Focus Sierra Leone

Updated: Apr 9 2002, 05:30am hrs
This is truly amazing. On 31st March, the union commerce ministry launched the Focus Africa initiative to tap the huge potential for trade with sub-Saharan Africa, especially Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania and Ghana. If you export to this region, a lower threshold will suffice for Export House status. It has hardly been seven days and I receive the following e-mail.

From: Mr. Collins Priye, Lome-Togo, Tel: +228-903-8771

Sir, I am Mr Collins Priye of Kenema District in Eastern province of the Republic of Sierra Leone. I wish to introduce you to a business proposal involving huge sums of money which I believe you would find acceptable. My father Chief Micheal Priye (now late) was the district head of Kenema (a diamond-rich district in Sierra Leone). He was involved in the diamond trade that flourished between my country, Europe and Americans. In his position, he made money amounting to Twenty Five Million, Six hundred Thousand US Dollars ($25.6m). This money was accumulated from over twenty years of his business relationship with the Europeans and Americans including royalties paid to our district by government of Sierra Leone. In the wake of the civil war in 1996-98 coupled with the coups and counter coups of the likes of Captain Fonday Sankoh, my father withdrew all his money from Sierra Leonian banks and changed them to American dollars. He then deposited the dollar bills in a trunk box and kept it under the custody of a local security company. To avoid public and government interest, he deposited the box with an open beneficiary and informed the company that the content of the box is personal effects/artifacts for export overseas. Unfortunately, my father died late last 2000 of heart attack. But before he died, he called my attention to the box and charged that I look for a foreigner who would assist me in the transfer and investment of this estate outside the shores of Africa. This is because most African countries are politically unstable and not good for investment. Having mourned my father with full respect, I decided to forward without delay this proposal. So I would be glad if you agree to assist me in achieving this great mission. My family has agreed to give you 25 per cent of the total sum for your assistance and 5 per cent will be mapped out for expenses that will be incurred during the transaction while 70 per cent will go to my family. You are also to advise us on any profitable investment in your country. Please this business is risk-free. Please, for the moment I am on arrangement to get this money out of Africa, therefore forward every communication to my direct telephone number here in Republic of Togo. Yours faithfully.

Since I am not an exporter or a prospective investor, I have no idea why I have been singled out for this singular honour. (It is not very flattering to deduce that someone thinks I am exceedingly gullible.) Nor do I know anything about Sierra Leone. All that I know about Sierra Leone is that UNDPs Human Development Report now ranks 162 countries (it used to be 174) and Sierra Leone is ranked 162nd. Using the Net, I checked out the following. Diamond mining does exist, though most of it is through the public sector National Diamond Mining Company. There was a Revolutionary United Front leader named Corporal Foday (not Fonday) Sankoh, who was captured and imprisoned by the Economic Community of West African States Cease-Fire Monitoring Group.

Kenema is the centre of diamond mining and exports. Some facts are thus evidently true. Had I been interested in pursuing the proposal, I should have next written to the Consul General of Sierra Leone in Mumbai or the Indian mission in Freetown. Unfortunately, greed does not follow laws of reason. And there have been earlier instances of people being duped, not by e-mails from Sierra Leone, but from Nigeria. (Before you get 25 per cent of $ 25.6 million, you will have to fork out some money as advance. The principle is no different from mailers you may get about having won prizes in Australian lotteries.)

Export (meaning export of goods) diversification means two different things. First, there is the issue of adding more items to Indias export basket. This is close to impossible. Indias present export basket is so diverse that it is virtually impossible to find new products. Increasing the share of specific products, such as value added ones, is a separate issue. Second, there is the question of geographical diversification and it is indeed true that traditionally, exporters have looked too much towards West Europe, North America and Japan, the former rupee payment area having collapsed. The Economic Survey argues that geographical diversification has taken place, traditional markets having declined in importance. This is indeed true.

The share of OECD has declined from 53.5 per cent in 1990-91 to 52.7 per cent in 2000-01 and the share of developing countries (other than OPEC) has increased from 16.8 per cent to 26.7 per cent (Eastern Europe having decreased in importance). But with the exception of Kenya and Nigeria, very little of Africa contributes to this increase. Africas (excluding OPEC) share in total exports increased from 2.1 per cent in 1990-91 to 3.2 per cent in 2000-01. (The share was 8.4 per cent in 1970-71.) As the commerce ministers speech argues, exports of 1.8 billion dollars to sub-Saharan Africa are sub-optimal.

Assuming exports are sub-optimal, can the government do anything to stimulate exports to a specific region Should it do something The constraints are known. Since exports are determined by commercial considerations, except instances where there are problems with information flows, I dont think the government has any specific role to play.

Many exporters to Africa have been saddled with non-payment problems. That is their funeral, they should have checked credentials of importers and not exported without letters of credit. If this logic is accepted, the government has no business to artificially encourage exports to Nigeria, South Africa, Mauritius, Kenya, Ethiopia, Tanzania and Ghana, or even to Sierra Leone, quite apart from the fact that Export House Status means very little now in terms of additional incentives. If you dont agree with me, perhaps you should get in touch with Collins Priye. There is clearly an investment (and perhaps export) opportunity there. You may lose your money, but you may get Export House status.