Sierra Leone: Interview with Joseph Mans with Dr Brima I.B Kargbo

Joseph Mans with Dr Brima I.B Kargbo

Director General and Director, Investments, Project and Estates (National Social Security Insurance Trust)

Joseph Mans with Dr Brima I.B Kargbo

Sierra Leone has a major potential to become a strong and stable economy in West Africa. In your own word, what are the essentials and requirements for Sierra Leone to fully reach its potential to become an emerging economy?

I will say a very stable political system which is very much important for investors to come in and we have demonstrated that in our past two elections that were very peaceful and there was a very peaceful transition. A stable political system is very paramount for us to be able to become a stable economy and a vibrant one at large. Our president is very much concern about human rights and he has gone very far exemplary in the maintenance of human rights and dignity for people, I think that is also very basic for us to be able to emerge as a vibrant economy. There are other more technical issues for example, the establishment of a stock market that we have already started and it is in the advanced formative stage and it will serve as the nerve centre of capital market operations. I will also say that the other indicators in terms of health of the citizens are very much important; as a healthy workforce will lead to an increase in productivity. It is against this backdrop that NASSIT in collaboration with the Government of Sierra Leone is working assiduously for the establishment of a universal social health insurance scheme that will cover the entire nation.

One of the main objectives of the agenda for prosperity of the president is to attract and diversify foreign direct investment. Beyond mining, what other sectors do you consider as potentially good for investment in this country?

I will say not only good but necessary agriculture, it is one sector that is not fully exploited and there is great potential for agriculture in this country. My institution has now incorporated a section on our investment code that enhances joint venture partnerships with other investors that are interested in the agricultural sector and we have started having a meat processing and poultry factory. Housing again is another sector that is potentially good for investment and I think it is another area that will help develop the country and bring in stable income for investors.

NASSIT is the strongest institutional investor in the country and the only pension fund scheme that offers services for formal and informal employees. I would like to understand the pension scheme industry here? What are the remaining challenges that your sector is facing in Sierra Leone?

We administrate the provision of pension for this country. We are the sole pension administration authority in the country; we cover the public and private sector. We are governed by an Act of parliament. NASSIT started in 2002 effectively; the Act was passed in 2001. We cover three contingencies; old age (you work till you are 60 years old and then retire), invalidity (if you are working and along the way you suffer injury and cannot continue working) and survivors (if the worker or pensioner dies, the spouse and dependants gets a pension until the expiring date), this is what we provide for now. As an institution, we want to pursue other contingencies under the convention 102 of the ILO which also will cover employment injury, and also the health insurance to cover the nation.

The challenges we have in terms of the administration of social security like any other country is the compliance in terms of people meeting their obligations in paying for their employees.

How many people are covered under NASSIT?

About 200,000.The informal sector, which is not actually covered, is made up of 95% of the country’s labour force but my administration is really working assiduously towards the establishment of a scheme for the informal sector. We started this study last year and by the end of this year we will be able to come up with a scheme and tabled it and have it passed through parliament. The issue with informal sector members is that their needs are different from those in the formal sector; we can wait until we are 60 years old but they are the hawkers, bike riders, etc, they cannot wait until they are 60 years old to collect their pension, so we have to develop a special scheme for them that is attractive, short term in nature, that they can get some money or even go in for loans within the system for their businesses. At the same time a portion of it can be kept for their retirement that is the new order now that we have within the ILO and International Social Security Association (ISSA).

Pension funds might become investment cooperation using their access to leverage the country’s economic growth – What is your current portfolio?

Our current investment portfolio is diversified to the extent that in order to meet our current benefits outlays, we maintain 49% of our portfolio on what we call liquidity matching assets. These are assets that we can easily convert to cash or near money, because we are a young and growing scheme and the number of pensioners keep growing every year we maintain this 49% on the matching assets. We have assets that are on short term nature and those that are on long term nature. For short term nature, we have call deposits which we give to almost to all commercial banks in Sierra Leone at an interest rate that is below the treasury market rate and as the name implies these are monies that we can easily recall within a day or two to finance our admin expenses or benefit expenses. Also of a short term nature are fixed deposits, some of them are issued for 3 months, 6 months or 1 year.

For the long-term nature, we have the government securities and they make up of almost one third of our liquidity matching aspect of the portfolio, these are treasury bills, treasury bearer bond, and other bonds as issued by the central bank with directives from Ministry of Finance. Closely connected to government securities are the debentures issued by the Trust to its portfolio companies but classified under long term fixed assets. Another section in our portfolio is the long-term asset profile comprising 51% of the portfolio, this is where we have our real estate, which is 25% of the portfolio; example, the Seaview Estate at Goderich, the pilot affordable housing project that we are looking forward to roll out and the shopping plazas in Kenema, Makeni and Bo.

Is NASSIT alone on these investments or are you bringing in partners to work with you?

The Trust is open to both joint ventures with credible partners as it’s always good to share the risk but where we find it difficult to get partners, we normally go it alone with a vision to diluting ownership in the future. Radisson for instance, we used to have other partners in the business those that were there before we came into business. We came in and purchase shares into the business and as from last year it is 100% owned by NASSIT, so there are no more partners there at Radisson. Then Golden Tulip, Essentials Kimbima is also currently 100% owned by NASSIT. On the real estate, Regimanuel was the company that constructed the estate and in that company NASSIT owns 40% equity.  We also have 60 % equity in Sierrablock Concrete Product Limited, the only factory that produces concrete products in Sierra Leone. Also we have what we call socially targeted investments. In these socially targeted investments, we are looking at returns but returns is not the primary driven factor but the contribution to the wider society in terms of leveraging economic activities, but at any point in time we should be in a position to realise returns that will match inflation plus two hundred basis points so that we can keep the value of the money/fund. So on this front we have the biggest market that we are already constructing here at the Sewa Grounds in the Central Business District of freetown. It is far advanced in terms of physical structure we are looking forward to a completion date of November this year. It is an investment that is in the neighbourhood of about 15.96 million US dollars and we expect to have over 4,000 shops and stalls upon completion.

When you go to the Provincial headquarter towns of Makeni, Bo, Kenema, we have offices in these areas but besides the area offices that we maintain, we tried our best to also have impact of our investments to be felt in those areas. So besides the pilot affordable housing units that the Trust constructed, we went further to have shopping plazas in each of these locations. The one in Kenema has been in operation since 2010, the ones in Bo and Makeni, we are looking forward to their operationalization by April 27 this year the day of our independence. Besides these ones, we also give out debenture loans to some of these companies like the Sierra Akker Agricultural Company, which is the only ISO qualified meat processing and poultry afctory in the Mano River Union basin.  The essence for this kind of intervention is to see how we can cut down on some of the importations of critical food items to save the foreign exchange because the Leones has been weakening all these years because we import almost everything we consume in this country. Our intervention in terms of provision of private placements to commercial banks helps to strengthen the economy through the availability of loanable funds. The Trust also have a conquering interest in Commerce and Mortgage Bank, it is a bank that is 99.4 % equity ownership. The Commerce and Mortgage Bank was setup to look at the housing needs because initially it was called HFC Mortgage. As a Trust we were looking at options on the supply side of housing but the demand side was not there and we want to see people taking mortgage, purchase and own some of these houses. So it was setup in 2007 as a mortgage bank until last year that they obtained licences from the central bank for them in addition to mortgage also go to commercial banking operations.  This Bank has over the years been actually paying dividend in excess of 100,000 dollars per annum to us the majority shareholders.

Then in terms of offshore investments, we have shares at Eco Bank Trans-national PMT as the Trust is allowed to invest offshore up to 15% of the protfoloio.

What other expansions are you looking at in terms of investments?

Currently, we are looking at how best we can scale down our exposure into the hospitality industry and sell up some of our shares. We want to go into health care provision then we also want to lean towards this agro-based processing and manufacturing and housing for students and the working population. This is what we will be looking at in the next couple of years in terms of investments, but we do not want to go into these investments alone and we are looking for strategic partners that will come along be it in the form of construction financing, joint venture partnerships and so on. In investments, the climate determines it all as no one size fits all works.

Last year, you were awarded the outstanding public serving award of the year – What was the main reason for such a success?

It has to do with leadership, driving the institution from where you met it to further height. Also understanding your mission and pursuing the ideals and objectives of your organisation, and I think I was able to do that throughout my tenure and I hope to achieve more.

How do you see NASSIT in the next 10 years?

I see NASSIT getting bigger in the next 10 years in terms of its participation in the economy and with the development of the stock market especially for which the whole country is looking up to us to list our own companies. It is important to understand that NASSIT technically is not a financial institution per say or an investment institution but it is a Social Security Institution which has its own obligations to it members on social insurance principles. We are not as brutal as the people out there, we have this other element of empathy and social protection and whoever become a leader in this institution has to have that in mind otherwise they will fail in terms of the services they provide. This is the direction I believe we will be going with the establishment of the stock market. NASSIT has great potential to assist the nation in development.

Could you give us a personal message to our ebizguides readers that can be future strategic partners?

I am very impressed with the production. It is laudable in terms of promoting the countries covered. I will say it is very vital for Sierra Leone at this point in time with a view of selling the country to external investors as well as tourists. Looking at the key areas that we have mentioned, coming up with articles especially on the agricultural sector and the housing sector, potential investors can participate into such ventures. The ultimate investment has to do with what the people need and not what you think the people need. As far as NASSIT is concerned, we are here and willing to partner with any investor within the parameters of our investment codes.