Sierra Leone’s ailing economy – overcoming the challenges – Part 1

Jesmed F Suma: Sierra Leone Telegraph: 13 January 2021:

Please note that, despite being a member of the NGC party (National Grand Coalition), the opinions offered here do not represent those of the NGC party. They are entirely mine and not that of the party or any member of its leadership.

The extreme level of poverty I witnessed, suffered by my fellow Sierra Leoneans during my recent visit to Sierra Leone, has made it apparent to me that the current government either lack the sincerity of purpose with respect to addressing the problem of poverty or they lack the know-how or both.

Therefore, starting with this article, I’ll begin to offer opinions on what I think this, or any future government should do to address poverty is Sierra Leone.

The problems of poverty are very complex and challenging, hence there is no silver bullet that will solve the problem overnight. But it is also true that without the right leadership and a concerted effort with sincerity of purpose we will never get to address it in any meaningful way. In my opinion fighting the menacing problems of poverty is like waging a war against an enemy threat.

To win a war, you must get your offensive and defensive arsenals right. The first phase will always be, having the right team that will be in charge of defining what the real problem is, and shaping the right strategy or policies to address it. Putting together the right team is crucial.

Fighting poverty, requires direct policy interventions; a set of rules, laws, regulations or actions taken by government to effect an outcome that may directly or indirectly impact the lives of citizens or large proportion of society. It starts with the policy choices. That is why the outcome and its impact on society greatly depends on the team that makes those policy choices.

Most often the process by which these policies are formulated tend to be muddy and contentious, influenced by competing interests and opinions. With respect to Sierra Leone, those influencing factors tend to always be political, self-serving and foreign interest be it donors or creditors. The political influencing factors usually includes tribal and partisan interest.

Over the past two going to three years, the current government has proven to be of no exception to this rule. The gross level of incompetence demonstrated by this Bio government is a direct reflection of the rot that permeate within the entire socio-economic fabric of the Sierra Leonean society.

It is true that President Bio inherited a government with serious structural weaknesses and poor financial management system, increasing the pressure on the fragile economy and hampering efforts to fix the problem they inherited. Unfortunately, the bad policy choices of his government has exacerbated the problem of poverty.

According to a recent multidimensional profile index conducted by a team of statisticians lead by Statistics Sierra Leone, 64.8% of our population almost two-thirds are below the poverty line, the severity of which doubles in the rural areas.

Multidimensional measurement of poverty is a more realistic approach because it takes into consideration non-monetary measures which are usually not captured using the traditional income and expenditure approach. This recent study took into consideration five dimensions; measuring poverty in terms of the level of access or lack thereof to healthcare, education, housing, energy and better living standards.

To address these challenges, the government should focus on certain important priorities none of which are easy to address. The first of which is to put the right policy team together.

SETTING UP THE RIGHT POLICY TEAM

There are many policy changes that could reduce poverty in Sierra Leone, but the first step starts with the composition of the President’s Economic Policy Advisory Committee. My recommendation is that this committee should comprise of representatives of three other policy groups namely: Monetary Policy Advisory Group, Fiscal Policy Advisory Group and General Economic Policy Advisory Group.

The main function of this Committee should be, to advise the President and his team on both domestic and international economic policy issues. The committee should be expected to prepare annual Economic Reports and should be able to set measurable and achievable economic goals with predictable outcome.

Members of the President’s Economic Policy Advisory Committee should meet at least three to four times a year and must comprise of representatives of three other sub-committees as noted above, namely:

1.Monetary Policy Advisory Group (MPAG): MPAG must be independent and free from any Govt. control and must be chaired by the Governor of the Central Bank and should include other policy advisers from the Private sector such as the Banking Sector, the Manufacturing, Insurance and the Agriculture industries and at least one representative from the Chamber of Commerce.

Money and Credit are the lubricant and fuel that drives the Macroeconomy of any country.  Therefore, members of this group must have a working knowledge of the functions of the overall monetary economy, including the functions and instruments of the credit market particularly in the context of Sierra Leone.

The operative words here are “Working Knowledge” not just academic knowledge. Understanding how money interacts with economic activities and the role of credit is fundamental to the role of an economic policy adviser. The principal responsibility of this group would be to offer Monetary policy recommendations geared towards price stability to control inflation, job creation and generate overall economic growth.

2.Fiscal Policy Advisory Group: Controlling government expenditure is very crucial in determining the government’s ability to handle its debts and balance its budget. This group should therefore focus on TAXATION and controlling government EXPENDITURE with the view of developing a positive impact on our aggregate fiscal discipline including the strategic allocation of resources, as well as the efficiency of public service delivery. It is important to note that improvements in the quality of public financial management, is key to achieving this objective.

We need to monitor Government budget and reduce our deficits both trade and fiscal deficits. This group must be headed by the Minister of Finance and must include the Financial Secretary, Director of the Ports Authority, Commissioner General National Revenue Authority, the Accountant General and other members of the Executive Branch dealing with Government revenue and expenditure.

3.General Economic Policy Advisory Group: This group should comprise of private individuals from academia such as the Department of Economics in the University of SL, business, labour, civil society and representatives of Sierra Leoneans living abroad, individuals actually doing policy related work for development agencies, or foreign governments.

The make-up of the President’s Economic Policy Advisory Committee EPAC should be drawn from the above sub-committees comprising of two representatives each from the Monetary Policy Advisory group, and the Fiscal Policy Advisory group respectively and three from the General Economic Policy Advisory Group a minimum of seven members. Every three-month EPAC members should meet with the President to present and discuss the set of recommendations on policy outcomes.

Each group could arrange on how often they would meet using available technologies, and when possible meet face to face at least once every three months. Each group must produce a written report which is presented to the President every quarter. I must add however, that it is very imperative that these groups of policy advisers are given access to all necessary data to help them make informed policy recommendations. Without having access to the data, they would not be able to offer the best advice.

I’ll be the first to admit that everything I’ve noted above would not be possible without a President that has the sincerity of purpose and has a team committed to the vision of reducing poverty. Being committed means you will be mindful of the need to avoid wasteful spending especially in areas such as wages, salaries, per diem, Govt. awarded contracts, and frivolous traveling. Being committed to the fight against poverty also means you will be committed to reducing fraud, waste, and abuse of govt resources.

Here are some relevant questions I believe a President that is committed should be asking of members of the Economic Policy Committee, which falls under key economic indicators:

1.What is the level of Public spending as a percentage of the Gross Domestic Product? The most important portion of Govt expenditure that he should be paying attention to is that which goes towards social services as a percentage of total general government spending.

We need to keep close attention on, not only the allocations but also how much of such allocation is spent on Social Capital goods as opposed to non-capital goods and services. An example of non-capital expenditure is the wage bill. He should be asking whether govt agencies are being overstaffed, or are there wastages and abuse of govt resources? The Committee should be able to answer these questions.

2.What is the trajectory of our Budget Deficit as a percentage of our GDP? Is it reducing or widening? Do we need to reduce our spending overruns and increase revenue mobilization?

3.What is the trajectory of our Public Debt as a percentage of GDP? It has doubled over the past ten years. How are we broadening our tax base to collect more revenue and reduce waste, fraud and abuse of government resources?

4.What leverage do we have over the Inflation rate particularly food inflation?

5.What are we doing to expand the private sector Credit Market especially for capital investment? Our Interest rates looming above 14.5% a serious deterrent to the growth of the credit market.

6.What is our growth trajectory to help reduce the Unemployment rate, which is heading to a double digit, increasing the pressure on the poverty rate?

7.What steps are we taking to narrow the big income inequality gap? How much are we Investing in Capital social services in such areas as education, healthcare, public transportation, food production to help narrow the income inequality?

8.What is our trade deficit, and what are we doing to, not only increase our Export volume but also diversify export?

9.What measures do we have in place to reduce our import of non-capital goods particularly for food items that can be produced and processed locally such as Cooking Oil, Rice, Meat etc?

10.What are we doing to encourage Investment in Capital Equipment both public and private sector investment which will considerably enhance our ability to produce more?

It is my view that if this President had such a setup of policy advisers focusing on the above stated indicators, we would have been in a much better economic condition by now than we are experiencing today. The above ten indicators are crucial for the work of the committee.

Members of this committee should not be expected to be full-time employees of the government, except those that already have designated functions that fall within the work of the committee, such as the Minister of Finance, Central Bank Governor, and the Finance Secretary. All others should be volunteers. (Photo: Author – Jesmed F Suma).

This will help to maintain their independence and limit influencing factors that may cloud their judgement in terms of the policy advise they may offer, some of which maybe bitter pills to swallow.

In my next article, I’ll focus on the healthcare sector, pointing out its relation to reducing poverty and what a progressive government should consider to address the challenging problems of the healthcare system.

About the author

Jesmed F Suma is President and CEO of BRIMCO Consulting LLC (An investment management consulting firm based in the US). He has a wealth of experience working for fortune 500 corporations in the US like Nielsen Media Research, Sears Holding and Amazon Corporation. He was the Executive Director of Sierra Leone Policy Watch Inc. A policy Think Tank based in Washington.

He can be reach on 908-759-4332 or JFSuma@Outlook.com

1 Comment

  1. At the end of the day, there is no shortage of well-educated, well meaning Sierra Leoneans, both within the country and outside the country, that wants to offer their professional services in the development of our country. These ideas are great and well intentioned. We know if Bio takes on board some of this ideas and works to implement them, he will be the the president that reaps the benefits of any long-term developments that takes place in our country. He will go down in history as the Jerry Rawlings of Sierra Leone. He should take this opportunity and lay the foundation stones, for both the structural, and economic changes needed to tackle the lack of developments in our country. We have to get our priorities right.

    For me, educatio, and infrastructural projects like good roads that link up the country North and South, East and West, where for example a Fulani man, is able to go and do his business in Kailahun and return North to Kabala, without risking his life and limb in our atrocious roads. This will create a greater understanding between our tribesmen.This lack of interaction in the country amongst the people tbat call this place home, is partly responsible for the divisions and suspicious that we see, or hear today. With good roads and one able to spend a day out from one part of the country to the other, we will focus more on what unite us than what divide us . In the age of the Internet we in Sierra Leone still see other tribes as the other.

    Over the years that has played a huge part in the lack of developments. But will he? Advising Bio is like banging your head against brick wall. There are more able, tried and tested Sierra Leoneans, that have worked in many respected international institutions and regional bodies, who have always excelled in their positions, executed their work and duties truthfully and transparently and are acclaimed for it. The questions then becomes, what is holding us back when it comes to offering the same services for our own country? Tribalism. I should also like to add one of the missing links to achieving our development goals; we need a wholesale structural change in terms of transparency, accountability and good governance. Respecting the rule of law and free speech is a sure way to advance your country’s democratic credentials.

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