Billions of Leones Borrowed by the APC
government Will Haemorrhage Sierra Leone’s
Economy
The Sierra Leone Telegraph Editorial Team
18 April 2009
The
President has laid down the gauntlet for his
party officials, Ministers and supporters at the
2009 APC convention held in his home town -
Makeni. But what is rather odd and striking
about his speech, was the absence of any
reference to his government’s real economic
achievements thus far.
The
convention ought to have been an opportunity for
the leader and his disciples to review their
performance against the much talked about
‘Agenda for Change’ manifesto pledge. Should we
then therefore expect to see the publication of
a mid-term progress report on efforts to combat
unemployment and poverty?
Since
raising the question as to whether the private
sector or the economy for that matter is safe in
President Koroma’s hands, we have in the last
few days read various ministerial pronouncements
of significance, to convince doubting Thomas’s
that the government indeed does not have a
coherent Private Sector or Economic Development
Strategy. What is in place is a ‘patch work
quilt’ of disjointed and discretely funded
projects, dotted across the country, which have
been inherited from President Kabbah’s
government.
Most of
the government’s projects are aimed at meeting
the priorities and objectives of the Poverty
Reduction Strategy Paper and the Millennium
Development Goals, handed down by the
international donors. Not surprisingly, the
frustration of the previous Minister of Finance
and Development, David Carew, at the lethargic
response of the donors in meeting their funding
obligations was strongly expressed before being
shuffled out of his job by the President.
The die
has now been cast – the government has this week
set its own defining moment of truth, when it
announced that; “Bumbuna will be the defining
moment of APC Government's achievement this
first term.” (Cocorioko News, 13 April
2009).This surely will be one of the STANDARDS
by which the PERFORMANCE REPORT CARD of the
government will be marked come 2012.
It was welcoming to read
that the Minister of Information, Ibrahim B.
Kargbo in his usual charming tone, stated; “very
soon President Ernest Bai Koroma will turn the
switch on at Bumbuna and will soon start
supplying electricity to Sierra Leone.”
But no sooner had I
finished writing this piece, including the
declaration that; ‘We, the patriotic citizens of
Sierra Leone, who do not view national
achievements from a partisan, regional or tribal
perspective, are delighted with the news about
Bumbuna and can hardly wait for the day
when President Ernest Koroma fulfils THE FIRST
OF HIS MANY PROMISES to the Sierra Leonean
people’, came this whopping report from AWOKO
(15 April 2009):
“It dropped like a bombshell
when President Koroma yesterday admitted that
the eagerly awaited Bumbuna electricity which is
expected this April has faced serious setback
and will not be due until the middle of the
rainy season.” This is very serious, I lamented.
No rain – No Bumbuna – No electricity. This is
plain talk and simple, but COSTLY.
Was the supply of water not
factored into the Bumbuna Project Plan, before
setting the date for commissioning?
Without wanting to sound
pessimistic, what if it does not rain much this
rainy season, as climate change seems to be
taking its toll? Does it mean that we all have
to wait for another year, or even longer for
Bumbuna to start functioning? But how could
April, being the end of the dry season, have
been chosen in the first place as the switch-on
date?
It seems the optimism for
an imminent economic recovery conveyed by
Information Minister - I. B. Kargbo just
twenty-four hours prior to the President’s
televised speech, was not matched either by his
ministerial colleagues; Messrs Samura of the
Finance Ministry and Momodu Kargbo, Deputy
Minister of Finance. In his speech delivered in
the USA, Momodu Kargbo mentioned (Patriotic
Vanguard, 13 April 2009), that;
“The Government of
Sierra Leone is in the business of providing
goods and services, and you are all welcome to
be part of this venture that is aimed at turning
the country around.”
No,
Minister. Government does not create wealth and
therefore should not be in the business of
providing goods and services for the people of
Sierra Leone. The government’s role and focus
must be to create an enabling, private sector
business friendly environment, which encourages
new business start – ups and promotes business
growth. Encouraging Sierra Leoneans living
abroad to come home to invest and create jobs is
excellent. But as I once again remind the APC
government:
-
The
President has given us no indication as to
what practical and financial support
businesses will receive from his government
in the next twelve months in order to kick
start Private Sector led economic growth of
10% GDP annually.
-
The government needs to guarantee access to
affordable finance; access to a pool of
skilled and trained workforce; access to
suitable industrial premises, managed
workshops and business incubators; provision
of reliable energy and water supplies; good
roads and telecommunication networks. These
are just the building blocks upon which a
modern economy is built. Industry in Sierra
Leone needs them NOW.
Granted
that the government has been in power for just
less than half its first term in office,
eighteen months is nevertheless sufficient
enough for the government to show professional
leadership and vision, as to where the country
is heading and how we are going to get there.
Rhetoric must be backed by ACTION.
Another harsh reminder
came from the Minister of Finance, Dr. Samura
Kamara himself this week (Awareness Times News,
14 April 2009), when he
reportedly divulged
that, the biggest threat to Sierra Leone is
unemployment. He stated that a huge percentage
of Sierra Leoneans lack capital to invest in the
commercialized sector. He said that most of the
commercial banks operating in the country are
owned by foreign nationals.
Does
that mean that President Koroma’s government has
given up in ensuring that the Banks play fair in
their dealings with indigenous businesses that
require affordable start – up or working
capital?
The
Business Counsellor and Coordinator for the
Joint UNIDO/AG funded Entrepreneurship
Development and Investment Training Programme,
which currently supports a group of 21 potential
indigenous entrepreneurs, warned that although
many of the participants already have micro and
small business experience and good business
ideas, they will struggle to get a head start,
as “there are limitations and constraints for
business start ups which they are likely to face
in a country where lending institutions are
reluctant to support start - ups or have limited
or no micro finance facilities” (Cocorioko, 15
April 2009).
These
official policy statements and reports would
appear to give credence to critics of the
government’s Private Sector Development
Strategy, that more needs to be done in order to
kick start the economy, if the government is
serious about tackling poverty. And this comes
at a time when the government is printing more
money by selling over 200 Billion Leones of
Treasury Bills, through the Bank of Sierra
Leone (Government’s
Treasury Bills Announcement,
Awareness Times; 14 April 2009).
If one
should believe that this additional Public
Sector Borrowing requirement authorized by the
President, is needed
in order to plug the gaping hole left in the
government’s coffers as tax revenue dwindles,
then Sierra Leone’s economic decline is set to
get worse than was previously anticipated. The
government is currently struggling to match
current budgetary spending with tax revenues,
hence the over reliance on donor support.
The
sharp decline in mining revenue, business and
personal taxation is ‘haemorrhaging’ the public
purse, yet Ministers continue to spend as though
the Leone is going out of fashion. Instead of
taking heed of the former Finance Minister’s
warning, he was quickly shuffled out of his job.
It is odd for a Finance Minister to be removed
from office after just eighteen months in the
job. This will surely affect investors’
confidence.
As
government ministers look up to Ivan Davies, the
British Minister, to make good on his promise
to provide £28 Million grant-in-aid, the
people of Sierra Leone are left wondering what
impact the recently announced 200 Billion
Leones Public Sector borrowing requirement
(sale of Treasury Bills) will have on
inflation.
A
pertinent question that must be asked therefore
is - how could a government that is trying to
encourage the Private Sector to borrow from
banks to pursue growth, is itself out in the
financial market place looking for money to
borrow? Will this not add to the woes of the
very businesses and potential entrepreneurs the
government claims to be seeking to help?
By
competing in the financial markets with private
investors, the government is inadvertently
driving up interest rates and the cost of
borrowing in Sierra Leone. This will further
compound the difficulties faced by indigenous
entrepreneurs starting up, or trying to expand
their existing businesses. The simple economic
rational here, is that;
NO
BUSINESS FINANCE = NO ECONOMIC GROWTH = NO TAX
REVENUE = POVERTY.
The
First Vice President of
the Sierra Leone Chamber of Commerce, Industry
and Agriculture, Mr. Tunde Cole is urging
‘government to be proactive by addressing the
challenges faced by businesses, and create a
proactive environment for business to thrive’ (AWOKO,
15 April 2009). Perhaps
one should no longer continue
to ask whether the Private Sector is safe in the
hands of President Koroma, but to conclude that
IT IS NOT.
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