Strategies for Increasing Productive Employment in Developing Countries with Special Reference to Sierra Leone

By Dr. Ibrahim B.S. Sesay

This book as pointed out by Professor Singer in his preface discussed divergent development problems facing developing countries. Participants of the seminar from various African countries brought in case studies from their own countries as comparison with the Kenya case study, where the seminar was held.
As a result of this comparative study, field trips were organized by the seminar authorities.
In view of these facts and experiences gained from this seminar, I was sufficiently stimulated for my task to write this book based on similar lines, but with special reference to Sierra Leone. My past experiences as a Labor Officer in the Ministry of Labor in Sierra Leone have, in no small way, also contributed to the success of the completion of this book for industrial relations readers to have interest in it.

On joining the Personnel and Administration Department of the Standard Bank, I was moved to incorporate in my book a chapter on the role of banking particularly the role of Standard Bank formerly known as the British Bank of West Africa in Sierra Leone. Readers will also find it in one of the chapters current economic development taking place in Africa, particularly regional groupings, for example, the Mano River Union between Sierra Leone, Guinea, and Liberia and The Economic Community of West African States (ECOWAS) and the now defunct East African Economic Community.

For this reason, this book will be of tremendous use to planners and economists, bankers, industrialists, teachers, and various people from all works of life concerned with the development of their countries, but it is more particularly useful to Sierra Leoneans because of the many references related to Sierra Leone.

• Language: English
• Publisher: Xlibris US
• Release date: Dec 8, 2014
• ISBN: 9781503510258

Dr. Ibrahim B.S. Sesay

Ibrahim B. S. Sesay was born in Kambia District, the northern province of Sierra Leone. His father, Alhaji Suliman Sesay, migrated in the late 1890s from Kaolack, Senegal, and settled in Kambia District, together with his father, Sheik Mohamed Lamin Sesay, and his uncle, Sheik Ibrahin N’jai, respectively. I. B. S. Sesay attended Government Boy’s Secondary School, Magburaka, from 1958–1965. He became senior prefect (equivalent to president of the student body) from 1963–1965. He passed the General Certificate of Education (GCE) at both the ordinary and advanced levels in 1963 and 1965, respectively. In 1969, he obtained BA Economics degree from Fourah Bay College, which was affiliated with the University of Durham, England. In 1969, he was appointed Labor Officer, Ministry of Labor, Sierra Leone. In 1976, he was appointed Assistant Staff Manager and Accounted in Standard Chartered Bank, Sierra Leone. He attended a study seminar in 1973, sponsored by the University of Nairobi and Sussex, England, on International Labor Organization (ILO) at Kenya Employment Mission in Nairobi University. Subsequently, he took a study seminar on employment problems in Sussex, England, in 1978.

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Strategies for IncreasingProductive Employment in Developing Countries with Special Reference to Sierra Leone

Ibrahim B. S. Sesay

Copyright © 2014 by Ibrahim B. S. Sesay.

ISBN:      Softcover      978-1-5035-1026-5

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TABLE OF CONTENTS

Dedication

Preface

Foreword

Apology

Acknowledgements

Introduction

Chapter One

The Concept And Causes Of Unemployment In Sierra Leone

Causes Of Unemployment In Sierra Leone

The Impact And Consequences Of Unemployment On Economic Development

Present Employment And Unemployment Situation In Sierra Leone

Sectoral Distribution Of The Working Population

Chapter Two

Employment In The Inrormal Sector Of The Economy The Concept And Characteristics Of The Informal Sector

Different Types Of Informal Sectors

The Urban Informal Sector

Repair Services

Carpentry

The Black Smithing Industry

Gara Dyeing And Weaving Industry

Baking Industry

Transport

The Rural Agricultural Informal Sector

The Extent Of Employment In The Informal Sector

The Role Of Trade Unions And Employers’ Associations In The Informal Sector

Relevance Of The Informal Sector To The Economy

Chapter Three

Education And Training

The Problem Of School Leavers

Opportunities Industrialization Centre

Rural – Urban Migration

The Introduction Of Specialised Educational System To Generate Meaningful Employment

The Impact Of Colonialism In Our Educational System

Chapter Four

Wages And Incomes Policy As An Element In Employment Strategy

Objectives Of Income Policy

Structure And Trends In Income Distribution

Wages And Income Policies

Assets Redistribution

Salaries

Wage Policy

Chapter Five

Appropriate Technology And Appropriate Products In An Employment Strategy

Relevance Of Technology To African Countries

Appropriate Technology As Applicable To The Primary, Secondary And Tertiary Sectors Of The Economy

The Role Of The Rice Research Station–Rokupr – Sierra Leone: Historical Background

West African Rice Development Association (Warda) Background

Cash Crop Production And Livestock In The Poor Farms And Districts

Appropriate Technology In Agriculture

The Integrated Agricultural Development Projects – Eastern Area And Northern Area

Aims And Objectives

Progress Of The Integrated Agricultural Development Project Northern Area

The Integrated Agricultural Development Project, Eastern Province

The System Of Loan Recovery

Problems Related To Small Farmer Agricultural Credit

Sierra Leone Produce Marketing Board

The Eastern Region Farmer’s Finance Company

Appropriate Technology In Mining

Settlement Schemes

Import Substitution And Its Main Defects

A New Industrial Strategy

Rural And Small – Scale Industry

Coordination Between The Rural Industrial Development Programme, Urban Industirial Estates Programme And Industrial Loans Scheme

Construction And Housing

Recommended Policies

Action Programme

Appropriate Technology In The Tertiary Sector Of The Economy

General Lines Of Government Policy

Commerce And Miscellaneous Services

Transport

The Hire – Purchase System

Tourism

Government Employment

Health Services

The Nurses Training School In Freetown

Repair And Maintenance

Recommendations

Conclusion

Chapter Six

The Role Of Banking In A Developing Economy

The Development Of Banking In West Africa

First Bank In Lagos

Bank Of British West Africa

The Emergency Of Bbwa As A Central Bank And The West Africa Currency Board

The Intervention Of Barclays Bank

The Present Functions Of The Commercial Banks

The Transformation Of The Bbwa Into Commercial Banking

The Effect Of The Great Diamond Rush In Sierra Leone

The Rise Of African Banks

The Emergences Of Central Banking In West Africa

The Economic Effect Of Banking

The Merger Of Bank Of West Africa Standard With Standard Bank

The Role And Functions Of The Central Bank

The Central Bank As Lender Of Last Resort

Liquidity Ratio

Exchange Control

Exchange Control Transactions

Capital Transactions

Current Transactions

Current International Transactions And Capital Movements

Exchange Control Measures

The West African Clearing House

Payment Problems And Intra-West African Trade

Operating Mechanism

Unit Of Account

Rate Of Exchange

Commercial Banking Arrangements

Credit Guarantee Scheme For Small Borrowers

Extent Of Guarantee

Advances Guaranteed Under The Scheme Not To Be Diverted For Any Other Purpose

Procedure For Invoking Of Guarantee

Rights Of The Guarantee Organization

Conditions Imposed Under This Scheme To Be Binding On Credit Institution

The National Cooperative Movement And The National Cooperative Development Bank

Principles And Objectives

Types And Functions Of The Cooperative Societies

The Main Types Of Cooperative Societies Are As Follows:

Thrift And Credit Cooperatives

Marketing Cooperative Societies

The Sierra Leone Arts And Craft Marketing Cooperatives

Multi-Purpose Cooperative Societies

Structure Of Cooperative Societies

Secondary And Primary Cooperative Societies

The National Cooperative Development Bank Ncdb

Finance

The International Cooperative Alliance- (ICA)

Chapter Seven

The Role Of Regional Groupings In The Economic Development Of Africa

The East African Community

Breakup

Ideological Differences

Unequal Development

Trade Imbalances

The Mano River Union

The Move To Admit Guinea Into The Mano River Union

The Political Implications

Economic Community Of West African States (Ecowas)

The Reason For Ecowas

Membership

Aims And Objectives Of The Union

Community Institutions

Member States And Their Sub-Regional Associations

Customs Union

Industrial Cooperation

The African – Caribbean – Pacific (ACP) And The European Economic Community (EEC)

The Yaunde Convention

Yaunde Ii Convention 1969 – 1974

From Yaunde To Lome

Financial And Technical Cooperation

Trade Union Participation

Establishments, Services, Payments And Movements Of Capital

The Institutions

Duration Of The Convention

The Food And Agricultural Organization (FAO)

Freetown Declaration

Chapter Eight

The Role Of The Ministry Of Labour And Its Future

The Role Of Employment Exchanges In Sierra Leone

What Is An Employment Exchange?

Labour Turnover Or Quit Rates

The Central Registration Bureau

Port Labour Pools

Trade Unions

Industrial Relations

The Future Of The Ministry Of Labour And Its Reforms:

Recommended Reforms: Reforms On Labour Legislation, And Compulsory Use Of Employment Exchanges By The Public Sector

(III) Reforms On Termination Of Employment

(IV) Reforms On Redundancy Measures

(V) Reforms On Collective Bargaining

A Collective Agreement Regulating Other Terms

Reforms On Employment Exchanges

Manpower Planning

1. Service To Public Administration

2. Service To Work Seekers

3. Continuing Programme Of Surveys

Administrative Reforms

Conclusion

References

Dedication

To the memory of my dear father Alhaji Suliman Sesay, and my dear mother N’Thuma Yillah, whose blessings made me what I am today, may their souls rest in perfect peace.

Preface

I have followed Mr. Sesay’s work and the gradual completion of this book with great interest ever since we were associated in a study seminar on the implications of the ILO Employment Mission to Kenya (1972), of which I was in charge. The results of the Kenya Mission were published by the ILO under the title, Employment Incomes and Equality – a Strategy for increasing productive Employment in Kenya. This report developed such concepts as the strategy of redistribution with growth (subsequently the subject of a joint publication under this title by the World Bank and the Institute of Development Studies at Sussex University), the Informal Sector, the Working Poor, etc.

Mr. Sesay’s book, while in some sense influenced by the Kenya Mission and applying its findings to Sierra Leone, in another sense makes independent and novel explorations, particularly in the concrete and detailed applications of appropriate technology in the specific context of Sierra Leone, and above all on the role of banking in a developing economy, with special reference to employment creation (a subject somewhat neglected in the Kenya Mission and other employment Mission organized by the ILO).

I think Mr. Sesay’s book strikes new ground and I recommend it to all students of development economics. The problem of creating productive employment is at the core of what is now called a basic needs strategy – a fact that in some of the recent literature on basic needs strategy has tended to be somewhat overlooked. Mr. Sesay, on the other hand, was not tempted to share in such current neglect of employment creation, since he wrote most of the book while working in the Ministry of Labour of Sierra Leone, also indicated by his last chapter on the role of the Ministry of Labour in the future development of Sierra Leone. This may also make the book of special interest to those connected with Ministries of Labour in other developing countries.

Sierra Leone is a small country, books dealing with the problems of small countries are always at a handicap with the International publications community, since almost by definition, and their direct market is more limited than those dealing with general problems or the problems of large countries. Hence, in this area, there is a gap in the literature and in our knowledge, and I believe that Mr. Sesay’s books will be welcome in helping to fill this gap. Perhaps those concerned with the international discussion of the problems of small countries, especially problems in the African context, may take note of this fact. My hope is that Mr. Sesay’s book will be widely read among those concerned. It contains the kind of information we badly need for rational progress in the North – South debate. I also believe it could be of direct value to those directly responsible for Sierra Leone development.

Foreword

This book as pointed out by Professor Singer in his preface discussed divergent development problems facing developing countries. Participants of the seminar from various African countries brought in case studies from their own countries as comparision with the Kenya case study where the seminar was held.

As a result of this comparative study, field trips were organized by the seminar authorities.

In view of these facts and experiences gained from this seminar, I was sufficiently stimulated for my task to write this book based on similar lines but with special reference to Sierra Leone. My past experiences as a Labour Officer in the Ministry of Labour, Sierra Leone have in no small way also contributed to the success of the completion of this book for industrial relations readers to have interest in it.

On joining the Personnel and Administration Department of the Standard Bank, I was moved to incorporate in my book a chapter on the role of banking particularly the role of Standard Bank formerly known as the British Bank of West Africa in Sierra Leone. Readers will also find it in one of the chapter’s current economic development taking place in Africa particularly regional groupings, for example, the Mano River Union between Sierra Leone, Guinea, and Liberia. The Economic Community of West African States (ECOWAS), and the now defunct East African Economic Community.

For this reason, this book will be of tremendous use to both planners and economists, bankers, industrialists, teachers and various people from all works of life concerned with the development of their countries, but it is more particularly useful to Sierra Leoneans, because of the many references related to Sierra Leone.

The role of the Ministry of Labour has been emphasized in the book as an arm of Government which should be involved in the development plan of the country by giving expert advice on the need to train and develop the human element which is a vital factor of production. The Ministry of Labour should not only be concerned with the maintenance of industrial peace, but should also be involved in the creation of employment and the economic plan of the country. For this reason, you will find in this book concrete suggestion for an immediate reform of this ministry so as to be fully involved in the economic development of the country. The subject matter of this book is therefore divided as follows:

Apology

Readers will observe that the statistics in this book are old and not up-to-date. The reason is that I could not obtain the most recent unemployment and employment statistics from either the Ministry of Labor or the Bank of Sierra Leone statistics office. It should be noted that Sierra Leone had a 10-year Civil War which dislocated the office mentioned in this book as sources for my statistics.

However, effort is being made by the author to follow the source of these statistics so that our update of these items could be put in place in the future. For this reason, I wish to send my apology to all readers for this omission. However, the ideas and facts remain the same and readers can deduce from the facts and ideas to make their own conclusion whilst reading this book. Thank you for your understanding.

Acknowledgements

As could be seen from the preface of this book a lot of the facts and figures which have been included here are the result of intense research. Of course, this could not have been possible without the guidance from Professor Hans w. Singer of the Institute of Development studies at the University of Sussex- Brighton in England. I may not be able to recollect all those that supported me in some way or the other in this exercise but I would like to express my deep gratitude particularly to the following people some of whom are professionals in their own fields: Messrs J.D. Sawyer of the Co-operative Development in Kenema, Moray Lamin-of Integrated Agriculture Development project, Kenema, J.B. Alpha- Daru Oil Palm Company. Kenema, J.B. Alpha- Lungay – Farmer’s Finance company, Dr. Albert Macfoy of the Ministry of Health, A.M. Sumah Bank of Sierra Leone, F. B. L. Mansaray – Mano River Union, and a number of typists who made the work complete – Christiana Johnson – Ministry of Labour, and Mabinty Bangura.

Introduction

Unemployment has now become a subject of discussion on global basis as obstacles to economic development, but those problems have been explicitly recognized as the major pre-occupation of economists, planners, governments and individuals alike. Popular opinion therefore seems to support the belief that employment and unemployment problems are highly sensitive if not potentially explosive with political, economic, social, and human implications which must be tackled in all their elements. Some or most developed countries have tried in the past to reduce open unemployment to about 6% of their labour force, whilst developing countries, problems such as labour utilization, low earning, mass unemployment and convergence of other factors some of which accompany demographic changes, are assuming serious dimensions as open unemployment increases up to 40% of their labour force. These, I consider, are issues crucial for future policy strategies and development.

In analyzing the problem of employment and unemployment therefore, it would appear that there is more than one approach. In the first place, it is possible to look at the problem from the point of view of the likely effects of reducing unemployment or generating more employment on economic development in Sierra Leone by the appropriate exploitation of our resources thereby redistributing income from growth. Secondly, this problem could be examined from the stand point of a careful appraisal of how both current low levels of employment and high levels of unemployment in Sierra Leone have contributed to the slowing down of the process of economic development. Another way to look at the problem could be to show to what extent policy measures have been adequate or inadequate in effecting changes in the employment and unemployment situation in Sierra Leone, and the effects of this on economic performance of the Country.

The approach to this book is therefore to examine the nature and extent of the existing unemployment and how employment creating policies and strategies could be manipulated in order to reduce unemployment by generating more employment so that Sierra Leone’s economy can benefit significantly from favorable results of such policies.

Over the few decades, both developed and developing countries have realized the substantial and increasing numbers of individuals available for work, but who unfortunately have either no work or unable to maintain an adequate standard of living on the basis of the employment opportunities at their disposal. Authoritative estimates* show that from 1960 to 1970, the number of unemployed and under-employed in the world increased from 166 million to 248 million –an increase of about 49%. It is also estimated that from 1970-1980, over 280 million additional workers were added to the world’s labour force, and of this about 173 million from Asia, 32 million from Africa, and 39 million from Latin America. Knowledge about this state of affairs is therefore causing increasing concern in political, economic and social circles, and the problems do not seem to abate in anyway what so ever. Although steps are now being taken to combat this population explosion by individual countries and concerted world action, the result may not be felt until after fifteen years from now as more children have been born already.

Past experiences have shown that any extent of expansion in the manufacturing employment has had nothing more than a marginal impact on total employment in developing countries. For instance Reynolds** had said that industrial employment has been regarded as the hero of the development drama. If only it increased enough, the labour surplus will eventually be absorbed and the economy will grow there after along conventional lines but performance has been disappointing. Country after country has found that industrial employment rises much less rapidly than industrial output. "Further knowledge and full understanding of such things as low per capital income, inequalities in income distribution, rapid urbanization and its attendant social and economic problems, and a host of related factors account for the growing concern in both developed and developing countries about the possible consequences of increasing unemployment and the massive waste of human potential. There is therefore reason to be moved by these trends because they point to the dangers and threats facing the growth and stability of the already staggering economies of the developing countries. Parts of these employment problems are structural, in that they cannot be cured simply by accelerating the rate of growth.

These employment problems can also be associated with inequalities in income and opportunities which are not merely among their consequences but among their causes as well. This is, in fact, the sharp growing contrast between rural and urban living standards and opportunities, and within the urban income structure, which account for the rush of migration to the cities such as Freetown, Bo, Kenema, Makeni, and Sefadu.

The high aspiration among educated youths and the effort and sacrifice in search for a better paid job causes the migration of the youths to these big cities leaving the land for the old men and woman. The problem of school leavers and migration are dealt with at a later chapter in this book.

Chapter One

The Concept And Causes Of Unemployment In Sierra Leone

In the context of a developing economy and for various reasons, the concepts of the labour force and hence of employment, unemployment, and economic development are difficult to define without making broad generalizations. Broadly speaking, employment implies the meaningful exploitation and utilization of human, natural and financial resources, whilst in a narrower sense, employment implies the state of being meaningfully engaged in a productive endeavor. Unemployment therefore constitutes the exact reverse of an employment situation.

The problem of unemployment is that of development itself. When the rate of investment is brought up by building capital and skills at important points of the economy, the demand for labour will grow up. This requires therefore labour-intensive and not capital –intensive techniques of production particularly in labour surplus economies. In an economy where the rate of unemployment is very high, the underutilization of human resources is significant, and chance of employment creation meager, income per capita can easily be found to be below the socially accepted average, income distribution could be heavily skewed; meaningful savings, investment and the general level of economic activity under such conditions are necessarily low. The overall effect will be a low level of real national income. This in turn hampers economic development efforts. Just as the economic structure’ readily affects the rate of growth, an economy can achieve over any period of time and therefore changes in this structure are necessary to maintain continued growth. Similarly, mass unemployment and massive human resource wastage can affect economic development in all its elements. Therefore any economic development should embrace the mobilization of manpower and other economic resources. The employment problem is thus more coincident with all the problems of economic development. Employment generation essentially becomes one of the major development objectives.

We therefore need to ask ourselves which precede the other, Economic development or low level of unemployment resulting from employment expansion? In this respect, cognizance should be taken of the view that rapid economic development is paradoxically the greatest cure for unemployment especially the technological type of unemployment. If a more rapid economic development takes place in a developing country particularly through an increase in production, the level of productive employment can be raised, and this is often followed by high standard of living for the greatest proportion for the population. Therefore the contention that unemployment is due to the absence of development must have no foundation at all. The reason is that development itself is, in a sense, the primary cause of unemployment since experience in the developing countries shows that it is development which opens up the gap between modern and traditional earnings. The result is the conversion of disguised unemployment into an open one and the acceleration of the growth of population. It should be noted at this juncture that the kind of development which gives rise to inevitable problem of unemployment is one that is purely urban oriented. However, if the processes of technological advancement set in motion other forces adequate to absorb labour so displaced by it, there can hardly be any conflict between employment and economic development. The fact is that the introduction of new technique will avail workers with fresh employment opportunities- at much higher levels of productivity. Hence employment and economic development can be regarded as co-partners in the development process. Expansion of employment should therefore be viewed as by-product of technological advancement and improved levels of productivity. For example, the introduction of computers in the work place has increased the marginal productivity of workers in various sectors of the economy especially in the tertiary sector.

4 Employment is either total or partial. A fully employed worker is one who is working at the existing wage rate and is not seeking more work. This could be described as the stage of full employment. Full employment in the strictest sense means no unemployment. In this case the state of the economy is such that the labour market must have reached the point of optimality and the cost of attempts to reduce unemployment would exceed the benefits. According to Lord Beverage, full employment means having always more vacant jobs than unemployed men’’. But in the real world and indeed in labour surplus economies full employment is rather a meaningless concept. The rate of the unemployment in all economies is always greater than zero because the characteristics of the labour force and the very nature of employment opportunities are such that structural’’, frictional’’ and seasonal unemployment always exist somewhere in the economy.

We can therefore state that full employment is reached when the labour force is fully unutilized in productive, processes and at given price levels. This can however be right only when where the economist assumes perfect market conditions with homogeneous labour inputs, easier movements of capital labour, where prices are flexible and market adjustment instantaneous. But these conditions can market adjustment instantaneous. But these conditions can hardly be obtained in the real world plagued by grossly imperfect market conditions and where the ideal of spontaneous market adjustments has no foundation. The consequences are that unemployment always exists at full employment levels. The economist is therefore left to determine how much unemployment is consistent with full employment. But as this may involve complex value judgments, it obviously falls beyond the scope of this book, where however, a worker is working and at the same time is looking for more work; he or she is said to be in the state of underemployment

Unemployment being the exact reverse of employment which either can be "frictional’’ or ‘structural’. Frictional unemployment refers to unemployment resulting from the fact that labour is not of the right sort or in the right place to meet the demand for it. This can be true even though there may be unsatisfied demand for labour. In other words normal frictional unemployment is short term unemployment due to market adjustment. For instance the frictionally unemployed are those unemployed but for who jobs are available within reasonable reach, reasonably suited to their skills and at the going wage levels. The difficulty of being employed in this case includes short duration imperfections of market information, business adjustment. And at times the preference of individuals for unemployment Frictional unemployment consists of the following elements:

The second type of unemployment is structural unemployment which means the amount of unemployment which cannot be removed by momentary and fiscal policy without creating substantial continuing inflation deriving directly from shortages of labour. This type of unemployment is composed of workers unable or unwilling to move to regions where they could be most needed, e.g. unemployment of depressed areas, workers not hired on marginal productivity grounds and so on.

Causes Of Unemployment In Sierra Leone

A solution to the unemployment problems in Sierra Leone as in many other countries in the world requires a thorough study of the origins of such problems. Debates on the causes of unemployment differ substantially from country to country, situation to situation and from period to period. What is certain is that such causes are often similar in countries with similar economic background and performance.

Most economists attribute unemployment to inadequate aggregate demand while others attribute this to structural changes in the economy, but in fact, both causes are relevant to the concept of unemployment. However, the most important causes of unemployment in Sierra Leone can be attributed to the following parameters:

A tight budgetary situation experienced in the public sector and the inadequate use of financial resources to productively utilize the available human resources and other factors of production. This can be tied up with the low level of national income and per capital backed by national pressures on private consumption spending.

The causes of unemployment as enumerated above could therefore be attributed to the failure of budgetary policies, institutional and structural changes