By Tanu Jalloh
In the United States of America where elections are due in three months, the economy, job and wealth creation have featured among the most prominent factors that are likely to determine the attitude of voters. It is fast emerging as the key battleground for the 2012 polls. The economy, the world over, is usually a weatherglass of stable, progressive and working nations. It is often used to project the overall growth of a people.
Therefore, although the US economy added 163,000 jobs in as recently as July, and which ideally could have handed the incumbent President Barack Obama a major election boost because nonfarm payroll figures were the highest in five months, observers say those efforts were just not enough to bring down the 8.3% unemployment rate. Consequently, some people who voted him in 2008 felt completely let down, at some point, and a good number of them could remain apathetic.
Salone Economy in 2012 polls
Welcome to Sierra Leone where the governors are yet to come to terms with the relevance of the economy to the country’s overall political and social progress. Job creation, human capacity building, boost to the middle man power, disposable personal income level, access to basic food stuff and general citizens’ welfare would seem to mean nothing in the social contract from which derives the mandate of governments. Now that the election year is here for a fresh mandate – or a change – let’s hope the AGENDA or the NEW makes the difference. While we monitor the process, below is an attempt to present the current state of affairs of the economy.
To start with, let me make it clear here that the economy is likely to move slowly during this period – August to November – because campaigning, which has already begun even before official declaration by the National Electoral Commission and the Political Parties’ Registration Commission, is forcing businesses to scale down as well for fear that they may be affected by post elections policies. Except for the flow of some wild campaign largesse, there is usually some suspense in economic activity on the eve of elections.
The IMF gaffes
The International Monetary Fund, IMF had forecast Sierra Leone to grow by a quantum leap in the next three years, without recourse to global market trends, inflationary pressure (the highest in the sub-region at 18 per cent) and productions capacity of other sectors of the economy on the one hand; and the non-availability of a readymade skilled workforce, institutional capacity and political will on the other hand. I strongly believe that inflation, which was projected to drop to a single digit by end of 2011, whether based on the assumption of the absence of international shocks or a tightening of the country’s fiscal policy, thrived on bad judgment. My sense is that the prognosis was based on what could be referred to as time-dependent pricing models, which lacked proper microeconomic foundation. How can you explain this adverse adjustment to the ordinary man whose hopes have been raised to suggest that their life would improve by next year? That could be totally misleading.
The Ore and the Oar
Although only two iron ore deposits could add an extra US$1 billion to the country’s US$3billion economy, such IMF forecasts have proven to be too ambitiously myopic. The Fund has already been forced to revise downwards its initial 2012 growth forecast of 51.4 per cent, after a fall in iron ore prices, to between 32 and 34 per cent. The basis was lacking in foresight. Some recent findings show that Sierra Leone was still among the poorest countries in the world, with ineffective policy approaches, uncoordinated infrastructure development, weak education, health, and governance institutions. It is said that a promising economy would depend on the strength of a country’s political and governance institutions. The stakes in 2012 are probably the highest since elections were last contested and won on the prospects of the country’s economic growth.
Sierra Leone has the world's highest youth unemployment rate with over 60 per cent of young people unemployed, underemployed or in the informal economy, according to the latest United Nations findings. This could be bad news for the economy. As the number of desperate young men in search of work grows, amidst poorly supplied social services, there are also perceptions of corporate unfairness among the employed few; hence they become politically tense and communally explosive. This is evident in the many strike actions across the country. Lawlessness heightens, armed robbery escalates, pick-pocketing thrives and ultimately crime rate soars beyond police control. All of this is costing the local economy fortunes.
Not Enough Money at the Banks
As it is right now, commercial banks cannot pay their numerous customers, and where they pay at all you see loads of dingy-looking small bank notes – the Le 1,000 era. This liquidity shortage has refused to go away since the close of last year. The vast majority of customers are small account holders and low wage workers who run their homes on shoestring budgets. If it were not for officialdom, they would invariably prefer to take their pay straight from the office counter. When, generally, there is such a negative financial situation characterised by the lack of cash flow the ordinary man on the streets might find it very difficult to understand. For instance they don’t care if achieving the objective of single digit inflation in the country would require that reserve money should be programmed to slow down. For them it is just HARDSHIP!
The hoi polloi
Common people as common as fishmongers have threatened to take to the streets naked in protest of what they claim are the lack of fish in the market due to capital inequality and other general inhibitive livelihood concerns. While their fear was staying out of business, it becomes the concern of every household that relies on fish for protein supplement. Meanwhile, the country is losing over US$29 million to uncontrolled fishing every year. Other locally produced food stuff, like cassava, yam and cocoa yam, gets costlier by the day. Poor storage and transportation constraints lead to huge loss in value for cash and damage to spices and other perishable condiments. There are limited processing plants for fruits and beverages so mangoes, oranges and pineapples perish before they get to the market in Freetown.
In all of the above, I have tried to highlight some of the basic but very important economic factors that should determine voting patterns in the November 2012 elections. Given the economic situation in the last couple of years, there seems to have been some oversight in the manner in which people’s lives were being touched. Tangible development in the form of infrastructure was to have completely addressed the water supply and power generation problems in the short term. Even though it is the largest single infrastructure project, roads are capital intensive projects and could be undertaken when oil and ore money fills the sovereign wealth fund in the long term.
In managing the economy it is either you address the bread and butter issue of the citizenry by allowing cash to flow and lubricate business fractions in the local economy or tighten cash flow and provide capital intensive social services. However, while the former could bode well in the current circumstance inflationary pressures, engendered by the complete lack of export capacity and foreign earnings, are affecting economic policy direction. Either way, prudent management is key to creating the expected impact.
Get ready for the polls in 100 days.
(c) Politico 09/08/12