Sierra Leone Telegraph: 19 November 2017
Julius Maada Bio – the presidential candidate for the opposition SLPP party delivered a speech at the Radisson Blue Mammy Yoko Hotel in Freetown yesterday, 18 November 2017, about his vison for Sierra Leone, which as in his 2012 campaign for the presidency, has once again referred to as ‘The New Direction’.
His speech focused on the policy areas he believes his SLPP party will take forward, if elected in 2018 “to address the critical development challenges in Sierra Leone”.
In the audience were members of the SLPP, members of the Diplomatic Community, members of the NGO community, Advocacy Civil Society Groups, and the media. The Sierra Leone Telegraph will be serializing Maada Bio’s speech in four parts, starting with today’s edition. This is what he said:
As promised in my Acceptance Speech on October 15, 2017, I am here this morning to elaborate on the five priorities I highlighted. These priorities are aligned with the Global Strategy of Sustainable Development Goals and consistent with Cooperation Agreements with donors and NGOs.
Sierra Leone is an unequal and divided society with a few rich and powerful governing elites who have vast social, economic, political and development opportunities and control the state’s political and economic processes.
On the other hand, two-thirds of the 7 million population live on less than US $1.25 a day, 3 out every 5 adults cannot read or write, life expectancy is 50 years compared to 53 in neighbouring Liberia and 59 in Guinea.
Most of the population either lack or has limited or no guaranteed access to basic services including education, healthcare and social protection.
Half of the population cannot afford adequate food to maintain and live a healthy life. Youth (persons 15-35 years) constituting one-third of the population and 70% of these are unemployed, underemployed, unemployable, unskilled and lacking social mobility opportunities.
Justice is not accessible to the majority of the poor and dispossessed in Sierra Leone today. These depressing socio-development indicators will not guarantee peace, security and stability in the country.
The New Direction is based on the political ideology of Social Democracy and its fundamental commitment to peace, freedom, security, justice, equality, unity and solidarity. The New Direction promotes and guarantees political, social, economic and cultural rights of all Sierra Leoneans through entitlement and access to basic necessities of life.
The New Direction Social Democracy political ideology aspires to create a more just and equal society in Sierra Leone as the only insurance to avoid another war and recurrent political instability.
Though the New Direction is based on free market neo-liberal economic development principles, we will depart from the traditional principle whereby only the market economy determines individual performance and reward.
The Social Democracy foundation of the New Direction is based on inclusive politics, inclusive development and inclusive economic growth whereby the benefits of economic growth are re-distributed to all Sierra Leoneans through the provision of affordable housing, public health services and free education. The New direction Social Democracy gives every Sierra Leonean a voice, ownership and a stake in the country and its future.
The New Direction Social Democracy believes that a Democratic Developmental State model will effectively deliver the primary goals and aspirations of the SLPP. A Democratic Developmental State is one that not only embodies the principles of electoral democracy, but also ensures that all citizens participate in the decisions that affects their lives as well as the development and governance of the country.
The Democratic Developmental State puts economic development and the redistribution of the benefits of economic growth as the top priority of the SLPP government policy. The New Direction SLPP Democratic Developmental State will create positive and competitive business environment to encourage and drive efficiency, affordable prices, high quality service delivery and meaningful employment for all Sierra Leoneans.
The New Direction Social Democracy and Democratic Development State are firmly based on our conviction of ‘One Country One People’ and that it is only by giving ALL Sierra Leoneans a sense of ownership and inclusive belonging that peace, stability, security and development can prevail in Sierra Leone.
As you would recall, my vision for this country is a “United, peaceful, progressive and happy nation where the people have access to jobs, food, education and health services and there is justice and equal opportunity for all”. To this end, our priorities shall cover revamping the economy, with special focus on the developing the private sector, human development, improving governance and developing the infrastructure
Revamping the Economy
Revamping the economy through sound economic management is not an end but a means of developing the human capital and infrastructure as well as promoting governance. Despite our huge resource potentials, we have failed as a nation to prudently utilize proceeds from this natural wealth for development.
Consequently, the bulk of our people are stuck in grinding poverty amidst the growing affluence of a few. Our strategy of revitalizing the economy entails improving the macro-economy, developing the private sector, improving the management of mineral and petroleum resources and developing the productive sectors, notably agriculture, fisheries and tourism.
Improving the Macro-economy
The main challenges in the macro-economy are low economic growth as a result of slowdown in activities in the real sectors, low domestic revenue mobilisation and burgeoning expenditure, high inflation, depreciating exchange rate, growing domestic and external debts and growing unemployment
The economy of Sierra Leone is shrinking. Economic growth rate is expected to slow down from 6.3% in 2016 to 5.6% in 2017 mainly on account of reduced activities in the non-mining sector. Despite the usual propaganda by the National Revenue Authority, domestic revenue was only 10.1% of Gross Domestic Product (GDP) in 2015 compared to 18% and 17% in Liberia and Guinea respectively that was equally affected by Ebola. Also, domestic-revenue GDP is far less than the 20% revenue threshold required for a state to finance its expenditure.
The domestic revenue remain grossly inadequate to finance the growing expenditure estimated at about 20.1% in 2015. It is this low revenue and huge public spending compared to target that is responsible for widening deficit currently estimated at 21.5% of GDP.
To finance this huge deficit, the Government has resorted to the ugly practice of bank lending with its associated inflationary implications. At present, inflation is estimated at about 18%.
Between 2007 and 2017, economic conditions have worsened and there is growing hardship for a large segment of the population. Prices of essential goods have risen. For instance the cost of 50Kg of rice rose from Le 60,000 in 2007 to Le 220,000 in 2017.
Households that required Le 15,000 to provide a single meal for a family of 6 members in 2007, now require at least Le 50,000 for the same family size representing 150% increase in cost of food basket.
Some of the factors for the low domestic revenue collection and huge leakages include unlimited tax and duty waivers to individual or entities, high concessions to mining companies beyond what is provided for by the law; under invoicing of value of merchandise and goods; miscomputation of duties and taxes; narrow tax base and weak tax administration.
The recent IMF mission in Sierra Leone in October 2017 estimated revenue of Le 200 billion below target and expenditure of Le 100 billion above target. As at now, unpaid checks (arrears) stand at over Le 3 trillion.
Consequent of the debt relief in 2006, the SLPP government reduced the external debt stock from US$1.6 billion to US$250 million in 2007 through debt relief under the Heavily Indebted Poor Countries Initiative (HIPC).
As at June 2016, total external debt rose to about US$1.5 billion representing nearly an increase of 400%. Domestic debt as at June 2017 was over Le4 trillion. Total interest payments was Le174.57 billion and expected to increase to Le 233.12 billion in 2016.
The exchange rate depreciated from Le 2,900 to 1 US$ in 2007 to US$7,500 to 1US$ representing over 150% depreciation of the Leone. The unprecedented depreciation is largely as a result of low exports and high import bills causing persistent trade deficit, the poor management of our exchange rate as well as the persistent dollarization of government transactions.
In the New Direction, the SLPP shall effectively and efficiently manage the economy with a view to promoting economic growth, creating jobs, increasing household income and reducing poverty.
The policies will aim at improving the macro-economic environment through increased production from real sectors, vibrant private sector, reduced budget deficits, low and stable inflation, and a low, stable and competitive exchange rate that will promote exports. The specific policy actions will include
In the New Direction, the focus will be to increase the domestic revenue GDP ratio from about 10% to 20%. Some key policy actions are (i) review all laws and policies relating to tax administration and implement robust reforms that will improve on tax revenue collection (ii) establish a single window for clearing of goods in 24 hours and (iii) review of laws for granting tax exemptions and (ii) broaden the tax base.
Public Expenditure Management.
Some specific policy actions that will be pursued to manage public spending in an efficient and effective manner are as follows (i) review and implement reforms in public expenditure management (ii) strengthen Public Expenditure Tracking (PET), Audit Service Commission and the involvement of Non-State Actors in monitoring public spending (iii) develop a National Development Monitoring and Evaluation System that will generate real time information on inputs, outputs and outcome of all development projects implemented by government and donors (iv) reduce spending on purchase and maintenance of government vehicle as well as on fuel by introducing a vehicle pool and movement tracking system (vi) harmonise the wage structure in the public sector to keep the wage bill sustainable (vii) implement the Treasury Single Account system that will pool all revenues from Government into a single account.
Exchange Rate Management
The objective in the New Direction is to maintain low, stable and competitive exchange rate through increasing exports and reducing imports of consumer goods. In the short run, my administration will improve on foreign exchange management to ensure the banking sector provides foreign exchange to the business community at official rates
Public Debt Management.
Overall, my administration will seek both concessional loans and grants to avoid debt distress and ensure debt sustainability. Specific actions will entail (i) introducing the concept of annual debt ceiling beyond which Government cannot borrow (ii) limit external financing of social services to grants and secure loans for productive sector and infrastructural development.
Diversification of the Economy
The major challenge in our economy is over reliance on the mining sector for our source of foreign exchange. The recent setbacks in the global mineral markets should be factored in financial planning by any responsible government. Thus, diversification of our economy will be a topmost priority in the New Direction.
In this vein, in addition to promoting growth in traditional food (rice and cassava) and cash crops (coffee, cocoa and oil palm), in the New Direction, we shall (i) support production and value additions of and non-traditional food crops (maize, sorghum…) and cash crop (such as cashew nuts and cotton) (ii) increase production of marine products and (iii) promote tourism
In part two, the Sierra Leone Telegraph will publish Maada Bio’s views on: Improving the management of mineral and petroleum resources; Developing agriculture; Improving on the management of marine resources; Promoting tourism; Developing the private sector; and so on.