It's Time for a Re-think on Natural Resource Management in Sierra Leone
If we are to learn anything about the extractive industries from the last few years, it should be to expect the unexpected. In 2011, it seemed that we in Sierra Leone were on the edge of a mining boom that promised transformational development. Investment poured into new iron ore projects and we registered some of the highest rates of economic growth in the world, hitting 15 percent in 2012 and 20 percent in 2013. Fast forward to 2015, and things don't look so optimistic, particularly for our iron ore mines. There is no doubt that the ongoing Ebola crisis has taken a toll on our economy, but we should not forget about another headline-making story in the world right now – the global downturn in commodity prices.
Falling natural resource prices are impacting resource-rich countries around the world, particularly those dependent on the commodities that have fared the worst–oil, copper and iron ore. Venezuela, Malaysia, Guinea, Mongolia and Zambia all have sorry stories to tell. In Sierra Leone, our woeful tale includes the bankruptcy of London Mining, the operator of our second-largest iron ore mine at Marampa; and the ongoing concerns surrounding the future of African Minerals, the operator of the country's largest iron ore mine in Tonkolili. The national prosperity that once seemed so certain just a few years ago now seem very far away.
Of course, there is not much we can do to stop a downturn, but there is a lot that we can do to protect ourselves from the damaging effects of a downturn. Well-prepared resource-rich economies, such as Norway and Chile or even Timor-Leste, show that getting the framework for revenue management right – essentially using money saved in the good times to help get a country through the bad times – can ensure that resources revenues can be harnessed for sustenance and even transformative development even when prices are not favorable. In Botswana, for example, revenues primarily generated from the diamond industry have been used to ensure high spending rates on education since the mid-1970s. The result today is that Botswana is a middle-income country with universal primary education and a secondary gross enrolment ratio of 82 percent, double the average for the rest of Africa. These educated citizens now contribute to the Botswana economy in many ways beyond mining, including production of vehicles, textiles, beef and tourism, so when mining stops there is a better chance that the economy will continue to thrive. As a result people in Botswana today are 15 times richer than us in Sierra Leone.
Ideas like these are not new to us in Sierra Leone. They have already been discussed at length in the Transformation and Development Conference, and many have been included in the Agenda for Prosperity, and upcoming pieces of legislation such as the Public Financial Management Bill. Nevertheless, we still have no clear plan for how to roll them out. The main strategy document for mining in the country – the core mineral policy – was written in 2003 and is now desperately out of date. In some ways the lull in iron ore prices actually provides us with an opportunity—it gives us time to deliberate about the long-term strategy for iron ore but also think about our other resources including rutile, bauxite, gold and diamonds, for which there haven't been the same kinds of price shocks.
This is why the government of Sierra Leone has put together a multi-stakeholder expert group with members drawn from government, the private sector and civil society, to assess the management of the mineral and petroleum sector and to help review the core mineral policy. Led by Hon. Abdul Ignosi Koroma, deputy minister of mines (representing the government) and Kadi Jumu-Peters of Save the Children (representing civil society), the team has already started with a comprehensive diagnostic exercise using the Africa Mining Vision and the Natural Resource Charter tools. Using this research, they will help a government-led team (also multi-stakeholder in nature) draft the new mining policy before the end of this year.
The government hopes that the outputs of this work can lay the foundations for a stable mining sector—one that yields benefits in the long term, even when prices drop again. One which is able to attract the kinds of new investors who are able to improve our country. This work supports Pillar II of Sierra Leone's Agenda for Prosperity by assessing the effectiveness of the legal, policy and regulatory regimes of natural resource management and provides clear recommendations that will improve the governance of natural resource exploitation. We will be encouraging the wider public to engage with this work through a series of consultation events that will be organized throughout the year.
This post originally appeared as a column in Sierra Leone's Politico newspaper on 25 March 2015.
Daniel Gbondo is a project coordinator with Sierra Leone's Ministry of Mines and Mineral Resources. NRGI has been working with him and his team to provide technical assistance on an ongoing diagnostic and planning exercise using the Natural Resource Charter framework. In 2014, Daniel spoke to NRGI for this video.