By: Abdulai Mansaray.
The Lungi Bridge has been a talking point for many
Sierra Leoneans lately and the amount of coverage has been well deserved. While
some see it as the right step in the right direction for development, others
consider it as a self aggrandising monument or a symbol of avarice by the Bio
government. It is not surprising that it has come in for criticism or applauds
from various sections of our society.
It is obvious that some of the opinions
expressed are deeply rooted in the various political persuasions; which in
effect could be suspect, while others are from patriotic standpoints. But in
between these contrasting opinions are those who have received the news with cautious optimism. This group of
people may have every reason to be equally optimistic
but cautious; optimistic because of the associated potential of the bridge,
but cautious because of the hidden or unknown cost.
Like I mentioned in my last article, the president has
done his best to re-assure the nation that building the bridge will not leave
us handcuffed to any national debt. It has been touted as a Build, Operate and
Transfer (BOT) business model. This may have left some people with the
impression that the bridge will be free. If the bridge was going to be free,
you would wonder why all the fuss, or ask why should people be looking a gift
horse in the mouth? My layman
understanding of the project is that; it will be built, operated, by the
providers for an agreed contractual period, until the amount invested is
repaid. But what is a BOT business model?
A Build-Operate-Transfer (BOOT) is one
type of a public-private partnership, or PPP. Under this project model, a
private organization will develop a large project under the contract of a
public partner. It is a way to create large infrastructure projects for the
public, while being able to use private funding for it. At the end of the
contract period, which may be 40+ years in length, ownership of the project
transfers from the private enterprise to the public sector. Some
people have already tied down this BOT to a 99 year lifespan.If that is the
case, none of us reading this article now will be around then. Scary, is it? So
what are we trying to bequeath to the unborn generations and what are the advantages and disadvantages of such a
model?
Among the numerous advantages, the BOT model minimizes the
public cost for infrastructure development, reduces public debt, and allows for innovation. In addition,
a BOT model provides a chance to bring in expertise, allows each party to focus
on their strengths, and keeps the public-sector where they are most needed. On
the downside, such models can have higher
transaction costs, require fund-raising to be successful and only works
for large projects. Such a model may also require substantial operational
revenues and strong corporate
governance to be successful.
Considering that Sierra Leone has a malignant diagnosis of
global developmental delay, do we have a strong base for fund raising? The
Lungi Bridge project is large, but do we have enough viable successful
operational revenues and strong corporate governance ethic? Can we succeed
against a backdrop of pervasive corruption; an affliction that President Bio
has sworn to cure? This article is not
aimed at pouring cold water on President Bio’s pet project. Rather, it is aimed
at generating a conversation for the general good; to ensure that we don’t jump
head first, into the very river that we are trying to bridge. Extra caution and
due diligence should be paid to possible Higher Transaction Costs. That may be
where the devil is in the detail; in spite of the notion that it will not cost
you and me a shilling.
President Maada Bio has just invited bidders to
undertake the financing of this project. There is nothing to indicate that
bidders are falling over themselves for the opportunity to take on the project.
This is not to suggest that there are no bidders. These things take a life of secrecy. But we
can second guess the usual suspects; and the Chinese will not be far behind in
this race. Chinese investments in Africa in the last 2 decades have been
monumental.
While the rest of the western world has been
pre-occupied with regime changes in the Middle East, China has
unapologetically, but stealthily slipped onto the developmental landscape of
the African continent. Their readiness to splash the cash, in exchange for
large swathes of the continent’s markets for their surplus goods on the one
hand, and the sourcing of the continent’s vast resources to service their
insatiable demands for its ever growing population is an open secret. Some call
it economic symbiosis, while others see them like drunken sailors ready to
spray the dosh.
Unlike their western counterparts like the IMF,
conventional wisdom would lead you to believe that Chinese aid have no strings
attached. In case you are wondering, the price of fuel has gone down by 3 pence
a litre in the UK, while the IMF recently ordered our government to increase
the price of fuel; sorry remove the fuel subsidy, in exchange for $ 21.6
Millions.
Catch my drift? But at face
value, Chinese investments have been made to look like charitable gestures to
the poor. But are they? In contrast, we get to know some of the conditions from
the IMF. With the Chinese, those conditions seem to take a cult-like
flavour.
This is one of the reasons why some people, while
recognising the need for the Lungi Bridge, have remained very cautious. Such cautions are not borne of out thin air,
but what you would call received wisdom
and the history books. China has been accused by its geo-political competitors
of engaging in “debt traps” for
African countries. I prefer to call it “debt-diplomacy” for now; until they
start calling for their cash. There is a
temptation to dismiss such accusations as coming from green eyed competitors
and sour grapes.
According to China Investments Global Tracker, Chinese
investments and
contracts in sub-Saharan Africa total $299 billion from 2005 to 2018. The Chinese president Xi Jinping vowed
to invest a further $60 billion into African nations at the 2018 China-Africa Cooperation
Forum. What is usually sold
as “Chinese companies” investing in Africa is grossly false; for the majority
of these “companies” are state owned.
In order for
us to understand why some folks are cautiously optimistic about this project,
we need to look at examples of Chinese “investments around the world in
developing countries; in our case underdeveloped. Let’s take the Sri Lankan
experience; where the Sri Lankan Port was financed by one of Beijing’s largest state-owned enterprises, the
Hambantota Port Development Project. With close proximity to the world’s
busiest shipping lanes, the forecast was for a strong base for fund raising.
But with tens of thousands of ships passing by along one of the world’s busiest
shipping lanes, the reality was that the port drew only 34 ships in 2012 (The
New York Times-June 25,
2018).
With the obvious loss, the government struggled to make payments. Under heavy pressure and series of
renegotiations, the Sri Lanka government had no option but to hand over the port and 15,000 acres of
land around it to the Chinese for 99 years last December. The Chinese
have been known to play hardball when it comes to debt collection.
Interestingly, many believe that the Chinese are
allergic to the internal politics of their host countries; in comparison to UK,
France or USA. That could be the case, but not if they have investments and
contracts to protect. So where did you think those red T-shirts, Okadas, other
promotional materials and the Le
30,000.00 came from during the last elections in Sierra Leone ? Now you know
why that Chinese guy was dancing during one of our political rallies last year.
Were there any obvious threats from the opposition party to tear up previously
agreed contracts, if it came to power?
Chinese companies have been known to pump large sums into campaign funds
of “friendly political parties” that agree to their terms. They have been known
to impose their own preferred companies in the bidding process; as a condition
to obtain loans. In some cases, the conditions for loans have been “no open
bidding” process (WikiLeaks). Some call these home economics.
There are two ways you can subjugate a country; the
sword or debt. I know which the Chinese prefer. Against such a backdrop, there
is no doubt that what passes for loans, support, assistance, debt, or whatever
you want to call it, always comes with conditions. Beware of the “SMALL PRINT”;
for the devil is in the details. But before we turn a frosty look at Chinese
investments in Africa in general, and the Lungi Bridge in particular, it was
worth remembering the following. Firstly, our President has just launched the
bidding process. This is not to say that the Chinese are, or will be the final
winning bid for the Lungi Bridge. But don’t rule the Chinese out as major contenders.
With our President’s assurance that the bridge will
not cost you and me a shilling to build, how will this “gift” be paid for? Some
have suggested that it will be operated on a toll system; taking a leaf out of
EBK’s “How to pay for your Road”, book Two, 2nd edition.
I still can’t figure out the use of the tolls
at Mile 38 and 47, other than as cash cows to fund another debt. Have they
reduced journey times or congestion? Don’t answer that. How much will it cost
commuters to use the bridge? How many users will it need to make it cost
effective or revenue generating friendly? Some may say that this is not the
time to “look a gift horse in the mouth”. But should we “beware of Greeks
bearing gifts”? In case, just in case there is a breach of contract, would the Operators
ask to operate Lungi Airport as well; to know who comes in or goes out of the
country.
Indications are that the majority of Sierra
Leoneans, including I support the project from a developmental point of view.
The caution may be about the unspoken details and inherent economic minefields
that such projects might be insidiously embedded. We need the Lungi Bridge, but
at what cost. What some of us are asking is for the government to be very
diligent; for once you sign on the dotted line, erasers are no longer
available.
Once you tick the “accept button, you can’t untick. Ask google. So
before we sign and tick the boxes, please read the fine print. And just as a
special measure, have a quiet word with the Sri Lankans, and find out where
they went wrong. It is not criminal to ask these questions. If it is, then I am
guilty as hell. Sorry.
Don’t forget to read the small print. And President
Bio is not short of Drs, Professors, and Lawyers etc., to do the job.
Don’t forget to turn the lights off before you
leave the room.
Comments
Post a Comment