Doing business in Sierra Leone is difficult but overcoming the challenges is not impossible, says Nikolai Germann, managing director of Addax Bioenergy in Ernst & Young’s 2011 Africa attractiveness survey.
Addax is busy establishing a large-scale sugar cane-to-ethanol factory in Sierra Leone to service the European market.
Germann says the company is experiencing difficulties around labour and transport. “Labour costs are low, but productivity is unfortunately still quite low too. We still need expatriates and we are trying to take advantage of the returning diaspora. But, as a result, this increases labour costs. Logistics costs are also high, and there are few workshops so getting equipment fixed is difficult. But these things will change over time. There will be better education, particularly once there is an outlet for higher skills.”
Addax will grow 10,000 hectares of sugar cane that will be converted into 350,000 litres of ethanol per day. The company is taking advantage of new directives by the European Union to boost the amount of ethanol in petrol.
According to Germann, one of the major reasons for establishing the project in Sierra Leone was because of the country’s large areas of uncultivated arable land. “Only 20% of arable land is actually used,” he notes.
Germann explains that Sierra Leone has undergone a significant transformation since the end of the civil war in 2002. “The situation is very different now and the popular perceptions are too often based on the movie Blood Diamond. But the political situation is much better now and current president Ernest Bai Koroma came from the party that was previously in opposition. He is a former insurance manager and strongly supportive of investment.”
He says the company has not experienced any corruption in Sierra Leone but concedes that their situation might be different because it is such a high-profile project.
Overall Germann is upbeat about the future of Sierra Leone’s business environment. “There really has been a paradigm shift that I think is irreversible. It is uneven, but it is not a one-off boom. Democracy is the key, it’s what people want, that is obvious. And with democracy comes better business practices.”