Sierra Leone – worrying signs, will the government review its World Bank approach?

Mahmud Tim Kargbo: Sierra Leone Telegraph: 4 March 2020:

The swift departure of Penny Goldberg from the chief economist role at the World Bank is a good example of what can happen when the world of public officialdom and that of academia combine – or in this case, clash.

Initially, the relationship is mutually beneficial — the institution’s reputation is raised through its union with a top-drawer talent, while the academic has a chance to shape policy. More often than not, however, the honeymoon is followed by a eye catching falling out, when the academic refuses to tow the party line and says the work of the institution is flawed.

Now it’s very clear, poverty in the developing world is intractable because the World Bank trains its employees on how to partner with local elites to siphon monies meant to tackle poverty.

Maybe these are worrying signs for Sierra Leone, having a former World Bank employee managing the country’s economic affairs as Finance Minister.

Many have no doubts, watching the country’s GDP dropping down to four percent, despite claims by the Bio-led government of having blocked all leakages in the economy.

The specifics of the chief economist’s departure are not known, with Goldberg herself saying nothing ahead of her return to Yale this March. However, the story links the departure with research — reviewed by her department, but allegedly blocked from publication by those higher-up. The research is into aid granted by the Bank, falling into the wrong hands. (Read article below).

After aid to a country spikes, money departs for offshore haven. And after a sensitive paper is spiked, Penny departs for New Haven.

The work is the fruit of three economists, including Jørgen Juel Andersen of BI Norwegian Business School and Niels Johannesen of the University of Copenhagen and CEBI —who have in recent years looked at where monies meant for the poor in the developing nations go (surprise: usually into bank accounts in financial havens). The other contributor is the World Bank’s Bob Rijkers.

The research paper indicates that monies in the form of aid flows into the pockets of elites in the recipient country, and not to those that it is meant to help. Ironically, this finding is reached through the use of the World Bank’s project database.

The research uses quarterly information on aid disbursements from the World Bank, covering the 22 most aid-dependent countries including Sierra Leone, in combination with Bank for International Settlements banking statistics, which cover the flows between the country receiving the aid and havens such as Switzerland, Luxembourg, the Cayman Islands and Singapore, where secrecy and asset protection are paramount.

For comparison, the research also looks at flows between the recipient country and Germany, France and Sweden — places not as vaunted for their banking secrecy. Scenarios that one would expect to lead to higher inflows and outflows, such as wars or financial crises, are excluded.

In a quarter where a country receives aid equivalent to 1 per cent of GDP, its deposits in havens increase by more than 3 per cent relative to a country receiving no aid; there is no increase in deposits held in non-havens. This, on average, means 7.5 per cent of aid is “leaked”.

There is compelling evidence too to support the idea that the higher the aid contribution and the more reliant a country is on aid, the more of that aid is siphoned off by elites, with the leakage figure for the most aid dependent nations rising to 15 per cent.

The economists acknowledge that the research has its limitations. For instance, it is impossible for them to tell who is moving the funds out of the country, with the BIS statistics only counting the total flows per quarter between countries.

Yet, their argument that the results offer “salient and plausible” evidence that elites in several of the world’s poorest countries are siphoning off aid is a compelling one.

Current research from data leaks and tax amnesty documents show that accounts in havens are overwhelmingly held by the very rich. The fact that most of the outflows occur at more or less exactly the same time as the inflows, strengthens their case too.

And, if it is businesses shifting the funds they gain from aid projects, then why are we not seeing a rise in deposits held in non-havens?

So what’s the case for the World Bank withholding publication of the research?

Well, it is clearly highly embarrassing that an organisation which aims to do good in developing countries may be exacerbating the already wide chasm between the haves and have-nots.

What the research also reveals is the World Bank’s futility: there is no way around the problem. In most countries, their presence is small, and the chances of the local staff being able to police corruption limited.

While there is always the risk of embarrassment, in the long run it’s better for the reputation of public institutions to foster differences of views than to allow their work to become stymied by groupthink.

If top economists fear that their work will be toned down and remain in academia, they will lose out too. Would the World Bank have been so willing to part with its data, if the academics had not been working in collaboration with someone within the bank?

Unless public institutions allow for research independence within their organisations, more bad policies will remain in place, unquestioned by those who fear their career is under threat from reprisal. And that is in the interests of no one, especially the world’s poorest.


  1. Mahmud Tim Kargbo always come up with good and very important articles. What a fantastic and soul penetrating piece; with all the intentions of creating awareness and educating the public. The level or standard of his writing is also very good.

    In most cases, all these institutions, including the IMF and World Bank, are merely devices used to decelerate (or slow down) African and other third world economies. In Sierra Leone, the evidence is quite clear: instead of aiding the improvement of the economy, the country is rapidly sliding down into the gutter – or the ‘wrong direction’. It is like knowingly pouring gallons of petrol into a leaking car tank, and then later expect full payment (including high interest rate) for the service rendered. In other words, it is like enriching rogue elites whilst siphoning much needed resources of a particular country.

    What do you expect when the main drivers of economic policy are fraudulent former World Bank associates and thieving classroom historians? The current sad situation in Sierra Leone is one of putting square pegs in round holes. Are there no eminent and patriotic economists in the present ‘new direction’ SLPP administration?

    It is now getting quite obvious that these crooked financial institutions indirectly aided the ‘defeat’ of the APC in the past 2018 elections, so that dummies can reside in State House, that will collaborate with their sinister agenda. They withdrew their support from the APC government just at the nick of time and craftily came back to work with their accomplices. What a ploy?!

  2. Worrying signs indeed. This is what happens when you fail to appoint men of conscience and integrity like Dr. Francis Kiakai as Minister of Finance. Our Minister of Finance must be someone who is credible and have the potential of convincing investors and our partners. As President, it’s always good to have credible and reliable people arround you, when you are not known globally.

    But appointing someone who did some calculations for the APC and now doing the super miscalculations for SLPP, will end in a financial mismanagement and miscalculation policy disaster. Did they hear that, loud and clear? I hope they listen the next time there is a cabinet reshuffle. God help our country’s financial policies

  3. Reports from the Evaluation Department of these institutions are also very remarkable sources of revealing information.The structure of these institutions, particularly the incentive systems for progressing up the ladder encourage the packaging of loans for approval by careful writing and by minimizing risks irrespective of the realities on the ground. A country programme with low level of loans (portfolio) because of high risk or poor design, is not a good selling point for those responsible and who naturally want to progress higher up.

    Next is the problem of fungibility. By taking up Government’s responsibility for basic services, revenues can be funneled to “other” uses or projects that are subject to less scrutiny or susceptible to leakages into private pockets. Worse is that World Bank projects are managed locally by the ruling elites who syphon funds to allies and loyalists.

    Combine the pressure to push loans with the appetite of domestic elites to syphon funds to allies and the results are bad projects, increased national debt, and increased flows to bank havens. The only losers are the citizens who must inevitably pay off these bad debts.

    True academics often get frustrated when they get into these institutions and attempt to pursue their search for the truth. Tensions occur and they leave. Assuming the story of the WB’s Chief Economist is true, this may well be how it played out.
    This phenomenon is completely different from academics being put in senior government positions where they have to deal with public policy at the national level. In this case they are confronted with a host of problems. The first is the wide gap that often exist between theory and practice. Bridging that gap is similar to finding a cure to a disease under laboratory conditions and then making it widely available to the public.

    Another problem is that public policy is rarely a single subject issue. Academics tend to specialise in a subset of a sector or theme eg an industrial economist is not necessarily a master of development planning. Yet, some leaders think that because the person is an industrial economist he must also have the last word in planning. Senior public positions usually call for good managerial skills but as academics, they rarely have such experience although a limited amount is reserved usually for the Dean . They are not known to be great managers.

    In my view the worst problem is psychological; the academic is accustomed to dealing with students for decades, and being considered the fountain of knowledge. They are often bad listeners and think they have all the answers. The resulting intellectual arrogance blinds them from listening and learning. Sadly once again they litter their passage with missed opportunities, costly errors and misguided policies.

    Having said all the above, I do acknowledge exceptions. But exceptions are hard to find.

  4. Well,I have always maintained that the World Bank,and the IMF are just another bunch of heartless,criminal exploiters,anxious to fill those repulsive shoes the Colonial Powers left behind,ages ago.The evidences pointing at the irreparable damage,and harm being done by a calculated,methodical,strategic system, designed to keep Africans in bondage by the IMF,and World Bank are overwhelming, glaring, and crystal clear. But let’s be sincere;If its true, that a man’s enemies are the men of his own household,then let us not hesitate to cast the blame for our misfortunes squarely where it belongs.

    Folks,our own brothers, and sisters in positions of power,and authority have sold the sovereignty,integrity,credibility,and dignity of our nations to financial bandits, pirates; vampires,and wolves with friendly,deceptive smiles,dressed in clothing’s of harmless sheep. You asked me why African leaders are the only thieves known to mankind that rob, plunder,loot,and steal millions,from the hungry poor,wretched,blind,mentally I’ll,and disabled?

    Here’s your answer – Because they are afraid, and suspicious of each other;scared out of our wits of poverty,lack,and being in need. An ungodly people,they are,cowardly anyway you choose to examine them, up, down, sideways, up close,or at a far distance,it doesn’t matter – cowardly,all the same. For who would be so cold hearted to steal donated rice intended for
    the poorest of the poor among us,if not a miserable coward dressed in lucent green (lol)

    Our Finance Minister, JJ Saffa is a cruel,brutal Hangman that unremorsefully represents the blood-stained gallows of IMF,and the World Bank,and not the struggling, suffering, dying people of our Sierra Leone. Two years,and counting,and nothing’s changing,except the levels,and dimensions of abject poverty in Sierra Leone. Dummies,with oblong,protruding tummies,that’s who they are. Huge feeders, with potbellies resembling oxygen balloons, men,out of touch with reality(lol).

    OLD,crooked and twisted like twigs,and figs,yet strangely, still getting married and being given into marriage.(lmao) It will take a rare individual to salvage what’s left of the African continent, and prevent it from sinking,and disappearing forever into oblivion. Are the beautiful ones capable of accomplishing such an impossible feat still not yet born Saidu? Well they are,but still very young…And the Great Sayedna is one of them…Rising Sun Will Rise Again.

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