October 14, 2010 / 4:14 PM / in 7 years

Sierra Leone tax breaks to boost export values

3 Min Read

FREETOWN (Reuters) - Sierra Leone hopes new low-tax industrial zones will boost local processing of its resources, raising the value of exports and creating jobs, the West African country's Minister of Trade and Industry said on Thursday.

Work has already begun on a 54-acre "Special Economic Zone" at Newton outside the capital Freetown, with the $5 million first phase scheduled for completion at the end of March 2011, according to the company running the site.

"The intention of the zone is to utilise our natural resources, to add value and to create employment," Minister David Carew said in an interview.

"It will brand the country. You will be able to go a supermarket in Europe and see fruit juice made in Sierra Leone," he said.

Sierra Leone's exports in 2008 were worth about $320 billion, according to the World Bank.

The country is rich in minerals including rutile, iron ore and diamonds, but eight years after the end of a devastating decade-long civil war it remains close to the bottom of the U.N.'s worldwide development index.

The Newton site will focus on processing agricultural products, but Carew hopes that eventually other local goods -- including diamonds -- will be processed inside the country. At least three other zones are planned by the government at locations to be confirmed.

"Everything we process here. There is no reason we should take it out (of the country) before we add value," he said.

The government will exempt from duty and taxes any goods or capital equipment imported or exported by businesses in the special economic zone, and offer a three-year tax holiday.

Companies that cut rough diamonds for export will still be subject to duty and tax provision.

Funding for the project comes from World Hope International, an American NGO, and other unspecified American investors. World Hope International established a for-profit venture, First Step Economic Opportunity Zone, to build and run the site.

"It is to attract labour-intensive businesses that could add value to local produce, improve the balance of trade, and create jobs for Sierra Leoneans," said Patrick Beckley, the Special Economic Zone Director.

The site will offer back-up electricity generators, a business requirement in a country where power supply remains temperamental despite a new hydroelectric plant at Bumbuna that came on line last year.

Africa Felix, a firm hoping to export pineapple and mango juice from Sierra Leone, is the first to sign up for the zone.

"The market in Europe is big enough to accept a new supplier," said company CEO Claudio Scotto in an email message. He said that, following an investment of around $3 million, production is intended to start in April 2011.

The CEO is undeterred too by Sierra Leone's war-torn history. "It's much less risky than widely internationally perceived," he said. "Human capital is very good."

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