NEWTON, Sierra Leone (Reuters) - West Africa’s first tax-exempt economic zone has opened in Sierra Leone, aiming to produce the impoverished country’s first significant value-added exports since the end of its civil war nine years ago.
The First Step Economic Opportunity Zone provides its tenants with duty- and tax-exempt status for any goods or capital equipment they import, along with a three-year tax holiday.
Fruit juice concentrate producer Africa Felix, the first tenant at the 54-acre site at Newton, an hour’s drive from the capital Freetown, will begin output next week.
“We as a government strongly believe that the private sector is the engine of growth,” Sierra Leone President Ernest Bai Koroma told the opening ceremony on Thursday.
“Soon people all over Europe and the U.S. will be able to taste Sierra Leone’s superior fruit,” he added, standing close by a newly constructed hangar-size factory building in a large expanse of newly cleared bush.
After Koroma came to power in 2007 he promised to run his country “like a business”.
Nine years after the end of hostilities in Sierra Leone, the country is widely considered a successful example of international intervention to secure peace. In February the last U.N. peacekeepers finally left.
However, Sierra Leone remains one of the world’s poorest nations, despite increasing interest from international investors focusing on its lavish natural resources, which include diamonds, iron ore, rutile and bauxite.
Eight hundred thousand of Sierra Leone’s 6.2 million people are without proper employment. The gross national income per capita stands at $340 a year — less than a dollar a day — and the national budget is a mere $500 million.
Special economic zones offering preferential terms in return for investment are common in parts of Asia but rare in Africa.
“Africa’s always seen as a place where you dig stuff up, cut things down or take it out of the water and ship it somewhere else,” said Richard Schroeder, president and CEO of First Step.
Michael Owen, the U.S. ambassador to Sierra Leone, added: “This special economic zone is in fact an incubator, a breeding ground for new ideas, a safe haven for foreign capital.”
Although a commercial enterprise, First Step is 75-percent owned by the American Christian NGO World Hope.
Africa Felix — which will initially produce pineapple and mango concentrate — is run by Italian Claudio Scotto.
With a background in the food industry and a Sierra Leonean wife, he was looking for business opportunities in the country.
“Importing shoes in this country is an easy business. It’s finding things to export that is the challenge,” he said.
Mangoes are abundant in Sierra Leone, but until now there has been little or no market infrastructure for farmers to sell the fruit.
Roads in rural areas are so poor that much of the crop ends up rotting on the branch, while the mango juice on sale in Freetown is imported from Lebanon.
There are few large growers, and so Africa Felix established ties with smallholders in the hinterland, who it hopes will be able to provide it with the fruit it needs.
“This is the way we want things to go in the future,” said Minister of Trade and Industry Richard Konteh. “We don’t believe that we should rely forever on aid.”