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 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 Million. 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.