Banks - The True Modern Day Alchemists - Can Solve Youth Unemployment and Control Sierra Leone's Soaring Prices (Entrepreneurship is the answer)

As a young person I have a first-hand experience with the difficulties young people face in finding employment our country. But I should start by telling you what I truly believe. Despite the challenges we face as a country, I believe deep down that we would all like to wake up in a prosperous Sierra Leone where things such as youth unemployment and our ever soaring prices are both things of the past. I also know that an economically flourishing Sierra Leone is in the best interest of every Sierra Leonean - including the president, all members of parliament, business owners and each and every other Sierra Leonean. Why? Well, from a purely pragmatic sense, government depends on taxes to execute its basic functions and pursue projects of national importance. With a strong and flourishing economy our government can raise taxes from its own people without relying on aid, the president and all other policy makers can go to bed in peace without worrying about unemployment and uncontrollable prices. Isn't that what we all want? Also, I am simply not able to think of anyone being happy to captain a sinking boat.
Of course, probably because youth unemployment (you can call some of it underemployment) has been a part of Sierra Leone’s narrative for such a long time despite changes of government, it is easy to perceive the problem as unsolvable. However, this is not true, in fact unemployment and soaring prices in the presence of banks is an absurdity.

The backbone of my thought here is that while the banking sector (when not well managed and directed by Government) can be a major source of the ever rising prices, they are also perhaps the best remedy for ending unemployment and creating inflation-free, stable and sustainable economic growth that I believe you so desire.  In this post I am going to push a theory of national development and poverty eradiation based on using banks for the national good.

An economy can be distilled into two basic economic activities; production and consumption (spending). It is the millions of individual production and consumption (spending) activities that take place in our villages, markets, households, communities, businesses and government offices that all come together to form what is known as the economy. While production takes place in three forms; households, market and public, it is market production that that holds the keys to economic transformation because it doesn’t only create new goods and services but it also redistributes benefits to its stakeholders.

On the other hand, we have consumption (spending) – here our problem with banks and rising prices comes. In an economy there are two ways to finance consumption; through what you earn (income) or by lending (credit). Credit can be created from thin air! Whenever, you go to the bank to borrow money or whenever you go to the nearby shop to buy a bottle of Sierra Juice and promise to pay at a later date, you have simply created credit. What many people don’t know is that a significant part of what they think is the money supply is actually just credit.  Credit has extremely powerful implications, it allows us to be able to spend beyond what our current incomes can afford. But credit creation, when not carefully managed, can also be extremely dangerous for a country and will inherently result to the problems we have been experiencing.

When banks lend money (creating credit), this can go into three main paths, only one of which can produce the types of results we want for our country. First, credit can be created to finance productive activities such as providing start-up capital for new enterprises creating employment and new goods and services. Second, credit can be used to finance speculative activities in the finance industry. Thirdly, banks can lend to people to finance household consumption such as buying a new television or building a residential house.

Mr. President, it is the second and third forms of credit creation that creates higher prices and leads to economies overheating and bursting into financial crises. When banks are left on their own, they won’t prioritize lending for new enterprises, especially for small and medium enterprises which are the perfect engine for the creation of employment.

Governments in many countries (for good reasons) have historically delegated the role of credit creation

          (To Be Completed...do reason with me...)

Investment In Childhood Nutrition Has The Highest Returns On Investment, According To Economists

"Nearly half of all deaths of children under five in Africa are attributable to under nutrition." (UNICEF 2019)
Furthermore the interaction of undernutrition and infection creates a cyclic relationship resulting in weakening health and poor cognitive development of children and poor work performance in adulthood.
However, it surprisingly turns out that investing in childhood nutrition has the highest returns on investment.
But why have past interventions failed?
What can be done to make the most of this?

A few days ago I was watching an interview featuring Dr.Jordan Peterson, where he was emphasising empirical research on how poor nutrition can have extreme (and as i found out sometimes almost irreversible) effects on the a child's cognitive development and the adult he/she turns out to be in society. Touched by this, I've spent the past few days reading up the issue of Early Childhood Development in general.

Billions of dollars in aid and interventions are spent each year by Governments, Intergovernmental Organizations, NGOs and Businesses aiming to transform the livelihoods of underserved communities. Decisions about what to spend available resources on are made difficult by the plethora of possible causes to target and interventions to support. However, not all causes are the same; the return on investment (ROI) of a dollar spent in one area may impact a broader set of outcomes and in a more profound way compared to another.

In economics, the value of pursuing a particular alternative (in the presence of competing alternatives) is determined by the extra benefit (return in this case) gained in pursuing that course of action compared to the second best alternative. The limited nature of the resources available to address our ever growing basket of challenges to tackle necessitates considering returns on investment (ROI) as a prudent endeavour for governments and agencies aiming to improve socio-economic outcomes in society. Research has shown that, among several of the big challenges facing our world today, a list including causes such as starvation, lack of water, tyrannical governance, poor sanitation, poor education etc., investing in childhood nutrition has the highest returns on investment for foreign policy dollars. According to this study involving a large and diverse group of economists, it was found that Investing in Childhood Nutrition has a staggering 250:1 return on investment! This means, for every dollar we invest in childhood nutrition, we get back 250 dollars.

The effects of poor nutrition on a child’s educational performance, mental and physiological health and development have been known for a long time, yet efforts to channel resources to tackling the problem has been mediocre at best. This is compounded by the fact that household consumption decisions don’t seem to follow the assumption of rationality so central to much of classical economic theory. The poorest households are most vulnerable to this problem.

However, demand for better health, especially nutritional health cannot just be reduced to the presence of income poverty. It has been observed that increases in income in poor households do not necessarily result in the consumption of more nutritious food; rather, poor households tend to go for tastier food! The more recent branch of behavioural economics may shed a lot of light into this strange phenomenon. The central theme in behavioural economics is that economic decision making is heavily influenced by social and psychological factors. This is a striking divergence from main stream economics based on the assumption of rational decision making.

What this all mean? Well, given that investment in childhood nutrition gives us the highest returns on dollars invested and we know that poor households may not necessarily improve nutritional intake given an increase in incomes, there is great impetus for intervention by governments and humanitarian agencies to seek out alternative solutions. Let us explore some of these solutions.

First of all, because of the great improvements in school enrolment and the fact that schools are already a well-integrated aspect of most communities, school feeding programmes can be a great way to provide essential nutrition for children while also promoting academic engagement. However, these interventions have mostly been short lived due to unsustainable funding mechanisms for their huge price tags. However, since agriculture is already the principal source of livelihood in most poor communities, finding ways to mobilise local production of the essential food ingredients and engaging parents (through a Parent Teacher Association or some other mechanism) can go a long way to ensure school feeding programmes are more cost-effective and locally driven. These school feeding interventions can also be packaged with a nutritional education component.

Secondly, general public information and awareness are an important part of sustainable solutions. Working with local authorities and traditional leaders, public and communal advocacy and educational campaigns can go a long way in changing local attitudes towards nutritional decision making. Community nutrition education campaigns can be done in a number of ways: local television and radio shows by local experts, radio soap operas, descriptive poster campaigns featuring local characters, short cartoon clips, and many others.

Finally, Governments can invest in school curricula reforms and teaching methodologies to ensure up-to-date nutritional education is accessible to all children, especially those from the poorest communities.

In the end, because we know investing in childhood nutrition has the best returns on investment, this gives an additional reason for governments and humanitarian agencies to invest in finding the most economically viable interventions to make adequate nutrition is accessible to children find ways to tackle the bottle necks that have limited the success of previous and existing solutions. Innovative and locally driven approaches with schools, parents and local community leaders at their centre will be critical to reach the most sustainable solutions.