Sierra Leone Governments Must Remember Economic Development Comes with Sincerity
A Special Commentary (14/06/18)
Setting the quality of economic development is only possible if there is honest and transparent action by all parties within the financial system.
It is apparent reference to Dr. Ezekiel Duramany Lakoh, Head of Department of Accounting at the Institute of Public Administration (IPAM-USL), who warned against double standards in fighting to ensure that there is an effective financial system.
Dr. Lakoh also talked about the importance of starting at the macro level, by safeguarding financial institutions and other stakeholders within the system. "They should be well instituted, monitored and ensure that they all follow key principles and serious reforms in the financial system especially the banks."
Stating that the model of financial intermediation is not broadening the capital market, as the capital market is very close, the need for a functional stock exchange and a growing capital market is required.
Ironically, Dr. Lakoh said Sierra Leone has these one or two year money market facilities that are also causing problem, and he is of the opinion that if the commercial banks are properly monitored there is a high stake especially on domestic debt proliferation.
"What happens to our huge domestic debt? So many questions needs to be directed to, how the banks syndicated some of these facilities and how are these things expanding? How were they created? What are the instruments used, there are so many questions to ask," he quizzed.
Pointing to President Julius Maada Bio’s Executive Orders on revenue mobilisation, Dr. Lakoh thinks that if the current trends continue within the shortest possible time, Sierra Leone will be able to address the huge Debra in the economy.
"Government needs to go back to the table and look at these tax exemptions and see what should be maintained. I think they made those proclamations which is not bad for a start," he said.
Referring to the exemptions, he said that no matter which laws are there, these laws can be changed but that the government needs to quickly look into it which is very important for the country’s international pedigree.
"As a nation it is very important for us to keep to our promises because that will affect the overall market hypothesis in the economy. If we have to form a very strong investor market, the market has to be perfect based on how we maintain rules and regulations within the spectrum overall framework of development vis-à-vis how we treat our investors, in terms of consistencies with investment principles," said Lakoh.
He cautioned that the country is free to decide if during the course of implementation of these principles, they found out that they are not benefiting the nation, they can then alter or renegotiate as it happens elsewhere.
Dr. Lakoh noted that the biggest threat to the country’s extractive development sector is the lack of infrastructure. "And companies will have to spend millions of dollars on the establishment of such infrastructures as they want a mechanism that will ease their investments. That is why some times exemptions are important to protect these industries," he noted.
He also said that economic development doesn’t only mean revenue mobilisation but it also means employment and so what you loss in revenue mobilisation via taxes can be re-compensated by another form of tax by employing people that pay PAYE.
He said the Treasury Single Account (TSA) is a corridor that narrows the path for withdrawal from the Consolidated Revenue Fund (CRF) as it strengthens accountability. The system enables one to go through a standard channel for access to any funds required, and secondly it enables government to exactly know the amount of money that floats within the public sector.
With this concentration of all government revenues in one pool, one of the disadvantages of this system according to Lakoh is that the centralisation can crowd out efficiency. So many people will be going through that standard channel, so if that channel entrance is not effective it will slow activities within the public sector and will manifest other inefficiencies.
His advice to government is that economic activities and the efficiency of the financial system depends on a greater extent on the structures and institutions that operate within these sectors.
They have to be very careful because the policies can be very good, but when the structures and institutions within that frameworks are not effective, instead of getting the best results, you will get worse than what you thought. So it’s all about human resource.
Courtesy: Awoko Newspaper Sierra Leone