Sierra Leone has benefitted just 50m Yuan, the equivalent of $7m after the China-Africa Summit recently held in the Chinese city of Beijing. The summit is held every year to strengthen relations between African countries and China and to discuss on further investment.
The Chinese government, according to reports, also cancelled 20m debt for Sierra Leone as part of its support to revamp Sierra Leone’s ailing economy. Social and political commentators however argue that the donation is a mere drop in the ocean as Sierra Leone needs over $4bn to get Sierra Leone out of the doldrums of abject poverty and under-development.
United States, United Kingdom, European Union, Commonwealth, African Union, ECOWAS, Germany, France, Russia who are key traditional donors for Sierra Leone have held back their funds as a form of non-recognition of the government.
According to the development partners, Sierra Leonean political authorities hold a stolen mandate, and called for another election. Sierra Leone recently lost about $1bn for government’s failure to conduct free, fair and credible elections and seeming refusal to cooperate with the Election Investigation Committee also known as tripartite committee.
The MCC (Millenium Challenge Corporation)’s $750m and a $250 grant from World Bank summed up such amount, and the US and the West are determined not to send any assistance to Sierra Leone until June 24, 2023 elections are investigated.
The options are little, and Sierra Leone looks up to China for economic stimulants, bailouts and aid packages to save the depressed economy. Low trade and commerce, uncontrollable inflation, poor exchange rate and currency depreciation and weak terms of trade are clear indicators of a dying economy.
The Chinese, according to global data, controls approximately 60% of African economies through debt diplomacy with Sierra Leone as a vulnerable victim. The Chinese are business-minded and can support any country that helps them grow their economy regardless of poor human rights abuse and bad governance.
Sierra Leone is one among few countries where China has shown unprecedented thirst for treasure hunting in the face of killings and other forms of human rights abuses. They still continue to do active business with Sierra Leone even when the international community stopped funding the country owing to bad governance, human rights abuses and alleged election irregularities.
Sierra Leone, rated among highly indebted poor countries, is one of the most indebted to China and authorities seem ready to do the bidding against all odds to keep the country going.
Sierra Leone, at the moment, has no alternative but to strengthen diplomatic ties with the Asian country to curry financial favours. Apart from the apparent hustle at the international stage, Sierra Leone’s struggle to come closer to the Chinese is also seen back home.
Public Works Minister, Denis Sandy is currently canvassing law makers to strike a deal with one of the Chinese companies, China Railway Seventh Group (CRSG) to increase the toll fee at the three tollgates on Freetown-Masiaka highway to put more money in the Consolidated Fund.
The CRSG agreement with government is now eight years old and 5% of the gate takes goes into the public purse, and with a high toll fare, government will make more revenue to run a government that is financially imbalanced.
As government places its hope in the hands of China, the Chinese appears to have a field day in the illegal mining sector tilling the soil of deeply forested communities in the South-East regions in search of gold, diamond, chromite and others.
Few months Back, government conferred a sole right on the Chinese Iron Ore mining company, Leone Rock in respect of the management of the Ferengbeya-Pepel rail and port in PortLoko and Tonkolili districts in the Northern region. The agreement excludes other companies equally contributing to Sierra Leone’s economic development. One of the Iron Ore miners, Marampa Mines in Lunsar raised strong concern over government’s decision to pave the way for Leone Rock to have an edge at the rail.
It also reminded government of its right to unfettered use of the railway as indicated by the judgment of an English court in 2021. A new company, Arise Integrated Industrial Platforms (Arise IIP), which has been struggling to get a foothold in the country’s rail transport and industrial sectors appears to have been the worst affected by government’s creation of a Chinese monopoly.
According to an agreement gone into early last year, the new company is supposed to have control of the port so that it could realise its aim of industrialising. Owing to the seeming disappointment, Arise IIP, according to reliable sources, is preparing to leave as they only come to know about the dominance of the Chinese company on the rail and Pepel port while rolling out their projects.
Although China seems to be controlling a large portion of the country’s economy, socio-economic conditions remain worse with the poor on the wrong end. In spite of the Chinese dollars or Yuans in Sierra Leone, exchange rate is still bad as millions of Leones currently chase few dollars with close to Le3m going into $100.
The bad exchange rate has direct linkage to the unbearable price hikes in the economy, a bad sign for an import-driven economy. A large chunk of Sierra Leone’s commodities including her staple food, rice come from other parts of the world, and foreign currencies particularly the dollar is used in such business transactions. It is no gainsaying that once the dollar shoots up, local prices will also hike beyond the reach of the poor masses. Business is also bad in an inflation-riddled country where demand for goods and services fall sharply.
Dozens of businessmen in Sierra Leone’s capital, Freetown have repeatedly vented out their frustrations over the economy. They make low sales a day as narrated by one of the traders on Abacha Street, Mabinty Kamara who trade in clothes. Named after Nigeria’s President, General Sani Abacha, Abacha Street is situated in the heartland of Sierra Leone’s capital, Freetown.
Before 2018, Mabinty recounted, she used to make as much as Le4m as a day’s sales. Now is a complete reverse as she finds it difficult to earn Le400, 000 (four hundred thousand Leones) a day. Other traders particularly shop owners are also badly affected by the depression.
Most times, shops are shut down in protest to the bad business environment which they say is brought about by government. Freetown traders have protested twice especially when government attempted to install their electronic machines for the collection of the Goods and Services Tax (GST), a composition of seven different types of taxes.
The e-machine, according to tax-collection agency, is to prevent tax evasion while the traders see it as a new form of harassment as the machine operators are government employees. Although China is still supporting, Sierra Leone’s terms of trade are still weak as the country is a mere price taker for her commodities at the global market.
Sierra Leone, as a primary producer, exports her agricultural and mineral resources raw thus lacking the power to control the price at the global market. The exporters can accept any amount given to them to avoid dumping. As long as Sierra Leonean businessmen continue to get less for their exports and pay high for imports, the international business environment will always be a disfavour to the country.
The move to have China more dominant in Sierra Leone’s economy is self-defeatist as SLPP (Sierra Leone People’s Party) used to be highly critical of the Chinese relationship with then government of President Ernest Bai Koroma. While in opposition, SLPP politicians were criticising the Chinese for building cosmetic road projects, and even bashed at the tollgate which they promised to end when they took over power.
Today, they are in power, but they are good beneficiaries of the flourishing Chinese projects than the past government who initiated them. No matter the aid scheme devised, China alone cannot take Sierra Leone out of the economic quagmire if the United States and the West Keep an arm’s length.