Field Report for Sierra leone - Assignment Example

Introduction Based on the research, Sierra Leone’s economy can be referred as that of a least developed country. Thecountry had a GDP of roughly 1.8 billion USD in 2008 (World Bank). By the time the civil war ended in 2002, the economy has been recovering gradually with a GDP growth rate of around 4 to 7% (Adepoju 45). The economic development in Sierra Leone has always been hampered and hindered by the country’s overdependence on exploitation of minerals. Sequential regimes as well as the inhabitants as a whole have continuously believed that gold and diamonds are adequate and appropriate lure for investment and foreign currency income generators. As an outcome, industrialexpansions, large scale agriculture of trade products, as well as justifiable and sustainable investments have been highly neglected by governments. Therefore, the economy could be defined as exploitative, and is based on the pulling out of unsustainable resources as well as non-recyclable assets. Interview on citizens’ response to development or the potential for development in Sierra Leone An interview was conductedon three different groups, and from each group, one person was chosen to represent the groups. The first group was made up of people working in the government, the other group represented common people, while the other group represented the privileged in the society.The first group was represented by Mr. John; the other one was represented by Mr. Eke, while the third group was represented by Miss Ann. Me: Hello, sir, what are the current policies promoting investment and private sector development in Sierra Leone? John: Sierra Leone is currently carrying out its development strategy under the national long term perspectives, a programme known as “vision 2025”. The significance of this programme spins around nurturing and promoting a strong, self-reliant, modest, and competitive private zone steered the economy with very strong and stable participation. Employing the overarching strategies of the long term perspectives, current macroeconomic policy is conducted on poverty reduction strategy paper (PRSP)developed with the IMF. The aspects of this plan include infrastructure development, private sector development, and reforms to enhance and increase domestic revenue collection. The poverty reduction strategy puts an emphasis on agriculture and fisheries, human development, transportation, as well as energy. Me: That seems like a very great approach. So, are there any challenges associated with this strategy? John: Both the PRSP and the “vision 2025” have a number of key challenges in the development of the private sector as well as an investment which includes; the dominance of a substantial and growing informal sub sector, Sierra Leone’s limited capacity to participate in investment activities, and a weak institutional environment whereby small enterprise expansion can be fostered. Me: Has the government taken any steps to address these issues Miss Ann? Ann: It has, and as part of the effort to address these issues, Sierra Leone is collaborating with different donor agencies on a private sector development programme which has undertaken a number of diagnostic surveys and is currently focusing on capacity building for Indigenous the small and medium sized enterprise. There is also the facet of private sector development effort, which focuses on improving investments both foreign and domestic. There is the privatization strategy, which has encompassed more than simply divestiture of government assets. Me: welcome Mr. Eke, can you tell me something about IMF and your country? Eke: Well, the IMF isresponsible for increased poverty in Sierra Leone even though it is said to offer assistance to developing countries. Me: What makes you say that IMF for increased poverty in Sierra Leone? Eke: because pressure from the United States government made IMF begin giving loans based on harsh and strict conditions which were not initially there. These policies have reduced the level of social safety in developing countries, and deteriorated labor as well as environmental standards in in Sierra Leone. Line of work liberalization can clue to dumping of reduced and substandard merchandise from outside. As a result, his challenges and undermines local industries in the country that yield or intend to create the same products. Me: Do you see any potential for development within the next ten or so years? Eke: I am very sure of it, I believe the government has come up with a well-organized stratagem, however, I hope this time round the money will be put into improved development so that the country’s economy does not drag behind owing to failure of paying the international debts. The impact of the World Bank/International/Monetary Fund upon Sierra Leone According to the research, the World Bank and the International Monetary Fund (IMF) are believed to be the major cause of poverty in Sierra Leone and other African countries today. Regardless of claims that they reduce poverty in Africa, it is extensively recognized that most of the debts, as a major cause of poverty in Sierra Leone, are owing to the strategies and policies of the World Bank and the IMF (Adepoju 45). The World Banks aggressive transactions with Sierra Leone, which was regularly reigned by authoritarian governments, exacerbated and worsened the developing county’s growing debt crisis, distraught local ecosystems and indigenous populations. Based on the research, most scholars in Sierra Leone as well as human rights activists vie that the Banks aggressive transactions with developing countries, which were regularly reigned by authoritarian governments, exacerbated and worsened the developing biospheres growing debt crisis, distraught local ecosystems and indigenous populations. The developed nations control the World Bank and IMF. Therefore, beneath a smooth devised mechanism these banks give loans to Sierra Leone in return for the modification as well as adjustment of their economies. This implies that economic bearing of the country would be planned, scheduled, examined, monitored, and controlled by the developed nations. For instance, the World Bank aid for assisting Sierra Leone encompasses the country investigations and surveys with a conference of begging Finance Ministers who are given a reformation agreement pre-enrolled for voluntary signature. Their policies have been deeply criticized over the years for the reason that they most of the times result in poverty circumstances. The World Bank and the IMFs policies are quitediverse now from what they were initiallyproposed. Both monetary organizations were originally formed by forty four nations at the Bretton Woods Conference in 1944 (Kiggundu 235). They had a main goal of generating a stable outlineand framework for the post-war international economy. The IMF to beprecise was initiallymolded to endorsethe steady development and full employment by givingunrestricted loans to economies in crunches and inaugurating mechanisms to alleviate exchange charges, and to simplifyas well as facilitate currency exchange (Keen 317). However, most of its visions never came to reality because pressure from the United States government made IMF begin giving loans based on harsh and strict conditions (Keen 319). According to the research, some critics in the country have also alleged that these policies have reduced the level of social safety in developing countries, and deterioratedlaboras well as environmental standards in in Sierra Leone. Line of work liberalization can clue to dumping of reduced and substandard merchandise from outside. This challenge and undermines local industries in the country that yield or intend to create the same products. To add on to that, the World Bank, which was originallyrecognized as the International Bank for Reconstructions and Development, was molded to supplyand fund the reconstruction of infrastructure in nations ravaged by the 2nd World War (Sierra Leone Trade Journal70). Its concentrationand focus later transformed in the 1980s, thebankrevolved its devotion away from Europe to other third world countries, numerous of which are in Africa (Kiggundu 253). It thus started funding immense industrial development schemes in Africa, Asia, as well Latin America (Kiggundu 253). Critics also say that IMF strategies have reduced the level of social safety in developing countries, and deteriorated labor as well as environmental standards in in Sierra Leone. According to James Sackey, former World Bank Country Representative in Sierra Leone, the instructions from the developed countries take account ofsales, high interest rates, privatizations, trade liberalization and much more (Kiggundu 257). Trade liberalization for economies that are under developedcan result to a number of severeconnected effects. To start with, it leads to dumping of substantial, unwanted, and cheap products to the country from outside. These items may include clothes, creams; shoes are just a few of many other substantial goods and commodities that flood market in Sierra Leone from the developed countries. This thus hinders and undermines local industries in Sierra Leone that produce or intended to yieldsimilar products. Advantages and disadvantages of world bank/IMF involvement in Sierra Leone Based on the research, the World Bank and IMF involvement disadvantages in Sierra Leone far outweigh its advantages. To start with, the World Bank was initially created as an organization to aid and help eliminate poverty as well as hunger across the world. It also promotes disease control, gender equality, as well as the promotion of education. While, the World Bank may have a lot of critics, its objectives as well as goals are certainly admirable in a number of countries. It has also been said to have simply exploited the third world countries.One of the most critical issues in Sierra Leone is the subject of poverty. The realization is that, although there has been substantial and noteworthy growth in the country, the living standards, poverty levels, as well as quality of life is yet to improve (Keen 319). The World Bank, being among the organizations that are prominent in putting efforts in addressing poverty issues has been active in development as well as implementation of policies to diminish poverty. Therefore, its involvement in Sierra Leone helps in poverty elimination in order to develop national infrastructures to sustain and maintain effective governance, to uphold environmental safety and protection,advance industries, and for human development. This is usually accomplished by providing research as well as operational support to Sierra Leone, in the form of expertise and finance. There is the implementation of a preferential rate system for members, particularly in least developed countries. It also offers grants to support macro-level ingenuities and initiatives, for instance, those that are designed for economic reforms or environmental protection (Adepoju 57). To add on to that, the disadvantages of the IMF and the World Bank involvement in Sierra Leone includes; high interest rates, privatizations, and trade liberalization (Keen 317). Trade liberalization for economies that are under developed can result to a number of severe attendant effects. It leads to dumping of substantial, unwanted, and cheap products to the country from outside. These items may include clothesand other substantial goods that flood market in Sierra Leone from the developed countries. This thus hinders and undermines local industries in Sierra Leone that produce or wished to yield similar products. Into the bargain, Sierra Leon’s infant businesses and industries miss the mark, to take off under trade liberalization. This is a very critical issue with regards to imported foodstuffs, including milk, wheat, rice, sugar, butter, cheese among others. Most developed countries tend to reduce the prices of these food items and export them to Africa when they have excess. When these situations happen and are not conditioned, Sierra Leone would thus never be able to produce its own food. On the other hand, privatization and its effects on the government initiatives that do not function and operate well cannot be confronted or challenged. However, general sale privatization of the whole enchilada that is government possessed cannot similarly be justified. At any rate, there are limitedproblems such as the inadequate indigenous trade to overthrow the government initiatives and projects; the scarcity of local private funds to pay for the running charge of privatized initiatives and the countlesssignificance of the amenities to the individuals of some enterprises as equated to being lucrative. What usually happens is that, the soft sectors in the government, such as the health sector, education, environment, and housing among others suffer from the cut on the government spending. If involvement has not been existent, what are the reasons? The lack of involvement with the World Bank and IMF in Sierra Leone would be because the country requested pardon because it was doing quite poorly and the debts had really risen. In order for a country to meet the debt cancellation on the IMF and World Bank, it must be poor and highly indebted, and having total debts worth more than one hundred and fifty percent of exports or more than two hundred and fifty percent of the government revenue. Therefore, Sierra Leone has had to lay the groundwork for privatization of twenty four state enterprises, comprising power, telecommunications, and water. This makes it quite hard to obtain more loans, but the government is trying to obtain support from the IMF and World Bank by starting a new project known as “vision 2025”(Fund, 104). World Bank creates proposals that can be employed for policy development or evaluation. The strategies are also employed as conditions of loans as well as grants bidden by countries. The World Bank uses this policy as a way of safeguarding and securing obligations to policies that it has ascertains as seriouswith development, expansion and poverty issues (Keen 319). Based on the research and findings from interviewing people, there is the indication that knowledge about IMF and World Bank activities in Sierra Leone are not common. A few advantaged classes have clear cut ideas in the country. However, the focus group discussions revealed that those who were aware of the IMF had very little or nothing to say concerning it. Some claim that IMF and World Bank in some manner were responsible for the increased poverty in Sierra Leone. Advantages and disadvantages of this lack of involvement The instructions from the developed countries take account of sales, high interest rates, privatizations, trade liberalization and much more. Therefore a country may stay poor with very limited resources without the IMF support, but the lack of its involvement can prevent the developed countries from taking account on its trade liberalization as well as privatizations. Trade liberalization for economies that are under developed can result to a number of severe attendant effects. In conclusion, increased interest rates heightens the motivations to save money, however, it also encourages speculative investments that would offer quick profits to a number of people, while this adds nothing to the productive capacity. High interest charges and high credit, likewise makes capital to start new commerce quite challenging to come by thus resulting in stagnation. Many nations that buy African products have fixed definite totals on how much can be imported or oblige fixed prices in foreign currencies to accommodate and shelter their products, even when they are cheaper on local currencies, they do not essentially gain different outside markets or earn more foreign rates. WorksCited Adepoju, Aderanti. The Impact of Structural Adjustment on the Population of Africa: The Implications for Education, Health & Employment. Portsmouth, (N.H.: Heinemann [u.a., 1993. Print. Fund, International M. Sierra Leone. Washington: International Monetary Fund, 2008. Internet resource. Keen, David. Conflict & Collusion in Sierra Leone. Oxford: Currey [u.a., 2005. Print. Kiggundu, Moses N. Managing Globalization in Developing Countries and Transition Economies: Building Capacities for a Changing World. Westport, CT: Praeger, 2002. Print. Sierra Leone Trade Journal. Freetown?: Ministry of Information and Broadcasting, 1961. Print. Read More