By Amin Kef Sesay
Sierra Leoneans generally are disappointed, appalled and frustrated that President Bio’s New Direction Government, through the Ministry of Trade and Industry seems to has no effective structure and mechanisms countrywide for monitoring and controlling the prices of basic essential commodities that the majority living on less than $2 a day (the World Bank’s minimum poverty earning rate) depend on to maintain a decent standard of living.
The Ministry has the sole mandate of developing policies and programs to stimulate local and export trade as well as to enhance private sector investment, industrial and economic growth.
The Ministry importantly must have a vision of a strong private sector-led economy, which will ensure that the socio-economic needs of the citizens are met through private sector development, job and wealth creation.
When trade is conducted within a well regulated environment that prevents monopoly control and price fixing, it contributes to eradicating extreme hunger and poverty by reducing the proportion of people suffering from hunger and those living on less than one dollar a day.
In which light, too much trade liberalization poses a threat to a developing economy like ours because importers are left free to dictate prices, invariably unreasonably to the great disadvantage of the consumers who have no power to fight back.
Poverty is the most crucial plague of our times. It is commonly agreed that in order to reduce the proportion of people living on less than $1 a day, developing countries need to substantially accelerate their economic growth by carefully opening their markets.
The standard rationale is that trade liberalization improves efficiency in the allocation of scarce resources, enhances economic welfare and contributes to long-term economic growth. For example, only few big traders import basic essential commodities into the country. It is very easy for them to corner the market creating artificial scarcity and forcing price to go up as one importer of cement has succeeded in doing with the Ministry of Trade seemingly powerless to intervene.
Trade openness has to come with comprehensive reforms in line with the degree of development. Minimum wage is Le600, 000. A full bag of rice has gone up beyond Le250, 000.
Trade is not a “sector” – it covers a wide range of activities and encompasses not just goods, but also services.
Thus, we expect a sensitive, proactive pro-poor friendly Ministry of Trade and Industry to set objectives and produce results, e.g. building trade capacity, enhancing growth prospects and reducing poverty.
At the same time, clear trading benchmarks are necessary for reliable monitoring and expansion of the ‘sector’. For example, the Ministry should offer:
- Technical trade-related assistance: for example, helping businesses that import and export to develop trade strategies, negotiate trade agreements, and implement their outcomes;
- Productive capacity building (including trade development): for example, providing support to allow industries and sectors to build on their comparative advantages and diversify their exports;
- Trade-related adjustment assistance: helping businesses with the costs associated with trade liberalization such as tariff reductions, preference erosion, or declining terms of trade;
There is a large body of evidence that there are positive links between openness to trade and economic performance, which – depending on the pace and pattern of growth – is important for achieving sustained poverty reduction.
This is seen in developing countries that have succeeded in benefitting from the expansion of global markets. Steady reduction in trade barriers – particularly in manufactured goods – has enabled these countries to rapidly integrate into world markets through an export-led industrialization process, and thereby share in the prosperity generated by globalization.
In such, there has to be a sound macroeconomic framework, promotion of a business-friendly environment, developing human resources, and ensuring that the most vulnerable are protected.
