By Sheku Putka Kamara

Revisitation…

Mending Sierra Leone’s Economy – The Viewpoints of Economists

 I once sourced and compiled this narrative and being that talks about the economic remain pivotal, I wish to revisit this publication with a thrust of reminding us all on some of the very necessary things that are to be done.

 For Unisa A.O Bah, there is every need to revive Sierra Leone’s economy. In an exclusive interview, he told me that to start with, ‘’we will need to highlight the causes of our economic instability as a country.’’ Clearly, my brother has a point. He was not only one of the brightest and most brilliant students during our days at Fourah Bay College, he now works as an economic administrator too. In my problem-solving classes, I have always come to the conclusion that problem identification is a crucial aspect of problem solving. So, A.O Bah Jnr. Certainly has a point. To him, the high rate of inflation, high interest rates, government debt, high rate of unemployment, the constant depreciation of the exchange rate and corruption are among the factors that are responsible for the lack of stability in Sierra Leone’s economy.

In Policies for Economic Development, Tejvan Pettinger (2019) discussed that Economic development implies an improvement in economic welfare through higher real GDP, but also through an improvement in other economic indicators, such as improved literacy, better infrastructure, reduced poverty and improved healthcare standards.

Policies for economic development could involve:

• Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth)
• Free market supply-side policies – privatization, deregulation, lower taxes, less regulation to stimulate private sector investment.
• Government interventionist supply-side policies – increased spending on ‘public goods’ such as education, public transport and healthcare.

For developing economies, other issues could involve:

• Export oriented Development – Reduction in tariff barriers and promoting free trade as a way to improve economic development.
• Diversification away from agriculture to manufacturing as a way to promote economic development.

Unisa furthered that the world over, developed economies have ensured that their private sectors are really and truly strong in terms of influencing growth and development. A major trend is to create jobs and employment opportunities. Bah said that for Sierra Leone’s case, we are highly and heavily dependent on government (public sector) to create jobs even when we know that government cannot possibly employ every citizen. A.O Bah attributed this norm to the old times when everything is pushed at government and the state. This, he said has been a greater problem to an extent that from 2018 to date, the business sector has greatly been challenged as a result of increased tax rates that have caused many businesses to become ‘moribund.’

I have deliberately used the illustration/image on policies for economic development to narrate even further. Link is www.economicshelp.org. One of the challenges developing economies often face is to effectively tax and collect what they are supposed to. If the government is unable to collect sufficient tax from the richest aspect of the economy (e.g., production of natural resources) there will be little funds to finance necessary public sector investment in services with a high social benefit. For example, the average tax rate in Sub-Saharan Africa is only 15% of GDP – compared to an average of 40% of GDP in the developed world.

On some recommendations, A.O Bah said that government should find a way of fixing the exchange rate which has adverse effects on not only businesses and consumers, but the employed too (public/civil servants). ‘Whiles the minimum wage rate remains at NLe 600, a continuous fall in the value of the Leone against the Dollar which implies a depreciating exchange rate will mean a decline in the real value of the SL Currency and thus making the individual worse off,’ he noted.

Additionally, he said that ‘inflation bears a concurrent effect to the salary of the Public Worker. Import-Export is a major occurrence that affects the exchange rate of a country. We need to start producing goods and services that attract demand in the International Market. If our export ratio increases, then the value of the NLe will appreciate and the inverse is also true.’

Prof. Arthur Lewis has rightly stated, “No country has made progress without positive stimulus from intelligent government.” Thus, to attain economic development at a quicker pace, proper maintenance of law and order and stability are very important. Economic development of a country also demands existence of a strong, honest, efficient and competent administrative machinery for the successful implementation of government policies and programmes for development. The existence of a weak corrupt and inefficient administrative machinery leads the country into chaos and disorder.

Bah made another recommendation where he stated that ‘the government should not increase taxes on citizens. Instead, it should broaden the tax base by focusing on other sectors that are taxable, but have not been captured in the tax net.’ He also said that ‘inflation needs to be controlled at least to a single digit.’ On this, he said that the Central Bank has a key role to play in so far as Monetary Policies are concerned. This, he said has to do with Fiscal Policy (Government Policy). ‘The interest rates in banks should be reduced to make soft loans available to people,’ he said.

In ‘How to Improve the Economy of a Country,’ Gaurav Gupta (2010) stated that ‘a country has a much harder time becoming prosperous without people who are willing to invest in its future. Whether a citizen decides to invest in education for other inhabitants of the nation or an outside investor chooses to build roads or establish communication networks, it is important that resources are dedicated on a broad scale to ensure that everyone is able to benefit from those investments.’

Whiles we continue to hope for the very best in Sierra Leone, we will continue to pray that our situations change for the better too. Let’s end the PUTKA ON EXPO here for today!

Copyright –Published in print in Expo Times Newspaper on Friday, June 21th , 2024 (ExpoTimes News – Expo Media Group (expomediasl.com)