The world economy faced its most challenging period during the last great depression and millions of lives were lost due to a pandemic caused by the Coronavirus.
Nobody to date has found a complete solution to how to prevent the downward trend of the virus and currently, the ongoing Ukraine and Russia war has also impacted the global trade for crude oil, gas and commodities as its most dependent on smaller economies from developing nations. Nonetheless, there is still hope for those nations that can find other opportunities to ease the stress and economic downtrend of their economies and their citizens.
Sierra Leone is one of those smaller nations that are reviewing many of their policies that can help boost businesses and hopefully enable the environment for businesses to be innovative and contribute to the economies positively.
Consequently, in the recent Finance Act 2022, the Government increased the taxation of imported rectified spirits by US$4 per litre, which will substitute the forex by Le135 Billion.This new increase in the import market of the alcohol sector will see a real positive shift in the inflow of forex because the need for local producers will rise up, which is also inclusive of the number of new jobs that will be created by those about to provide reliable quality jobs and wages for ordinary Sierra Leoneans.
Mostly, the medical and sociological effects of alcohol and drug abuse is ignored, but a simple policy that will encourage importers and manufacturers to be more aware of the harmful chemicals that unknown producers may have in their beverages is very life-threatening; and so the decision to put an increase in tax tariff in a profoundly saturated and difficult importers-market for alcohol, is not only economically beneficial but has health and safety benefits too.
But the story of Sierra Leone and its enormous challenges grossed from the current two European high-producing countries for fuel and gas has reversed the global average growth that many countries were beginning to gain after the downturn pressures of COVID-19. In contrast, countries now have an average household loss of 1.5 percent of their real income due to price increases in corn, wheat, and rice alone. And climate change, as related to global warming, has also been a significant issue to greater yield results in farming.
The ongoing cost-of-living crisis disproportionately affects countries and people with limited capacity to cope. These effects are caused by three major transmission channels: rising food prices, rising energy prices, and tightening financial conditions. Each of these elements can have a significant impact on its own, but they can also feed into each other, resulting in vicious cycles - something that, sadly, is already beginning. High fuel and fertilizer prices, for example, raise farmers' production costs, resulting in higher food prices and lower farm yields. This can exacerbate household finances, increase poverty, erode living standards, and exacerbate social instability.
Higher prices put pressure on policymakers to raise interest rates, increasing the cost of borrowing for developing countries like Sierra Leone while devaluing their currencies, making food and energy imports even more expensive. Because the availability of forex to restart the cycle is limited, there is a risk of restricting all imported items, including gas and oil.
Due to the combined effects of the pandemic and the war in Ukraine, 68 million Africans living just above the poverty line are at risk of falling into poverty. Other measures to improve availability while also building resilience include increasing local production of various food commodities, diversifying sources of imported foods (receiving support for higher food import bills when available), reducing food loss and waste, improving fertilizer availability and farmer access, and sustaining the transition to sustainable production.
Foreign currency in the current fiscal year for a country like Sierra Leone is the most welcoming news if the government of the day has mechanisms in place which will create a prosper attributes for the private sector key components to be inclusive in the process. Therefore, for a timely and proactive measure like this, the government of Sierra Leone, through the Ministry of Finance, has a small but victorious step right toward the increase in local content demand, health and safety concerns, and opportunities for more ordinary Sierra Leoneans to get decent paying jobs, whereas the government in return can see an increase in PAYE and reduction of unsafe alcohol importation.
From a locally produced alcohol product called Extra Neutral Alcohol (ENA), a Sierra Leonean-based company Sunbird Bioenergy Limited (Former Addax), is said to produce more than the in-country demand of raw alcohol materials that most importers of alcohol use, including the world's largest beverage company, Diageo are buying directly from Sunbird now, is a massive reflection of the highest quality of a "Made in Sierra Leone" produced Alcohol against those substandard cheaper types that were coming into the country before. As Sierra Leoneans, we must be appreciative of such policy by the government for taking this proactive step.
Additionally, to improve the country's energy security too, the government can make significant investments in renewable energy technologies such as biomass, solar, wind, and hydrogen. Availability is being impacted by current global supply chain issues, among other things.We look forward to more such strategic fiscal policies brought about to stand out amongst other countries.