Sierra Leone NGC Leader KKY Speaks On Economy

By Anthony Kamara Jnr.- 18 August 2019

Sierra Leone’s Finance Minister – JJ Saffa, was at the studios of Radio Democracy 98.1 on Tuesday 13^th August. By all indications, his performance during a live interview did not offer Sierra Leoneans much hope for an improvement in their economic wellbeing, as rising food prices and the rapid fall of the value of the Leone take their toll.

The interview left many labelling Saffa as “arrogant”, “condescending” and “insensitive” to the plight of the suffering masses – the same people he was appointed to work for, on behalf of the Julius Maada Bio administration.

On a previously scheduled call I had with Hon. Kandeh Yumkella (KKY), I took the opportunity to ask him about the state of the economy, given that I had just listened to Minister Saffa’s interview.

This is what he said:

Question: The common topic of discussion for Sierra Leoneans at home and abroad is about the economy and the “Bread and Butter” issues. What is your view about our economy?

KKY: Well, macroeconomic fundamentals can be very stubborn and they cannot be fooled by good intentions and propaganda.

Question: What do you mean? Help the man at the Ataya Base and the market woman along Kissy Road understand your response.

KKY: That is to say, success in economic management is ultimately measured by GDP growth rate, inflation, interest rates, jobs and the exchange rate, among other variables. Ok, may be you can go further to consider the social or developmental or welfare impact of these variables on poverty, health, education.
So the minister’s, and by extension the government’s, performance in managing the country’s economy must be assessed against these variables and not just their rhetorical flourishes.

Question: So how would you frame the debate on the economy?

KKY: The debate on the economy today should examine how the indicators I mentioned earlier changed? Remember, I talked a few minutes ago about exchange rates, interest rates, jobs etc.

Thus, during the period 2017-2019, have the indicators changed for the better, or have they remained stagnant? Have they gotten worse? For now, all indicators tell us that the economy is in deep trouble.

The fact is, we witness the catastrophic depreciation of the Leone due to the absence of any export activities in the country, high inflation, high taxation of the private sector, and more importantly, the absence or paucity of foreign investment due to the unstable and risky governance environment.

It is not too late for the government to take a deep breath, recalibrate, and do a course correction.

Question: There is a lot of talk about the revenue being generated today under the Bio administration compared to President Koroma’s. That was one of the things the minister tried strenuously to stress during his interview. Does that not factor in the state of the economy?

KKY: Well, revenue collection is a necessary condition, but it is what we do with the money we collect that matters. Economies are similar to our household budget; if you receive a high salary every month but you spend it on jingoism and hedonism instead of investments, you will be poor in your old age.

Economies are the same, raising revenue and spending on the wrong things, without deep structural and institutional reforms, will simply postpone the crisis for a bigger meltdown in the future. It is like putting new wine in old wine skin.

Question: Is the New Direction’s economic management different from what you aptly referred to as “Rankanomics”?

KKY: (laughs) Without a doubt, a NEW Direction was and is NECESSARY! However, we expect the current regime by now to put us in the right pathway to growth. The question then, becomes, in which direction are we heading? Are we on the RIGHT direction/trajectory?

Question: Where do you think they are getting it wrong?

KKY: The managers of the economy have basically maintained all the structures left by the previous regime. I am yet to see radical shifts from business as usual. For example, the wage bill has not reduced. In some sectors there is over-hiring and huge expenditures in other areas, and the same parastatals and agencies exist.
Furthermore, still over 80% of our revenues go towards wages and debt payment and this must change. This fiscal capture or overhang trumps all the efforts at enhanced revenue collection.

Question: What would you advise President Bio to do?

KKY: a couple of things: first, appoint a 15 member Council of Economic Advisers (CEA) – on a PRO-BONO basis comprising of businessmen, some bankers, former credible bank governors and former Sierra Leonean IMF staff to hammer out his own economic blue-print. Past leaders in Malaysia, Singapore among others have maintained such an advisory group during their tenure.

This same group can monitor implementation of the president’s economic agenda which should be aligned with private sector aspirations and investment plans.

More importantly, they will give him sound apolitical advice rather than just what he, the president, wants to hear. Second, end inflated procurement and government contracts. Third, aggressively lower the cost of doing business by making it easy to clear goods at the port and lower some import duty and private sector taxes. We need deeper changes in the productive sectors – agriculture, fisheries, mining, etc.

Question: Even before his interview, there have been calls from the public for Finance Minister and the Bank Governor – Kelfalla Kallon to be replaced. Your thoughts?

KKY: I think that question should be addressed to the President. However, don’t forget that it is the President’s prerogative to hire and fire those appointed to serve in his administration. It is the President’s prerogative to hire competent people to help him run his administration so every Sierra Leone can benefit from his stewardship. It is the president’s responsibility to seek the best untainted advice, beyond his immediate circle.

Question: As an MP, have you discussed these concerns over economic management with the government?

KKY: The locus of my discussion with government has been Parliament. But our concerns as MPs or as an opposition are always ignored. If you go to our first budget debate, I raised strong concerns about frivolous spending, and the danger of “jobs for the boys”. I called for rationalization of institutions and more aggressive fiscal consolidation.

The tendency in our country is that ruling parties acquire hubris immediately they are in power (they suddenly seem to know-it-all and damn every other point of view). Another example is that as a party the NGC went to Bintumani-III as a genuine attempt to promote social cohesion. But after that event we have seen the rise in selective justice; we see an increase in political violence and other actions that will cause investors to be cautious about bringing money to the country.

As we head into three bye elections over the next few weeks, we are concerned about the trend in political violence and whether our people will be allowed to exercise their right to vote. If these bye elections are marked by violence, intimidation and fraud, then the world will know that this is not a country where the rule of law, property rights and good governance prevail.

Sometimes I even wonder whether the Sierra Leonean people want genuine change. The deep seated Pull-him-Down syndrome, Do-me-ah-Do-you Syndrome, and Nah-We-Turn Syndrome will make economic management very challenging.

Question: What is your take on the recent floods?

KKY: First, our thoughts and prayers are with the victims. It is a sad spectacle every time.
We hope the impact of climate change will be taken seriously.

This nation still exports massive amounts of lumber in spite of all the expert advice of uncontrolled deforestation. I myself did an article and a video on the latter last year. The Speaker of Parliament hosted a briefing to enlighten members about the long term impacts of deforestation. The recent episodes of flooding in Freetown shows that we are putting bandages on a bad sore.

The Mayor is trying her best efforts; this has to be backed up with bigger public investment to direct the flow of water from the hills to the sea (via ducts); we must move some folks from various disaster-prone areas.

Building climate resilience for infrastructure, agriculture and other development projects is expensive. However, there are many climate funds to help countries undertake such projects.