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 minimises 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 Bioโs pet project. Rather, it is aimed at generating a
conversation for the general good; to ensure that we donโt 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 continentโs markets for their surplus
goods on the one hand, and the sourcing of the continentโs 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 โdebt trapsโ for African
countries. I prefer to call it โdebt-diplomacyโ 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 โChinese companiesโ investing in Africa is grossly false; for the majority of
these โcompaniesโ 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 โinvestments around the world in
developing countries; in our case underdeveloped. Letโs take the Sri Lankan
experience; where the Sri Lankan Port was financed by one of Beijingโs largest state–
owned enterprises, the Hambantota Port Development Project.
With close proximity
to the worldโs 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 worldโs
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
โfriendly political partiesโ 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 โno open biddingโ 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 โSMALL PRINTโ; 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 donโt rule the Chinese out as major
contenders.
With our Presidentโs assurance that the bridge will not cost you and me a shilling to
build, how will this โgiftโ be paid for? Some have suggested that it will be operated on
a toll system; taking a leaf out of EBKโs โHow to pay for your Roadโ, book Two, 2
nd
edition. I still canโt 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?
Donโt 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 โlook a gift horse in the mouthโ. But should we โbeware
of Greeks bearing giftsโ? In case, just in case there is a breach of contract, would the
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Operators ask to operate Lungi Airport as well; to know who comes in or goes out ofthe country.Indications are that the majority of Sierra Leoneans, including I support the projectfrom a developmental point of view. The caution may be about the unspoken detailsand 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 thegovernment to be very diligent; for once you sign on the dotted line, erasers are nolonger available. Once you tick the โaccept button, you canโt untick. Ask google. Sobefore we sign and tick the boxes, please read the fine print. And just as a specialmeasure, have a quiet word with the Sri Lankans, and find out where they wentwrong. It is not criminal to ask these questions. If it is, then I am guilty as hell. Sorry.Donโt forget to read the small print.Donโt forget to turn the lights off before you leave the room.Abdulai Mansara
