Ann Pettifor

Storm over Freetown…and Europe.

Dear readers. Please forgive the long absence, but I am in Africa on a trip: first, to Sierra Leone, and now in Ethiopia. The picture above was taken as our ferry drew away from Freetown port, and headed across the sea to Lunghi airport. Am here as part of a project for the reduction of maternal and newborn mortality in two countries, Sierra Leone and Ethiopia.

Of course here in Africa we are all watching the Eurozone crisis, the floods in Bangkok, the snow in Connecticut, and the upheavals at St. Paul’s

And observing these dramas from the perspective of one of the poorest countries in the world, has been salutary.

As I often mention in my talks, we may deplore our banking system, but countries without sound, well developed banking systems – that work to support development rather than financial elites – suffer quite unnecessary impoverishment and degradation. In Sierra Leone there are very few banks, only one ATM machine (as far as I could see) – and that was not fully trusted by Saloneans as they are known, so I was advised against using it (which may have been unfair). No payments are made by cheque or credit cards; only cash is accepted. But people get by – just – with the little money they can lay their hands on.  Money changers operate on the street, and very efficient they are too.  Obtaining hard currency from the only bank that supplies such hard currency in Freetown, was something of a feat.

But what really moved me was this simple fact: there is so much to do in Sierra Leone. And so many capable and articulate people to do it.

All they need is money.

And despite the fact that humanity has used and developed credit and money systems for about 5,000 years now…we still cannot manage to build a system that will allow Sierra Leoneans  to do what is necessary to maintain dignity and life: namely, work.

Sure, Sierra Leone has a challenging climate: each night rain and thunderstorms – preceded by fearsome winds – swept in from the sea, and thrashed down on Freetown. The thought of poor families with children huddled under leaky corrugated roofs kept me awake and alarmed. The driving rain pours down the mountainsides which Freetown straddles, and systematically undermines roads, making it a major trial each morning to accomplish the simple task of moving from A to B, while keeping one’s humour, clothes and vehicle intact. And yet, and yet: there they were – endless lines of schoolchildren dressed in white plimsolls, white shirts and smart shorts – no doubt washed in the local river and ironed under those corrugated roofs by their mothers – dodging puddles as they marched determinedly to school, confident of a future.

But as things stand that future looks bleak. 60% of Salonean youths are unemployed, according to the government.

So why can’t the IMF and World Bank, and all those accomplished economists that periodically undertake ‘missions’ (a telling word) to Sierra Leone – build an economic and monetary framework that makes it possible for Sierra Leoneans – and their eager schoolchildren –  to do what they can do: work?  To do what they can do to reconstruct and develop their country?  To ‘afford what they can do?’

A distinguished woman member of the British House of Lords (and please readers, help me remember her name) once said: “all the poor need is money”. Sadly, despite their considerable intelligence; their education; their privileges – the world’s economic elite are not capable of creating a framework that provides the poor with the money they need to do what they can do – no more.

Far from creating such constructive frameworks, economists have instead put their minds to building  divisive frameworks – such as that of the Eurozone – which cause divergence, rather than convergence; which disrupt rather than unite; which polarise rather than equalise.

It sure is time for a change.  And with some luck, the times may be a’changing.





6 thoughts on “Storm over Freetown…and Europe.”

  1. Hello Ann, I saw your 2 pages in War Cry this week, well done, very interesting, I only got about 10 sq inches, bottom of P2, and this is my first for about 18 months, despite sending many items in. I note you wrote the above from Sierra Leone, I too have an interest in that country and have written a few papers that have been hard to “sell” to the media, all have job creation potential with a bit of seed corn, or investment if that word is not too contaminated in the circles in which you move.

    “Not invented here” is the reaction I invariably get, judging by the total absence of replies from the recipients I have approached. Agreed, cold calling is a lonely furrow to plough, and the cynical view is problems are (bad) news, potential solutions are good news so are not news. Having said that, in my files I do have replies from Hilary Benn, Paul Boateng, and Baroness Emma Nicholson. None invite me to follow up.

    I hope the NEF will share my vision, and if you can send me an e-mail address, I can send them as attachments. In addition to W Africa, I have a plan to prevent house repossession that several banks and MPs have ignored, Again I hope NEF will be different.

    Best wishes, Wesley, Bandsman at Lockerbie Salvation Army.

  2. Hi Ann, It didn’t look like Ruth or Georgia were the right contacts for this query and please excuse me if this is not the right forum either. I write from Ireland, where our Labour parliament stated this week that a government in Ireland’s position (of overwhelming debt to foreign creditors) cannot afford the kind of stimulus package it would like to implement or, any appearance of not meeting it’s austerity and repayment commitments (with a view to returning to the private financial markets one day).

    Why is it that our government is not listening to arguments like yours? Is it really as simple as you say, that a government (with control of it’s own currency) simply enters a desired amount into the debit side of it’s own ledger, at a self-determined low interest rate and begins to fund economic activity with a view to repayment from increased tax receipts from such stimulus in the years ahead?

  3. If this is the case, then the views of one Irish financial commentator (David McWilliams) make sense. Speaking to a Greek audience last month he said Ireland should pull out of the euro, return to it’s own currency and put the insolvent banks through normal commercial bankruptcy proceedings (as Iceland did), thereby restructuring it’s debt. Assuming Ireland can politely decline the ECB/IMF offer, what sized self-funded stimulus package could the Irish government generate given current annual tax receipt income is 30 billion and actual annual running costs (wasteful expenditure included) are 60 billion?

    And in your personal experience of the debt crisis moving from the periphery countries to Europe’s, is the reality of a default (like Argentina’s or Iceland’s) truly horrible for normal people’s everyday lives? Sorry I couldn’t find the person’s name re the quote either.

  4. Wesley thanks for your note….and sorry that your ideas have fallen on stony ground. NEF would no doubt welcome sight of your ideas…but like the politicians you approached previously, they are not implementers…I would send these ideas to the IMF or World Bank representatives in countries….They are at the coal face, after all.

    Keith…thank you for your query too. The reality of both Argentina’s and Iceland’s decision to prioritise the interests of their people over the interests of foreign creditors that lent recklessly – and often fraudulently – is that they both thrived. See the extract below from a piece written by Martin Wolf for the FT on the 21st November, 2011:

    What happened to Iceland is clear: its banks ran amuck.

    By 2007, the assets of the three largest banks had reached nine times gross domestic product. For the world, these banks were not too big to fail. For Iceland, they were too big to save. This combination had happy results.

    As the prime minister, Jóhanna Sigurðardóttir, remarked in the opening speech of the conference: “In effect . . . the lion’s share of the banking collapse was borne by foreign creditors. There was no other way, there was no other option, considering that the banks’ assets were ten times Iceland’s GDP.”

    Árni Páll Árnason, the minister of economy, explained what happened: “First, deposit holders were given priority to the bond holders of the banks. Second, all domestic assets were transferred, along with deposits, to new banks at a ‘fair’ value. The new banks, capitalised by the State, then assumed the role of the old banks in the payment system. The international operations of the old banks were however put into liquidation in regular bankruptcy proceedings. In the process the system shrunk from . . . 10 times Iceland’s GDP to about two times”.

    The contrast with what happened elsewhere – particularly, in Ireland – is striking. Iceland let the creditors of its banks hang. Ireland did not. Good for Iceland!

  5. Hello Ann, I saw your 2 pages in War Cry in Nov. I note you wrote the above from sierra Leone, I have written papes on this subject that have proved hard to “sell” to the media, all have job creation, with a bit of seed corn investment. “Not invented here” seems to be the reaction altho’ I do have in my files replies from MPs Paul Boateng and Hilary Benn and Baroness emma Nicholson, but none invited a follow up.

    I hope NEF shares my vision, if you can send me an e-mail address, I can send you my papes as attachments.

    Best wishes, Wesley Paxton, Bandsman Lockerbie Salvation Army.

  6. Hello again Ann, I don’t know how it happened, but it was only afte I put part of my original note in again, I got sigth of your reply, thanks anyway, but my experience of writing to outfots like the IMP is they are exceedingly stony ground. C’est la vie…?

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