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Sierra Leone: Can Maada Bio restore order to dire state finances?

Sierra Leone: Can Maada Bio restore order to dire state finances?

Sierra Leone commemorated its 57th independence anniversary on Friday under a new leader, President Julius Maada Bio, who was elected into office only last month. He has reportedly inherited an economy in ruins and empty state coffers in a country described as one of the poorest in the world. Can he pull the fat out of the fire? Desmond Davies reports. 

Although the former All Peoples Congress (APC) lost the presidency, it has maintained its control of the 132-seat parliament with 63 MPs, which could rise or fall given outstanding petitions to be resolved. The SLPP came second with 43 seats. Two new parties – the Grand National Coalition and the Coalition for Change – and a smattering of independents make up the rest of the parliament.

But following this week’s scenes at the opening of parliament where new MPs from SLPP and APC locked horns, forcing police to intervene, how Bio and his government deal with such situations will make for an interesting period of democracy in Sierra Leone. Many are asking: Will the APC frustrate the programmes of the government? Will the former ruling party look for opportunities to remove Bio from power constitutionally? This will depend on the mood of Sierra Leoneans who voted decisively for change.

Initial assessment by the Governance Transition Team reveals that my administration will be faced with the worst economic situation since independence.PRESIDENT MAADA BIO

It is the economy….
Undisputedly it was on the economy – or financial corruption – that the APC failed to win the presidency. The upshot is that Bio’s new government is facing a calamitous economic situation: an external debt of $2bn and domestic debt of Le4.9 trillion.
Speaking in Freetown last month during a meeting with the International Monetary Fund, Bio said: “In addition, the health of the banking system is significantly challenged by the financial conditions of two state owned banks that have huge non-performing loans, some [given] to politically exposed persons… This, coupled with low levels of economic growth, high incidence of poverty, lack of economic diversification, high unemployment and [a] challenging business environment for private sector development, has further exacerbated the problems.”
Non-performing loans run into trillions of Leones and it will be up to the government to recoup these in the interest of the people. It will also have to pursue those who salted away some $23m of pension contributions by ordinary Sierra Leoneans.

Bio noted: “Initial assessment by the Governance Transition Team reveals that my administration will be faced with the worse economic situation since independence. Before now, government cannot pay monthly salaries without borrowing or heavy reliance on overdraft facility at the Bank of Sierra Leone, which now stands at over Le160bn.”

Restoring sanity
But there is already some good news on the economic horizon, according to Bio. “For the first time in two years, government will pay salaries of Le150bn including [pension] contributions without recourse to domestic borrowing,” he said.
Bio wants revenue collection to contribute at least 20% to GDP. In this regard, the new government has suspended all import duty waivers except those under the Vienna Convention, which covers diplomatic immunity. This makes sense because almost every international organisation operating in Sierra Leone – especially the non-governmental types – was looking to bypass import duties.
The government has also suspended the export of timber logs “with immediate effect”. It has also ordered funds collected on behalf of the government to be transferred “into the Consolidated Revenue Fund with immediate effect”.

Before now, government cannot pay monthly salaries without borrowing or heavy reliance on overdraft facility at the Bank of Sierra Leone, which now stands at over Le160bn.

Bio told the IMF conference: “As we take on the reins of government and march towards economic recovery, we will be guided by the promises we made to Sierra Leoneans. We promised a change in the New Direction to the people, a change that restores sanity in economic and financial management, a change that provides quality service delivery to the people of Sierra Leone.”
In order to achieve all this, Bio will have to stamp heavily on indiscipline in Sierra Leonean society; where moonlighting civil servants do not turn up for work while pocketing their salaries. Bio has thrown down a marker on this. He said that if civil servants turned up late for meetings with him they will have to explain why.
He appears to be following in the footsteps of a former military man like himself, Colonel Andres Juxon-Smith, who enforced strict discipline during his year in office, from 1967 to 1968. It’s going to be a very interesting period for Sierra Leone over the next five years, and as he states in his scathing independence day speech, the economic plight of Sierra Leoneans is dire and it will be a long road to recovery.

Additional reporting by reGina Jane Jere 

 

 

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