Sierra Leone Telegraph: 2 July 2019:
Yesterday’s decision by fuel companies in Sierra Leone to increase the pump price of petrol by more than 21%, has sparked fears of further rise in inflation which currently stands at about 17%.
The price of petrol has gone up from Seven Thousand Leones (Le7,000) to Eight and Half Thousand Leones (Le8,500).
Speculation about fuel price rises have been rife over the last few weeks, with the country’s largest retailer accusing the government of owing the company millions of dollars in unpaid fuel bills.
However, yesterday’s announcement comes as cost of oil on the global market shoots up, due to rising tension in the Middle East, amid fears of a war between the US and Iran.
But the genesis of Sierra Leone’s continuous fuel debacle can be traced to the country’s weak foreign exchange and low economic growth.
In the last three years, the value of the Leone has suffered a 30% fall, due to a collapse in mining export revenue.
Sierra Leone still relies heavily on foreign aid and loans from the IMF, which comes with tough structural adjustment conditionalities, including the removal of government subsidy on fuel.
Although the government is being criticised for increasing borrowing, but it seems the government has very little choice in the short-term.
Assuming that private sector investments in key economic sectors such as fishing, farming, tourism, timber production, light manufacturing, and agro-processing, can begin to stimulate economic growth and create employment opportunities in the next two years, then the Bio-led government should have more money to spend on infrastructure development, education, health, and improved access to clean water, without further public sector borrowing and reliance on foreign aid.
But until then, the government is stuck between a rock and a hard place. The temptation to borrow more from the IMF and other sources will in the next two years be difficult to ignore.
In the meantime, inflation remains stubbornly high. But as local journalist – Sarah Kallay reports, yesterday’s increase is less likely to see a rise in cost of transportation in the country.
This is Sarah’s report:
Prior to the modification of the fuel pump prices, the Ministry of Transport and Aviation in consonance with the Ministry of Trade and Industry, and commercial transport owners, held a meeting on Thursday 25th June 2019, to discuss the expected increase in fuel prices and its resulting impact on point to point fares for motorbikes, tricycles (Keke), cars (taxis) and vans (Poda-Poda). The meeting also involved all district heads.
Speaking at the meeting, the Minister of Trade and Industry – Edward Hinga Sandy, explained that due to extenuating circumstances in the global oil market, caused by political uncertainty in the middle east, there has been significant pressure on demand.
This pressure has now manifested itself globally by a slight but significant increase in oil prices, and Sierra Leone is susceptible to its effect.
However, the Minister assured that the increase will not exceed a thousand five hundred Leones (Le 1,500) on any of the oil commodities. Minster Sandy then called for the review of the fuel prices using the existing matrix as price determinant for new cost of oil commodities.
The Minister of Transport and Aviation Kabineh Kallon cautioned against exorbitant price hike in drivers’ possible nefarious efforts to extort travellers.
He also warned against oil marketers collaborating with certain individuals to create false scarcity of fuel in the country, as this has the propensity to disrupt the flow of trading and normal daily routine of citizens.
The President of the Motor drivers’ Union Alpha Bah, President of the Indigenous Transport Owners Association – Alhaji Abu B. Fofanah, President of the Bike Riders Union – Umaru Talie Bah, and President of the Sierra Leone Commercial Tricycle – Union Bornoh Samba Kamara, all concurred that prices of point to point transport fare will not alter much.
It should be noted that even with this hike in fuel pump prices, the cost of fuel in Sierra Leone remains the lowest, compared to other countries in the sub-region, such as Guinea and Liberia.
It’s a very good update for us in the rural area.
It is really disheartening when some African leaders still cannot understand the position of the IMF. The IMF was set up as one of the means to replace colonisation. Not until we realize this, before African nations can start the journey to prosperity.
This is really a disaster for Sierra Leone’s economy.
This is exactly what happens when you accept AUSTERITY in exchange of CHICKEN DOLLARS from the IMF, remove subsidies on the LIFE SUPPORT of the essential commodities in the country, a disastrous weak currency and a disgusting draining economy. Also, when the GENTLEMAN MINISTER starts saying that even with the price increase on petroleum products, the country has the lowest fuel price compared to other countries in the sub region does not make sense. Does the GENTLEMAN MINISTER know the PURCHASING POWER OF the people in those countries? It is really unfortunate and disappointing to hear a GENTLEMAN MINISTER making such comments.
These ministers always find someone to blame or make BOGUS comparisons when there is CRISIS instead of explaining the source of the problems and sorting out the MESS. Just imagine where a government gives you X percent salary increase, goes out at sea with the IMF, gets XX million chicken dollars aid, removes OIL, FLOUR, RICE etc subsidies; and finally your salary increase becomes your former salary minus the X percent increase minus a quarter from your former salary. You just become very poor. So, what’s the use of the X percent salary increase? You tell me.
As long as you continue to go out at SEA with the IMF in search of ECONOMIC FORTUNES, then, such problems will continue forever. It’s going to be a nightmare throughout. What is always worrying is, our leaders and governments give deaf ears to our calls. Finally, a day will come when a President will renegotiate everything our country is engaged in.
I personally give President Donald Trump credit for renegotiating every deal in the interest of the US. Sierra Leone is not far away from adopting the same policies. It’s going to happen. AMEN AND AMEN.
Thank you Susan for your pragmatic analysis. Anyone with a critical altitude, good sense of judgement,would have known by now that the Principal aims,and objectives of the IMF,although disguised in gestures,and utterances of goodwill, are strictly designed to keep African nations in financial shackles,and chains.
And remember also that night,and day are totally different – President Makaforie believes in hard work,and ingenuity; in standing on his own two feet,and not through the help of crutches. Our people are suckling infants,crawling,who are still being spoon fed with milk.
Makaforie is the Jade Vine flower,one of a kind – a rare breed of African species,that is resolute, confident,intelligent,and totally convinced,he is able to measure up to the challenges his nation is facing. Now who is it, that wouldn’t applaud the efforts of such a man?
I have been warning our leaders against digging themselves deeper into holes,they will never be able to come out of – Yep,tirelessly,I have been blowing trumpets of restraint,and caution,but all to no avail. Trust me lady,there’s no use beating loud drums,and banging deafening cymbals no one wishes to hear.They just won’t listen to sensible advice – Let the chips fall where they may.Rising Sun Will Rise Again.
The IMF has not helped any country in the past. The over reliance on IMF would be the down fall of the Bio government if they are not careful. Bio started well by cutting down on government expenditure. But he has veered from that. Let him learn a thing or two from the current Tanzania president. In the last one year President Makaforie of Tanzania has not travelled more than ten times outside his country. When he does it is to neighbouring countries like Rwanda,Kenya and Uganda and he goes by Road. Recently he has frozen all private foreign exchange bureaux and centralised it with the banks. Few have gone out of jobs but there has been a big boost in foreign currency going through the central bank.
The results, the private bureaux are negotiating with the government to self regulate itself properly. The government still subsidizes fuel despite IMF threat. Tanzania is a hub for commercial transportation in the sub region. The government subsidized the cashew nut farmers when the market went bad few years ago. The result, there was an increase in cashew nut harvest. This attracted a Chinese investor and now Tanzania has one of the biggest Cashew nut processing industry that has created jobs and export earnings.
So the lesson is that we have to be conservative some of the time to navigate ourselves out of the current economic quagmire. Too much Bookman economic policies engineered by IMF has failed many developing countries. Think of it, the IMF is not a charity organization.