Monrovia, Liberia – February 7, 2019: In the West African nation of Liberia, the reporting of deaths is woefully inadequate, in spite of the country’s Public Health Law which requires the registration of all deaths within 24 hours of occurrence. Severe under-development coupled with various factors have limited the ability of Liberia’s Ministry of Health to fulfill its mandate.
According to the Government Health Agency its Mandate include:
◾Formulation, Implementation, Monitoring and Evaluation of Health Policies, Plan, and Standards.
◾Deliver and Coordinate the Delivery of Decentralized Medical Care in Public Facilities.
◾Develop Health Manpower.
◾Undertake Preventive Services and Health Services, including Specific Health Interventions.
However, in a statement posted to its website, the Ministry, in trying to explain its inability to register all deaths in the country, stated that, “…This regulation has not been implemented to its fullest by the Ministry due to limited access to death registration services and information on the importance and need for death certification. As a result of inadequate access, the coverage of registration has always been below 5% annually. Apart from the mentioned plausible reasons for low registration of deaths, traditional and religious practices contribute to lower registration in Liberia. Death certificates are usually processed in Liberia with the intent to obtain insurance benefits, to settle inheritance issues and not as a requirement for burial and documentation of cause of death. The registration of deaths continues to fluctuate over the past seven years. In 2007, 548 deaths were registered compared to 624 in 2011 and 549 in 2012. In 2013, 659 deaths were registered compare to 600 in 2014.”
Vital Statistics require the accurate, complete and standardized reporting of births and deaths. The data collected from birth and death certificates and forms by the Liberian government is to be utilized for the identification, monitoring, informing and allocation of adequate budgetary resources to address public health issues. Data is also utilized in planning for the implementation and achievement of the Ministry’s vision of “A healthy population and social protection for all”.
With 14,916 Full Time Employees, the Health sector 2018/2019 budget is $81.7 million USD.
About $51.7 million USD account for employee compensation. In its budget narrative, the Health Ministry noted the following achievements for the past fiscal year and objectives for the current one.
Built adequate capacity for management of required medicines and supplies.
Restored and enhanced service delivery systems to ensure a safe working environment and quality of care for clients to improve health outcomes.
Established a functional emergency medical service including referral system between primary, secondary and tertiary care.
Ensured adequate supply chain of medicines, Equipment and laboratory facilities in county hospitals, and
Build a fit for purpose productive and motivated health workforce that equitably and optimally delivers quality services
2. Expand capacity for leadership and governance to ensure that effective guidance of health actions is provided, and
Support health professionals’ in-service training and career advances with an appropriate scheme of remuneration and benefits payment for healthcare workers based on performance and places of assignment.
In contradiction of these achievements listed in the 2017-2018 budget narrative, just three weeks ago, reliable reports surfaced that insufficient budgetary allotment for the smooth operation of the Phebe Hospital in Suakoko District, Bong County in central Liberia was causing problems.
Administrators at another government hospital in the southeastern political district of Grand Bassa County say the hospital is experiencing severe lack of essential drugs and fuel to operate. Major health centers operated by the Ministry of Health in Liberia continue to operate with meager budgetary resources and untrained personnel.
Liberia’s Health Minister Dr. Wilhelmina Jallah has admitted the shortage of essential drugs and resources for the smooth operation of medical facilities across the country but says her administration is seeking assistance from donors to address the deteriorating situation. She recently returned from assessment visits to medical centers in three political districts in western Liberia.
The 2014-106 Ebola pandemic laid bare the inadequate health system of the poor West African country. By April, 2016, when the pandemic was declared over by the World Health Organization (WHO), the U.S. based Centers for Disease Control (CDC) reported that Liberia accumulated 10,678 total Ebola cases and estimated 4,810 deaths.
Meantime, a signature project of Liberian President George M. Weah, the construction of a military hospital is ongoing.
The estimated cost of the facility is $3 million USD with an estimated completion date of late 2019. The cost is, however, expected to jump based on an increase in the price of materials. The project is in addition to the construction and relocation of the new Redemption Hospital in the western suburb of Caldwell, outside Monrovia. Unlike the Redemption Hospital for which an Environmental and Social Management Plan (ESMP) was generated and is posted on the website of the Ministry of Health, the 14 Military Hospital has no such plan.
The main objective of an ESMP is to provide measures to minimize adverse effects on the biophysical and socio-economic environment during construction and operation of such facilities.
Military 14 Hospital has no ESMP which would undertake the following:
1. field assessment of the construction site fto appreciate the magnitude of the project activities and determine their environmental and social footprint.
review on the policies, regulations and environmental standards in order to develop a comprehensive and guided policy, legal and institutional framework so that the ESMP is responsive and aligned with government’s and financiers’ policies;
discussion with major stakeholders including the Ministry of Health;
4. discussion with key informants from the surrounding communities, affected directly by the project;
assessment of the socio-economic and the health-care systems data and prevailing national regulations, policies and standards; and
verification that the project meets international standards.
Liberia is one of the poorest countries in the world with 64 percent of its citizens living on less than a $1 per day. Latest available Human Development Index (HDI) rates Liberia at 0.427. Comparatively, Norway which has the world’s highest HDI ranking is rated at 0.949. According to the Atlas method in (current US$), Liberia’s GNI per capita is recorded at $370 annually. (World Development Report, Liberia At A Glance – Economic Growth Data, 2015 -2017).
As the country forges ahead in a post-Ellen Johnson Sirleaf era, the challenges of economic recovery will require adopting both short and long-term reform measures. This dissertation outlines some of these crucial challenges and offers structural reform alternatives that are worth considering.
According to the United Nation Development Program (UNDP), the Sustainable Development Goals (SDGs), referred to, in short, as the “2030 Agenda”, is a universal call to action to end poverty, protect the planet, and ensure that the citizens of the world enjoy peace and prosperity.
Building on the successes of the Millennium Development Goals (MDGs), the 17 goals of the SDGs seek to address the issues of poverty; hunger; health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation, and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate change; life below water; life on land; peace, justice, and strong institutions; and partnerships for the goals. (UNDP – Sustainable Development Goals; 2015). The possibilities of success in tackling these goals are based on the adherence to good governance and building strong economic systems.
Liberia, being a fragile post-conflict nation is facing a plethora of these challenges and would do well in achieving successes in each of these categories.
The Liberian economy like those of many developing countries in Sub-Saharan Africa is dualistic. It is characterized by a formal and an informal economy. Beyond this dichotomy, the Liberian economy is largely controlled by foreigners. Multinational companies and foreign wholesale and retail businesses are the major importers and exporters.
As a consequence, they contribute the largest share of taxes to the government. The informal economy comprises of a mix of rudimentary economic activities and transactions. They include menial labor and other forms of subsistence livelihood including village farming, hunting, and petty trading. These economic activities are neither taxed nor regulated by the government. For the most part, activities in the informal economy are not included in the Gross National Product (GNP) or the Gross Domestic Product (GDP).
According to World Bank data, Liberia recorded a GDP of 2.101 billion (US$ dollars) as of 2016. The real GDP of Liberia contracted by -1.64 percent in 2016 and grew at approximately 2.1 percent in 2017. Reports by the Central Bank of Liberia (CBL 2017 Annual Report), reveal that the projected expansion in real GDP is attributed to significant increase in output in the mining and panning sectors as a result of anticipated rise in industrial gold production and manufacturing. (CBL 2017 Annual Report)
Based on data from the Liberia Labor Force Survey and Trading Economics, Liberia’s national workforce is recorded at 1.6 million and comprises of workers between the ages of 16-65. Of this amount, 195,000 or 12.18 percent represents the wage-earning employment workforce and 87.82 constitutes the vulnerable unemployed.
The formal economy is characterized by a heavy reliance on the extraction of non-renewable natural resources such as iron ore and gold; as well as renewable natural resources such as rubber and oil palm. Such a resource dependent economy or otherwise referred to as an “enclave economy” that depends on the extractive sector produces fewer jobs. The mining sector in particular doesn’t induce much employment growth.
The recessionary trends in the economy came about as a backdrop to the 2014-2015 Ebola epidemic and came closely on the heels of the precipitous decline in global prices for iron ore and rubber; Liberia’s two primary exports.
By the end of June 2016, the Ebola outbreak had further decimated an already fragile economy. The Sirleaf administration had admittedly failed to diversify the country’s productive output through the introduction of labor-intensive industries that would have expanded the domestic production of goods and services.
As a result, we have witnessed an increase in inflationary pressures. The annual average headline inflation in 2017 was 12.4 percent from 8.8 percent at period ended 2016, mainly underpinned by a 24.5 percent depreciation of the Liberian dollar. Reflectively, there was an exchange rate decline of
L$125.50/US$1.00 in December, 2017 compared with L$100.80/US$1.00 in December, 2016. These economic trends have led to an increase in the cost of living. (CBL 2017 Annual Report)
According to Trading Economics, Liberia recorded a current account deficit of 25.10 percent of the country’s GDP in 2016. Then latest reports by the Central Bank of Liberia,reveal that the current account balance deteriorated by 6.5 percent to a deficit of US$346.5 million during 2017, from US$325.4 million deficit reported in 2016. It is stated that the deterioration in Liberia’s current account deficit in 2017 was due to a sharp deterioration in net secondary income owing to a 43.6 percent projected reduction in receipts.
However, the latest current account deficit when compared to the US$852.3 million deficit recorded in 2015, did register an improvement of 59.
The need for a robust economic stimulus program
While the recent election of 2017 brought with it opportunities for a newly elected government to infuse dynamism into the affairs of government, it has also brought to the forefront some of the intractable challenges that the Liberian economy has been faced with in recent years.
As such, I’m of the opinion that the economy will require major reforms in the real and financial services sectors along with an ambitious infrastructural development program. The broad goals of economic diversification, inclusiveness, and sustainability should form the primary goals of structural reforms.
Although the government’s much heralded Pro Poor Agenda has garnered a high degree of anticipation, it has yet to be comprehensively adopted. Such an agenda will need to be well-crafted. In addition, it must provide specific core policy objectives, targeted capacity building programs, and a set of well-defined outcomes.
By all indications, the Liberian economy is not producing adequately to meet current budget demands or to support a 4.02 percent growth in real GDP that has been forecasted for 2018. Many of the earlier forecasts however did not account for a deteriorating terms of trade condition and the accompanied liquidity crisis that we have recently witnessed. According to recent reports, amidst the need for rigid austerity measures, the government released its recast national budget for FY 2017/2018.
According to the release, the recast budget is registered at US$536.2 million, a decline of US$27 million from the original budget that had been signed by the former president Ellen Johnson-Sirleaf of US$563.5 million. (Henry Karmo, FrontPage Africa, “Executive Presents Revised Budget to Legislature with Major Austerity”, March 9, 2017)
Austerity measures and the current recast budget
The government recently announced a set of austerity measures. While an important initial step, US$27 million doesn’t seem to go far enough. Much of this amount is already captured based on the sluggish budget performance witnessed in the last two quarters of 2017. Hence, it appears that at minimum, there is a need for 30 percent of additional cuts in wasteful spending particularly of recurrent expenditures. With a downturn in business activities, it is further expected that the government will experience a major challenge to raise the tax revenues of US$401.4 million which represents 71.2 percent of the recast budget.
If appropriate measures aren’t taken in the short-term to go beyond the existing cuts earmarked in the recast budget to further strengthen fiscal management and curtail waste and abuse, the government may find itself running an intractable budget deficit by the close of FY 2017/2018.
Import Substitution and Export Diversification
Along with drastic austerity measures, the government will need to institute a robust short-term stimulus program. These measures should revolve around monetary and fiscal policy adjustments that are aimed at jump-starting growth within the economy.
In my dialogue with colleagues, I have laid emphasis on the broad goals of instituting import substitution measures alongside a gradual diversification of exports. We’ve already noticed that the options available in an already tight liquidity situation will require adherence to a well targeted set of initiatives that would include the streamlining of trade barriers and expansion in capital formation. In addition, authorities would need to seek external support to recapitalize a select number of banks with the aim of financing growth in agriculture and agro-based industries.
Additional capital will also be required to enhance growth in labor-intensive low-cost manufacturing.
Expanding agriculture and agro-based industries with an emphasis on mechanized rice production
Discussions and actions taken so far around an attempt to reduce the price of imported rice have been gravely inadequate. Observably, with the economy spending on average of approximately $US240 million per year on rice imports, this is one area where import substitution policies could work. The Central Bank of Liberia (CBL) reports that the international price of rice has witnessed a rising trend from the beginning of 2017. At end-2017, the international price of rice was projected to rise by 3.5 percent to US$401.9 per metric ton, from US$388.3 per metric ton recorded at end-2016 and by 5.7 percent when compared with the value per metric ton recorded in 2015.
The estimated rise in the price of the commodity during 2017 was significantly occasioned by scarcity amid increased demand mainly from the Asian region. (CBL 2017 Annual Report)
Agriculture as a major sector of the Liberian economy is worth 38 percent of GDP and employs 70 percent of the population. Unfortunately, much of this production is at subsistence level and provides very little contribution in the way of tax revenues to the government. Liberia has a climate that is favorable to farming with vast forested land and abundance of water. Notwithstanding, the low yield from food production including rice has precipitated the importation of 60 percent of the food that the population consumes. This has led to a significant loss of foreign exchange.
As such, any actions taken to introduce mechanize farming to increase food production and expand agricultural exports will not only markedly reduce the country’s high import bill but also lead to growth in tax revenues through a boost in trade and employment activities.
Liberia’s reliance on foreign imports has placed a burden on our foreign exchange position. Thus, the government should work along with the Central Bank of Liberia (CBL) which is the fiscal agent of government to institute an expenditure-switching macroeconomic policy. The aim of the policy would be to balance the country’s current account by altering the composition of expenditures on foreign and domestic goods.
Consequently, the Ministry of Finance and Development Planning needs to develop some revenue-and-expenditure-switching policies in order to expand the revenue base and reduce expenditures on activities that provide limited socio-economic returns. This will also include controlling corruption and waste of financial resources.
The main challenge to this undertaking is that Liberia’s current financial system is still very underdeveloped despite the expansion of the banking system within the last 12 years. There is still a lot of room for the legitimate application of capital and portfolio investment that could be harnessed to spur home-grown economic development.
To start, the CBL will have to get more involved in open market operations which is supposed to be one of its cardinal roles; the buying and selling of government issued bonds. We are learning that there is movement toward that endeavor but more transparency is required to promote participation and bring about positive results. Such a move would cause adjustments to short term interest rates and impact money supply levels.
Without such capacity, the CBL will have limited influence over adverse pricing conditions or to expand and contract money in circulation. It is also evident that the Liberian financial sector needs to undergo a major policy shift by instituting structural reforms that would enable the central bank to operate as a full-fledged monetary authority. Without such reforms of the financial system, the goal of achieving long-term price stability in Liberia will continue to be elusive.
Liberia’s ongoing development paradigm has led to a huge import bill to meet the needs of heavy-duty capital equipment that was required to jump-start the operations of many large multinationals that started to operate in the country during the Sirleaf administration. Also, the drive to construct new roads, rebuild the energy grid, and meet the demands for housing expansion etc. has placed pressures on demand for hard currency. This is going to be a trend for some time to come if expenditure-switching along with import substitution policies are not embarked upon.
Therefore, the Ministry of Finance and Development Planning along with other government stakeholders need to analyze imports to evaluate where out-flows of US dollars to pay for non-essentials can be curtailed or taxed upward and where through the switching of tax rates, government can generate more revenue of hard currency from certain types of for-profit foreign-emanated services i.e. bank transfers, insurance etc.).
In short, we need to be smarter in managing the demand for foreign consumption and expand access to domestic production.
Monetary policy and banking reform
The primary role of a central bank is to manage a nation’s financial system and promote long-term conducive pricing conditions. There are several instruments that should be at the disposal of a central bank in order to achieve these goals. In Liberia’s case, due to the uniqueness of its monetary system, the central bank has never operated as a “bank of issue “. This happens to be an important role of a full-fledged monetary authority. Owing to the fact that Liberia decided many years ago to adopt the use of the US dollar as a legal tender, the country’s monetary system has depended to a large extent on its political and economic relationship with the United States.
This also meant that the domestic economy has been traditionally subjected to the negative impact of exogenous currency shocks.
During the period before the global oil crises of the mid-1970s when Liberia experienced relative stability and good relations with the United States, the country did benefit from what I would call a pseudo sense of economic and financial stability by its use of the US dollar as a national currency. The very sustenance of the economy was driven by foreigners mainly the United States for which Liberia promoted by adopting an Open-Door Policy during the Tubman Administration. Unfortunately, this policy arrangement kept the economic base unrealistically small and placed a heavy fiscal reliance on foreign multinationals (i.e. Firestone, LAMCO, LMC, Bong Mines, etc.).
The ruling class did not capitalize on our special political and economic relationship with the United States in order to expand and diversify the domestic economy, strengthen the productive base, or harness the adoption of a national currency backed by strong external reserves.
I call this period a very lazy approach toward national economic management. In essence, the structural and managerial deficiencies of the Liberian economy was being covered up by us using the world’s most convertible currency. As such, the US dollar stood as a type of guarantor of Liberia’s monetary and financial system. (William Ponder, “The Macroeconomic Challenges of Adopting a Realistic Exchange Rate Regime for Liberia”; Liberia Studies Journal, XXII, 2 (1997).
Reports however suggest that after the spiraling events of the 1970 oil-crises, the Tolbert Administration had begun to hold talks with authorities at the United States Federal Reserve and with the IMF to gradually institute a national currency regime for Liberia that would’ve been backed by a strong US dollar external reserve position. Unfortunately, that was short-lived as the 1980 coup derailed those possibilities. Everyone knows that the political and economic conditions in Liberia which prevailed between 1943 and 1980 did not last.
Since 1982 when Liberia first found it necessary to introduce the Liberian five-dollar coin as a solution to addressing the devastating deflationary effects of capital flight; the drawbacks from a de-facto application of the US dollar as national currency has become evident. I once stated in a paper that proponents of what I then referred as the “dollar myth concept” view the US dollar as a panacea to all of Liberia’s monetary and trade problems.
I also recommended at the time that Liberia needed to adopt an official national currency within a framework and a timetable that would allow for the strengthening of the domestic currency by building strong external reserves. Unfortunately, that was in 1997, and everyone knows what was politically pertaining in Liberia during that time.
Whereas I wouldn’t blame the current financial sector administrators for the structural limitations of the relatively weak monetary system which they’ve inherited, I would believe that immediate attention should be made toward adopting a comprehensive set of new policies. These policies should be geared toward curtailing the impact of a currency system that is vulnerable to external shocks. We must come to the realization that we can’t and will never again return to the days when Liberia depended solely on the United States and its currency as a guarantor of domestic economic stability.
And even today, to place a heavy reliance on foreign direct investment driven by the new wave of multinationals like China Union and Accelor Mittal as an approach toward alleviating the employment crisis; is just sheer policy laziness in my opinion. This indicates that even today there are some Liberian economic managers who are relying on approaches and policies of the past which had kept the economy small and under-productive and largely driven by external factors.
Lastly, I would like to state that several central banks particularly those going through financial crisis have adopted “inflation-targeting policies” as a pragmatic response to the failure of other types of monetary policy regimes. To be brief, “inflation targeting” is an economic policy in which a central bank estimates and publishes a projected, or “target” inflation rate and then attempts to steer the actual inflation level toward the targeted inflation rate. The Liberian central bank should consider inflation-targeting as a significant policy objective in controlling inflation.
Again, it would go back to my earlier statement of operating as a full-fledged central bank. But I remain convinced that inflation-targeting measures are necessary for the Liberian economy which continues to exhibit a heavy demand for imported goods and services.
Mobilizing domestic savings through the introduction of mobile banking has taken-off on the continent of Africa. In the last decade, mobile money services have expanded in several African countries with particular diversification of activities in Kenya and Tanzania. The mobile money has proven to be an accessible tool for payments. Moreover, other financial services, such as credit, insurance and savings have been rolled out in a number of markets, allowing people to better manage financial risks and household shocks. Credit services enabled by mobile money, in particular, have proliferated in the region: from six services in Kenya in 2011 to 39 services in 11 other countries in 2016.
The inclusion of mobile money has led to expansion and growth of formal economies and has introduced new ways of tracking transactions and markets to promote the growth of banking and insurance. Utility companies have also been able to introduce mobile money in their attempts to institute digital billing and payment arrangements with clients in remotest regions of these countries.
I would thus recommend that Liberia expands its drive to institutionalize mobile money platforms in the country. The critical tasks of safeguarding the telecommunications infrastructure and setting up the regulatory and legal framework to protect consumers and users, would be the major challenge. Moreover, the government should seek external training for those involved in this emerging industry.
External Debt Sustainability and Re-basing of GDP
The World Bank and IMF establishes that a country can be said to achieve external debt sustainability if it can meet its current and future external debt service obligations in full, without recourse to debt rescheduling or the accumulation of arrears and without compromising growth.
A Debt Sustainability Analysis (DSA) conducted by the IMF in November 2017 revealed that Liberia’s external debt stocks have been increasing rapidly due to a scale-up of infrastructure spending and to deal with multiple adverse shocks. The report however concluded that the country’s risk of debt distress is moderate. Concomitantly, since September 2016 to June 2017, the total debt stock has increased from US$597 million to US$736 million comprising mostly of multilateral loans.
Meanwhile, the 2017 GDP projections deteriorated as a result of a lower-than-expected impact from the draw down of UNMIL and the continuing effects of a sluggish performance of exports. (Liberia: Debt Sustainability Analysis: IMF Country Report 17/348, November 1, 2017).
Given these underlying economic trends, there can be only limited reasons for which the government would try to justify exponentially acquiring new loans at higher than concessional terms at this time.
During the 2018 Spring Meetings of the IMF and the World Bank Group, I heard the Minister of Finance and Development Planning, Mr. Samuel D. Tweah Jr through a podcast, reveal that the government is anticipating the re-basing of GDP. Re-basing of GDP occurs when a country that has long neglected to undertake the statistical work required to maintain accurate GDP figures finally awakens to the task and comes out with numbers that are completely out of line with its previous estimates.
It can lead to marked distortion of historical data and trend analysis. This has remained largely an African problem. In 2014 alone, Kenya, Nigeria, Tanzania, Uganda, and Zambia all completed rebasing exercises. (Amadou Sy, “Are African Countries Rebasing GDP in 2014 Finding Evidence of Structural Transformation?”: Brookings Institute; March 3, 2015)
Minister Tweah alluded to the goal that Liberia will seek to rebase GDP so it will provide additional fiscal space to accommodate new debt and other financial obligations in order to grow the economy. GDP rebasing also provides a clearer look at the economy, and in particular it should capture from which sectors most of the growth in the economy is coming from. While rebasing might be necessary, it doesn’t tell the full story.
Liberia will require more than GDP rebasing to stimulate the economy. While it is important to have up to date statistics, rebasing GDP will not of its own lead to economic prosperity or change the reality concerning the high levels of poverty. The revised GDP statistics may have changed but the reality of poverty and income inequality remains the same. Therefore, if the economy doesn’t grow in real terms, the upward adjustment in GDP will not lead to better economic outcomes.
The need for targeted reforms to achieve growth cannot be overemphasized. Once the implementation of policies is geared toward expanding and redistributing income such that the lowest percentile of income earners is lifted out of poverty, the aim of a pro poor agenda would become achievable. Furthermore, if growth can be accompanied by the bridging of the gap between the formal and informal economies and adding of more wage-earning jobs, Liberia’s path to promoting sustainable economic recovery would be guaranteed.
However, these goals cannot be achieved by mere happenstance. It will require the political will and fiscal discipline to substantially reduce waste and corruption. Concomitantly, the government will need to target a robust set of short-to-medium-term policies several of which I’ve enumerated on in this paper.
Amadou Sy, “Are African Countries Rebasing GDP in 2014 Finding Evidence of Structural Transformation?”: Brookings Institute; March 3, 2015
Central Bank of Liberia, (CBL) Annual Report, 2017, CBL (Highlights and Statistical References), January 23, 2018
Karmo, H. FrontPage Africa, “Executive Presents Revised Budget to Legislature with Major Austerity”, March 9, 2017
Liberia: Debt Sustainability Analysis: IMF Country Report 17/348, November 1, 2017
Ponder W. “Macroeconomic Stabilization and the Budgetary Implication for Liberia in Post 2017”. Published in the Global News Network (GNN) online magazine – August 27, 2017
Ponder W. “The Macroeconomic Challenges of Adopting a Realistic Exchange Rate Regime for Liberia”; Lead Article – Liberia Studies Journal, XXII, 2 (1997) – Published by the Liberia Studies Association
Ponder W. “My Response to Developing an Inclusive Financial Sector: By – William F. Ponder, Liberia’s Case Study”, Presenter – African Studies Program, 2001 , Association Lecture, Series, Boston University African Studies Lecture Series
Report on the Liberia Labor Force Survey 2010, Liberia Institute of Statistics and Geo‐Information Services (LISGIS)
World Development Report, Liberia At A Glance – Economic Growth Data, 2015 -2017, the World Bank Group
About the author:
Mr. William Ponder is a graduate of the University of Liberia where he earned a BSc in Economics and from Boston University where he earned an MBA in Public Management.
Mr. Ponder has over 30 years of work experience as a public policy specialist and banker. He once served as an economic researcher with the National Bank of Liberia (NBL), the precursor to what is today, the Central Bank of Liberia (CBL). More recently he worked for several years in private banking and investor services with the Brown Brothers Harriman and Company, the oldest private banking firm in the United States headquartered in Boston, Massachusetts, USA.
The author is an avid researcher and has published several articles major among which includes, “The Macroeconomic Challenges of Adopting a Realistic Exchange Rate Regime for Liberia” a 38-page leading article published in the Liberia Studies Journal, XXII 2, 1997.
Mr. Ponder’s research interests are centered around structural reform and economic diversification, achieving debt sustainability, and adopting an inclusive environment for the growth of small and medium-sized businesses.
Following his call to members of the Liberian Legislature to follow his lead and take a reduction in salary, there appears to be no ground swell of support among legislators to the call of the new Liberia President George Weah.
Addressing the Legislature on Monday in his first nationwide address, Weah disclosed that he would be taking a 25 % pay cut because of the dire economic situation of the government.
Citing the reality of the declining rate of the Liberian dollar against US currency, he told lawmakers, “Our currency is in free fall; inflation is rising, unemployment is at an unprecedented high and our foreign reserves are at an all-time low.”
Comparatively, the average lawmaker in Liberia makes about $180,000 which are paid in US dollars in addition to other benefits; that breaks down to about $15,000 USD monthly plus benefits for vehicle, vehicle insurance, repair and maintenance, newspaper, workshops, conferences, books, scholarships, housing, office staff, constituency visit, gasoline, internet, local and foreign travel allowance, entertainment, etc.
The average U.S. Representative makes about $174,000 annually plus benefits.
The Guardian newspaper in 2016 reported the salary of lawmakers in various European Parliament as seen below: Country Salary Mean earnings (2010) Ratio Source
Austria €120,165 €38,895 3.09 Austrian parliament
Belgium €86,064 €43,388 1.98 Belgian parliament
Bulgaria €16,318 €4,618 3.53 Standart News
Croatia €24,487 €12,494 1.96 Croatian parliament
Cyprus €47,324 €26,927 1.76 Cypriot parliament
Czech Republic €27,246 €12,592 2.16 Czech parliament
Denmark €91,767 €49,714 1.85 Danish parliament
Estonia €41,331 €10,395 3.98 Estonian parliament
Finland €76,560 €40,281 1.90 Finnish parliament
France €85,200 €33,897 2.51 French parliament
Germany €108,894 €38,735 2.81 Cornelia Trefflich
Greece €68,460 25,669 2.67 Greek parliament
Hungary €28,704 €9,916 2.89 Hungarian parliament
Ireland €87,258 €42,546 2.05 Irish parliament
Italy €167,257 €31,680 5.28 Italian parliament
Latvia €27,492 €8,357 3.29 Latvian parliament
Lithuania €30,380 €7,138 4.26 Lithuanian parliament
Luxembourg €75,319 €51,663 1.46 Chambre Des Deputes
Malta €21,145 €18,744 1.13 Maltese parliament
Netherlands €102,039 €41,149 2.48 Dutch parliament
Poland €27,951 €10,426 2.68 Polish parliament
Portugal €49,323 €18,354 2.69 Portuguese parliament
Romania €18,984 €5,991 3.17 Romanian parliament
Slovakia €23,532 €10,232 2.30 Slovakian parliament
Slovenia €42,447 €21,135 2.01 Slovenian parliament
Spain €33,768 €27,057 1.25 Spanish parliamentary
Sweden €79,392 €38,716 2.05 Swedish parliament
UK €106,000 €35,840 2.96 British parliament
EU average €60,843 €25,591 2.4
The salaries for law makers compared to the ordinary Liberian is grossly disparate.
In the 2017-2018 National Budget of nearly $564 million, about $295 million was allocated for salaries. In its narrative for the allocation of monies to the National Legislature, the National Budget noted that …”The purpose of the Legislature of the Republic of Liberia, in keeping with the 1986 Constitution of the Republic of Liberia, is to formulate and make laws, ratify treaties, conventions, and make amendments on existing laws and adopt resolutions. This branch of Government serves as representative of the citizens through which their views and demands are addressed.
The National Legislature is cited as providing no information on Objectives or Achievements for 2016-2017 fiscal year.
However, in the 2017-2018 Budget, National Legislature expenditure including salaries are projected for $29,581,158 USD; increased from $26,546,165 in the 2016-2017 budget.
The 2017-2018 budget projected the receipt of external assistance of $688,185 million. The breakdown of this amount were as follows in USD:
$49.7 million as Budget support with $20 million from the International Development Associate, $12.7 million from USAID, $12.7 million dollars from the EU and $4.3 million dollars from Norway. Targeted external assistance was also projected for various sectors of the Liberian government such as the Trust Fund for $17.79 million, Pool fund of $5 million and Project/Program Aid of $568.75 million dollars.
Major categories of Expenditures in the 2017-2018 budget were in recurrent, contingent and Public Sector Investment Plan, Public Administration, Gender Response and State Owned Enterprises. Compensation of employees accounted for 59% of recurrent expenditure.
Liberia’s economic outlook was exacerbated by decline in commodity prices for its iron ore and rubber exports, the impact of the Ebola pandemic in 2014- 2015 and exit of the UN Mission in the country.
The World Bank’s latest overview of Liberia notes that “…Headline inflation averaged 12.4% in the first half of 2017, compared with 7.3% the previous year, driven by the relatively fast pace of the depreciation of the Liberian dollar against the U.S. dollar (of 20% in the first half of 2017 compared to 11% in the same period in 2016). Other factors include excess liquidity in terms of Liberian dollars, and the relative shortage of inflows of foreign exchange. The resultant rise in the cost of living, especially the cost of food, which is mostly imported, increased fiscal pressures. Limited employment continues to undermine the welfare of Liberians in both urban and rural areas..”
The small West African nation of 4 million people is banking on favorable agricultural sector growth in commercial gold and diamond production and expansions to improve its economic growth.
The new administration is yet to lay out its economic strategies for addressing the declining economic outlook and pressures on limited government revenues. President Weah, in his address to lawmakers on Monday, all but admitted that Liberia is “broke”.
According to World Bank, “… Commensurate with GDP per capita growth and single digit inflation, Liberia’s poverty headcount ratio (at the national poverty line) is projected to fall to 45.2% in 2019, compared to 49.8% in 2017.”
According to President Weah, he will submit several legislations and policies to the country’s Legislature intended to spur economic growth, develop and expand agriculture and address the infrastructure needs across the country.
His government, he said, will focus on road construction and the provision of affordable and adequate electricity power.
While expectations are high for immediate solutions to national challenges, some Liberians say they are prepared to give the new administration some time to address the issues.