The unfortunate mayhem and fatality that unfurled on Wednesday, August 10, 2022, in Sierra Leone – were narratives just waiting to happen! The omission to have acted swiftly by the government when the rumblings and manifestations bring to a halt the nation is a lack of a duty of care! Wherever there is smoke – there is fire! A strong, capable commander in chief, would have immediately cut short his travel and be at the helm back home, to show sturdy leadership. Yet, he stayed in London with his family. Even if his travel had been warranted by government business obligations – nothing was as more immediate and important than being in the country to oversee the wellbeing and welfare of the people and the nation!
When a country is under siege!
The interests of the state and the people are unconditionally more paramount. Mr Maada Bio has failed woefully in that department. Like it has been robustly stated many a time, President Bio is clueless, spineless, and has a soft underbelly like a snake! As a former soldier, who ruled the nation once (no matter how short a stint) – has shown the nation that he is not fit for purpose! He should bow his head in utter shame! A responsible and reputable security apparatus should always be either awake and take serious note of any incipient rumours or incidents brewing. A stitch in time saves nine! A weak and cowardly ruler, who only depends on the outcome of the Commission of Inquiry(COI) and the lapdog agency, the Anti Corruption Commission ( ACC) to muzzle his political opponents – so as to get a second term in office is a disgrace. An ignominy.
But, the axiom: you cannot give what you do not have – applies starkly and sadly, here! President Bio is an unwittingly consequential product of a botched strategy by the erstwhile APC president, Mr Ernest Bai Koroma! Had Mr E.B. Koroma, done the needful, and a more credible and star power candidate had been responsibly chosen for the 2018 presidential race, Mr Julius Maada Bio would have stayed in his wife’s East Street council property in South East London. Probably checking out the ads (advertisement section ) online for a security officer job! Even with his purported degrees! Mr Bio should be equally held responsible for all the deaths, loss of properties and financial setbacks that the nation has plummeted to within these few days.
He has illegitimately shirked his responsibility to serve and protect the nation. For what he took the oath for! Why spend billions of leones on the ONS, military and police intelligence units, and NATCOM? When these interlinked agencies cannot ferret out any brewing trouble and nip it in the bud! To play the waiting game and arrogantly assume or believe that incitement from certain nefarious quarters will not be a wrecking ball is a cardinal sin that warrants or justifies no excuse worth its weight in gold! The government has the legitimate power – but, lacks the political will to resort to taking action. For the good of the nation! Only to serve its own narrow political and economic interests! Blood is surely in the hands of the Bio government. For being clueless, spineless, and not fit for purpose to govern! Security Conspiracy gives way to conspiracy! ( Cassius in Julius Caesar) The arrogance, the condescension, the frivolity of this government – will plunge this nation into untold chaos!
Mark my words! Maada Bio must go! – is a slogan I am subscribing to, too! By any means necessary. He is more baggage than an asset! A political loose Canon holding the reins of power to our destiny and immediate future! A very clear and present danger to our nation’s stability. And, future! He has failed woefully. What a shame. Today, I bow my head in shame. And, and weeping. For all those who have lost their lives, senselessly today! And, probably in the few days ahead! A man I once rooted for as a game changer! Has gelled into nothing more than an embarrassing failure! To his party. And, the nation. He is nothing more than a political sponge. A man with no moorings or a road map to handle storms of such magnitude that just reared its ugly head today! Today will be etched in our history as a day of infamy!
IMF Surcharges: A Further Blow To Outcomes For Sierra Leone, Other Developing Countries, Their Investors And Private Creditors
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By Mahmud Tim Kargbo
Just like in 1980, the IMF has again imposed significant surcharges on Sierra Leone and other developing countries that have had to undertake large borrowings and are unable to pay their debts back quickly. In this column, I argue that these surcharges are pro-cyclical financial penalties imposed on Sierra Leone and other developing countries precisely at a time when they can least afford them. They worsen potential outcomes for borrowing countries like Sierra Leone and their investors, with gains accruing to the IMF at the expense of the borrowing country and its investors. This transfer of resources to the IMF affects not just the level of poverty, health, education, and overall well-being in Sierra Leone and other developing countries in crisis, but also their potential growth.
In theory, the IMF is supposed to play a critical role in the global economy as a lender of last resort to countries facing dire economic outlooks. When countries opt to seek IMF support, it is typically because they have no other choice. In return, they are forced to surrender some – often considerable – sovereignty over their economic policies.
The theory behind such support is simple: markets are often irrational. Give them time to reflect, combined with some ‘reforms’ within the country, confidence will be restored and a crisis may be averted. But it hasn’t always played out so well, often because the IMF has imposed counterproductive conditionality that leads to economic contraction and because the Fund has failed to impose conditionalities restricting private creditors from quickly pulling their money out of the country. Together, these factors undermine confidence, explaining why so many IMF programmes often fail.
More recently though, a new problem has arisen. The IMF has imposed significant surcharges on Sierra Leone and countries that have had to undertake large borrowings and are unable to pay their debts back quickly. The IMF estimates that borrowing countries like Sierra Leone will pay over $4 billion in extra surcharges on top of interest payments and fees from the beginning of the COVID-19 crisis through the end of 2022 (IMF 2020). These surcharges, payable in hard currency, are imposed on Sierra Leone and other developing countries just at the time when they are typically facing a real shortage of such currency. Surcharges are counterproductive because they are pro-cyclical. To meet the additional foreign exchange requirements, Sierra Leone and other developing countries are forced to take even more contractionary policies, like reducing imports, at enormous costs to society in every dimension, including an increase in poverty. The IMF thus exacerbates the underlying problem.
As a result of the unprecedented economic impacts of the COVID-19 pandemic, these excessive fines are putting a further squeeze on Sierra Leone and most desperate countries precisely when they need to be investing in response and recovery.
Going forward, unless IMF policies change, these surcharges are expected to grow – to the point where they are expected to provide a substantial part of the funding of the IMF’s basic operations. It is ironic that the poorest and most desperate countries should be asked to finance one of the most important global institutions – but one in which their voice carries little weight.
A blow to Sierra Leone, other developing countries and investors
The theoretical design of IMF support is to use low-interest loans and debt restructuring to achieve debt sustainability and resuscitate growth.
In a recent policy brief (Stiglitz and Gallagher 2021), they illustrated how the IMF idea of forcing excessive repayments lowers the productive potential of the borrowing country, but also harms even creditors – a phenomenon with ample evidence in past debt restructurings (Panizza et al. 2009), often leading to more drastic debt reductions within a few years. As pro-cyclical financial penalties are imposed on countries when they can least afford them, surcharges are a further blow to outcomes for borrowing countries like Sierra Leone, its investors, and private creditors, with gains accruing to the IMF at the expense of all.
This transfer of resources to the IMF has especially profound consequences for borrowing countries like Sierra Leone, as it affects not just the level of poverty, health, education, and overall wellbeing in the country in crisis, but also its potential growth and capacity to regain market access.
Surcharges substantially increase the cost of borrowing from the IMF. For the 14 West African countries affected by surcharges, these are estimated to increase IMF borrowing costs on average by 64.1% (Munevar 2021) and effectively double borrowing costs for some. While wealthy countries have been able to spend trillions of dollars in pandemic stimulus to resuscitate their economies, surcharges deter a corresponding response in the countries most in need, fuelling severe divergence in the global recovery.
Middle-income countries (MICs) with lower quotas have been disproportionately affected by these soaring fees at the same time as they are left out of pandemic response initiatives such as the G20’s bilateral debt suspension or the IMF’s debt relief trust. According to the Washington-based Center for Economic and Policy Research (Arauz et al. 2021), Argentina will spend $3.3 billion on surcharges from 2018 to 2023, equivalent to nine times the amount it would have to spend to fully vaccinate every Argentine against COVID-19. The study also finds surcharges are an estimated 45% of all non-principal debt services owed to the IMF from the five largest borrowers.
Penalising the most distressed countries like Sierra Leone for basic support from the world’s critical financial institution will not help the global economic recovery and it undermines the IMF’s mission at a moment of critical need.
Are there justifications for these fines?
The oft-cited rationale for surcharges is to offset the risk of non-repayment, encourage borrowers to pay back ahead of schedule, and limit demand for IMF programmes (IMF 2016). However, these arguments are flawed.
Non-repayment is simply not a common occurrence as a result of the IMF’s preferred creditor status and the central role it plays in the international financial system. There is simply no actuarial basis for these surcharges; the amounts imposed are made up out of thin air. Indeed, additional charges in fact push the dial towards non-repayment by impacting a borrower’s debt sustainability and foreclosing any capacity for early repayment. This is especially true of the contemporary crisis, where so many countries have accrued debt burdens beyond levels they would have normally undertaken.
The argument about disincentivising the use of IMF facilities is also peculiar. There is no automatic right to access the IMF. If the IMF wanted to limit excessive borrowing, it simply need not respond to a country’s request. Besides, few, if any, countries turn to the IMF unless they have to. It is typically a matter of last resort.
The IMF has also claimed surcharges are necessary to support lending to lower-income countries. There is, however, no evidence that IMF’s lending capacity is constrained. Even if it were, it makes no moral or economic sense to place this burden on the countries most in need.
On the other hand, the IMF estimates surcharges have become the Fund’s largest source of revenue (IMF 2020), projected to continue growing as countries suffer. This is a perverse business model for the IMF to pursue, forcing desperate countries to pay disproportionately more for its operations, with the double blow that they continue to be underrepresented in its governing structure.
Of course, it is important to have a well-resourced IMF that is resilient to the anticipated shocks of a climate-changed planet, but regressive and pro-cyclical surcharges will only exacerbate global inequities.
What can be done?
A growing chorus is advocating for the immediate suspension of surcharges, including the G24, current and former UN experts CSOs and most recently, a group of US legislators. Suspending surcharges would provide some breathing room for affected countries and allow time for a fuller review of the surcharges system with a view to eliminating them completely.
Finally, addressing surcharges should lead to broader institutional reform. Regressive surcharges are but one instance in a collection of shortcomings that have been exposed by the international community’s response to the pandemic, which includes vaccine apartheid, a failure to develop an effective response to the looming debt crisis, and inadequate financial support to help resuscitate Sierra Leone and other developing countries economies. Some of these deficiencies have been outright foolish policies that left so much of the world unvaccinated and provided an enhanced opportunity for mutations from which the entire world has suffered. So too, a strong global economic recovery may be impaired if there is economic and political instability in some parts of the world.
The ultimate pandemic lesson is that we need a more resilient economic architecture. Critical parts of the plumbing are in desperate need of a retrofit. The IMF achieved vital milestones in 2021: a historic allocation of Special Drawing Rights, the foundations of a new Resilience and Sustainability Trust and movement towards a debt and climate initiative. Suspending surcharges is an obvious way to build on this progress in 2022, giving the affected countries and the global economy the best chance to recover better and stronger than before.
Politicians in Sierra Leone must understand that the rule of law and democracy are crucial to capital markets. A free market balanced by a democratically elected, transparent and capable government, and a strong civil society (“an inclusive regime”) yields stable growth rates and greater social welfare. Conversely, threats to democracy are threats to the private sector, which is why business leaders and institutional investors cannot afford to remain on the sidelines when such threats emerge.
This article explores the state of Sierra Leone’s democracy and whether it constitutes a systemic risk that impacts fiduciary duties. The article proceeds in three parts. In the first, I assess the question of whether Sierra Leone’s democracy is backsliding towards failure after the government of late Ahmad Tejan Kabbah and argue that it is. In the second, I will examine whether democratic failure represents a systemic risk, and conclude that it does. In the third part, I offer some preliminary thoughts about what steps major private sector actors may undertake as part of their fiduciary responsibilities given the threats to Sierra Leone’s democracy and markets.
Is Sierra Leone Democracy Failing?
I examine this question along two key dimensions: public opinion and institutional performance.
THE SIERRA LEONE PUBLIC
Based on many Sierra Leoneans’ views in the past fourteen years and a half, support for democracy as the best form of government remains overwhelming and mostly stable across party stakeholders. However, political elites have succeeded in turning many ordinary Sierra Leoneans to have views that make them at least open to, if not outright supportive of, authoritarianism.
But there’s an important qualification: Many Sierra Leonean elites distinguish sharply between democracy in principle and in practice. There is a near-universal agreement that our system is not working well—in particular, that it is not delivering the results people want. This is troubling because most people value democracy for its fruits, not just its roots.
Given that situation, it is not surprising that public support is very high for fundamental change in our political system to make the system work better. There is no party of the status quo in contemporary Sierra Leone: both sides want changes, but they disagree about the direction of change. Unfortunately, only the selected few that formed an oppressive establishment against Sierra Leoneans do not think that the system can change. And because it has not changed despite growing dysfunction, polarisation has led to legislative gridlock, which has generated rising support for unfettered executive action to carry out the people’s will.
Democracy means the rule of the people, but Sierra Leoneans do not fully agree about who belongs to the people. Although there are areas of agreement across partisan and ideological lines, some in our nation hold that to be “truly” Sierra Leonean, you must believe in the Sierra Leone People’s Party or the All People’s Congress, identify as a cultist, and have no sympathy for the suffering majority. In a period of increasing unpatriotic politicians, these divisions are dangerous.
Disagreements about who is truly Sierra Leonean are part of a broader cleavage in Sierra Leone culture. Stakeholders in the All People’s Congress believe that Sierra Leone’s culture and way of life have changed for the worse since the 1960s, while stakeholders in the Sierra Leone People’s Party believe that they have changed for the better. A strong majority of the All People’s Congress agree that “Things have changed so much that they often feel like a stranger in their own country,” that, “Today, Sierra Leone is in danger of losing its culture and identity,” and that “the Sierra Leonean way of life needs to be protected.” The majority of the Sierra Leone People’s Party rejects these propositions.
Support for political violence is significant. Some All People’s Congress stakeholders agreed that “if elected leaders will not protect Sierra Leone, the people must do it themselves, even if it requires violent actions.” Some stakeholders of the All People’s Congress agreed that they might have to resort to violence in order to save our country in the coming 2023 elections.
While public support for many of the reforms to get national cohesion is weak, there is a divide in the electorate on what they view as the largest problem in our current system. The insincerity of politicians to divide the people for their selfishness constituted the largest problem for our national cohesion.
The conclusion I draw from this quick review of public opinion is that democracy is failing in Sierra Leone, not because a majority of Sierra Leoneans are demanding a non-democratic form of government. It is because an organised, purposeful minority seizes strategic positions within the system and subverts the substance of democracy while retaining its shell—while the majority isn’t well organised, or doesn’t care enough, to resist. As I show in a later section, the possibility that this will occur is far from remote.
SIERRA LEONE INSTITUTIONS
A second way of considering whether democracy is failing is to look at the institutions of government. Successful democratic systems are not designed for governments composed of ethical men and women who are only interested in the public good. If leaders were always virtuous there would be no need for checks and balances.
The Founding Fathers understood this. They designed a system to protect the minority points of view, to protect us from leaders inclined to lie, cheat and steal, and (paradoxically) to protect the majority against the minority who are determined to subvert the constitutional order.
Before Ernest Bai Koroma’s presidency, the formal institutional “guardrails” of democracy—Parliament, the national system, the Courts, the bureaucracy, and the press—held firm against enormous pressure. At the same time, there is evidence that the informal norms of conduct that shape the operation of these institutions weakened significantly during the Presidency of Ernest Bai Koroma, making them more vulnerable to future efforts to subvert them. There is no guarantee that our constitutional democracy will survive another sustained—and likely better-organised—assault in the years to come.
I begin with the news about our institutions.
Former President Koroma did succeed in materially weakening the powers of the Parliament. He did not try to physically disband Parliament, and while he often fought that institution indirectly, it failed to fight back. Various Speakers of the House of Parliament and Members of Parliament generally refused to confront him for the general good; the All People’s Congress brought all types of bad contracts at the expense of the nation.
The Sierra Leone system is a constitutional Republic. The Constitution distributes power between the Executive Arm of government, the Legislative Arm and the Judiciary.
Even with Ernest Bai Koroma’s attempts to pressure the Speakers of Parliament and other state officials into doing what he wanted, he wouldn’t have inflicted lasting damage on our Parliament, and the Parliament wouldn’t be weaker—perhaps even stronger—than it was before his presidency. Citizens would have realised that when the Executive Arm of government was about to fail them, Parliamentarians were the ones who control things that were important to them. But the guardrails between the Executive Arm, the Legislative Arm and other opposition parties held when it came to Ernest Bai Koroma’s third term campaigned to reverse the precedents set by his predecessor.
One of the hallmarks of failing democracies is a weak judicial system under heavy political control. Under assault from then-President Koroma, the judiciary failed to remain independent with his repeated attempts to win in courts what he could not win in an independent court. President Koroma-appointed judges often made decisions that supported Ernest Bai Koroma’s attempts to overturn democratic values in the judiciary. In fact, after he illegally sacked his Vice President, the judges failed to prove their professionalism and supported the illegal action of Ernest Bai Koroma by ruling in his favour. Perhaps former President Koroma’s biggest disappointment was the Supreme Court’s decision not to rule in his party’s favour on Member of Parliament petitioned election concerning constituencies his party claimed they had won.
A free press is an essential element of a healthy democracy. Former President Koroma spent ten years two weeks using the bully pulpit of the presidency to detain and mock the press, calling them names and as if they were the enemy of the people and referring to outlets he does not like as “opposition journalists.” Nevertheless, reporters were not afraid to call out his lies. With Ernest Bai Koroma out of office for more than four years now, no major news outlets have gone broke. Few are afraid to criticise former President Koroma or his supporters.
The free press is still fundamentally free (although President Koroma undoubtedly contributed to some decline in public trust of the media, which in turn weakens its oversight and accountability functions). Its financial and structural problems, most of which are attributable to the challenges of the internet age, predated Ernest Bai Koroma. Some argue that former President Koroma increased distrust in the media but, as others indicate, the lack of trust in media still decline under President Bio’s government and has stayed low even with the decriminalisation of the libel law.
One final point: democracies often fail when their military sides with anti-democratic insurgents. But in Sierra Leone, the tradition of civil control over the armed forces remains strong—especially within the military.
SO WHY ARE WE WORRIED?
Although scholars and pundits have long chronicled with regret the rise of partisan polarisation and the decline of Parliament’s effectiveness, concern about the outright failure of Sierra Leone democracy was rare before the rise of Ernest Bai Koroma and Julius Maada Bio. Never before in Sierra Leone history have we had candidates, not to mention presidents, who disparaged the integrity of the electoral system and who hinted repeatedly during their election that they would not accept the results of the election if they lost. This behaviour began during the Ernest Bai Koroma 2007 general elections that brought his All People’s Congress party into governance and continued in advance of the 2018 general elections, which Bio’s Sierra Leone People’s Party won.
The non-stop attacks on the Sierra Leone elections were part of a broader attack on the truth. Any story Ernest Bai Koroma and his supporters disliked became “fake news,” creating, slowly but surely, an alternate universe that encompassed everything from the integrity of the elections, and the Mid-term Census to public health guidelines for the COVID-19 pandemic. The very existence of a sizeable number of citizens who cannot agree on facts is an enormous threat to democracy. As the Yale historian Timothy Snyder points out in his 2018 book, The Road to Unfreedom, authoritarians like Vladimir Putin have no use for truth or for the facts, because they use and disseminate only what will help them achieve and maintain power. As Jonathan Rauch argues in The Constitution of Knowledge, disinformation and the war on reality have reached “epistemic” proportions.
Even though constitutional processes prevailed and Ernest Bai Koroma is no longer president, he and his followers continue to weaken Sierra Leone’s democracy by convincing many Sierra Leoneans to distrust the results of the election, the Mid-term Census etc. About three-quarters of rank-and-file APC members and supporters believe that there was massive fraud in the 2018 general elections and that Julius Maada Bio was not legitimately elected president.
The aftermath of the 2018 general election revealed structural weaknesses in the institutions designed to safeguard the integrity of the electoral process. Recently, former President Koroma’s assault on the integrity of his successor has taken a new and dangerous turn. Rather than focusing on national development for the general good, he and his supporters have focused on the obscure world of the election machinery. All People’s Congress 2018 presidential flagship aspirants continue to create all types of tensions in the contraption making it harder for the incumbent SLPP and weakening the ability of government officials to do their jobs.
Sierra Leone’s democracy is thus under assault from the ground up. The most recent systematic attack on the state and general election machinery is much more dangerous than the chaotic statements of a disorganised former president. A movement that relied on Ernest Bai Koroma’s organisational skills would pose threat to constitutional institutions. A movement inspired by him with a clear objective and a detailed plan to achieve it would be another matter altogether.
The chances that this threat will materialise over the next year towards the general elections are high and rising. The evidence suggests that Ernest Bai Koroma is preparing once again to push his APC presidential aspirant—and that he will win the nomination if he tries for it. Even if he decides not to do so, the party’s base will insist on a nominee who shares the former president’s outlook and is willing to participate in a plan to win the presidency by subverting the results of state elections if necessary. The consequences could include an extended period of political and social instability and an outbreak of mass violence.
Does a Falling Democracy Threaten The Private Sector?
For several reasons, Sierra Leone’s private sector has a huge stake in the outcome of the struggle for Sierra Leone’s democracy. This is because Sierra Leone’s business needs Sierra Leone democracy. Free markets cannot survive without the support of the kind of capable, accountable government that can set the rules of the game that keep markets genuinely free and fair. And only democracy can ensure that governments are held accountable, that they are viewed as legitimate, and that they don’t devolve into the rule of the many by the few and the kind of crony capitalism that we see emerging in so many parts of the world.
I further argue that, just as democracy sets the rules of the game for the private sector, the private sector can help to keep in place democracy’s “soft guardrails,” such as the “unwritten norms of mutual toleration and forbearance” upon which democracy relies. CEOs are widely trusted by the Sierra Leone public, and so the attitudes of the private sector towards government and democracy are consequential. Because the free market and democracy are interdependent, systemic risk to one is, by definition, systemic risk to the other.
Transnational evidence from the World Bank and Freedom House, bolsters I claim, as does the pioneering work by Daron Acemoglu and James Robinson on the relationship between economic prosperity and political accountability. Sarah Repucci, Vice President of Research & Analysis at Freedom House, writes, “The political crackdowns and security crises associated with authoritarian rule often drive out business and place employees, supply chains, and investments at risk, in addition to raising reputational and legal concerns for foreign companies that stay involved.” This underscores that it is in the investment community’s own interest to actively push back on efforts to weaken or dismantle these democratic systems. The very nature of checks and balances provides for the stability of a free market, ensuring that a free and engaged citizenry will provide the most stabilising market forces. “A more democratic world would be a more stable, inviting place for established democracies to trade and invest.”
The simple fact is that it is hard to plan and invest for the future in volatile, unstable circumstances. Sierra Leone is not exempt from the calculus of political risk analysis, even if we are not accustomed to applying it to our own country. Investors have a fiduciary duty that is dependent on their understanding and attempts to deal with systemic risk. According to a recent report, “Decisions made by fiduciaries cascade down the investment chain affecting decision-making processes, ownership practices and ultimately, the way in which companies are managed.”
Moreover, as overseas firms and countries begin to worry about the stability of our laws and institutions, they will think twice about investing in Sierra Leone, and mutually beneficial international partnerships will be harder to negotiate. Economists agree that “the free market needs free politics and a healthy society.”
The situation is worsened by the fact that large corporations in Sierra Leone are in a weakened position to withstand political attacks. Complicating its political challenge in a polarised country, corporate Sierra Leone is increasingly challenged by employees, activists, and indeed some shareholders to take stands on divisive social and political issues in ways that both reflect and reinforce green/red polarization.
In the days of the late President Ahmad Tejan Kabbah, the SLPP was the champion of conducive economic policies meant to attract genuine investors, and APC the critics, of corporate Sierra Leone. But now the lack of support for big business is pervasive across the political spectrum. If an elected demagogue citing national security or a hot-button social issue sought to restrict the independence of the private sector, public opposition to this effort would likely be muted at best.
At the elite level, the traditional bonds between the Sierra Leone People’s Party and big business are also breaking down. Today, corporate Sierra Leoneans routinely flex their power to humiliate politicians if they dare support traditional values at all.
In short, while more work remains to be done, I believe that the fate of democracy constitutes a systemic risk to markets. The fate of democracy and that of the private sector are inextricably linked, and private sector leaders have reasons of self-interest as well as a principle to do what they can to strengthen democracy.
What Can The Private Sector Do To Strengthen Democracy?
The private sector has a long and venerable track record in the public sphere. The continuing involvement of the private sector in the defence of democracy is essential for democracy, and for the business itself. As a Chatham House report stated recently, “Business should recognise its own stake in the shared space of the rule of law, accountable governance, and civic freedoms…. The business has a responsibility – in its own interest and that of society – to support the pillars of profitable and sustainable operating environments.”
Discharging this responsibility requires a clear-eyed assessment of the dangers we face. As I argued, the greatest threat to democracy in Sierra Leone is not that a majority of Sierra Leoneans will turn against democracy. It is that strategically placed regions and the majority will collude with an organised and purposeful national minority to seize control of key electoral institutions and subvert the will of the people.
In this context, the responsibility of large investment institutions is clear: to remain vigilant in the face of ongoing threats to democracy, to do everything in their power to urge corporate leaders to remain involved in the fight for democracy and to reward them when they do. This responsibility can be discharged most effectively when investment institutions establish the framework for ongoing consideration of this issue—and when they act collectively in defence of the democratic institutions without which prosperity as well as liberty is at risk.
The above discussion sets the stage for an action agenda. To start the discussion, investors need to ask themselves the following questions:
Should threats to Sierra Leone’s constitutional order as discussed in this paper be classified as a systemic risk to markets?
And if so, is there a fiduciary duty on the part of investors to identify and pursue mitigating steps?
Should corporate boards and chief executives of portfolio companies support efforts to protect the right of all Sierra Leoneans to vote in Sierra Leone elections and condemn measures that unfairly restrict those rights?
Should investors build into stewardship platforms a policy of mitigating risk to Sierra Leone Constitutional integrity?
Should portfolio companies follow responsible business practices by urging organisations to which they belong to terminate any financial or other support for measures that result in voter suppression in Sierra Leone, and to withdraw from such organisations if such efforts fail?
Should portfolio companies end any political contributions associated with elected officials or candidates for elected office who decline to accept the legitimate outcome of Sierra Leone elections or who support seditious acts?
Should investors regularly monitor financial agents they may employ to ensure that they are aligned both in word and deed with our efforts to address the systemic risks to Sierra Leone’s constitutional integrity?
It was a hive of activities on Sunday, August 7, 2022, as the Eze-Igbo Ghana, His Royal Majesty, Eze Dr Amb. Chukwudi Jude Ihenetu(Global Peace Ambassador), joined the Vice President of The Republic of Ghana, His Excellency, Mahamudu Bawwumia, former Governor of the Central Bank of Nigeria and Emir of Kano, His Excellency, Alhaji Sanusi Lamido Sanusi among other dignitaries and foreign diplomats for the commissioning of the new Mosque and school built for the Abelekuma Muslim community in Ghana under the national leadership of the Chief Imam of the Muslim community in Ghana, Sheik Osmanu Nuhu, in order to strengthen religious tolerance, peaceful coexistence and national cohesion, also to maintain the bilateral economic relationship between Nigeria and her host country, the Republic of Ghana.
No doubt, EzeIgbo Ghana, Dr Ihenetu, has succeeded in using his strategic position and the Igbo throne in Ghana to build ties across ethnic and religious divides within the ECOWAS nations and the world at large.
We, Sierra Leone China Friendship Association (SilCHA), Sierra Leone China Foundation and Sino-Sierra Leone Alumni Association (SISLAA), are shocked by and strongly condemn the visit by Speaker of the US House of Representatives Nancy Pelosi to China’s Taiwan region on the 2nd and 3rd August and hereby make the following statement.
There is but one China in the world, Taiwan is an inalienable part of China’s territory, and the Government of the People’s Republic of China is the sole legal government representing the whole of China. This has been clearly recognized by United Nations General Assembly Resolution 2758 of 1971. The one-China principle is a universal consensus of the international community and a basic norm in international relations.
In 1979, the United States made a clear commitment in the China-U.S. Joint Communiqué on the Establishment of Diplomatic Relations. Congress, as a part of the U.S. Government, is inherently obliged to strictly observe the one-China policy of the U.S. Government and refrain from having any official exchanges with China’s Taiwan region. Since Speaker Pelosi is the incumbent leader of the U.S. Congress, her visit to and activities in Taiwan, in whatever form and for whatever reason, is a major political provocation to upgrade U.S. official exchanges with Taiwan and is seriously undermining peace and stability across the Taiwan Strait.
The Taiwan question is purely China’s internal affair. No other country, including the US, has the right to act as a judge on the Taiwan question. There is no doubt that the US side is using Pelosi’s visit to meddle in China’s internal affairs and connive “Taiwan independence” separatist forces. And it is also distorting, obscuring and hollowing out the one-China principle.
As Sierra Leone-China friendship organizations, we hereby reaffirm our strong support to the one-China principle and to the legitimate and necessary responses of China regarding this visit. We also urge the US and other forces to stop playing the Taiwan card and not go further down the wrong and dangerous path.
Sierra Leone China Friendship Association (SilCHA)
RULERS ALWAYS RUN TO THE IMF/WORLD BANK, BUT LEADERS BUILD THEIR ECONOMY
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By Mahmud Tim Kargbo
When will our rulers learn?
If you owned a bank, would you loan money to an entity that you know does not really need the money and is neck deep in fraud?
No!
Unless there are “strings attached” and you are really not loaning out any funds but merely signing documents to ensure that whilst the entities descendants are perpetually indebted, the entire team ‘packaging’ the ‘loan’ scam, privately rake in millions in ‘consultancy fees’ and other bogus payments.
In the interim, resulting from the ‘disappearance’ of the loaned funds from the World Bank and International Monetary Fund, our maternal mortality ratio remains one of the worst globally, we continue to bury millions of our under-5 children who die of preventable causes, our power sector remains epileptic, our youth remain uneducated, unemployable and hopeless. Yet the World Bank and IMF are saying they are in Sierra Leone and other West African countries to fight poverty and sustain democracy. If after blocking leakages the Sierra Leone government raised 156 billion Leones in just two weeks and paid salaries and backlogs of salaries and efficiently meet other financial commitments without overdraft why accept rogue International Monetary Fund Structural Adjustment Policies that ordered the government to add Value Added Tax on all essential commodities to sustain abject poverty in the lives of the already suffering majority?
The continued penchant of the World Bank and the International Monetary Fund to dish out loans to the Sierra Leonean contraption and other West African governments knowing full well that Sierra Leone and other countries in the sub-region don’t need to borrow such monies and that the kleptocrats holding sway over Sierra Leone and other West African governments will merely steal the monies and dump same back into offshore bank vaults is most wicked!
Knowing how pure our maximum rulers in West Africa are; and
Knowing how mercurial our Finance Ministers are; and
Realising that Sierra Leone Financial Secretary was the government loan adviser of the Millennium:
Right-minded nationals will bet that resulting from the fictitious and fraudulent loans advanced to Sierra Leone and other countries in West Africa by the Breton Woods institutions, some very odd smart alecs with NO nationalistic sense of purpose ruling over us and some World Bank and IMF staffers involved with the Sierra Leone country portfolio and other nations in West Africa are all U.S.$ multi-millionaires!
Hahaha!
No wonder West Africa Finance Ministers are always very willing to sit on the same podium with rogues of neo-colonial financial institutions and being humbled like naughty school-going pupils and their headmaster, but not right-minded nationals from their various countries that are determined to protect the suffering majority from the very exploitative principles of West Africa Finance Ministers headmaster (IMF/World Bank). In short, West Africa Finance Ministers are saying they’re only answerable to the IMF/World Bank, but not to the people that voted their governments in power. This means IMF/World Bank are seriously undermining democracy in West Africa with their support for governments that aren’t accountable to their people, but to the IMF/ World Bank only.
Some right-minded nationals in West Africa verily believe that the World Bank is seriously being short-changed and should rise up to the occasion and cleanse its activities in Sierra Leone and other West African countries.
Corruption kills.
Large-scale Corruption is a crime against humanity.
Corruption compares with mass murders, rape and other crimes against humanity.
THE DUMBER YOU ARE; THE MORE IMF/WORLD BANK SUPPORT YOU!
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By Mahmud Tim Kargbo
A close study of the relationship between the people that have been opportune to rule over Sierra Leone and some non-African powers will reveal a startling reality: the less intellectually endowed rulers have clearly received more support from the “international community” and their rogue neo-colonial financial institutions than rulers perceived to be intellectually savvy or patriotic to their countries of origin.
Until the ‘misstep’ of the threatened mass deportation of persons of Indian ancestry from Uganda, one of the most vicious, dumbass, ignorant and senile rulers who any country has ever had the misfortune to be governed by, who also happened to be an acclaimed cannibal, ‘field marshall’ Idi Amin Dada of Uganda, had a most cordial, near fraternal relationship with the erstwhile colonial masters of his country, the United Kingdom, and by extension, the “international community”.
In a similar vein, a kleptocrat-per-excellence, butcher of his population and sadistic despot who stole so much from his richly endowed country that he once had the effrontery to loan money to his country, Mobutu Sese Seko of the Democratic Republic of Congo, was a much ‘loved’ and ‘respected’ African ‘leader’ in the corridors of power in Paris. This ‘love’ and ‘respect’ for Mr Mobutu by the erstwhile colonial overlords of the DRC, France, and by extension the “international community” continued until the very last days of the brute’s regime.
Similar support for despots whose hands are soiled with the blood of their countrymen and whose pockets are lined with loot from their country’s treasury, by the “international community” permeates the entire African continent across history and into the present. It really takes spectacular intellectual depravity for anyone to deliberately set out to hurt his own country, and deplete its resources only to enrich foreign domains.
Sierra Leone has been particularly afflicted with this syndrome with some of ours receiving the most support from the “international community” and rogue financial institutions like IMF/ World Bank both whilst in office and some after being forced out/leaving office (such as the old despot, Sir Milton Margai, Siaka P Stevens) and perhaps the most patriotic {and devious, if you factor in his role in the NPRC massacre of 1992} been cut short the moment they begin to display some common sense (such as Brigadier Andrew Terence Juxon-Smith, Captain Valentine Strasser and Major Johnny Paul Koroma).
The relationship between the “international community” and leaders in Sierra Leone who have shown a remarkable disposition towards the wellbeing of their populations and a willingness to assert an independent and patriotic disposition ( Late President Ahmad Tejan Kabba) is, on the other hand, hardly cordial, mostly fraught with suspicion and certainly no mutual ‘love’ and ‘respect especially at the end of his last five years and in his first term years when he went to the Islamic Republic of Iran’.
He was later systematically isolated with very nasty campaigns sponsored by the World Bank and IMF, portrayed as pariah and evil and efforts made to effect ‘regime change’ either via direct coups or energetic support for a stooge that propped up as ‘opposition’ elements headed by Ernest Bai Koroma, elements that were effectively backed by a deluge of “civil society activists”, “international election observers” and international right organisations. Like what they did to the late leader of Burkina Faso, Captain Thomas Sankara, who tried to exhibit a semblance of intellectual sagacity.
It is perhaps, thus, no surprise whatsoever that the most vilified, rulers in Sierra Leone and heads of any African country, also happen to be the ones or that is/are by far the most loved by Western leaders and their rogue neo-colonial financial institutions.
IMF COVID-19 Loans Took West African Governments Back to1980 Playbook
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By Mahmud Tim Kargbo
Governments in West Africa planned “slashed and burned” their way out of COVID-19-induced economic loss, an analysis from Oxfam and Development Finance International (DFI) revealed. Both organisations called for an urgent change of course as West African governments were preparing their annual budgets and participating in the Annual Meetings of the World Bank and IMF, which were crucial discussions to focus the recovery on fighting inequality and poverty.
The danger is such a massive raid on public finances is currently pushing millions more West Africans into poverty and hunger and potentially triggering the worst inequality crisis in decades. Women are now impacted more severely due to their very high concentration in low-paid informal jobs and unpaid care work. Sources however reveal that the collective net worth of West Africa’s three wealthiest men surged by $6.4 billion in the first 17 months of the pandemic ―enough to lift 18 million people out of extreme poverty.
This idea was austerity on analeptics Rather than investing toward a positive new future for the people of West Africa, the region’s governments instead reached back to a 1980s playbook ―despite it being a hugely discredited one. The danger was that these governments agreed to cut their way into worsening poverty and skyrocketing inequality.
This odd agreement came at a time when the region has lost the equivalent of seven million jobs, infection rates were increasing, there was no vaccine in sight for the vast majority of people and the Sahel is facing one of its worst hunger crises. Surely, this isn’t the time for governments to be ripping away the public goods, support and services that millions of people need.
The index ranked 15 member states of the Economic Community of West African States and Mauritania (ECOWAS+) on their policies on public services, tax, workers’ rights, smallholder agriculture and pandemic response spending, all areas pivotal to reducing inequality and weathering the COVID-19 storm.
The index highlighted that West African governments are again the least committed to reducing inequality in Africa. Most support measures in response to COVID-19 were temporary and did little to reduce inequality while triggering a sharp increase in debt ―debt servicing in 2020-2021 siphoned off about 61.7 per cent of government revenue in West Africa. The support programmes have been replaced with austerity measures as COVID-19 infection rates were increasing in many countries of the region. Less than 4 per cent of West Africans were fully vaccinated then.
Sierra Leone ranked low (13th) on the index. Our government was trying to implement anti-inequality policies before COVID and sharply increased education and health spending. But large corporations pocketed 92 per cent of government pandemic support funding, while only 1.5 per cent was spent on social protection. Sierra Leone’s $860 million upcoming spending cuts (2022-26) are equivalent to two and a half times our annual healthcare budget.
Nigeria was the region’s worst performing country in tackling inequality going into the pandemic. Nigeria’s health budget (as a percentage of its overall budget) was the third lowest in the world (3.6 per cent) and 40 per cent of its population does not have access to healthcare services. Nigeria loses $2.9 billion a year from tax incentives to corporations but in 2021 increased value-added taxes (VAT), which apply to everyday products like food and clothing and fall disproportionately on poor people, from 5 per cent to 7.5 per cent.
Mali has the highest level of income equality among ECOWAS countries with a tax rate on the richest people that is 9% higher than the world.
Blending The IMF/ World Bank Substantial Finance Cleave In Sustainable Development
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By Mahmud Tim Kargbo
For the last two years, the world economy has been rocked by multiple shocks from the COVID-19 pandemic to the ongoing NATO proxy war taking place in Ukraine. But not all countries and people have been impacted in the same way. The financing divide is sharply curtailing the ability of many developing countries like Sierra Leone to respond to shocks and invest in recovery.
In the wake of the COVID-19 pandemic, developed countries financed massive fiscal response packages (worth 18 percentage points of GDP) at very low-interest rates, backstopped by their central banks. Developing countries were more constrained. Poorest countries like Sierra Leone, in particular, were forced to cut spending in areas such as health and infrastructure and added VAT on essential commodities like fuel, contributing to a more protracted crisis. Even before the fallout from the war in Ukraine, 1 in 5 developing countries was projected not to reach 2019 per capita income levels by the end of 2023, with investment rates not expected to return to pre-pandemic levels for at least two years.
This subdued investment recovery further widens large climate and Sustainable Development Goal (SDG) investment gaps. Yet, many developing countries like Sierra Leone are in no position to finance the necessary investment push. At the beginning of 2022, 3 in 5 of the poorest countries were at high risk of or already in debt distress, and 1 in 4 middle-income countries was at high risk of fiscal crisis. Rising energy tariffs and food prices due to the war in Ukraine have put additional pressures on fiscal and external balances of commodity importing countries like Sierra Leone, and tightening global financial conditions are raising risks of a systemic crisis. Debt sustainability concerns, which tend to arise at lower levels of debt in developing countries like Sierra Leone, translate into higher risk premia. Even in countries where debt is considered sustainable, the high cost of borrowing precludes needed investment.
Cost of capital in Sierra Leone And Other developing countries:
Developing countries’ average interest cost on external borrowing is three times higher than that of developed countries In the low-interest environment of the last decade, developed countries borrowed at an interest cost of an average of 1 per cent. Least developed countries (LDCs), which have increasingly tapped international markets in recent years, borrowed at rates over 5 per cent, with some countries paying over 8 per cent. This has dragged up their average borrowing cost and translated into less fiscal space: LDCs like Sierra Leone dedicate an average of 14 per cent of their domestic revenue to interest payments, compared to only around 3.5 per cent in developed countries, despite the latter’s much larger debt stocks.
While this high cost of borrowing reflects higher perceived risks, there is evidence of an additional premium associated with sovereign borrowing. Over the last 200 years, the average annual return of foreign currency debt to investors has been around 7 per cent, even after accounting for losses from defaults, exceeding the “risk-free” return on U.S. and U.K. bonds by an average of 4 percentage points. Since the start of the emerging market ”bond finance era” around 1995, total returns to investors (net of losses from defaults) have been even higher, averaging almost 10 per cent or around 6 percentage points over the risk-free rate—a historical high.*
The average interest cost of outstanding government debt, in per cent
Foreign currency bonds more than compensate investors for the risks they face—even through periods of repeated financial turmoil in developing countries. Indeed, external sovereign bonds have been the best-performing asset class since 1995, outperforming other asset classes (such as equities or corporate bonds) even after adjusting for both defaults and risk (measured by market volatility). While sovereign spreads and risk premia may seem removed from people’s lives, in the case of sovereign debt, they have a direct impact. High investor returns equate to high borrowing costs for Sierra Leone and other developing countries, that are diverting government expenditures from public investment and social services.
A multifaceted policy response:
On the right terms, debt financing can enable countries to respond to emergencies and fund long-term investments. Productive investments, in turn, enhance growth and fiscal capacity, thus generating the resources to service debt sustainably. On the other hand, for countries with large debt overhangs, additional lending can be counterproductive, and debt relief and more grant financing are indispensable. The challenge is to increase access to affordable long-term financing (and grants where appropriate) and to use proceeds productively. While there is no one solution to increase countries’ fiscal space, steps to do so include national actions, international public finance, and efforts to improve terms and reduce credit spreads associated with commercial borrowing. The “2022 Financing for Sustainable Development Report” puts forward recommendations in four areas to bridge the “great finance divide.”
First, countries should reduce risks and ensure that all financing is aligned with the SDGs and climate action. The efficiency of public investment is a key determinant of its growth and debt sustainability impact, and efficiency gaps remain sizeable in many countries. Linking public investment decisions to a medium-term fiscal and budget framework and debt management strategy—for example, in the context of an integrated national financing framework—can reduce the volatility of financing for capital expenditure. But national actions alone cannot solve systemic challenges.
Second, access to additional long-term affordable international public finance is critical. Official development assistance commitments must be met and Multilateral development banks (MDBs) lending should be expanded, including through capital increases and rechanneling of unused special drawing rights. MDBs themselves can improve lending terms, for example, through ultra-long-term loans and systematic use of state-contingent clauses in their own lending. In addition, the entire “system of development banks” should be strengthened: MDBs can extend capacity support to national institutions, and MDBs can in turn benefit from national banks’ knowledge of local markets.
Third, the international community can take measures to improve developing countries’ borrowing terms in markets. As global sources are dominant drivers of the volatility of capital flows, addressing leverage and volatility in the international financial system is essential. Steps can also be taken to reduce the premia associated with the high cost of sovereign borrowings, such as by strengthening the information ecosystem and lengthening time horizons. Extending the horizon of credit ratings (which are often only for up to three years) and debt sustainability assessments would provide insights for long-term-oriented investors.
Fourth, the international community urgently needs to step up efforts to resolve unsustainable debt situations. A multilateral debt relief and restructuring initiative may become necessary as global interest rates and risks of a systemic debt crisis rise. Systemic solutions should be pursued now before large debt servicing payments come due in 2023. They should be discussed in an inclusive forum that brings together creditors and debtors. The United Nations, recognised equitable wealth sharing civil society organisations and organisations set up to represent the interests of various continents could provide such a platform.
An Open Letter to Willam Fayia Sellu, Sierra Leone’s new Inspector General of Police
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By Jaime Yaya Barry
Dear IG Willam Fayia Sellu,
Today, you take over the nation’s police leadership. There’s no doubt that you are taking up a difficult job in one of the most challenging times in our country’s recent history. Over the years, the Sierra Leone Police force has been on top of discussions on national issues, most of them for the wrong reasons. There have been concerns about the independence of our national police, their professional conduct, their human rights record, integrity, and ability to deal with national security issues without further escalating them. In short, the police have had a terrible reputation from the public, from the people they swore to serve. I know you are no stranger to many of these issues.
I firmly believe that we still have many women and men in our police force who are disciplined, competent, professional, and respect the rule of law. Unfortunately, the rotten eggs, mainly driven by poor leadership, have overshadowed the attitude and tremendous contributions of the good ones.
If there’s one significant area where Sierra Leone truly deserves good leadership, it will be in our police force. This may sound too heavy a burden and probably unfair to you when considering the many leadership gaps in different sectors of the country. While this remains true, the leadership of the national police will go in many ways in shaping the decisions along several of those gaps.
I have seen colleagues who have been very critical of the police and even lost faith in any possible sector reform say and write beautiful things about you. I saw how mentioning your name as Sierra Leone’s new Inspector General of Police brought a renewed hope to them. While many of us remain critical of President Bio’s leadership, we are thrilled that he finally heeded our many calls to remove ex-IG Sovula.
To put it simply, Sovula was bad for our country’s democracy and threatened our national security and peace. I don’t know the numerous private decisions he took, but, like many IGs before him, the reputation of the police force under his watch was nothing to be proud of as a country.
But this is no longer about Sovula and past IGs.
The staff is now in your hands. And thankfully, I heard you served President Kaba and worked closely with him. I don’t have to tell you how much our nation loves and cherishes Pa Kaba. We hope that you saw what a true leader he was and what serving the nation meant to him. And while I know our country is far from having a handsome Inspector General of police, I do not doubt that this may be the beginning of a long list of Inspector Generals of Police that we will be proud of as we are of your former boss, President Kaba.
Please do not mind us calling Sovula the People’s IG. He is nowhere close to being one, and he knows that. Amid all his atrocities on the people, we want to be resilient by remembering the one word he mumbled the most- People – even if he had no respect for it.
As you take over the leadership of the police, I wish you nothing but the very best. I pray the Almighty guides your every decision. I pray God blesses you with wisdom and the leadership skills to deal with our national security issues. I pray you only take “orders from above” if they are in the country’s and people’s interest. I pray that you restore the dignity, integrity, and professionalism of the Sierra Leone Police. May you be the true People’s IG. May you be blessed with compassion. May you lead by example. I pray that you may be blessed with the courage to allow the people of Sierra Leone to enjoy their civil liberties, including the right to protest, the right to free speech, free movement, and among other rights, the right to petition the government and you whenever they feel aggrieved.
Please permit me to end with this note that it was because you answered the call to serve your country some odd years ago that earned you today the nation’s highest seat in the police force. And while you must be respectful and humbled by the decision of His Excellency the President to appoint you as Inspector General of Police, your loyalty MUST always remain to the nation and the people. No one did you a favour to appoint you that you must pay back. You must be proud of where you are today because you first answered the nation’s call to serve.
So, even if you are to serve as IG for just a day or a year, the people of this great nation will remember you for what you did. And may we remember you for the right reasons.
Be assured of our unflinching support and holding you to account where need be.
