COUNTRY CASE STUDY OF MARKET FAILURE: SIERRA LEONE
Market failure is a common phenomenon to all types of economic system, and for which its acuteness is heavily prevalent in developing / underdeveloped regions of the world due to the absence of prudent democratic governance structure. In developed economies like the UK, USA and Western Europe, the presence of critical voices from opposing factions in politics and also the educated masses are making it possible for acute market failure to be brought under control, while the situation is different in underdeveloped economies, mostly located in the Southern region of Africa, Latin America and Asia. A particular case of country specific market failure is that of Sierra Leone; the country is a former British colony, once considered as the Athens of West Africa (Jackson, 2018). Successive bad governance in the early part of 1980's has progressively spearheaded the collapse of a well-structured colonial nation, which was practically viewed as a model of the West African subregion. Scholarly arguments from writers like von Hayek (1944, reprinted in 2001) have argued his points to imply "that market failure does not imply that government should attempt to solve market failures, because the costs of government failure might be worse than those of the market failure it attempts to fix (Cunningham, 2011)". This situation is typical in many of the underdeveloped economies around the West African sub-region where poor intervention of governments and their agents normally result in the inefficient allocation of goods and resources than would have considered in situations of planned intervention. Specific to Sierra Leone, failed governance system can be directly associated with the concept of Market Failure (also referred to as government failure), which prevent an economy from making effective use of available resources to facilitate growth and development. As emphasised by McMillan (2002) and Fligstein (2001:3), it is thought that the prevalence of strong market requires the existence of strong government, which has been a complete opposite with many of the postcolonial governance structure seen in Sierra Leone. The existence of skewed and corrupt governance system in Sierra Leone between 2007 -2018 have made it possible for public officials in key ministries and parastatals to become 'patronisers' of a failed market system, despite successive interventions made by international bodies like the International Monetary Fund [IMF] to support the country's pathway of failed market system. Heterodox economics views around post-colonial occurrences of the successive failed governance systems would testify deliberate failure of a corrupt governance system to deliberately deviate from program activities devised by international institutions like the IMF aimed at shaping the country's failed market structure, already burdened by high fiscal indiscipline. The result of this was seen where further loan disbursement was halted, thereby leaving the economy in a state of nearly collapse, while at the same time government officials were seen moving around negotiating unsustainable loan programs that would have almost placed the country in an endless state of indebtedness to a country like China. As stated by Messner & Meyer-Stamer (1992), efficient markets require strong government and transparent institutions to ensure economic agents are acting in the best interests of the nation. Sierra Leone for over decades after independence has been battered by weak and corrupt governance structure, which ultimately have placed the country and its citizens in a precarious situation. Corruption in politics by successive government has infiltrated into the fabrics of the Sierra Leone economy to an extent where there seem to have being little or no confidence on the 10 part of citizens on their leaders in managing the affairs of the economy. Selfishness manifested by successive corrupt governments in Sierra Leone to protect themselves in power normally result in asymmetric market information, given the fact that government would mostly provide weak measures like subsidy to services that are not economically viable to effectively drive developmental efforts in the country. Over the years, the country has witnessed an almost complete state of anarchy, more so as a result of the politicisation of institutions that seek to support the operation of illegal activities. This was clearly seen lately with the breakdown of confidence on the part of international institutions like International Monetary Fund's [IMF] to suspend loan agreement to a reigning regime given the undisciplined nature of public servants' abuse of public funds (Thomas, February, 2018), and even the collapse of government owned parastatals like commercial banks, which nearly brought a sink in the country's financial system. The deliberate and almost wicked manifestation of elected and public servants in ministries and parastatals to become prudent in their act of public services is almost tantamount to the death of a nation, where institutions are almost considered non-existent due to failed market system. Such type of inept manifestation of public services requires strong individuals or citizens to transform institutions and one way this can be achieved is through the establishment of strong legislations and high level of discipline infused in public servants to deliver on merit as opposed to being considered politically connected. As emphasised by Cunningham (2011: 28-29), there are serious consequences for market failure by a nation, and particularly in a small and endowed country like Sierra Leone.
Discuss at least 5 recommendation as how the government of Sierra can overcome with market failure according to the case study above