PRIVATE SECTOR APPROACH TO SOLVING THE PROBLEMS IN SIERRA LEONE

Onial O' Cathasaigh

Published by THE TIMES Tuesday August 28, 2007

Like many of the foreigners in Freetown, Nial O’Cathasaigh came here to do well.

Aged 28 and with an accounting background, he spent 12 months running the finances of an Irish aid agency. It was a good year, spent helping Sierra Leoneans to emerge from the ruins of a decade civil war.

The community of aid workers, peacekeepers, unemployed mercenaries and eccentric expatriates was vibrant and the bars that dot, the sandy beachfront at Lumley were filled with beer, grilled fish and music.

He loved the war-battered tropical paradise, but O’Cathasaigh was not impressed with his first taste of the development industry. `I quickly saw the limitations of the way development is done. It creates all the wrong incentives for the beneficiaries and for donors’, he says.

Three years later and Mr. O’Cathasaigh is still in Freetown, but as a private equity investor with £3 million raised from hedge funds and private investors in Britain. With his business partner Tom Cairnes , 29, he has set up ManoCap to take money from helping Sierra Leone to develop.

`We’re not on a development crusade, this is our careers,’ Mr. O’Cathasaigh says bluntly.

He will invest about Le 250,000 in different business run by entrepreneurial Sierra Leoneans, aiming for a 30 percent return for his backers.

Sierra Leone brutal civil war ended in 2002, leaving a chartered economy and devastated population. Five years of peace have followed, during which hundreds of millions of pounds of aid money has poured into the country, including £40 million of aid from Britain.

Yet Sierra Leone has stubbornly refused to show signs of improvement; its six million people are the world’s second-poorest (only the people of Niger are worse off, according to the figures from the United Nation’s human development index).

`The private sector is the only way that Sierra Leone can work its way out of poverty,’ Mr. O’Cathasaigh argues- and he is not alone in believing this. In a speech on ending poverty delivered at the UN, Gordon Brown said: `Not only does business have the technology, the skills, the expertise for wealth and job creation....it is also in your best interest to help poor countries develop.’

The flaw is in the way in which the aid system works. Aid consultant fly into a country carrying a pile of briefing papers written by other consultants. They stay for up to 12 months, are paid and then leave. `They aren’t accountable for what they do,’ Mr. O’Cathasaigh says.

According to Jeffrey Sachs, the economist, the system is also wasteful. Professor Sachs estimates that out of every dollar given to Africa in aid, sixteen cent goes to foreign consultants rather than to the intended, poverty stricken recipients.

With his friend and Co-Founder, Mr. O’Cathasaigh has persuaded some business heavy weights to back their plans. ManoCap (named after West Africa’s Mano River Union) is chaired by Lord Stevenson, HBOS Chairman.

Unlike many of the African neighbours, Sierra Leone is only beginning to attract attention from China. It lacks the vast stores of oil and iron ore that China craves. Instead it has diamonds, gold, forests and fish- and perhaps in the future tourism. Before the war , British and German visitors flocked to Sierra Leone’s unspoilt sandy beaches , where palm trees  nod towards clear warm waters and freshly grilled lobster was delivered  with a smile and a low price tag. It provided the setting for the iconic 1980’s advert for the bounty chocolate hat.

ManoCap will not invest in mining which is dominated by Lebanese funded artisanal miners who shift stones from muddy pits in the east of the country and by South African and Israeli Companies. But O’Cathasaigh sees `huge opportunities’ in the fisheries industry, agriculture, financial services, manufacturing and Tourism. The funds first investment in a local food and beverage manufacturer should be concluded at the next six weeks.

Hindering investment is the fact that Sierra Leone , despite its small size- is half as big as England (in terms of its land size)- is as corrupt as Nigeria, according to ranking by Transparency International Index. `Corruption is a huge challenge, it makes attractive sectors uneconomically and in small ways you are asked for stuff every day,’ Mr. O.Cathasaigh admits. The legal framework is also very weak.

Despite the challenge of working in a post conflict country, Mr. O.Cathasaigh is not leaving  He and Mr. Cairnes will stay in Freetown throughout their funds seven year life and hope to raise a second fund to target larger projects and regional investments.

Yet there are downsides. `The fact that most things don’t work is frustrating’, Mr. O’Cathasaigh says. `And if you ask Tom he’ll tell you it’s hard to meet the girl of your dreams’.

Author: Tristan McConnell, Freetown, Sierra Leone