Sierra Leone’s lack of development lies in the hands of our politicians and it has been at the centre of international concern. It is the poorest country in the world and poverty is on the increase by the day, along with HIV/AIDS, malaria, malnutrition, lack of clean water, medication, healthcare and housing.
Life expectancy has dropped to an all-time low, and it is no secret that we will be unable to achieve the Millennium Development Goals in 2015 or even 2030, because change of government in Sierra Leone means restarting projects and sacking of officials whether they are party affiliates or not, thereby reversing the trend.
Presently the international community is becoming skeptical about giving aid to Sierra Leone, as corruption and inefficiency make it seem like pouring water on the back of a duck. Most of the monies spent in Sierra Leone over the past 15 years have little or no effect on the country’s economic growth, as part of the funds given are utilized by the donor themselves.
Many observers believed that the state of affairs in the country is our own doing and can always be explained by the civil strife, war, bad governance and corruption. From an economic perspective, other attributes can be linked to lack of openness to trade and investment, lack of clarity in our land laws, too much state intervention in national economies and a widespread reluctance to espouse market-friendly policies and principles.
Since independence, the land tenure law is still unclear, because people from the western Area and with western names cannot acquire land in the provinces, but the provincial men can purchase land in the Western Area. A Guinean can easily purchase a piece of land in the provinces but I can’t. With such laws in place, the country will never develop and the strain will continue to be felt by the city because of over crowding leading to lack of housing, medication, clean water and clean environment.
But the more nuance analysis of the Sierra Leone problem paints a rather different picture, and in the context, history does matter. Sierra Leone gained independence from the colonial powers in 1961. It was evident that the post-independence government would need to step in and take over the management of the economy because the colonial powers did not create the right conditions for indigenous entrepreneurial class to emerge.
Thus the role of the state in economic management was essential for maintaining a viable economy, and the government opted for import substitution and infant industry protection that had been the policy choices of early industrial countries in Asia and Latin America. During the post-independence period, Sierra Leone’s growth performance and development indicators were better than Japan and many other strong economic countries of Asia and Latin America.
Three major factors were decisive for Sierra Leone’s subsequent downturn. Firstly, according to research, Sierra Leone’s growth was largely the result of a commodity prices boom of the 1960s and 70s. The fluctuations of prices for primary commodities declined in the late 70s and early 80s as a result of world-wide recession. Prices did not recover until fairly recently and even then have not returned to the levels of the 70s. The excessive reliance on primary commodity exports meant that the terms of trade losses suffered by Sierra Leone created balance of payments problem that could only be addressed through borrowing.
Thirdly, the hosting of OAU brought heavy financial and economic woes to the country. After the OAU, the country plunged into debts and the Leone lost considerable value that we are still suffering to date. After the OAU, electricity supply became erratic – that has continued to date. Presently, the country’s economy is now in the hands of donor agencies rather than in the hands of Sierra Leoneans.
The time between us being independent and the economic downturn in the world was short and indeed affected the ability to build viable institutions of governance, create a new entrepreneurial class and develop a diversified economic base. Sierra Leone’s window of opportunity was not wide enough for a new managerial generation to become educated and take control of the institutions of public and private governance. Infrastructure bottlenecks also meant that Sierra Leone was very much tied to trade patterns that had existed throughout the years of colonial rule, so there was little chance to create the type of regional trade dynamics that the East Asian countries were able to develop.
From the 80s onward macroeconomic policies were being increasingly shaped by the multilateral financial institutions, in the context of structural adjustment policies and conditionalities attached both to lending and aid. These policies called for trade liberalization, privatization of state-owned enterprises and de-regulation.
Asian countries like Japan, Singapore and Malaysia had liberalized once they had their institutions in place, and even then so did they gradually become more competitive in international markets. Sierra Leone by contrast was told to liberalize in order to become competitive, a difference that the proponents of unilateral liberalization have chosen to ignore.
Another problem with us is the slow and erratic growth, rising unemployment, poverty and institutions of governance that have been the result of withdrawal, de-industrialization and increasing shifts into the informal economy. These have become the main features of Sierra Leone economy in the past 30 years. Rich countries growth have been primarily due to higher primary commodity prices like the rising demand from China, and the substantial injections of official development assistance to countries that have become showcases for neo-liberal policies.
To break the cycle of poverty and underdevelopment, Sierra Leone needs to grow at an average of at least 8 percent yearly. This requires a major increase in investment in human and physical infrastructure and productive capacity through vertical and horizontal diversification.
Sierra Leone’s illiterate percentage is far too high and the literate group is also affected by unskilled professionals. The more literate and skilled population we have the easier for the country to develop. The earlier the land tenure act is changed the better it will be for the development of the entire country. The more continuity we have in the political sphere the easier it will be for the country to develop. A new government in power always wants to start afresh by condemning projects and proposals left by their predecessor. The more politicians forget about regionalism and tribalism, the easier it will be for the country’s development.
The current rate of investment in Sierra Leone’s economy is far below the average for other developing countries, amounting as it does to some 18% of GDP and reflecting, too, low levels of domestic savings that are less than 15% GDP. Sierra Leone investment gap has not been filled by foreign direct investment despite every effort to attract inward investment. The duping of business people by crooks and the police is a major factor affecting investment.
The exception is the mining and extractive sector, but owing to its capital intensive and enclave nature, this sort of investment has not been able to generate the usual positive benefits of job creation, technology transfer and linkages with the rest of the economy.
But according to my research, Lesotho a smaller country with less diamond deposits than Sierra Leone but the same Kimberlite mining have been benefiting immensely from the mines because of the strong mining policy of 30% from the proceeds going to the government. Botswana became successful from diamonds, using the Sierra Leone Selection Trust (SLST) blue print. This plan was for Sierra Leone, but never worked or was never implemented in the country.
Comparing the other developing regions, the extractive industries in some African countries have not generated enough tax revenue for them to invest in infrastructure or the diversification of the economy. Instead a country like ours has been in a race to the bottom offering major tax incentives to attract scarce foreign investment to others.
Because of our regular bottom place as the poorest country in the world, the international community now recognizes the fact that they need to double their aid to us and write off all debts, because it is virtually impossible for us to pay those debts even in the next 100 years.
Per capita in South Korea and Hong Kong for the past 20 years topped $700, while Sierra Leone averages about $32 per capita. Although of critical importance, financial flows are not enough on their own to set the country onto a sustained growth path. Sierra Leone requires policy space to devise macro and microeconomic policies adapted to their individual needs and requirements.
We also need strategic industrial policies and a more balanced integration into the world economy unhampered by international rules and disciplines, using the flexibilities provided under existing arrangements as well as special and different treatment. Also we need access to the markets of industrialized countries and a major reduction of Agricultural subsidies in the developed world.
Good governance, the rule of law and democratic institutions are the result of successful development policies, not their precursors, says the west. China has the fourth largest economy and the largest foreign exchange reserve in the world without democracy. Sierra Leone is now experiencing the fundamentals of democratic change, and as with other fledgling democracies there will be hiccups. The fight against corruption has started but not effective. Developed partners must play their share role in this process, and every effort must be made to ensure that the democratic processes under way are not tantamount to “voiceless democracies” in which economic policies are ultimately dictated by outsiders.
By Austin Thomas
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