By Mohamed Jaward Nyallay
In the early days of Sierra Leone’s response to the Covid-19 pandemic, there was a seeming sense of panic, especially for businesses and the economy. Before then, the country’s growth looked really promising, but with Corona came grim predictions which suggested that things could get really bad.
Hoarding, price hikes and concerns about a possible shortage of foreign currency and goods were rife. But it seems Sierra Leone has gone through the worse in the last three months and things can only get better.
It is important to look back at the forecasts after which one will make sense of the country’s journey in the last 99 days.
In March this year at a press conference at State House, Finance Minister Jacob Jusu Saffa said they were expecting the country’s growth rate to contract by 3.8%.
“Growth in the Service sector was expected to fall from 5.1% to 2% by the end of 2020, whiles Trade and Tourism is expected to be the worst hit from 5% to 2%,” Saffa announced.
To help businesses, Saffa further announced the possibility of giving tax breaks, exemptions and deferrals. “The thrust of the program is to cushion the shock of the effect of the virus on persons and households,” he said.
That announcement was followed shortly by the Bank of Sierra Leone’s own announcement of Le500 billion funds for credit to businesses, especially importers.
World Bank figures also predicted that Sierra Leone would not be able to better its 5.1% growth in 2019 because of the COVID-19. Figures from the group’s website state that the country’s economic growth could fall short by 2.3 to 3.1% in 2020. This also means overall economic growth in the medium term could be reduced by 1.4 to 2.0%.
Sierra Leone is not the only country that is expected to be economically affected by this pandemic. In April this year, the Africa Pulse report, a biannual economic publication on the continent by World Bank- revealed that the continent would see between $37 billion and $79 billion in terms of output losses for 2020.
The Sierra Leone Finance Ministry has said the country would lose up to US$ 100 million in revenue throughout the year.
How will all these numbers play out? Can we measure the full impact? These are questions that we might not have answers to, for now. We will have to see the final numbers in the last quarter of this year and asses them, to measure the full impact.
Beyond the numbers for businesses
Beyond all these numbers it is important to see how the private sector has fared so far, especially businesses. Sierra Leone Importers Association is one of the major components of the private sector architecture in the country.
Its Secretary General, Rashid Conteh, told Politico that the last three months has been a mixed bag of good and bad for businesses in the country. Whiles some sectors have thrived, others have been on the receiving end of the brunt of the pandemic’s effect, he said.
“Some sectors have actually thrived whiles others have been badly affected. For example there has been an increase in the sale of rice for example. I spoke to CTC [major rice importer] and they told me that their sales have gone up by almost 70% since the pandemic. Tomatoes, onions medicine and surprisingly cement, there is a massive increase in sales,” he said.
Conteh said most of the effect has been on the low tier businesses that depend on cross border trades.
“When you look at the other areas, especially the cross border trade in the Mano River Union, it has suffered so much. In the cross border trade, the people that operate at the bottom who are the informal sector, form the bulk of the private sector. The informal trade has had some serious challenge because of the restrictions in the borders of Liberia and Guinea,” Conteh explained.
Sierra Leone shut down its land borders with Guinea and Liberia on the 28th of March this year, as part of efforts to prevent the spread of the COVID-19 to other district beyond Freetown and its environs, which was the epicenter at the time. However, goods were still allowed to go through the borders, but Conteh said the impact has still been tough on the informal sector.
Baby Kallon, a groundnut seller at How For Do Market in Kenema District, explained the reality for traders like her.
“The price of groundnut per pan is no longer ten to fourteen thousand leones, instead it now costs us twenty five thousand Leones. Because of the virus in the country, there has been no movement and no trade fair for us to sell our goods,” she told Politico.
Almost two weeks ago, President Julius Maada Bio announced plans for a proposed meeting among MRU (Mano River Union) member countries to discussion the possible reopening their borders.
A study currently underway and which seeks to track the economic impact of the COVID-19 pandemic in Sierra Leone and Liberia, shows that 68% of businesses in Sierra Leone have reported a drop in weekly income since March 2020. The study is being conducted by the international governance think tank, International Growth Center.
Government’s announcement of a Le500 billion fund for businesses came as a relief for many local players, who were facing uncertain future in the early days of the pandemic. But small businesses have found it difficult to get access to the money.
Conteh said: “The way they structured the funds it only benefitted the elites. It did not trickle down to the bottom at all. I had a lot of complaints from our members saying that they were not able to access it. They set a two tier approach; firstly you had to meet the criteria of Bank of Sierra Leone and you had to meet the requirements of the [commercial] banks, because they are taking 100% of the risk.”
“The conditions are so stringent that for you not to be able to meet the criteria they (commercial banks) can even give an option for you to take an overdraft if you desperately need money, for which they can charge you 18%” he added.
According to Conteh, Interest rate on the Le500 billion fund was set at 6%; 4% to go to the central bank, whiles 2% to commercial banks who were giving the loans.
“We are appealing to the government that if this is going to continue, they have to create special funds for us who are right in the bottom; for businesses bringing in one or two containers,” he recommended.
Effect on revenue generation
One of the institutions that have held it together in the face of the pandemic is the National Revenue Authority (NRA). In the early days of the pandemic, there were serious concerns that NRA’s usually ambitious revenue generation drive might be seriously dented. But that has not been the case.
In a press conference at the Ministry of Finance in May this year, the Commissioner General, Dr Samuel Gibao said the impact of the pandemic on revenue generation hasn’t been as serious as they had anticipated.
He said in the first quarter of the year the NRA collected Le 23 billion daily and that had now dropped in the second quarter to Le 21.7 billion daily. Politico understands that the actual projection the institution had at the start of the year was Le 25 billion, but that has now been revised with partners.
Final assessment
On the whole, Conteh, the Secretary General of the Importers Association, also believes that the government has done a good job at managing the impact of the virus on the economy.
“The outbreak of the Ebola gave us a lot of experience and I think that is why we got this one right. That is the reason why this virus has not really affected our economy compared to Ebola. Ebola battered our economy,” he said.
He added: “Yes, I know the hospitality industry have been badly affected with things almost grinding to a halt, but for other sectors it has not been really that bad.”
And to deal with this, in May this year, government launched a very ambitious response package addressing all sectors within the economy. The Quick Economic Response Program (QERP), as it is called, is aimed at making sure that the virus doesn’t take the government off its Medium Term National Development Plan trajectory. The QERP is estimated to cost around US$136 million and already funds are coming in.
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