A tiny country on the Western coast of Africa, Sierra Leone is home to a beautiful coastline as well as a breathtaking mountain range from which the country derives its name. However, the country has never been a hot spot for tourists. This is probably due largely to the civil war which ravaged the nation during the 1990’s, as well as Sierra Leone’s poor showing in the UN Human Development Index in 2000: dead last. Sierra Leone was impoverished before the war, and any attempts at modernization were lost in the conflict, along with the homes and lives of more than three million.
The cost of rebuilding has been enormous and has left the country with a huge public debt to the IMF, World Bank and other sources. In this paper I hope to illustrate why Sierra Leone qualifies to be the “poster-child” of third world debt relief, as well as tackle the fundamental question of whether or not international economic cooperation actually benefits the developing world.
When Britain abolished slavery in the 18th Century it was decided that instead of letting them remain in Britain, the freed slaves should be returned to their homeland of Africa.
They then decided that a recently acquired territory called Sierra Leone would be the ideal location for such a homecoming, and shipped almost 70,000 former slaves through the capital, aptly named Freeport, and into Sierra Leone in the late 18th and early 19th centuries. Great Britain went on to practice colonial rule in Sierra Leone until 1961 when the government s granted Sierra Leone it’s independence.
After 1961, successive governments were dominated by a small political elite who profited exclusively from the country’s lucrative diamond trade.
Reacting to this system of exclusive patronage, a political outsider, Foday Sankoh, formed the RUF (Revolutionary United Front), and started an armed insurrection. Rebel leader and later president of neighboring Liberia, Charles Taylor, backed Sankoh and the RUF. Dissatisfied with the government, the military took power in 1991 igniting ten years of civil war and unrest that left more than 2 million of its estimated 4.5 million residents homeless and internally displaced, made refugees of almost 500,000 more people, and resulted in the death of an estimated 20,000 (although it could be closer to 200,000) (2). The war caused the near collapse of the country’s productive agriculture and mining sectors and led to the almost complete deterioration of even the most basic social services for health, education and water. The first international support for Sierra Leone came when Nigeria became increasingly alarmed by the atrocities being committed and provided British-backed support against the rebels.
While this initial intervention succeeded in returning the elected president to office the situation soon deteriorated and over ten thousand British and UN peacekeeping forces (UNAMSIL) were deployed to the area to embark upon a disarmament, demobilization and reintegration (DDR) program. Despite setbacks, such as the capture by rebels of 500 UN personnel, the UN operation succeeded in disarming 45,000 RUF rebels by the beginning of 2002 and Sierra Leone became a constitutional democracy under President Ahmed Tejam Kabbah (1).
After peace had been restored the newly secured government of Sierra Leone had to deal with the arduous process of rebuilding a war-ravaged country as well as repaying the loans they procured in the process. The DDR program was managed by the Sierra Leone Government’s National Committee for Disarmament, Demobilization and Reintegration (NCDDR), which worked closely with several partner organizations such as UNICEF, the World Food Programme, and UNAMSIL in the implementation of the program.
A World Bank administered Trust Fund, set up at the request of the Government to raise grant funds from donor nations for the program, financed the operations of NCDDR and supported partner organizations implementing DDR activities (2). This trust fund was a key part in Sierra Leone’s rebuilding process for a few reasons. First and foremost, it paid for the DDR operation that finally ended the atrocious civil war which had ravaged the nation for a decade, and as an added bonus the money came in grant form, so the government wouldn’t have to repay it.
It was and remains important for Sierra Leone to receive as much aid as possible in the form of grants so that it doesn’t accrue further debt. Unfortunately for Sierra Leone after the conflict ended so did the grants. The already poor country soon found itself immersed in a huge public debt. According to economic think-tank Jubilee: “As of 2002, Sierra Leone’s public and publicly guaranteed external debt is estimated to be approximately $1. 2 billion in nominal terms, or $749m in net present value terms. Total debt was 118% of Sierra Leone’s GDP in 2000 and a staggering 681% of her exports.
Total projected relief for Sierra Leone once she reaches Completion Point will amount to $950m in nominal terms, or $600m in net present value terms (1). ” To understand just how overwhelming and unserviceable Sierra Leone’s debt is one must simply refer to the guidelines of the Heavily Indebted Poor Countries Initiative (HIPC) created by the World Bank and International Monetary Fund (IMF) in 1996. The HIPC was a result of growing concern over the global debt crisis that was thwarting development in the most impoverished countries of the world.
Finding that at least 41 countries that were both poor and paying more to foreign debtors than they spent domestically on health and education, they decided that that the main criterion for judging debt sustainability was the capacity to repay debts using resources received from exports (3). This policy makes sense because a country’s exports are one of the main sources of revenue for the government, especially in a poor country such as Sierra Leone with a small tax base.