roles o f M&E Practitioners and enabling requisite information flows in central GoSL, MDAs, District Councils, CSOs and development partners will promote adherence to the PRSP-I1 implementation principles and thus improve accountability and transparency in delivery o f public services. The following activities are planned to address this component: 0 Enactment o f national and district M&E policies to define roles and responsibilities o f all practitioners Production o f clear and consistent M&E guidelines to ensure the effective application o f policies and concepts 0 Development o f national and district level M&E databases and information flows. 13.7.3 STRENGTHENING CAPACITY OF M&E PRACTITIONERS M&E personnel in central GOSL, MDAs, District Councils, CSOs, and other participants in PRSP-I1 working groups require effective training on fundamental M&E skills, and technical capabilities in data collection, analysis and management where required. The following activities are planned: 0 Training for all M&E practitioners on PRSP-I1 process and tools 0 Technical training for relevant practitioners on data collection, analysis, and management Provision o f data storage equipment and additional resources required for operational success. 13.7.4 DEVELOPING M&E T O O L S The development o f M&E tools, particularly the Results Framework and PMCs, i s a matter o f priority. The success o f these tools relies on ambitious but realistic target setting, which requires competence in project planningand management on the part o f MDAs, District Councils and other delivery organisations. These organisations must also be able to manage the routine data systems required to make these tools dynamic and invaluable. This i s a significant challenge and w i l l require support from various stakeholders. The following activities are planned: Training for delivery organisations in modern project management systems and target setting Training for delivery organisations in routine data systems Provision o f data storage equipment and additional resources required for operational success 143 Sierra Leone Povert). Reduction StrategJ I 2008-2012 13.7.5 ENHANCING THE PARTICIPATION OF THE GENERAL PUBLIC There i s need to enhance the participation o f the public in the M&E process through strengthening dissemination of M&E outputs nationwide on a regular basis using the most suitable media. The dissemination techniques will take into considerationthe sociological and educational background o f the general populace. Addressing this component i s important since increasing public awareness i s critical for the general public to understand the progress made by the Government in reducing poverty. Thus, the Annual Progress Reports shall be disseminated down to chiefdom level and made reader-friendly by producing different versions for all audiences. The following activities are planned: Production o f quarterly M&E bulletin Printing and dissemination o f M&E reports through various media Organising regional focus group discussions on M&E results Organising media discussions on PRSP-I1 progress. The monitoring and evaluation of PRSP-I1 will form part o f a larger, holistic M&E framework being developed gradually but comprehensively by GoSL. This framework will support the successful implementation o f government programmes, not only to reduce poverty but also promote sustainable growth o f the economy. The Office o f the President, Cabinet Secretariat and Ministry of Finance and Economic Development are the primary institutions that will be responsible for setting up this framework, that in turn w i l l be guided by the same five principles o f monitoring and evaluation laid out in this document: development, results-focus, transparency, efficiency and local relevance. 144 Sierra Leone Poverty Reduction Strategy I 2008-20 12 The objectives and strategies described in this section are intended to mainstream sectoral statistical systems within the government's development programme (PRSP). Obstacles can be encountered when attempting to mainstream sectoral statistics into the PRSP. However, the phases o f the design o f the National Statistical System (NSS) provides an excellent opportunity to build long term relationships to address these issues, and to create cross-cutting strategies that benefit all the sectors o f the resulting PRSP. As part o f the democratic process, governments are called upon to account for their mandate to govern, which, in practice, amounts to service delivery. The accounting process often involves measuring performance using measures based on statistics generated from sample surveys and administrative data or parameters from censuses. The standard framework for accountability has been to set up an agency or system to measure government performance. The agency i s usually the National Statistics System (NSS). A NSS produces "official" or "national statistics", that is, statistics used in the public domain. The role o f official statistics i s threefold: Centred on activities around the Gross Domestic Product (GDP), official statistics provide a meaningful description o f a country's economy. 0 National statistics also provide a description o f the distributional aspect o f development among social groups and geographical areas, such as those vulnerable to poverty. In so doing, they provide a window on the work o f government and on how effectively the government i s doing it. 0 Official statistics also support decision-making processes by the wider community including the private sector. We establish from the foregoing that measurement i s an essential aspect o f service delivery. 1 14.2 THE NATIONAL STRATEGY FOR TIIE DEVELOP,\-lEiW OF STAYISTICS (NSDS) The NSDS which was designed by Statistics Sierra Leone provides a detailed outline o f the statistical activities that the National Statistical System ( N S S ) plans to implement in the five years from 2009 to 2013. There i s an established international consensus on the role o f macro-economic statistics in the formulation o f policy for economic development. The new approach to development policy i s to set clearly attainable goals with measureable targets and indicators attached to a time frame. Evidence based policy making involves policy reviews after careful and rigorous analysis o f costs and benefits using sound and transparent data. The results agenda i s reflected in the poverty Reduction Strategy Paper (PRSP) and the Millennium Development Goals (MDGs). Measuring 145 Sierra Leone Poverty Reduction Strateg) I 2008-2012 progress towards achieving the MDGs depends o n reliable and timely statistical indicators used to monitor and evaluate these goals. 14.2.1 ECONOMIC STATISTICS The Economic Statistics programme i s focused on providing robust economic indicators with the primary objectives o f providing data for development planning, monitoring progress towards achieving the MDGs and Poverty Reduction, meeting the macroeconomic data requirements o f multilateral agencies such as ECOWAS, IMF, WORLD BANK, ILO, UNSD, DFID, EU, The UN Family, etc. To meet the West African Monetary Zone (WAMZ) criteria on fiscal deficit, real sector growth, monetary stability and external sector performance, sound and transparent economic statistics are required to monitor compliance to monitor the convergence criteria. This brings into focus the need to improve on the capacity o f the NSS to collect, process, analyse and disseminate economic statistics that will meet these needs. The key deliverables are: Expanded Aaricultural Statistics including an agriculture costs survey in 2010, and an agriculture outputs in 20 10, and agricultural census in 20 10/2011. Agriculture i s the mainstay o f the Sierra Leone economy and monitoring production, incomes and costs provide essential statistics for agriculture and food security policies. Agriculture continues to contribute close to about fifty (SO) percent o f the Gross Domestic Product in Sierra Leone. Thus a reliable agriculture data will mean that the GDP estimates will be largely reliable for any policy-making on the Sierra Leone economy. A new Labour Force Survey o f households in 2009. Such surveys are a standard feature in other countries but have not yet been conducted in Sierra Leone. They provide comprehensive details o f formal, informal sector employment and o f unemployment and inactivity on a consistent basis across the household population. Improved, more timely and expanded annual and half yearly national accounts. Providing an improved basis for monitoring economic progress in the country and assessing the affordability o f government development plans. Quarterly published fiscal statistics following IMF standards. Enabling the monitoring and assessment o f government income and expenditure on a consistent basis within the fiscal year. Improved and more comprehensive BOP statistics following IMF standards. Again an essential component o f monitoring the economic progress o f the country. Improved external trade statistics agreed, published and used by all parties. (The current situation o f two different sets o f figures produced by S S L and BSL undermines confidence in the integrity o f the statistical system. 146 Sierra Leone Poverty Reduction Strategy I 2008-20 12 (vii) A new quarterly index o f Droduction from 2009. This SSL series based on expanded and more comprehensive business surveys data w i l l replace the partial and inadequate system established by the BSL in the absence o f anything better. (viii)A new quarterly Producer Price Index from 2009. PPI's are an essential element in the programme o f improvements to the (constant price) national accounts and valuable in their own right as indicators o f inflationary pressure in the economy. (ix) Improved and enhanced business register from 2009 to provide a sound basis for improved sample surveys o f businesses. (x) Annual data published on formal sector employment and wages by industry based on N A R PAYE records in 2009 and 20 10. (xi) Informal sector business survey and report in 2010/2011. Part o f the programme for improving the National Accounts, but also important in i t s own right as an important element o f economic activity missed from standard business surveys. (xii) A new Household Budget Survey and report in 2009/2010 (known as the S L Integrated Household Survey SLIHS) to be used for rebasing the Consumer Price Index (CPI), poverty analysis and national accounts. This w i l l provide an essential update on the PRSP monitoring trends since the 2004 survey. 14.2.2 DEMOGRAPHIC, SOCIAL AND REGIONAL STATISTICS Statistics covering data on population issues, education, labour, health, gender and other social statistics provide timely and accurate data for policy planning and formulation for the country and it will help to design appropriate strategies to monitor the impact o f some indicators on the labour force, poverty-reduction and economic growth within the country. Accurate statistics on health and education in Sierra Leone are vital, not only for the achievement o f our MDGs, but also for an assessment o f our human development index. Additionally, the government o f Sierra Leone can only succeed in making a development impact in these areas with the availability o f vital statistics on health and education. Reliable household survey information i s essential for effective dev elopement planning and policy formulation. This has been one o f the success stories for the N S S in the past and w i l l continue to be so in the future. The household survey programme will provide essential monitoring information on society and poverty in advance o f the next census o f population planned in 20 14. The key new published deliverables and reports planned for specific areas o f statistics w i l l be: (i) A Demographic and Health Survey and report (SLDHS) in 2009: This will provide important new indicators for the PRSP as well on health and disability in the population. The demographic indicators w i l l help improve the population estimates and forecasts between census years. i) ( i Core Welfare Indicator Questionnaire Survey (CWIQ) and report in 2010/2011: The sample for this would be combined with the S L I H S above and would provide earlier indications o f poverty trends since the previous such survey in 2007. 147 Sierra Leone Poverty Reduction Strategy I 2008-2012 (iii)Exuanded and improved regional and district statistics and publications: Part o f servicing and government decentralisation agenda i s required for the PRSP purpose. (iv) A Geograuhic Information Svstems (GISI local area information system for all MDAs to use. Such I T based mapping technology and databases are an essential part o f the technical infrastructure for administrative planning and local area statistics. (v) Annual demograuhic indicators and uouulation estimates: an essential part o f the statistical and planning infrastructure not currently being produced on a regular basis. (vi) Regular and accurate statistics on Health and Education derived from new Administrative Systems. The EMIS and the HMIS are already in the implementation stage. Their prime purpose i s management information, but accurate national and local statistics w i l l be an important secondary output. (vii) Regular Criminal Justice Statistics to be established via an upgrade o f statistical capacity in the Ministry o f Justice. (viii)A national survey o f HIV/AIDS in 2010/2011: This w i l l update the previous survey conducted in 2007 and w i l l concentrate on attitudes and behaviour among the population. In addition to survey publications and existing regular series, there w i l l also be a range o f new annual publications covering main statistical topic areas, and an improved and expanded website. The Annual Digest o f statistics will continue to be produced on time. Dates for forthcoming press releases w i l l be announced in advance. 148 Sierra Leone Poverty Reduction Strategy I 2008-2012 15.1.1 P O L I T I C A L RISKS Strong political w i l l at all levels, combined with good governance, i s the linchpin for successful implementation o f the poverty reduction strategy. The Government remains fully committed to poverty reduction and development o f the country as a whole. The recent administration that began in September 2007 has emphasised good governance, including improving transparency and tackling corruption as very high on i t s l i s t o f priorities. The peaceful national elections o f 2007 showed that Sierra Leone has moved away from the violence that characterised the decade to 2002. The local elections in 2008 also happened peacefully; the National Electoral Commission now needs to remain strong and independent for the political arena to remain calm. 15.1.2 E C O N O M I C RISKS Macroeconomic stability i s one o f the core pillars o f the PRSP-11. Failure to observe the measures and provisions o f the already fragile macroeconomic framework would make PRSP- Implementation difficult. The limited capacity to absorb resources may also constitute a significant impediment. While the Bank o f Sierra Leone and MoFED keep a tight hold on fiscal and monetary policies, this i s a low risk. The development o f indigenous business remains a priority; this requires capital and human resources, as well as a strong enabling environment for business. Indigenous businesses are most likely to re-invest within Sierra Leone and to contribute strongly to the long-term development o f the country. A business-friendly legal system i s essential for continued growth and development o f indigenous businesses, and this will also encourage international investors to invest in areas other than primary commodities to help diversification o f the economy. ~~ ~ 15.1.3 CONSTRAINTS ASSOCIATEDW I T H THE PARTICIPATORY PROCESS A lack o f understanding o f the participatory processes involved in PRSP-I1 may be an obstacle to the acceptance o f the PRSP-I1 by development partners and local communities. The coordination structures for steering the PRSP need to be strong so that i t s effectiveness i s not jeopardised. The first PRSP was somewhat misunderstood by parts o f the Sierra Leone community, a thorough education programme i s needed to explain what the PRSP i s and how it w i l l impact people's lives, otherwise' expectations may be raised too high. Common misunderstandings about PRSP-I included the expectation that it was a single pot o f money waiting to be spent, which the government was not giving out, and that it was a single project designed to lift Sierra Leone out o f 149 Sierra Leone Poverty Reduction Strategy I 2003-2012 poverty within 3 years. Although Sierra Leoneans should expect a l o t from the PRSP, their expectations should be grounded in the truth o f what the PRSP expects to achieve. There needs t o be strong co-ordination across the government departments, so that duplication of efforts i s avoided and limited capacity i s used efficiently and effectively. 15.1.4 S O C I A L CONSTRAINTS Sierra Leone currently faces high unemployment among the youth. Unfortunately many o f these were unable to complete their education due t o the interference o f the civil war. Although employment i s currently available in Sierra Leone, it i s often only for those who are highly skilled and educated. Thus, the unemployed l o w and semi-skilled youth, particularly in the urban areas o f Sierra Leone, remain a risk since they need but are unable t o find stable, long-term employment. In terms o f sustainability o f PRSP-I1 outcomes, l o w educational participation o f the girl-child and l o w literacy rates among women in Sierra Leone remains a constraint. Throughout the world, those countries which have focused o n educating women and girls have had stronger economic development over a longer period o f time. This i s particularly related to the health o f children of well-educated women, as well as the higher likelihood o f these children completing their education, thus giving greater growth and development in the future. For continued development into the future, it i s essential t o ensure that women and girls receive a good education, since this will severely impact the future o f Sierra Leone. Uncertain political and economic situations in any neighbouring country could disrupt Sierra Leone's economic development. I f terms o f trade are disrupted for Sierra Leone's exports, t h i s could handicap the country. Sierra Leone i s dependent o n o i l and other petroleum products. If the international price of o i l were to continue t o increase, it would damage the economy, both in terms o f supplying power in the short term until the Bumbuna hydroelectric plant comes into operation, as well as in the transportation o f goods, since the majority o f goods travel by road. The food crisis o f early 2007 and the resulting rise in the price o f basic foodstuffs, particularly rice, i s cause for concern, and could well become a risk for the future. However, Sierra Leone has very fertile soil, and agriculture has a strong potential to thrive, assuming resources are handled carefully. Extreme international weather conditions can impact o n the price o f food in Sierra Leone; it i s therefore important that agriculture takes a prominent place in the implementation o f the PRSP-I1 t o ensure minimal instability as a result o f international changes. If environmental changes cause weather patterns to shift, Sierra Leone must be aware o f potential changes in climate and h o w agriculture in particular can be adapted to thrive in a new environment. For example, shifting rain patterns may mean that other types o f rice that are not currently under cultivation in Sierra Leone may prove to be more productive in the future. 150 Sierra Leone Poverty Reduction Strategy I 2008-2012 Desertification in countries to the north may cause populations to shift as they seek new, more fertile lands. Although the final impacts o f this w i l l not be felt for some years, the PRSP-I1i s an ideal opportunity to begin to prepare for a potential inflow o f people from lands that are becoming less fertile. If budgetary resources shrink, this i s likely to impede execution o f the thematic strategies. Delays in disbursement o f resources from international development partners would also badly impact the effectiveness o f the thematic strategies. Finally, the current emerging global financial and economic crisis could impact negatively on the Government's ability to raise significant donor funding support, especially at the start o f PRSP-11. 151 N 0 N co 0 - 0 N h F 2 j; 8 E 0 d 2 p c 0 0 8 x -1 13 4 iT: