Last Friday I went to the Kroo Town Road market to do a story on the high cost of foodstuff and by extent the cost of living. I met a middle-aged lady, Victoria, not her real name, who said she’d spent over one hour at the market trying to get what she needed with what she could afford. She stopped and sobbed and broke down. Victoria is certainly not alone. Her situation is typically what obtains in many homes across the country, may be around the continent. It will, it has to be said, be unfair for anyone to squarely blame Government for this situation which has forced a good number of Sierra Leoneans to live under reduced circumstances.
Government has hence reacted to the present harsh economic reality and the ever increasing cost of everything not least foodstuff with the statement by the Minister of Trade and Industry in which he has expressed government’s concern at the state of affairs. But there are a few truths the minister has not bothered to either tell or tell forthrightly. In most, may be all, of the radio interviews I have heard him talk on the issue, he has heaped more blame on so-called unscrupulous traders than on the factors that drive these traders to increase prices. In my view, the recruitment of wardens to gauge the price increase is a waste of time and resources and spreads panic of the old era of price control in this free market economy that we have. Who doesn’t know the causes of the price increase? Global surveys have shown that food prices have reached their highest since records began. Being a part of the global village we are ineluctably bound to be affected.
That said, our situation is compounded by many other factors. Our local currency, the Leone, is on a downward spiral. Among the things that should change that such as a strong export base don’t seem promising. Hopes are now pinned on the iron ore sector with diamond export being on a massive decline especially since November last year. The reason for the decline in diamond export is chiefly due to the over taxation. Government last year increased export duty by more than one hundred percent. As a result of this increase, which was not in tandem with other Mano River Union countries, the projected monthly export of diamonds dropped from US$ 8 million to a little over US$ 4 million. Smuggling by diamond exporters is a possibility in this circumstance owing to the high increase in export duty.
In what is a catch 22 situation, until the value of the dollar is stabilised, it is difficult for traders who, naturally, import in foreign currency, to be able to break even. The buck is surely passed on to the consumer.
But the government’s expansive expenditure has a direct correlation to the harsh reality. Some of the expenditure is thanks to the cost of running the bloated government and another on especially its impressive road project, is another reason. Sources at the International Monetary Fund say the Government has overspent by over 20% its budgeted expenditure. This is alarming for every reason. And with the massive infrastructural work being undertaken on the roads especially with domestic revenue, that overspending will be difficult to soon bring down to a single digit.
But perhaps that can be mitigated by a reduction in the cost of running the government. The cabinet, especially with some unnecessary deputy ministers, should be reduced. The recent creation emanating form the split of some ministries after the annual budget had been read out will have a far-reaching strain on the government’s expenditure. And the attendant fiscal implications thereof will be stunning.
The high unemployment and underemployment rates are another issue that has weakened the local economy leading to the non-affordability of money to keep families going. This is made more stringent by the announcement by Government of an imminent pay rise for all public sector workers. With the Goods and Services Tax, domestic revenue has increased substantially but the world must remain engaged with the government to mitigate the current situation which has the tendency of having a backlash on the socioeconomic situation.
Traders don’t just go to bed and wake up in the morning and increase the cost of their goods. Such is determined by the forces of the market. Agreed there are some traders who capitalise on situations to make ill-gotten wealth. But all of them cannot do so at the same time. A trader at the Kroo Town Road market hissed at suggestions that the minister blames traders for the high cost of goods. She even seemed to be directing her anger at me as if I had said so. But her logic was very logical. “Don’t blame us the poor traders, not even the importers. Blame it on the reality which has forced prices to shoot up”, she said. And I can add that that could be made more severe with a further increase in the price of fuel which seems imminent owing to both the global increase in the price of petroleum product and the freefall of the Leone.
But for the seeming dire financial situation, a stimulus package could be worked out. I am not sure how that can be done. However, the immediate term measure could be significantly reducing tax on foodstuff. I know it will affect the revenue projection but that is better than a civil unrest that could emanate from a squeeze that could be brought about as a result of a continued increase in the price of foodstuff. Such a tax reduction could be transferred to luxury goods such as cigarette, alcohol, cars, etc. Here bread and butter should be warm not hot. Rice should be cooked not parboiled. And unrest should be nipped in the bud not allowed to fester. And a hungry man is an angry man.
By Umaru Fofana