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DevNews Q & A with Country Director Mats Karlsson, Board Approves Loans

February 26, 2003 - The World Bank's board of executive directors approved $40 million in grants for the West African nation of Sierra Leone yesterday, one to rehabilitate basic education and the other to fund the rebuilding and development of the health sector.

DevNews caught up this week with Mats Karlsson, World Bank country director for Ghana, Liberia, and Sierra Leone, to discuss how Sierra Leone has been reshaped by conflict and how peace will reshape the country's economic destiny.

DevNews: How has the conflict affected Sierra Leone economically and socially?

Karlsson: I don't know a way to fathom the trauma this people has gone through. We can perhaps put numbers on the deaths and the devastation, but do we have any idea of the consequences of a young generation having been so deeply wounded? Still, what I see now is a country that's working very hard to rebuild social capital, not just the burnt down houses. Public authority is restored in the whole country, the refugees have returned and almost all ex-combatants have been somehow reintegrated. A Truth and Reconciliation Commission and a Special Court is working to deal with past crimes. The democratic culture is being deepened. Economic growth has come back, six percent for the second year running. Inflation is very low. Gross enrollment rates among first graders has gone from 74 percent in 1999 to 120 percent today. So there's no question the country is coming back in a remarkable way.

DevNews: What does the country need to do now to set development back on track?

Karlsson: Everything, unfortunately: rehabilitate infrastructure, rebuild capacity, kick-start agriculture, and use the mining potential. The Government is very keen to address the root causes of conflict, which it puts down to the exclusion of the countryside and the alienation of so many in the past. Therefore basic service delivery has extraordinary significance. And that's why the World Bank started by giving such emphasis to the social sectors, with four major projects. World Bank Vice President for Africa Callisto Madavo launched the HIV/AIDS project during his visit in December. And now we are ready to go on rehabilitating basic education, reconstructing the health sector, and later on giving a major boost to the national social action program. Decentralization, participation, building and relying on local and community capacity is therefore key to Sierra Leone's future development.

DevNews: What can donors do?

Karlsson: Stick with Sierra Leone. There has been an extraordinary effort over the past years - and the Bank can be proud to have stuck with the country during very difficult circumstances. When we had the first Consultative Group meeting in many years last November, it was clear that that willingness remains. The meeting was successful in promising the required financing for a Results Framework that we established, but we still fear that as the country moves from being in a post-conflict phase to one which is more "normal," interest and support will drop off. The extraordinary allocations will fall and bilaterals may find it difficult to move the country from a "humanitarian, post-conflict" column in their budgets to one of long-term support. Yet, that's just what Sierra Leone needs.

DevNews: Will private sector investment take off?

Karlsson: People are rebuilding their houses. That is driving a lot of activity. The Government is focusing on the investment climate, with an Anti-Corruption Commission and with judicial reform. The Bank is engaged in both. A National Commission for Privatization is up and running. There is also investment in mining, with a major step taken as the Rutile Mine restarts production soon. It was a major source of export income before the war. A revised Mining Policy is being finalized, inspired by a critical piece of Bank work, "Tapping the Mining Wealth for Human Progress-A Break with the Past", led by Preeti Arora, senior economist for Sierra Leone. So things are moving ahead, but wealth creation is directly linked to what happens to agriculture. Sierra Leone, with its abundance of water, used to export rice to the whole region. It has to get back to that role.

DevNews: How important is the regional dimension?

Karlsson: The Liberian Civil War remains a major concern for Sierra Leone. There is still risk of spill-over and a new influx of refugees and combatants. Stability in Cote d'Ivoire becomes important as well. So peace in the region is the over-riding concern. Only later can economic potential be realized. The Mano River Union of Guinea, Liberia and Sierra Leone is still far from being a working institution. It is difficult to imagine Sierra Leone sustaining progress without the sub-region also improving.

DevNews: How do you see Sierra Leone's economic future down the road?

Karlsson: We are aware everyday of the risks. If progress stalls, corruption and alienation come back, the fragility of today's stability will make Sierra Leone very vulnerable to economic and political shocks. However, if progress continues at today's rates, there is no reason why everyone shouldn't have enough to eat, why exports of food and minerals shouldn't give the country a stable source of income and why there should be steady improvements in education and health, and the spread of HIV/AIDS reversed. A particular dream I have is to see the Fourah Bay College restored. It was sub-Saharan Africa's first university. Students came from all over Africa to study there. If studies could catch the imagination of a new generation in Sierra Leone, the country will surely change.