By Musa Sanneh
From July 29th to 31st, 2023, PDOIS held its “midterm congress” in Penchami Hall at the Paradise Suites Hotel in The Gambia. Delegates from across the country converged to discuss a slew of policies and activities presented by the party’s Secretary General. Like its previous congresses, this year’s congress followed the same anthology. The Chairperson of the Central Committee gave the opening remarks followed by a flurry of colorful lectures by the party’s Secretary General. During his presentation, the Secretary General waded into plethora of PDOIS’ talking points on circumstances that he said led to the formation of PDOIS, how PDOIS conducted itself since its founding in 1986, its relations with other political parties, the kind of economic policies it will pursue if given the mandate to govern, and going forward what PDOIS should do to remain relevant and viable. The thrust of this essay is not to delve into the boondoggle of these talking points. Rather, the discussion here would focus entirely on the debate on the resolution for creating a Sovereign Wealth Fund (SWF) for the PDOIS party and as a policy prescription for The Gambia. We have dealt with this verbiage in the past. However, since what was then considered a trickle has now morphed into a deluge, it’s important for us to restate our position that creating a sovereign wealth fund at this material time for PDOIS, or for The Gambia, is both fiscally irresponsible and fundamentally a misplaced priority.
A sovereign wealth fund in its elemental term is surplus funds put away by a country for use by its future generations. In other words, sovereign wealth fund is that portion of a nation’s income (wealth) invested in a given financial assets designated for future spending. At its basic, a sovereign wealth fund is analogous to long-term savings of private individuals. In economics, a part of an individual’s income that is not consumed is saved for investment and future spending. Private savings therefore equals to that part of private disposable income left after consumption—spending. In the same vein, government savings equals the net government revenue minus government recurrent expenditures. Recurrent expenditures are type of spendings that the government must make to keep teachers in the classrooms, nurses at the bedside of patients, police officers at crime scenes, taxi drivers on the roads, electricity and water in our homes, soldiers on our land and maritime borders, etc. Consequently, from the above, we could safely conclude that savings is a derivative of income and consumption. For an individual or government to maintain healthy savings for future use, its current revenues must exceed its expenditures. Given this background, the question we must therefore answer is that, interfaced with these basic economic facts coupled with our economic realities, should The Gambia prioritize the creation of a sovereign wealth fund at the expense of investing in its dilapidating schools and hospitals among other social services that are necessary to lay the foundation for future growth?
Let’s examine the evidence to give an informed response.
During the first nine months of 2022, The Gambia, according to Ministry of Finance, had a total revenue including grants of D14.2 billion. Total revenue, it should be noted, includes the sum of the all the monies that the government generates from all its revenue sources including taxes on international trade and grants from so-called development partners. However, during the same period in 2022, government expenditures totaled D18.8 billion. Total expenditure is the overall government spending including salaries paid to civil servants, government subsidies and transfers, subventions to government agencies, interest payments on domestic and external debts, government spending on education, health, and agriculture, etc. For the period under consideration, The Gambia spent D4.1 billion on wages and salaries of civil servants, D2.3 billion on interest on debt servicing, D2.2 billion on tax breaks for on-going government projects in roads, education, and agriculture, and D6.2 billion on other charges including subsidies and subventions to government agencies. These four categories accounted for 79 percent of the total expenditure. Meanwhile, the public debt stock alone amounted to D90.7 billion. Consequently, notwithstanding the increase in grants, the overall fiscal deficit ballooned to a staggering D4.6 billion. Without grants, the fiscal deficit stood at a whooping D8.4 billion. A fiscal deficit occurs when the total revenue collection is insufficient to pay for total expenditures. Needless to say, a country such as The Gambia with this kind of a fiscal deficit would always be prone to contracting more debt, higher interest payment, and without a doubt low investment to keep itself afloat. Mounting debt, high interest payments and low investments are all key indicators of a persistent downward economic spiral. Unless I am missing something, I am inclined to say that we do not address economic problems emanating from revenue shortfalls and other negative economic shocks by sucking away more revenues into a sovereign wealth fund. That simply goes against all economic sensibilities.
Rather, to mitigate against the likelihood of a perpetual economic downward spiral, the most important thing to do is to adopt prudent fiscal policies geared towards maintaining economic stability, which in our view, cannot by achieved by creation of a sovereign wealth fund at the present time. At minimum, prudent fiscal policies must include sound and responsible management of public finances, by controlling government spending, reducing budget deficits, judiciously managing public debt levels, and formulating a strategic plan to lay the foundation for economic stability and sustainable development. Thus, in the short to medium-term, what The Gambia needs is not a Sovereign Wealth Fund. On the contrary, it needs investments in technology and communication infrastructures, its dilapidating health and education sectors, and most importantly, in research and development among others. Pursuing economic policies such as creating a Sovereign Wealth Fund based on an ideological belief that there is unlimited amount of natural resources buried under the dirty sand banks of Bato-Kunku and Sanyang without providing any data to back such claim is both calamitous and wishful thinking. Unfortunately, wishful thinking driven by defective ideology cannot ensure preparedness of a country during economic turbulence.
Since PDOIS, unlike the government it criticizes daily, has not presented its financial statement for scrutiny, we are conditioned to rely on anecdotal evidence and some of the resolutions passed at the congress to make the case that creating a PDOIS Sovereign Wealth Fund for the party is equally fiscally irresponsible and fundamentally flawed resolution.
Over the course of my nearly thirty years of membership in PDOIS, I have never witnessed a time that PDOIS has been able to field candidates throughout the country during legislative and local government elections, nor has it ever provided adequate number of polling agents at all the polling booths that housed ballots for PDOIS candidates during elections. Furthermore, over the same period, PDOIS has never maintained sufficiently funded staff in any of the regions where a bureau existed. Arguably, one could say that there are multitudes of reasons responsible for these failures. Notwithstanding, what is not in dispute is that PDOIS has never marshalled enough financial resources to hire enough polling agents during presidential, legislative and local government elections, or maintained adequately funded staff to operationalize its operations throughout the country. What PDOIS has been doing over the years to meet its operational budget is deficit financing. The lack of adequate financial resources, I must hasten to add, is a function of bad leadership than willingness on the part of the party’s ranks-and-files to provide the needed funds. Leadership in PDOIS is synonymous with the belief that leaders are totally virtuous and correct on all issues while the general membership is senile, feckless, and incapable of engaging in critical thinking on their own. Consequently, in the United States, where members hardly agree on anything, the one thing that many of the members agreed on is that as members, we are merely “automated teller machines” whose function is only to dish out dollars to the party’s leadership whilst our mouths must remain shut at all times”. Once we have dished out the funds, what happens next should not be any of our businesses as that will require critical thinking which we are simply ‘incapable of doing.’ Case in point, a year ago in the EU Branch, some members organized a fundraising and remitted their receipts to the leadership in Churchill’s town. Subsequently, the same members proposed venturing into another fundraising activity hoping to raise additional funds for the party. But the organizers fell short on cash. As a result, they decided that part of the remittance to the Central Committee should be clawed back as investment for the proposed fundraising. True to their conviction that PDOIS general membership are incapable of making informed financial decisions on their own, the leadership reportedly rejected this request on the grounds that the initial remittance has already been lodged into the bank, and that withdrawing any part of it for any reason was unacceptable even though the funds were neither earmarked for any particular expenditure at that time, nor was it deposited into any interest bearing account that could potentially generate sufficient returns equivalent to what the proposed fundraising could have generated.
Similarly, in 2017, a group of dedicated members in the United State and Europe pulled their resources together to organize a fundraising activity for the party by inviting a renowned Pan-African intellectual from East Africa. For days, the organizers took their time and painstakingly explained to the leadership the rationale for organizing the fundraiser and what they hope to realize from the program beside physical cash. But once again, rather than trust the sensibilities of the organizers, the party leadership, through its avowed surrogate, reduced the goodwill efforts by dedicated members into a charade by insisting that the organizers must agree to hand over to him all proceeds from the event on the spot, or the Central Committee will not provide approval for the event to take place.
As bizarre and ridiculous as it may sound, it is this kind of attitude by the leadership that drove many committed PDOIS members in the Diaspora to keep their distances from the party or remain reluctant to dig deep into their pockets to fund the party.The resultant effect of all these is that PDOIS as party became colossally underfunded. And because of the underfunding, regional and other relevant grassroot structures which are vital to operationalizing PDOIS’ activities also became non-existent; adequate number of polling agents could not be secured to supervise our ballots; and the leaderships, outside the official campaign periods, could not afford to make regular rendezvous with what is left off its support base throughout the country. Not surprisingly, therefore, during the congress, it could not be loss on anyone who knows PDOIS when representatives from various groups made proposals as to how to fund the party and made proposal for the Central Committee to conduct tours around the country outside of the regular campaign period in addition to claiming their freedom from the tyranny of the Central Committee.
Given the totality of the evidence, one would think that the most prudent thing for PDOIS, at least for the next five years, is to invest in its grassroot structures, and in ensuring that its wards, constituencies and regional bureaus are adequately funded, staffed and equipped with the necessary logistics to making the party visible and functional countrywide. Anything short of these would not only be fiscally irresponsible, but may also lead to the final demise of PDOIS—the ultimate dereliction of duty. It is one thing to make mistakes, but it is entirely a different thing to let one’s pride get in the way of what is required to course correct.
Whilst sovereign wealth funds could be very important instruments for managing strategic resources and generating returns on their investments, financially depressed countries and entities may find creating sovereign wealth funds practically and fiscally less impactful or even counterproductive. For such countries, investing in the technology and communication infrastructures, health and educational facilities among other public goods within the confines of responsible management of public finances, controlled government spending, reduced budget deficits, well managed public debt levels, and comprehensive strategic plan for economic stability and sustainable development are the most fiscally responsible things to do. Anything else would not only be fiscally irresponsible, but also a profoundly misplaced priority.