A President of the Chamber of Commerce once told me I am President of the Public Sector and he is President of the Private Sector, and that in their Annual Dinners he has the right to address me as his colleague President and relate to me on an equal footing. I promised then to seek advice from my Attorney General about the legality of that assertion, and whether we should assert my Presidency and powers by pressing some charges. But I don’t think I want to do that anymore, this address by the President of the Chamber is a balanced one. Many addresses from Presidents of Chambers had focused a lot on what government was not doing for the private sector. But this address is different, it emphasizes what government has done, and it has fewer complaints. This means that the partnership for prosperity between the public and private sector is having a positive turnaround. This has been an objective of my government, to ensure a partnership with the private sector that is good for this country, good for our economy, good for development, good for investments and delivery of services. And I hope that at the next Annual Dinner of the Chamber, my colleague President will push the transformation further by spending some time to tell us about what the Chamber has done in the year to mobilize funds and expertise, facilitate effective mergers, and create efficiencies for further growth, wealth creation and inclusion.
Distinguished Ladies and Gentlemen, I always look forward to this annual dinner because it is a sort of reunion for me. It is a reunion with colleagues with whom I attended the same schools of work experience. I gained many skills in that school of experience called the private sector, faced many challenges, scaled many heights and made many friends. I see many of these friends here this evening.
Distinguished Ladies and Gentlemen, my government’s policies and actions are creating significant opportunities for private sector growth and contribution to growing our economy. The challenge now is to sustain the translation of this growth into significant benefits for our people, and ensure that this country arrives at its goal of being a middle-income country by 2035. I call upon you today to seize the opportunities created by macro-economic stability and the growth of our GDP. GDP growth for 2013 was recorded at 13.3%, with Sierra Leone ranked as the country with the second highest growth rate in the world. The growth rate is expected to continue in 2014 with a growth of about 14%. My Government is exploring all possibilities to make this growth more inclusive. Our local content policy is geared towards this; our financial inclusion policies through our opening of community banks and facilitation of new branches of commercial banks are aimed at this objective; our free healthcare initiative, our payment of fees for public exams and increased financial transfers to colleges and local councils, our continued investments in infrastructural development, and our increase of the minimum wage are geared towards spreading the benefits of growth to everybody.
But these policies also promote private sector activities. We have ensured fiscal incentives some of which include lower or zero import duty on raw materials for domestic industries. Inflation rate has declined considerably from 16.6 % at end December 2011 to 8.3 % at end December 2013. The single digit inflation rate, among the lowest in Africa, is advantageous to businesses as it provides stability and predictability that are essential for planning.
We are ensuring prudent budgetary performance: Domestic revenue increased to Le 2.3 trillion or 13.4 percent of GDP and exceeded the target of Le 2.2 trillion or 12.7 percent of GDP for 2013. In relation to expenditure, we are rationalizing spending to minimize wastages. As a result, the budget deficit, excluding grants, is estimated at around 3.1 percent of GDP from 9.6 percent of GDP for 2012.
Our trade balance has improved significantly recording a surplus of US$ 23.9 million in 2013. Our policies and actions are resulting in increases in our exports by 69.3 percent to US$ 1.80 billion in 2013 compared to US$ 1.10 billion in 2012. Mining, however, continues to dominate the export sector and we need to diversify exports to better withstand external shocks. I call upon you as our partners for prosperity to be integral to this diversification.
The exchange rate has been relatively stable since 2009, especially at this time when currencies of neighboring countries are depreciating sharply. The Bank of Sierra Leone has recently adopted policies to ensure that the Leone remains the legal tender and strengthen its usage for payment for goods and services. A stable currency is very critical for businesses to flourish.
In addition to the stable exchange rate, there are adequate foreign exchange reserves to meet domestic demand for foreign exchange, which has contributed greatly to the stable exchange rate. Our reserves can conveniently cover three months of imports.
My government is reducing borrowing from the public. Interest rates on government securities fell considerably, with 91 day treasury bills falling from 23.4 % at end December 2011 to 3.4% at end December 2013. Similarly reductions were observed in all the tenures. The commercial banks’ lending rates are beginning to reflect the decline in the government securities rates. The Bank of Sierra Leone is engaging the commercial banks to further bring down their lending rates to boost lending to the private sector.
No government in the history of this country has implemented more reforms of our financial sector than this government. Our reforms are ensuring a financial system capable of mobilizing funds and providing investment opportunities. We have acted to develop a more robust legal environment, which will give confidence to investors and businesses in general. Thus we have enacted The Companies Act 2009, The Bankruptcy Act 2009, The Payments System Act 2009, The Credit Reference Act 2011, The Bank of Sierra Leone Act 2011, The Banking Act 2011, The Anti-Money Laundering and Combating of Financing of Terrorism Act 2012. We have set up the Credit Reference Bureau, modernized the payments system, and we are building a state of the art Disaster Recovery Site to ensure business continuity for the central bank and all commercial banks in the event of a disaster.
But we know more needs to be done in the financial sector. That is why we are introducing a number of legislation this year, including the Borrowers and Lenders Act to facilitate the use of moveable assets as collaterals/securities for loans; the Securities Act to establish the platform for more trading on the Stock Exchange and allow firms/businesses to raise additional long term capital for expansion and production; and the Collective Investment Scheme Act to facilitate joint investments with other parties in order to undertake large projects.
Furthermore, in order to boost the ability of banks to finance large projects the Bank of Sierra Leone will be increasing the capital requirement of commercial banks. Following a survey of regional and international practices, it was observed that the minimum paid up capital requirement in the sub region ranges between US$10m and US$160m, with Sierra Leone’s minimum paid up capital being the lowest at US$5.5m. At this current level, banks are severely disadvantaged as to the level of intermediation they can provide and are severely constrained to support the private sector led growth or to withstand any serious shock, unless their capital is substantially increased. The Bank is now considering increasing capital requirements to match regional standards to ensure that any bank operating in the jurisdiction is able to realistically support private sector led growth while preserving financial stability in the country.
Growth and development bring their own challenges that must be addressed. Increased economic activities in the country have led to increases in number of containers at the ports, and we are seized of the challenges this is presenting. That is why we are developing an inland port. Already two sites have been identified. For the short term, within the next six months, a 50 acre site has been acquired at Grafton for the construction of 75 bonded and other warehouses and attendant lots for trucks and stacking. For the medium term, a thousand acre of land is being acquired at Songo for construction of a thousand warehouses and attendant facilities.
In relation to the New Airport at Mamamah, the advanced construction and management team from China has just arrived this week. A meteorological station to determine exact location of the runway installed; and ground survey is commencing for the first phase of the construction that shall include the construction of the runway, terminals and administrative building to make the airport operational. Thereafter the second phase will commence.
I noticed my colleague President mentioned electricity. No government has done more to improve the electricity sector in this country than my government, and the evidence of our commitment and improvement could be noticed in Freetown and other towns. But there are remaining challenges. And we are meeting them head-on. The unbundling of the Sector is at advanced stage. We have formed three entities in this regard, two of which willrespectively deal with supply, transmission and distribution, andthe third is a regulatory body, the Electricity and Water Commission. I will soon constitute the boards of these entities and we are inviting private sector membership. The unbundling would create efficiencies and greater opportunities for private sector participation and contracting, training, and job creation. We are also at an advanced stage in relation to power generation. A number of mini hydro projects stations are being built, and plans are at an advanced stage in relation to Bumbuna Two. We aim at an energy mix of solar, hydro and thermal generation and we are emphasizing local content in our negotiations to ensure significant Sierra Leonean participation in management and technical areas.
In conclusion, ladies and gentlemen, I again call upon you to access the opportunities we are creating. Government alone cannot ensure prosperity; it is only businesses and persons who seize opportunities that create wealth for a nation. I know there are still challenges in the private sector, but I want to urge the Chamber of Commerce to think out of the box and come up with innovative ways of igniting activities for sustaining our growth and translating this growth into benefits for our people. We will not rest until the Sierra Leonean private sector becomes the real drivers of growth in the country. I am confident that we will make it. But the private sector needsto be more innovative, more assertive, more trusting of each other to ensure mergers and create efficiencies, more hardworking to deliver on their contracts; more supportive of training opportunities and job creation for our people. Our growth cannot be sustained without the Sierra Leonean private sector being major players. International players may come and go, but Sierra Leoneans will always be here with their skills and competencies to sustain our growth. The future does not belong to those who grumble, it belongs to those who meet challenges. The era of ‘fold hand fold foot en grumble na corner’ is over; the era of transformation is dawn upon us. We are at a time in our country’s history when what will happen for the next several decades is being set; be active and positive parts of that set point in our history. That is the objective of my presidency, to create a partnership for prosperity with the private sector, and I believe it is within your rights, your aspiration and your capacity to be active members of this partnership for prosperity.
I thank you for attention