Abdulai Mansaray: Sierra Leone Telegraph: 05 December 2022:
No one needs a lecture to conclude that Sierra Leone’s economy is in a crisis and has been for a long time. If Sierra Leone were a patient, and if allowed to describe its economic situation in clinical terms, it needs intensive care on a life support machine. If it needed a fiscal marrow transplant, you would wonder where to get fiscal marrow donors.
Our economy has been tanking for the last seven years, at a rate that baffles the most ardent financial alchemists. At this rate, we might need financial sorcerers for miracles. Our Bank Governor and the Ministry of Finance recently decimalised our currency, a tourniquet to arrest the bleeding. Has it worked? The jury is out on the psychological impact, as we talk about old and new Leone. Just remember which one you sign for on your cheques.
Although it is factually true that world events have significantly contributed to our current economic demise, we cannot continue with this excuse as a matter of convenience. President Bio’s government has made tangible strides in pushing the country forward in many spheres like the Free Quality Education, among others. It is well meaning, but equally a financial albatross. However, President Bio would and should be the first to admit that things have not gone well as planned.
Is it time for a rethink?
Many critics point to neighbouring Guinea to illustrate our financial quagmire. I recall those days in the 80s, when Sierra Leoneans needed wheelbarrows to cart the Guinean Syli (currency) in exchange for a few Leones in Conakry. The Leone to the Guinean Franc exchange rate today is eye watering.
I still remember those days when Sierra Leoneans did not need to buy foreign currency to travel abroad. You could exchange the Leone for the UK pound on arrival at UK airports. That was all before the OUA conference, on the invitation and “tranga yase” of the late President Siaka Stevens, who played host to the organisation. The rest is history.
As a country, we had purchasing power and bragging rights. We had SLPMB, NDMC, Sierra Fisheries, Yazbeck and Kontiki Tours, Sierra Rutile (as we knew it), NATCO, Aureol Tobacco Company, Sierra Leone Oil Refinery, DICOWAF, etc. as economic foundations. Our GDP reached a peaked growth of 107% in the 1970s but sadly proved unsustainable later, consequently shrank by 52% in the late 1980s and a further 10% in the 1990s.
Since the end of those “sweet Salone” days, successive governments have presided over the downward spiral of our economy. You do not need to be an Einstein to see the relationship or coincidence between the disappearance of our industries, companies and infrastructure, and the deterioration of our economy.
The world economies are in a spiral, no doubt. However, do we have the shock absorbers to cushion the effects of such global trend financial tremors? Please do not mention timber, because it is a classic example of how to mortgage our environment for future generations.
Unlike Guinea, which is not only a leading exporter of bauxite but holds the largest reserve in the world, Russia, China and many of its partners provide enough shock absorbers to soften the blow and strengthen their tourniquet against the financial haemorrhage. The Ukraine war has not in any way disrupted production or export of their raw materials.
Recently, some were pointing at the “rapid decline” of Ghana’s economy. Over the last 15 years, Ghana’s international trade increased significantly, positing a balance of trade surplus in 2017-2019. This was boosted by its exports in crude oil, gold and cocoa beans.
Ghana remains a favourite destination for investment in West Africa, as European businesses compete to use Ghana as the gateway for the region. It is valued as an investment destination because of its “political stability, relatively open democratic institutions, free media and a fairly vibrant civil society”.
The 2020 Mo Ibrahim Index on African Governance ranks Ghana 8 out of 54 African countries, noting indicators like “Sustainable Economic Opportunities” and “Safety and Rule of Law”. At this point, we might want to ask whether Sierra Leone has such “sustainable economic opportunities” or “safety and rule of law”.
However, we cannot run from the fact that Ghana’s economy has taken a hit recently. Unlike Sierra Leone, Ghana and Cote D’Ivoire are the world’s leading cocoa producers, and Europe is the world’s biggest consumer of chocolate. In July last year, the EU-Ghana European Partnership Agreement (EPA) for development and trade was implemented. However, the agreement among other regulations, demands that chocolate entering the EU are free from deforestation and child labour.
Ghana demands higher prices to make sustainable chocolate a possibility. Ghana farmers want a $ 400 per tonne Living Income Differential to pay wages to adult labourers. The EU manufacturers refuse to budge, wanting to eat their chocolate and have it back, despite 90% of the industry’s $ 130 billion in annual profits.
Ghana and the EU now find themselves in a catch 22 impasse. EU wants sustainable chocolate, meaning no deforestation or child labour. Big chocolate manufacturers like Barry Callebaut, Lindt, and Nestle publicly back the sustainable approach, but privately avoid paying the premium. The ensuing impasse and other factors appear to contribute to Ghana’s current economic problems.
Is it any why wonder some are tempted to see Sierra Leone and Ghana as financial Siamese twins? That would be a mistake because the former’s situation seems temporary while ours looks chronic.
Unlike Sierra Leone, Ghana has a lot to bring to the table. They might not get all they want but they have what their European partners have. In addition, Russia and China provide the competition to Europe, which gives Ghana some leverage in the horse-trading. It sounds like any attempt to compare Ghana’s current economic woes to that of Sierra Leone’s is just a case of Schadenfreude (pleasure derived by someone from another person’s misfortune).
|Annual GDP [+]||2021||$15,851M||$4,148M||2021||Annual GDP [+]|
|GDP per capita [+]||2021||$1,174||$509||2021||GDP per capita [+]|
|Debt ($M) [+]||2021||6,869||3,289||2021||Debt ($M) [+]|
|Debt (%GDP) [+]||2021||42.54%||79.29%||2021||Debt (%GDP) [+]|
|Debt Per Capita [+]||2021||$509||$404||2021||Debt Per Capita [+]|
|Deficit ($M) [+]||2021||-279||-303||2021||Deficit ($M) [+]|
|Deficit (%GDP) [+]||2021||-1.73%||-7.32%||2021||Deficit (%GDP) [+]|
|Expenditure ($M) [+]||2021||2,484.0||1,172.0||2021||Expenditure ($M) [+]|
So, why is Sierra Leone’s economy failing in comparison to its neighbours?
Like Ghana and Cote D’Ivoire, we have the climate, the land and same natural resources at our disposal. We know the midwives who presided over the disintegration of our infrastructure and industries. We know the impact of the civil war, the Ebola, the landslide, the Corona Virus, and even the keh keh. Yes. Our neighbours have suffered from similar or the same devastating events. Therefore, why are these countries faring better than we are? How long do you have?
The Human Development Index (HDI) is measured by mean years of schooling, expected years of schooling, life expectancy at birth, and gross national income (GNI) per capita. It is safe to say that our country does not feature well here, as we rank 10th in the lowest HDIs. Nevertheless, like Ghana, Guinea, Cote D’Ivoire, etc. why are we not going back to the drawing board?
Gross Domestic Product (GDP) is one of the most used jargons in the parlance of national economies. By definition, it is a measure of the size of and health of a country’s economy over a period. It is calculated by the total value of goods and services produced (output), everyone’s income or what everyone in the country has spent. Now you do the maths for Sierra Leone.
Does Sierra Leone produces the goods and services to support a sustainable GDP?
Yes, Sierra Leone has the goods and services to support a sustainable GDP. If so, what are we missing? There is a temptation to conclude that this piece is aimed at bashing our country. Rather, it is a humble attempt to look deeper than what meets the eye. Like these neighbouring countries, we have the God given natural resources.
Take our staple food rice, and factor how much we produce as compared to how much we import. Are we fully utilising these resources for sustainability? If we were to drag our country out of this quagmire, our country would need sustainable development and trade alliances.
We cannot continue to live on just the good will of others. Donor fatigue is becoming commonplace as financial crises are becoming universal. We need the partnerships to thrive.
We know that our economic development rests on among others, our GDP. This means that we need to marry our natural resources and human capital into a wedlock of sustainability. Sierra Leone cannot do this on its own. We need trade alliances for sustainable development. Therefore, we need to attract investment partners.
If we are to attract investment partners, natural resources alone cannot do the trick. We need to provide, show and maintain “sustainable economic opportunities”. However, such opportunities could only thrive in environments with political stability. Safety and rule of law are major ingredients of the equation.
That is where we need good leadership to take us out of this quagmire. If Ghana was crowned as the favourite destination for investment in West Africa because of “Political stability, relatively open democratic institutions, free media and a fairly vibrant civil society”, can we say the same for our country? Do we have “Sustainable Economic Opportunities” and “Safety and Rule of Law”? Apart from the natural resources, do we have the foundations to attract investments to our country?
How far do our leaderships go to promote, maintain, and protect safety and rule of law? Do we provide enough sustainable economic opportunities to bring in investors, or even support local content?
This is where leadership of our country counts for everything. Our country needs the political muscle to set the wheels rolling. They need to ensure that safety and the rule of law are paramount features of our country. The next time our governments want to engage in arbitrary arrests of opposition members, muzzle free speech, engage in constitutional gymnastics, it may be worth its weight in gold, to factor the impact on our potential and real partners in development.
The next time you want to take to the streets, on the incitement of self-exiled Sierra Leoneans, think of how this will play on the TV sets of potential investors. The next time you want to replicate the MGM or Caesar’s Palace in our parliament, think of what image you would paint of our nation.
Imagine that you are an Ambassador, a Trade or Cultural attaché at one of Sierra Leone’s embassies. How would you sell our country as a place of “Political stability, relatively open democratic institutions, free media and a fairly vibrant civil society?”
Ask yourself why you would invest in a country with no such guarantees.
As a nation, we cannot continue to live by the size of the begging basket, or the good will of others. We need sustainable development. We need good leadership. The measure of a man is what he does with power. Over to you Ngor.
Don’t forget to turn the lights out when you leave the room.