By Foday Moriba Conteh
In a pivotal Press Conference held on Wednesday 29th November, 2023 at the SLeCAD’s office on Bathurst Street in Freetown, the Executive Secretary of the Sierra Leone Chamber for Agribusiness Development (SLeCAD), Ahmed Nanoh, presented crucial findings on the demand and supply side of access to finance in Sierra Leone.
The assessment, conducted for the International Labour Organization Opportunity Salone Project, funded by the European Union and managed by the International Labour Organization, aimed to shed light on the challenges faced by agribusinesses in accessing financial services.
Addressing pressmen on the key findings, Ahmed Nanoh said only 9% of agribusiness Small and Medium Enterprises (SMEs) and companies confirmed access to finance and among those who received loans, many experienced high-interest rates (28-30%), short-term loans, no grace period and high transaction costs.
He added that only 15% of agribusiness SMEs, cooperatives, and farmers have accounts with banks while 85% access loans through Village Savings and Loan Associations (VSLA).
Ahmed Nanoh pointed out that 95% stated that high-interest rates negatively impact business growth and that 95% reported a lack of communication from Financial Services Providers (FSPs) regarding Cost of Transaction (CoTs) deductions.
He said that 92% complained about bureaucratic delays, especially for large amounts with 75% reporting difficulty obtaining Letter of Credit (LCs) with a short maturity period (30 days), stating that 95% found Advanced Payment Guarantees (APG) complicated, with 40% of funds released from a grant or payment for project activities.
The SLeCAD boss stated that as part of the findings various concerns were raised about commission fees, bureaucracy in fund transfers, high visa charges, expensive cheque books, and the impact of high Government lending for local banks and that 98% of agribusinesses, cooperatives, and farmers indicated a lack of insurance.
Ahmed Nanoh revealed that the negative consequences include: Dwindling Government tax base, Impact on GDP, Expansion of the informal sector, Retardation of investment, Poor entrepreneurship, Increased unemployment, Increased Government borrowing and debt, High inflation, Lack of trust in the banking system, Increased hoarding and too much money in circulation among others.
According to him, in order to address the issue of Access to Finance in Sierra Leone’s Agribusiness Sector, the Sierra Leone Chamber for Agribusiness Development (SLeCAD) is recommending the reduction of interest rates to support Government programs, reducing money in circulation and standardizing currency denominations, cutting down on Government spending and focusing priority projects, instituting/promoting a cashless economy to reduce corruption, reducing and harmonizing taxation to increase investment flows.
He went forward to state how they further recommend for the establishment of an entrepreneurship or investment bank with single-digit interest rates as well as for the promotion of Village Savings and Loan Associations (VSLA) for rural economies.
The Executive Secretary said there should also be improved supervision to reduce hoarding and boost private sector confidence and finally to increase engagements with the private sector in order to enhance the economy.
He ended up emphasizing that SLeCAD’s recommendations are strategically designed to address the challenges uncovered in the findings geared towards fostering an environment that is conducive for the robust growth of Sierra Leone’s vital agribusiness sector.