11 January 2018

Liberia: Who's Holding Economy Hostage?

Photo: Boakai Fofana/allAfrica
Traders in Monrovia's largest market district, 'Waterside'.

In 2017 the business advocacy group Patriotic Entrepreneurs of Liberia (PATEL) staged a protest against government policies which they said were strangulating Liberian businesses.

The political leader of the Liberty Party and his collaborating partners were accused of holding the economy hostage and putting the country at the brink of political chaos because they opted to seek legal redress for alleged irregularities and fraud that attended the October 10 presidential and representative elections.

During the prolonged political impasse that beset the elections many had opined that the litigation processes were deliberate attempts by Brumskine and others to strangulate the country's economy, endanger the relative peace and most of all deny a formidable candidate of the presidency.

More importantly, on the economic front, the political stalemate, it was believed, manifested itself in subdued consumer activity, investment, business activities and the virtual curbing of bank lending in the midst of skyrocketing commodity prices.

President Sirleaf termed the litigation processes as just not an assault on democracy, but an attempt to undermine the economy.

"Democracy is only as strong as its weakest link and at these moments, our democracy is under assault. Our country's reputation is under assault, our economy is under stress," Johnson Sirleaf said in a radio address in November.

"Allegations, hate speech, inciteful language has been defining what should be a proud moment in our history," she said on. "We politicians must do better ... Historians will look back at this time and judge us by how we conduct ourselves at this critical moment in time."

Many said the political deadlock at the time, had not only left Liberians in suspense over whether or not there would have been a successor to President Sirleaf as her tenure elapsed, it was also hard hitting the country's economy. Many Liberians even described that litigation period as being more than a state of war as entrepreneurs were afraid to import their regular consignments and everybody was holding their money tightly.

However, the Brumskine's case has been resolved and the elections are over. Yet, prices of basic commodities are still soaring while the rate of the Liberian dollar continues to depreciate against the US dollar. One would say that the electoral impasse might be gone, and President-elect George Weah is poised to inherit numerous national challenges, paramount among which is to fix the economy.

It is no secret that the country is broke beyond belief, and is in need of financial relief, especially for the incoming administration, because of the Sirleaf's administration's economic mismanagement policies characterized by rampant corruption.

This severe situation will certainly pressure President elect Weah as his very first act of office may be to seek another financial bailout -- on top of what the country already owes it creditors including Liberia's traditional partner, the United States of America.

Many now fear that Liberia is racing backwards instead of forward, and for that Sirleaf bears a huge portion of the blame.

The Liberian economy has been in shambles for years now. The Executive Branch has noted that it is unable to generate US$563.6 million outlined in the national budget signed late last year and is therefore beseeching the Legislature to revisit its provisions. That, according to analysts, was an emphatic sign pointing to the precarious economic situation.

Certified Public Account, J. Yanqui Zaza, recently catalogued the reasons for the depreciation of the Liberian dollar between 2005 and 2017.

He said the demand for the US dollar has contributed to the decline of the value of the Liberian dollar since 2006.

It declined from LRD62 to US$1 dollar in 2006, to LRD108 to US$1 in 2016, and in 2018, it is now LRD130 for US$1.

"The exchange rate decline is now been exacerbated by the liquidity crisis. As a result of the liquidity crisis, commercial banks are reluctant to cash government checks or provide credit lines to government contractors," according to the President of the Liberian Banking Association who said this recently.

However, the plummeting of prices of major national exports commodities such as rubber and iron ore on the world market, compounded by the impact of the Ebola outbreak in the country are reasons provided by government. However, budget shortfalls were frequent occurrences prior to and after the Ebola scourge.

Ellen leaving behind a shattered economy

Few would have anticipated such a fall from grace since 2005, when Sirleaf's historic election seemed to promise a new beginning for a country all but destroyed by more than a decade of civil war. But unfortunately, key indicators of Liberia's progress remain much as they were back then: most people are mired in poverty, the health care and education systems are in shambles, and roads and electrical grids are only started to be seen.

At her first inauguration on January 16 2006, she President Sirleaf declared corruption "Public Enemy No. 1," only to later preside over a notoriously corrupt administration. Then in 2011, while running a re-election campaign built around "The Liberian Promise", the government vowed to place the country on a trajectory to becoming a middle-income country in the next 10 or 15 years." (That seems highly unlikely: in 2016, GDP per capita was still just $455 and growth rate in the negative. Added to that is a current debt burden of nearly one billion dollars she is leaving behind.)

The throng of unmet promises, coupled with events beyond Sirleaf's control, including a devastating Ebola outbreak and the collapse of commodity prices, have not just dimmed the president's star; they have created an opening for the ghosts of Liberia's past to return.

Being the darling of the West, President Sirleaf had a lot of allies in the West who were, as it seemed, eager to help Liberia out of its woes and make her a development success case study. Former British Prime Minister Tony Blair and his Africa Governance Initiative signed on as did Oxford economist Paul Collier s an advisor. George Soros's Open Society Foundations and Humanity United made big investments in training government officials and rebuilding institutions.

It is also being reported that over $1.1 billion came in as foreign aid in 2015 alone.

Reports indicate that Weah is left with a mere $500,000 United States dollars in the national treasury to run the country. The payment of civil servants' salaries, salaries of the military and police and meeting other recurrent expenditures for the next 6 months will prove to be a very challenging and uphill task .

But curiously, either by design, sheer ignorance, or criminal collusion, Weah has pronounced that the protection of President Sirleaf from prosecution after she leaves office will be his foremost priority despite what appears to be overwhelming evidence against her. As a result, his fiery rhetoric on fighting corruption may very well turn out to be just another play to the galley.

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