Sierra Leone Telegraph: 12 May 2017
Yesterday – 11th of May 2017, was the day that Sierra Leoneans were expecting massive cash windfall – at least $50 million, from the sale of their Star of Sierra Leone MK2 – the second largest diamond ever found in the country. But once again they were left disappointed.
Since the government’s official announcement in March of the bid process in Freetown to sell the 709 carat diamond, only five bids were opened at the offices of the Bank of Sierra Leone yesterday. None of which met the government’s expected sale price of $50 million. What went wrong?
How could the minister of mines – Minkailu (Photo) and his officials have got their valuation so widely wrong?
The highest bid – $7.7 million, was made by a British citizen named as Ziad Al-Ahmadi, on behalf of an Antwerp based diamond trading company – Raydiam BVBA.
How could the government have read the market so erroneously?
The global market demand for precious stones – such as diamond is currently fairly high, as investors move their cash from other extractive minerals, as demand from countries like China – and global prices slumped markedly in the last five years.
Sierra Leone is one of the poorest nations in the world. With a population of about six million and a GDP of less than $3 billion today, every little the government can raise from the sale of the country’s natural resources should make a difference to poverty – assuming the money does not find its way into the pockets of corrupt officials.
In 1961 – when the country attained its independence, its GDP was less than $0.5 Billion, for a population of 2.2 million people. By 1980, GDP had grown to about $1.1 Billion and the population had increased to 3 million.
But by the time the war started in 1991, corruption, poor governance, madness and impunity had derailed the country’s path away from economic success and social development. (Photo: A war victim).
The ruling APC had transformed a once prosperous nation into a failed state, bringing death, misery and untold suffering on its own people.
In 1990, GDP had fallen to an appallingly low of $650 million, whilst population had risen from 3 million to 3.9 million.
But as the ten year war came to a miserable end – leaving millions of people in destitution; over 250,000 dead, 5,000 known to be amputated, Sierra Leone had become a shadow of its pre-independence youthfulness.
With the help of the international community, the World Bank and IMF – the country was put on life-support for emergency resuscitation. In just ten years after the end of the war in 2001, Sierra Leone received over $10 billion in foreign aid and loans for development.
And by 2007, when the APC made a return to governance one more time, Sierra Leone’s economy had grown by an average of 8% a year to $2.1 Billion, as industries were resuscitated, infrastructures built, governance institutions established.
By 2010, GDP growth had started to slow down again. But a single $1 billion investment drive into the iron ore mining industry by African Minerals, made a huge impact on the country’s GDP – pushing it up by over 30% – the highest annual growth recorded on the continent in 2011.
But, unemployment, poverty, malnutrition, adult and child mortality continued to rise. This was exacerbated by the Ebola epidemic which struck the region, killing about 4,000 people in Sierra Leone in 2014 and 2015.
The death toll left behind by Ebola was half the story. Its economic devastation is still being felt today, as the country’s economy slumped by 60%, with GDP back to its 2010 level.
Sierra Leone’s economy is today struggling to make a recovery. Foreign investments have dried up. Big promises made by China to invest massively in the country’s agriculture, fishing, energy, and tourism sectors have not materialised.
In December last year, president Koroma and his senior ministers were in Beijing, China, with the hope of returning home with a bag full of investment bonds, but they were disappointed. Instead the visit was turned into a ‘presidential succession beauty parade’.
While China claims not to be interfering in the politics of Sierra Leone, it is clear that it had wanted to influence the decision of the ruling APC party as to who succeeds president Koroma in 2018.
China has not succeeded, and is now unlikely to make good on the investment promises it had made to the president, who has since made several trips to other countries such as Israel, Turkey, and Saudi Arabia, drumming up support for much needed investments in Sierra Leone’s economy.
But with less than twelve months before elections are held in Sierra Leone, not many investors will be willing to take such a risk. They will sit and wait the outcome of next year’s elections, which the ruling APC are desperate to win, so as to consolidate their political dominance. Critics say – to continue their corruption and poor governance.
But in the meantime, the economy is in dire straits. There is recession in town. Not surprisingly, the government has busted its own austerity measures it had imposed on the people last October, and has run out of cash.
Had it succeeded in selling the 709 carat Star of Sierra Leone MK2 yesterday for $50 million, there would have been jubilation at State House and in the streets of the ruling party’s stronghold.
President Koroma and his ministers can only now sit and wait for a generous buyer in Israel or Antwerp to offer the government something close to the $50 million, or half that sum, to pay for the big pre-electoral spending it needs, if it is to win the 2018 elections.
So, where does the government go now with the sale of this diamond?
“We’ve decided not to sell the diamond today because the highest bid price does not match the government’s reserve price,” Sahr Wonday, chief auctioneer and head of the National Minerals Agency told reporters yesterday.
“We are going to sell the diamond in Antwerp, Belgium, for us to get the best (bid) within the next few weeks.”
And what about Emmanuel Momoh – the pastor who found the diamond? Is he happy to wait for another auction?
“I was unhappy with the highest bid price,” Momoh told reporters yesterday. ” It is worth a lot more than $7.8 million.
“I want my diamond to be sold abroad so I can get the best price to enable many people to benefit from the proceeds,” said Momoh.
But questions still remain in the minds of Sierra Leoneans: How did the minister of mines and his officials get their valuation so massively wrong? There is a big difference between $7.8 million offered by the market and the $50 million expected by the government.
What had gone wrong? Is it incompetence or something more fundamental – corruption?
Are we talking about the same diamond found in March that was valued at $50 million?