iChapter one

Background of the study

I.BACKGROUND

1.SierraLeone covers an area of 71,740 km2 and is bordered

by Guinea to the northeast, Liberia to the south, and the
Atlantic Ocean to the west. In 2002, its population was
approximately 4.8 million, of which 34% (2004) lived in
urban areas; per capita GDP was US$208.8. The rate of
population growth is fairly high with a birth rate of 2.3% per
annum; average life expectancy is estimated at 34.3 years.

Retailing consists of the sale of goods or merchandise from a

fixed location, such as a department store or kiosk, or by
post, in small or individual lots for direct consumption by the
purchaser. Retail establishments are often called shops or
stores. Retailers are at the end of the supply chain. Retail
comes from the French word retailer which refers to "cutting
off, clip and divide" in terms of tailoring (1365). Retail is one
industry we all have a part in—after all, it is the sale of
products to individual consumers (as opposed to
businesses). Retail goods are traditionally divided into
durable goods, such as furniture and large appliances, which
are expected to last at least 5 years, and nondurable goods,
which include food, clothing, and other categories far too
numerous to mention but which eventually form the bulk of
the stuff you see on makeshift tables at garage sales.
Manufacturing marketers see the process of retailing as a
necessary part of their overall distribution strategy. Online
retailing, also known as e-commerce is the latest form of
non-shop retailing (cf. The pricing technique used by most
retailers is cost-plus pricing. This involves adding a mark-up
amount (or percentage) to the retailers cost.
Retail trade contributes around ------% of Sierra Leone’s GDP
and currently employs a very significant number of the
countries population. Within this, unorganized retailing
accounts for 98% of the total retail trade. These retailers
also make up a portion of the population under the poverty
line. Traditional forms of low-cost retail trade, from the owner
operated local shops and general stores to the handcart and
pavement vendors together form the bulk of this sector. In
the absence of any significant growth in organized sector
employment in Sierra Leone, that is in the manufacturing or
services sector, a good number of the work force are forced
to seek their livelihood in the informal sector. Most of these
retailers who come up as a result of unemployment do not
last long in the business, they are forced to close down due
to competition or poor management.
. Retail trade, which has been a relatively easy business to
enter with low capital and infrastructure needs, has acted as
a refuge source of income for the unemployed.

Liberalization is arguably the most strongly advocated policy

for improving economic performance, Trade liberalisation
means reducing the limitations on trade that countries
around the world have erected over a number of years.
Protectionism is a means of attempting to ensure that
domestic industries are protected from competition from
foreign producers and can be carried out through a variety of
means - through tariffs, which raise the price of goods
coming into a country (imports), quotas - a physical limit on
the number of goods that can be brought into a country, and
other non-tariff barriers such as regulations and
legislation that make it very hard for foreign competitors to
sell goods into another country.

The government of Sierra Leone can put legislations in place

to protect these retailers who are coming in and also to
protect the consumers from being exploited.
It is the policy of the State to promote consumer welfare in
attracting, promoting and welcoming productive investments
that will bring down prices for the sierra Leonean consumer,
create more jobs, promote tourism, assist small
manufacturers, stimulate economic growth and enable Sierra
leone goods and services to become globally competitive
through the liberalization of the retail trade sector.

The retail trade sector is a very important sector in the

economy of any country. In the USA it is the second largest
sector and 97% of this sector is represented by unorganized
retailers , in India this sector accounts for 10% of the
countries GDP in which also 97% of this sector is the
unorganized retail market. This is a sector which every
country should encourage to grow by putting policies in
place to encourage them to grow.

Problem statement
In Sierra Leone the constitution does not have well defined
and active policies to control the retail trade in the country.
According to the Ministry Of Trade and Industries’ trade
policy review of 2005 posted on the World Trade
Organization web site dose not have a well written policy on
retail sector, it focuses more on the imports and exports.
After going through the Ministry Of Trade and Industry,
Freetown City Council, the Law School’s library and a few
lawyers, I still could not get any well written and active
policies on the retail trade market. This market is one of the
most important in any country and for the economy to grow
this sector must be regulated, by implementing liberalization
measures and some form of restriction in this market.