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Local Content Policy is New Direction for SMEs

HomeAYV NewsLocal Content Policy is New Direction for SMEs

Local Content Policy is New Direction for SMEs

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For example, the policy indicates that:

  • In all enterprises operating in any sector of the economy; at least 20 % of the managerial and 50% of intermediate positions shall be held by Sierra Leonean citizens. The respective ratio will be increased over the time and after 5 years of establishment will stand at 60% for managerial positions and 80% for intermediate positions. (Section 6.3.4.4)
  • A foreign company that partners with Sierra Leonean firms will be granted preferential treatment when competing against companies with no percentage of equity share ownership by Sierra Leonean firms or citizens. (Section 6.3.5)
  • That 20% of the equity shares of every registered foreign entity in Sierra Leone should belong to Sierra Leoneans.

The Sierra Leone Local Content Act was passed to provide development of all sectors of the economy through the incorporation of local content in their productive activities. The Act establishes several aspects of the local content inclusion process such as the Sierra Leone Local Content (SLC) Agency. It also creates a fund to support suppliers, exporters and importers; details provisions for employment and training of citizens; generates a SLC certification, scorecard, and a performance report; and establishes several rules for tendering processes.

The Act also requires bidders and subsequently, operators to submit a Sierra Leonean Content Plan each year to demonstrate compliance with local content requirements. The Plan must indicate “how an operator or contractor will give first consideration to Sierra Leonean companies, materials, goods and products made in Sierra Leone, including specific examples showing how first consideration is considered and assessed in evaluation of bids for materials, goods and products required by the project, operations or activity.”

It goes without saying that one of the main objectives of former government’s Agenda for Prosperity (A4P) was to attract and diversify FDI to the country and boost private sector investment, now estimated at only 10% of GDP.

This is where it is important to note that the Sierra Leone Brewery Limited (SLBL) is a good example of successful attraction of foreign investment as part of the Heineken Company.

It is the belief of the SLBL management that the agricultural sector in Sierra Leone will boost the manufacturing sector of Sierra Leone, especially if the manufacturing sector is enabled to invest and utilize local raw materials to a significant level in their processes in order to produce high quality products, satisfying consumer demand and reducing dependence on imported products.

This, according to social commentators will ultimately yield a multiplier effect across the value chain thereby providing opportunities for local entrepreneurs and contributing to private sector growth.

With the Finance Act of 2016, it is clear that government is committed to its industrialization program and to boost Sierra Leone as an investment destination. The enactment of the Finance Act is a landmark move and a positive regulatory icon to develop a stronger private sector. The provisions of this Act encourage the development of the local industrial sector especially the beverage industry.

Furthermore, developing local leaders through internationalization, investing in the latest technology to produce high quality brands, innovation and community development have so far been some of the major benefits of the implementation of the Local Content Policy.

It could be recalled that in order to enhance sorghum cultivation following the enactment of the Local Content Policy Act, the SLBL introduced the Community Revenue Enhancement through Agricultural Technology Extension (CREATE) Project to support the local growth of sorghum to be used as an active ingredient in the production of its local brands. It is the global aim of Heineken of which SLBL is a subsidiary to use 60% locally produced raw materials in the company’s production processes.

Currently, sorghum is a viable commercial crop grown all over the country and creating a reliable source of income to over 12,000 farming families. Certainly, the multiplier effect of this on the local economy is huge.

In line with the above, it is debatable whether enforcement of the Local Content Policy Act is viable or not. But responses from owners and managers of SMEs across Sierra Leone are urging the current Maada Bio-led SLPP administration to enforce the Local Content Policy Act as it is the new direction which can bring about positive change for all categories of Sierra Leoneans with particular emphasis on SMEs as these make up the bulk of enterprises employing Sierra Leoneans.

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