Concessions Businesses in Sierra Leone

 Posted by Kevin Ho and Johnny Dorsey

ImageIn this post we seek to share a few important facts about concessions businesses in Sierra Leone, based on our meetings last week in the country. The industry is not monolithic, but we believe that the following facts are widely true. We will present each fact, and illustrate the point with stories from our meetings.

1. Concessions businesses in Sierra Leone are financially precarious

 Sierra Leone is homes to tons upon tons of valuable mineral resources, from diamonds to bauxite to gold. However, it is home to many challenges. Consequently, a. the businesses that come here must not be very averse to risk, and b. many face financial hardships.

We sat across from an agricultural-entrepreneur who acknowledged that the firms growth had not gone as planned, and they’d have to “try their best to make due” until hitting profitability. We spoke with a mining leader who admitted operating at massive losses, and angrily counted off the ways the firm has failed to capitalize on its opportunities.

This reality will prove important as we think about how to push the firms to better serve the community.

2. Businesses are influenced by the new Mines and Minerals Act

 The government is extraordinarily proud of its Mines and Minerals Act of 2009, described in Michael and Ramya’s post. Fortunately, some of our experiences affirmed this optimism.

At one mine, we heard that the EPA was sending staff the following week to measure effluents emitted from its cleaning process. We learned that the 1% funding or communities had a line reserved in the budget. One mine leader’s overall reflection was: “It will be good for Sierra Leone. It is much needed. It will be more stringent on us, but is better.”

That said, there is little evidence that the 1% community fund has been put to use by companies, so this demands further investigation.

3. Businesses suffer from weak relations with communities

All three major businesses we met with suffered from weak community relations. This caused trouble for communities, certainly, on which others will comment in additional posts. It also posed a serious business threat, by halting operations and introducing uncertainty about the future.

One mining firm had to stop operations for 4 or 5 days in order to negotiate terms after a protest. The community intended to take up the cause again. Another firm had to change its crop planting decision when a community refused to allow planting on lands over which the firm believed they had ownership.

Two of the three companies have engaged military police in ending strikes and protests, which have not put the tensions to rest.

4. There is an imbalance of power between businesses and communities

 While tensions between communities and firms suggest that community members can disrupt firms’ operations, initial contract negotiations are highly skewed toward firms. They have access to high-powered law firms, often linked to government officials, who successfully negotiate highly favorable contract. We spoke with a lawyer involved in one recent deal, and familiar with several deals, who shared: “I’m also a Sierra Leonean, and I think this is not fair for the people.“

5. Businesses appear to participate in bribery

All three businesses we interacted with appear to participate in bribery. This takes many forms – giving funds to Paramount Chiefs for support, paying police forces for support, giving cash to community leaders during times of tension, etc. One lawyer told us, “We have to engage the paramount Chief.” When we asked, “What does that mean,” he responded, “I think you are hearing me.” Others shared more blunt accounts off the record. This bribery was also evident in some of our meetings with community leaders.

While it is easy and fair to criticize business for this bribery, it is worth noting that in many ways they may prefer a more transparent system that did not reward these actions. There seems to be little cost to government and community leaders in asking for bribes.

 6. Business, and their employees, are not monolithic

 We met with one mining official who was straight out of central casting. He was a big South African from an Afrikaner stronghold who had previously mined diamonds in Zimbabwe (an even more difficult environment than Sierra Leone). On the other hand, we met with an apparentlywell-meaning twenty-something who seemed very committed to helping train her employees and support them in moving up the skill and pay ladder. We spoke with one Sierra Leonean mining official who knew his firm was doing some bad things, but also believed that if the mine could succeed and be fair to the people, the nation would be better off. In our work, we will resist the temptation to paint the concessions businesses and their staffs with a single brush, while always putting community and country needs above private interests.


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