It is the economy and the economy and the economy!
Liberia’s newly elected president, George Oppong Weah is still in honeymoon season. The crowds love him, the media celebrates him, but reality is a few inches away – commencing January 22.
As he takes the oath of office that day to become the newest ECOWAS leader, thanks to the outcome of a bruising two-round electoral battle, the ex-football maestro would from that moment inherit the very grave burden that outgoing President, Ellen Johnson-Sirleaf has been trying to paper over for months now; Liberia is broke!
At the moment close to 85 percent of the nation’s youth is unemployed. Many of these voted for him and have been part of his very awesome electoral machine over the years that culminated in his 61.5 percent victory in the second round of the presidential elections process on Boxing Day, 2017. How long would they wait? How quickly would Weah deliver?
Underscoring the depth of the crisis is the drama that followed the unveiling of the current 2017/2018 National Budget of Liberia. Shortly after its formal signing, President Ellen Johnson Sirleaf had convened a special meeting with the Legislature. The reason: they needed to revisit about all of the core parameters contained therein because government is unable to raise the revenue needed to fund the US$563.6 million budget.
In the explanation of the President, the crisis was on account of the decline in global prices of commodities. What she stopped short of saying was that the crisis was in actual fact not a new one as it had been on for a few years and counting! So, she had only prepared a political feel-good budget!
True, there had been a decline in prices of major exports like rubber and iron ore on the world market. And then there had also been the the impact of the Ebola outbreak, but there had also been serious issues of fiscal indiscipline, with Mama Sirleaf ‘s government being largely unable to reduce recurrent expenditure and boost local agriculture and agro-allied economic activities.
Almost all through the Sirleaf years, there had been a continuous depreciation of the value of the Liberian dollar relative to its American counterpart; falling from LD 62 to US $1 dollar in 2006, to LD 108 to US$1 in 2018, and now LD$126 for US$1.
Compounding this is an accompanying public sector liquidity crisis in which commercial banks are reportedly unwilling to cash government checks or provide credit lines to government contractors. Put at over US$400 million in real terms, this liquidity shortfall is well over two-thirds of the total allocation for the now being revised National budget!
More recently also, President Johnson-Sirleaf has frozen all payments of bonuses, severance allowance, and incentives to members of the Board of Directors, Managing Directors, Deputy Managing Directors, and all other Officials of similar standing, in State-Owned Enterprises (SoEs), Commissions, and Autonomous Agencies of the Government of Liberia.
Equally, she ordered that all expenditures be other than those for salaries and allowances be halted and that invoices for for the daily operations of Government Ministries in the amount US$10,000 and above must be approved by her office.
Indeed, things are really so bad now that government employees are now receiving truncated salaries with government checks bouncing on vendors.
Weah would need therefore to hit the ground running and give life to his so-called “pro-poor government.” He has talked of improving the economy through the cultivation and export of cash crops rather than being solely dependent on the export of mineral extractives and rubber but this then has to be practically done in addition to demonstrating greater transparency than was the case in the outgoing ra in the management of the revenues derivable from the extractives and power sectors.
Analysts say that one model that the new president should consider could be neighbouring Ghana that has been able to define the allocation of its petroleum revenues through its Petroleum Revenue Management Act.
Then there are several other challenges. Liberia ranked 179 out of 189 countries in terms of protecting minority investors in the 2017 Ease of Doing Business Index. Access to electricity remains a problem as it takes an average of 465 days and costs 4066.6 percent of income per capita to secure electricity connections today. And capping the restraints is the fact that the country presently boasts zero percent credit bureau coverage and a corresponding non-distribution of credit information on both firms and individuals. Meaning: the much needed capital that is required to drive growth even at the level of SMEs and private business is invariably still too difficult to find at this time when government needs all the help it can get.
Mr Weah, your work is surely cut out for you.
President-Elect, George Oppong Weah of Liberia