Recession Hits Sierra Leone

As I type this, I am in transit back to the US from my fourth trip to Sierra Leone in 2008. I spent eight days there covering the country the way I usually do, spending some time in Freetown, the capital city, some time at the beach, some time with the schools and orphanage we support, and some time at our mining site.

I am a social venture capitalist entrepreneur. I invest in and build companies that desire to make a profit while making the world a better and safer place. Besides founding Ruff&Cut, I am a proud shareholder and non-management consultant with Target Resources, PLC (a London AIM-listed company with the symbol TGT.L), a socially responsible diamond- and gold-mining company doing business in Sierra Leone for the past four plus years. My area of responsibility is to provide Target Resources with on going corporate social responsibility (CSR) services, investor relations, and PR. Very often, my duties include taking lots of photographs of the schools and community development projects, ongoing and expanding operations, and the culture and beautiful landscapes of Sierra Leone.

My partners and I have brought a different model of diamond mining to Sierra Leone, involving a category of expense not seen before in that country and rarely seen in the mining sector. Each month, we expend tens of thousands of dollars on diesel fuel to run our bulldozers, excavators, camp equipment, etc. In addition to diesel fuel and labor costs, we have an expense called “community development capital.“ Over the last four years, we have built several schools, covered markets and road bridges, have funded scholarships and micro-loans, and we also support an orphanage.

I have made many trips to Sierra Leone over the past four years, and right now, the hope and energy I feel there is amazing. The food is amazing. The music: amazing. The people are always so quick to give you a beautiful smile and offer an insight into their lives. The laughing never stops and the hope for a developed country abounds. In Freetown, and throughout the provinces, Obama T-shirts, hats, and buttons are very popular attire. The Sierra Leonean people are as excited about President-Elect Obama as we are in the United States. The “hope“ that the Obama presidency has established in the US is alive in West Africa, even in Sierra Leone, one of the poorest places on Earth. I went to a nightclub where there is a very popular reggae song with the chorus: “Barack Obama, Barack Obama, oh yea oh yea.”

But the local people do not yet realize the dire effects the global recession is already having even on this small country.

Almost all of the commercial mining companies have shut down. People are starving, both for jobs and, in some areas, literally for food. Everything is for sale. For instance, just last March and again in May, all the hotels in the mining area were packed to capacity. Now-as the mining season is moving into its peak period, making it the best weather season for success-all the hotels a virtually empty. (Sierra Leone has a rainy season with an average rainfall of 195 inches and mining is at maximum capacity during the dry season.)

In the mining sector, the largest sector in terms of GDP and GNP (and I suspect other sectors as well), no new investment capital is coming into Sierra Leone. With the exception of Target, most if not all of the commercial diamond-mining companies have shut down and left the country. Sierra Leone Diamond Company (AIM-listed)-gone. Petra Mining-gone. Shadow Mining-gone. Cariba Mining-gone. West African Diamond Mining-gone. Koidu Holdings, the largest and most valuable mining company in Sierra Leone, has stopped mining for two years while it reengineers its shafts. The hotels in the mining sector are all now empty.

The local paramount chiefs (elected officials) speak of vast unemployment. They are begging us to expand our operations as thousands of jobs have vanished as a result of the mass exodus of commercial mining companies. For the first time in all my visits to Sierra Leone, I have heard the word “starvation” coming from the paramount chiefs and diseases like typhoid and malaria are on the rise.

Yet my impressions of Sierra Leone continue to be positive, if not absolutely bullish. I believe recessionary times bring opportunities for those who are most prepared for success. Every recession in history produces new wealth for people and companies that can leverage their goodwill, cash, and capabilities to weather the tough times and look to the future beyond low commodity prices.

Lately, I have been the recipient of a lot of flak for being so foolish as to launch Ruff&Cut–our luxury brand of socially responsible jewelry–in these tough economic times (Click here to read "New Jewelry Line’s Strategy: Tugging at Heartstrings" and my response to article ). In response, all I can say is that it took us 22 months to create a brand, inspire designers to work with R&C (and with rough diamonds) creating beautiful and unique pieces, to put together a top-notch team of colleagues, to be able to replicate the designs to fill orders, to develop a fantastic website, and to retain the best publicity firm in the US. And to be open for business in the fall of 2008 in time for the holiday season (Click here to read "Ruff & Cut Jewelry Line Launches").

Ruff&Cut has been in the market now for two months now. Surprise, surprise, we are selling very little jewelry. But, we continue to keep our costs as low as possible and we plan on being around for a long time. When you buy from Ruff&Cut, you know that a percentage of your dollars are going to make the world a better and safer place.

Highest Regards,

Wade