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Sierra Leone Business: Challenges faced by SMEs is beyond finance – Minister Saffa

There has been this emphasis to increase the tax base and that has been evident in the 2019 Budget as part of the new measures in the Finance Act 2019. In Sierra Leone small companies or businesses struggle to create infrastructure for them to operate.  Finance Minister Jacob Jusu Saffa was questioned on his strategy on how will the Budget encourage these Small and Medium Enterprises (SMEs) to grow and create the needed jobs, if they continue to stifle them with more taxes, like the upward review of fees, licenses, rates, charges and levies imposed and collected by MDAs. The issue of the small and medium enterprises (SMEs) the Minister said is quite complex but from several studies on small businesses in the urban towns the problem they are faced with is beyond finance. As a Government, he said that the Budget will seek to promote entrepreneurship through youth empowerment programs/schemes, which they have established by providing support to small businesses directly through training; and a lot of concession will be given to them along the line as they continue to operate. The Minister stressed that the issue the SMEs are facing particularly in the Western Area is renting of premises, “someone starts a shop somewhere, and one year down the line it closes because it is so expensive, and that seems to be outside government’s purview.”  He went on to say that if an SME is given US$10,000 that person may not have somewhere to sell, “go along town and see if you have decent salons to do haircut, because they just cannot afford to pay the huge rent, you have better facilities in the provinces than in Freetown for businesses” the Minister said.  Minister Saffa promised that they will empower the SMEs to grow and within the next year they will start importing for themselves which he said is part of the youth empowerment program. “The Ministry of Youth will also receive from the domestic capital budget, the sum of Le15 billion for the implementation of various youth development and empowerment programs. Notable among these is a National Youth Entrepreneurship Program that will provide trade credit to our youth to import goods” according to the 2019 Budget. Recently the Small and Medium Enterprises Development Agency (SMEDA) conducted interviews with over 3,000 SMEs in different industry type with commerce accounting for 55% of those who buy and sell second to agriculture. According to Finance Officer James Karrow Kamara he said that a look at the different types like construction, fisheries, logistics, services, transport and manufacturing which is very low, shows that there is no value addition to what we produce.  “So we need to improve on value addition, this data will inform us as to which sector to pay attention to, even though the commerce sector involves a lot of people, but what value will they will bring to the country” he asked. He recalled that during the Ebola outbreak a lot of people were not able to go to China to buy goods, “but if we have our manufacturing companies here and they manufacture goods from our own produce that will help the county.” SMEDA also asked about industry by geographical spread as they discovered that 50 percent is in the Western Area as everyone is coming to Freetown to do business. Funding from donors he added is decreasing and as such government need to generate funds for it, “but how will the government generate funds for itself when there are no businesses and those that are there are in the informal sector.” These SMEs he said will not be able to tap into government resources because if they are in the informal sector they will not be able to participate in government expenditure processes because they are not registered. “This means that they may not be able to participate, that is why we are saying foreigners are taking over the businesses because most of the businesses run by Sierra Leoneans are not registered. You see a very big shop but when you ask them for their registration paper, NRA        certificate or FCC they don’t have it, so this is the reason why we need to develop SMEs.”

Monday November 26, 2018.

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