Liberia has a system problem, but the failed politicians want to keep the country-congau debate going –A Critique Of Economic Governance System (Part 2)

Wonderr K Freeman, Attorney

After getting a free pass from the ideologues and adherents of the country-congau divisive politicking, I feel absolutely vindicated and even bullish to move on to part two of my series on Liberia’s system problem. If Liberia is to progress as a nation, its system issues must be identified and addressed, head-on. Scapegoating, prevarications, and obfuscations will not do us any good. The problems in our economic governance system did not start today, and while we may put some of the blame on the current Unity Party government for “wasting opportunities”, to get Liberia working again, we need a system reboot or even a system overhaul. Inpart (2) of this series, I will address some key issues in our economic governance system that is holding our country backwards. Until and unless we address these issues, it’s going to be business-as-usual; irrespective of whom we put in the Executive Mansion.

THERE NEVER WAS A GOOD OLD DAYS – ECONOMICALLY SPEAKING

Liberians like to talk of the good old days. Politically speaking, this makes sense. After all, there was peace and there was stability. People were happy – even in their one-room shacks. In that sense, life was good. But,economically speaking,there never was anything as the good old days. Liberia made millions from its raw materials and cash crops, but the proceeds went to an elite – at one point a “congau” elite and at another point a “country” elite. The majority of the populace remained poor – dirt poor. Either way, the system was porous and available for exploitation – and people (being people) – exploited our porous system to [as Liberians would say] “number nonsense”.  Without a rigorous system of checks and balances or system and controls in place, it’s going to be a train-wreck, whether we are governed by the Wissehs or the Macleans. So it makes more sense to straighten-up the system – the economic governance system – and leave the finger-pointing. Want some evidence? Let’s take a few fromsome [disinterested] outsiders who observed Liberia from a neutral point of view.

  • 1955 – VJ Browne in his article “Economic Development of Liberia” writes viz: For many years there were areas in Liberia where health conditions were in such a deplorable state that they were described in 1932 as a “serious danger on the West Coast of Africa”.
  • 1966 – Clower et al, in his book“Growth without Development, an Economic Survey of Liberia” writes viz:Liberia’s [economic] growth has relied on laissez-faire incentives and has been substantially undirected. It has been marked bycorrupt and wasteful practices and has yielded a highly-skewed income distribution (few chop and the majority go hungry)…that deliberate changes in government administrative, fiscal, and educational policies are needed in order to alter the social, economic, and technological dimensions of tribal life in order to distribute national income in a manner consistent with social justice.
  • 1987 – Paul Gifford in his book “Christianity and Politics in Doe’s Liberia” cites instances of pure theft of public resources and disinvestment in education and health – under Doe (the “Countryman”). Gifford writes viz: (1) a 1987 audit by the US General Accounting Office revealed that in Doe’s six years, millions of dollars of US aid was diverted to government officials’ [pockets] (2) a World Bank study noted that between 1982-1986, public primary school enrollment dropped 27% and education budget dropped 45% (3) that JFK, under Doe’s administration became a national disgrace as its budget dropped from US$12m in 1983 to US$6.2m in 1989.
  • 2016– and in fact since 1971, UNCTAD – UN Conference on Trade and Development – has consistently included Liberia as one of the world’sLeast Developed Countries (LDCs)–meaning states that are deemed highly disadvantaged in their development process, for structural, historical and also geographical reasons. LDCs face [more than other countries] the risk of deeper poverty and remaining in a situation of underdevelopment.Currently, there are48 LDCs(about880 million people) which face severe structural impediments to growth. Liberia has been on this list since 1971, even though others have graduated from this list– including Botswana, Cabo Verde and Maldives. No luck here. A country doesn’t graduate from this list via domestic or international politics: it’s only by transparency and accountability– by better economic governance.

 THERE IS NEVER GOING TO BE ANY BETTER DAYS WITH OUR CURENT SYSTEM

As a politician now myself, our species are in the current habit of making promises – promises of a better tomorrow – if only we are elected. But the plain truth is:there can be no better days with the current economic governance system. Without a rigid commitment to economic governance reforms, Liberia is doomed. And given that our government is the biggest player in our economy, the reforms must start with the government machinery itself. It is big, bulky and unwieldy and not capable of delivering economic growth and social development in its current form. No article may cover all the issues undercutting Liberia’s economic and social development potential, but I shall delve into a few to make my case.

  1. Fiscal Policy

Liberia’s has a total revenue envelop of about half a billion US dollars (USD500m). Of that amount we consume approximately 85% – leaving only 15% for developmental purposes. Focusing only on our today (consumption) jeopardizes our tomorrow. Our bloated government structure does not allow for meaningful infrastructural development projects or human capital development.

And without these two, Liberia’s economy will remain in a perpetual state of stagnation. As we proceed towards elections, the prime reason why many are gunning for public office or for their parties to win is to “milk the system”. People are already imagining themselves as being minister this or director that. But Liberia’s prosperity lies in scaling back on consumption (recurrent expenditures) and scaling-up investment in infrastructure and human capital development, which will lead to expansion of the private sector and a buzz in economic activities.

But who is going to close their eyes to the patronage system and straighten up government finance? This is what we have to do to take government budget to no less than a billion dollars – in which at least one-third to one-half can be put into infrastructure and human capital development. For example – the issue of paved roads all across Liberia cannot be the responsibility of just the World Bank, USA, China or Japan.

The same can be said of electricity, pipe-borne water, healthcare and affordable housing – Liberia must take the lead for its own development. Our international airport has been a national disgrace, simply because we have been waiting for China to cough up the funds in grants or loans. Our education system has been declared a mess by no less than the President of Liberia, H.E. Ellen Johnson Sirleaf, and abandoned to an INGO – Bridge Academy (which leaves sound-minded Liberians to ponder: where is our sovereignty?)

  1. Trade and Commerce Policy –

We make much ado about our Liberianization policy. But what we need, in fact, is a Liberianization law/act, that prioritizes Liberia’s businessesand its commercial interests. Instead of this level of prioritization, we get a government that prioritizes foreign interests over Liberia’s interest. That’s why we still cannot forgive our current crop of legislators who presided over the wholesale auctioning off of Liberia’s economy.

How in the world can a government sign concessions after concessions that contravenes Liberia’s laws – 66 bogus agreements out of 68 (Moore Stephens Audit)? Add that to the wholesale delivery of major infrastructure projects to foreigners or the taking of bribes to undercut the laws of Liberia (Sable Mining Bribery Scandal, Ellenito, etc). To make matters even worse, government’s first major attempt to help Liberian businesses ended up a flop, with the only beneficiaries being criminals disguised as Ministry of Finance officials (PSDI Audit).

We had oil blocks sold for a song (Oranto?); while legislators took their share in oil consultations from the National Oil Company (NOCAL). NOCAL was bankrupted by corruption and financial irresponsibility. Our President decided this national disaster wasn’t worth investigating – just pay off the executives (who caused the bankruptcy in the first place).

Liberia was “screwed” in every way possible. How in the world will Liberians ever see economic prosperity if they are continuously being blindsided and double-crossed on all major trade and investment deals?Lest we forget, Liberia’s prosperity begins with Liberians playing a key role in their economy.So far, trade and commerce opportunities that should have been utilized to improve the living standards of Liberians are being traded (with impunity) by our political leaders. To add insult to injury, some of that money is now freely flowing to convince Liberians to perpetuate their misery by continuing the status quo.

For Liberia to pick up, economically speaking, we have to double, triple or even quadruple our manufacturing output (currently at 6-7%). We will have to improve our farming practices by introducing more machinery. This will required some investment in the [agriculture] sector, but that’s clearly one investment worth making. More so, Liberia will have to help businesses that convert our farm produce and raw materials into finished products right here in Liberia and provide better economic incentives for people/businesses that make goods that Liberia can export or for businesses that do business in the interior. We will have to “jack-up” our labor productivity – by providing world-class education and job-training skills for thousands of our young people.

  1. Monetary Policy

The Central Bank of Liberia (CBL) is primarily responsible for the GOL monetary policy formulation and implementation. The CBL’s job, according to the CBL Act (Part I art 3) is viz: The principal objective of the [CBL] shall be to achieve and maintain price stability in the Liberian economy.  To this end, it shall devise and pursue policies designed to:

  1. preserve the purchasing power of the national currency;
  2. promote internal and external equilibrium in the national economy;
  3. encourage and mobilization of domestic and foreign savings and their efficient allocation for productive economic activities.

Judging by the constant devaluation of the Liberian dollar (and the consequent rise in the prices of goods and services), one can see how much success the CBL has achieved on this front. While we applaud the CBL for growing the financial sector and for improving our reserve position, the Bank’s insistence on sticking to the dual currency policy is severely limiting its policy options. How do you properly regulate an economy, when the currency of choice (for transaction and for savings) is a foreign currency? This policy (dual currency) negatively impacting other CBL policy options such as the FX auction and T-bills sales.

Additionally, as lofty a goal as it was, the Bank’s policy of financial inclusion was hijacked by the then Governor (Dr. Jones) for political purposes and ended up leaving the sector with a hefty dose of non-performing loans, howbeit ultra vires. Worse still, the CBL is yet to provide solution for the unusually high percentage of currency outside the financial sector. In a recent interview with the current Governor of the CBL, Hon. Milton Weeks, dated May 3, 2017 on www.liberianobserver.com/news, intimated that out of approximately LRD12.7 billion of Liberian currency in circulation, only about LRD1.5 billion was in the [formal] banking sector. The rest, i.e nearly 90% of the currency in circulation, was outside the banking sector. We are still waiting for the Banks policy prescription(s) on how we address this issue. In the meantime, while the Liberian currency remains outside the banking sector, we will not have a strong and viable banking sector and this stymies Liberia’s economic growth and socio-economic development. Without a viable banking sector, the GOL/CBL’s ability to improve the business climate by way of monetary policy is significantly undermined.

CONCLUSION

So, to cap it off – Liberia’s system problem is not just in the political landscape (as we have shown in part 1 of this series), but also in the economic governance landscape (part 2). Yet, when the failed politicians speak, they want to keep this country-vs-congau narrative going.  In this article (part 2) on the economic governance system, we were able to establish that:

  • That there never was a “normal” day in Liberia, economically speaking – even though there was relative peace and stability;
  • That Liberia had spells of “country” exploitation of our collective resources and “congau” exploitation of our collective resources;
  • That there is not going to be any better-days unless we change the current system;
  • That Liberia can get out of its disparate economic situation by making systemic changes to its (1) fiscal policies (2) trade and commerce policies and (3) monetary policies.

In the absence of systemic changes to the way we govern our country – we can change leaders, as much as we want, but we are forever going toget business-as-usual – the same old corruption, nepotism, crony capitalism, waste and abuse of public resources.

Wonderr K. Freeman

ATTORNEY

Monrovia, Liberia

August 31, 2017

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About Cholo Brooks 5134 Articles
Joel Cholo Brooks is a Liberian journalist who previously worked for several international news outlets including the BBC African Service. He is the CEO of the Global News Network which publishes two local weeklies, The Star and The GNN-Liberia Newspapers. He is a member of the Press Union Of Liberia (PUL) since 1986, and several other international organizations of journalists.