African Markets Managing Natural Resources a Report from the Economist Intelligence Unit
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African Markets Managing natural resources A report from The Economist Intelligence Unit Sierra Leone Commissioned by: March 2013 African Capacity Building Foundation www.eiu.com African Markets Managing natural resources Country profile: Sierra Leone Politics and institutions Sierra Leone has a largely presidential system of government. The president and members of parliament are elected every five years by universal adult suffrage. A constituency system was adopted in 2007, replacing the national list proportional representation system, which had been in place since the end of the civil war in 2002. The country’s third democratic election, in 2007, was held in relative peace and led to the first peaceful handover of power from one party to another in post-independence history. The country has a legacy of civil war and military coups, although it has held three peaceful democratic elections since the end of the 1991-2002 civil war. This war was launched by the rebel Revolutionary United Front (RUF) and undermined the already weak institutions and fragile government. In 2002, after an estimated 50,000 deaths, the war was officially declared over, following the deployment of UN peacekeeping forces. However, the causes of political instability in Sierra Leone, such as corruption and socio-economic imbalances, have not been addressed. Creating networks of patronage in return for support at the polls is a long-established tradition in Sierra Leone, and one that continues today. Political parties The political scene is dominated by two parties; the ruling All People’s Congress (APC) and the Sierra Leone People’s Party (SLPP). The APC dominates the Temne communities in the north and west, while the SLPP draws most of its support from the Mende ethnic group in the south and east of Sierra Leone. The presidential election result in 2012 reflects this clear divide. Julius Maada Bio (SLPP) won the six southern districts, dominated by Mende communities, securing on average 74.8% of the vote. Meanwhile, Ernest Koroma (APC), won the other eight districts, with more than 80% of the vote on average and was consequently elected president. International observers praised the poll as free and fair, despite noting some irregularities, notably the APC’s access to state resources, which gave it significant advantage in the run-up to the polls. After a long civil war and many years as an opposition party, the APC regained power in 2007, and won re-election in 2012. The period of corrupt rule that the APC presided over from 1968-92 is now a distant memory for most people. The party was elected in 2007 on a mandate of wide-ranging reforms, including tackling corruption, creating jobs and raising the standard of living. Mr Koroma pledged to “run the country like a business”, and told parliamentarians that they were now working for Enterprise Sierra Leone Limited. Mr Koroma and his party have overseen a rise in economic growth—largely owing to foreign investment in the mining sector—as well as improvements in infrastructure, the power supply and the delivery of basic public services. Moreover, it has successfully made inroads into the eastern swing district of Kono through patronage networks and the strategic selection of Samuel Sam-Sumana, who hails from the district, as Mr Koroma’s running mate. Meanwhile, the SLPP has been weakened by internal divisions, and in 2012 the credentials of its presidential candidate, Mr Maada Bio, © The Economist Intelligence Unit Limited 2013 1 African Markets Managing natural resources were tarnished by his involvement in two military coups in the 1990s. It will need to overhaul its party structures and widen its appeal beyond its strongholds in the southern and eastern provinces if it is to challenge the growing dominance of the APC. Institutions There are 124 seats in the unicameral parliament, while 12 paramount chiefs retain the right to sit as members. The quality of democracy is compromised by a number of factors, including weak institutions. The functioning of government is poor, reflecting weak administrative capacity, endemic corruption and widespread mismanagement. Poor levels of political participation reflect low representation of women, ethnic minorities, and indeed mainstream ethnic groups not associated with the ruling party. There are still concerns over civil liberties in Sierra Leone; freedom of speech, particularly the press, is not always respected, and the judicial system is very weak, suffering from limited capacity and political interference. The civil war and slow recovery weakened the state, and civil society organisations have played an important role in delivering public services, acting as intermediaries between government, donors and the wider population, and raising government accountability. The presidential, legislative and local elections in November 2012 were deemed free, fair and transparent by international and regional observers. Nevertheless, the SLPP’s criticism of what it saw as widespread and systematic fraud could tarnish the image of both the regime and the election process. Although the allegations of fraud levelled by the opposition could merely be an attempt to deflect attention from its poor showing in the election, political stability could be undermined should the National Electoral Commission or the judiciary be seen as biased against the opposition in their handling of any electoral disputes. Sierra Leone’s constitution came into force in October 1991, but it was suspended on a number of occasions during the civil war. Many judges, civil servants and other professionals left the country because of the war. Those remaining draw salaries, but often still lack the means to carry out their duties. The Anti-Corruption Act in February 2000 led to the formation of the Anti-Corruption Commission (ACC), but there has been concern over the failure to prosecute political offenders. During the APC’s first term in power (2007-12), it strengthened the powers of the ACC, giving it the power to prosecute. The ACC indicted 29 people on various corruption offences related to the misappropriation of donor and public funds in March 2013. Although 22 convictions on graft charges were secured in 2012, including that of the former mayor of the capital, Freetown, the anti-corruption fight has been undermined by lenient penalties. Most convicts are fined and avoid prison sentences as long as they pay. The country’s judiciary is weak and hampered by inadequate resources, corruption and political interference. Despite several allegations against senior public officials, there has been a lack of high- profile cases, leading to an impression that powerful politicians and civil servants are untouchable. Natural resources The varying level of rainfall in different regions is important for agriculture. The growing season is longest in the south-west, which makes it ideal for cash crops. The climate of the north-west is more 2 © The Economist Intelligence Unit Limited 2013 African Markets Managing natural resources suitable for growing staples, such as rice and cassava. Natural resources are also spread throughout the country. Kono, in the east of the country, is the most important centre of diamond production, while central and southern Sierra Leone contain large deposits of iron ore. Mining started in the 1930s and has been the country’s main source of foreign exchange and export revenue, as well as a significant driver of GDP growth. Sierra Leone is rich in mineral resources; diamonds, gold, bauxite, rutile (titanium ore) and iron ore are known to exist in large quantities, although geological studies have not yet mapped all the country’s terrain, and may reveal additional mineral deposits. The rise of commodity prices in recent years, particularly for minerals, has led to strong interest by international mining companies in Sierra Leone, resulting in a surge of new mining licences and exploration. Main mineral production 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Diamonds ('000 carats) 351 506 691 668 582.3 604 371 400 437 350.3 Iron ore (tonnes) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 137,883 Rutile (m tonnes) n/a n/a n/a n/a 70,361 86,505 69,163 66,666 70,131 44,619 Bauxite (m tonnes) n/a n/a n/a n/a 970,654 1,154,223 815,371 680,219 1,254,742 1,421,765 Gold (ounces) n/a n/a n/a 751 2,642 5,623.4 5,361 9,362 5,287 Ilmenite (m tonnes) n/a n/a n/a n/a 8,561 12,006 22,597.0 10,230 21,193 19,089 Coffee (m tonnes) 947 113 118 1,532 1,475 2,483 1,958.2 8,144 2,704 3,787 Cocoa (m tonnes) 1,177 2,733 6,187 6,634 13,939 13,721 17,892.1 16,937 16,070 17,999 Source: Bank of Sierra Leone. Agriculture Conditions for the cultivation of food and cash crops are favourable in most areas. Rainfall is abundant, although highly seasonal, posing problems of flooding and erosion. The soil, however, is relatively infertile, and cultivation of single crops is the norm. Agriculture, the mainstay of most of the population, was devastated by the civil war of 1991-2002. The war lasted longest in the eastern borderlands, where cash crops such as coffee, cocoa and palm products are grown, while the spread of conflict to the north also affected the production of rice, the country’s main staple. By the time the war ended, much of the rural population was left dependent on food aid. The post-conflict government has emphasised the need for self-sufficiency in food supplies, and some progress has been made towards this. Agriculture has rebounded strongly with the return of large numbers of refugees and internally displaced people to their former holdings.