We, members of the Collaborating Parties (UP, LP, and ANC), listened with great anticipation to President Weah’s recent statement on the economy. The news we heard was generally bad. The President told us that since he assumed office in January 2018, the Liberian Dollar has depreciated by 25 percent. He further explained that this depreciation in the value of the Liberian Dollar, which occurred under his watch, “has increased inflation by 4 percentage points to 21 percent from 17 percent back in February 2018.”
Ordinary Liberians know what this means. It is tough on their pockets. They must now pay 25 percent more for everything they consume. That means since the President took office, food items that cost $100 LD now cost $125 LD. School fees that were $4,000 LD now stand at $5,000 LD.
This is a serious problem that requires serious policy responses. Unfortunately, the President provided us no serious detailed plan for “the structural transformation of the Liberian economy” that he says is necessary to solve the problem. Instead, as the President himself admitted, all he offered us are “short term-fixes” and a promise to release a long term development strategy that he says is only now “nearing completion.” Given the immensity of the economic challenges we face as a country, it is certainly our hope that the President’s long term strategy was now available for robust public debate and implementation. We therefore look forward to engaging the President and his administration on their plan, whenever it is released, and offering our ideas and thoughts to make it more responsive to the challenges we face as a nation.
For starters, we have set forth below some thoughts we hope the President and his team will consider as they go about developing their plan. Unlike the President, our focus is not on short term fixes that, at best, produce only temporary relief from the current crisis. Instead, we emphasize policy options that can produce some immediate positive results while simultaneously and more importantly addressing the long term structural impediments to growth and development:
· Maintain Sound Fiscal Discipline: We must live within our means as a nation and avoid unwise debt we cannot afford. There are some indications that the sharp decline in the Liberian Dollar since the President came to office is a result of financial markets already taking into account the strain that servicing over $1 billion in new debt sought by the government will place on our meager national budget. We should thus look to smartly grow—and not borrow—ourselves out of the country’s current economic morass.
· Adopt Smart Growth Inducing Tax Policies: Desperate for cash to fund what amounts in many cases to unwise spending, the government maintains a regime of relatively high tariffs and other taxes that stymie growth and risk taking so essential to wealth creation. Moreover, tariffs on essential imported commodities are among the most regressive taxes, adversely affecting the poor whose cause the President claims to champion. Smart tax policies, including targeted reductions in tariffs and other taxes, can stimulate growth and, in the process, add more revenues to the government’s coffers than the current regressive tax regime.
· Eliminate Monopolies: The average Liberian knows that if the government gives only one person the right to import “chicken soup” or tomatoes that person, because he has no competitor, can charge supra competitive prices or bring in inferior products. There is no net economic benefit we derive as a nation from giving only a few persons or entities exclusive licenses to import essential products like rice, chicken soup, and other consumer goods. Opening the market to more people with focus on Liberian business people, would result in lower prices and better product choices for consumers.
· Implement Land Reform: There is ample evidence that Liberia’s current unsettled land tenure system is not conducive to investment and growth. The government should quickly work to adopt reforms that standardize land tenure so as to unlock value in land, allowing people to use real property as collateral for loans to start businesses, create jobs, and improve lives.
· Enhance Environment for Exports/Import Substitution: Adopt sensible, cost-effective regulations and policies to increase local and foreign investment in export/import substitution sectors. Regulations and policies could include:
§ Creating a food safety inspection unit along with relevant regulations so that our farmers’ produce can meet standards for export to European and other markets: There are many stories of our development partners trying to help our farmers export crops such as okra, pepper or eggplant only to be stopped in their tracks because of the absence of something as basic as a national food safety inspection system or unit. Small investments in establishing such a unit could pay huge dividends.
§ Establishing industrial parks in coastal cities like Buchanan and Harper with built in advantages such as sea ports and easy road access to airports and Monrovia: These advantages would serve to attract investors looking to manufacture for export or local consumption.
§ Improving the value chain for key agricultural products like rice: Pilot projects funded by international donors around the country amply demonstrate that improving the rice value chain by, for example, helping Liberians entrepreneurs establish rice mills can produce huge results—improving the quality of locally produced rice and creating a market for local producers. Scaling up these projects could help us reduce the hundreds of millions of dollars we spend annually on rice imports—money that could go to build schools, hospitals and roads.
§ Implement Reforms that make it easy to move goods In and Out of our Ports: Moving goods in and out of our Ports is unnecessarily cumbersome, complicated and expensive. Reforms to simplify moving goods in and out of our Ports should be implemented to enhance ease of doing business and to help ordinary Liberians.
The ideas above, we are proud to note, will cost little to nothing to implement. All they require is the political will and technical know how to make some difficult, but smart decisions. We therefore hope the government will quickly move to adopt and implement these proposals as we look forward to further engaging our counterparts in government on the way forward for the Liberian economy. In fact, given the scale and scope of the economic challenges we face, the focus of the government should be on engaging all Liberians on the way forward, rather than scapegoating and leveling baseless and knowingly untrue and false charges against opposition leaders as we have seen some cabinet officials do in recent times. The stakes are too high for such pettiness, misleading and knowingly untrue accusations. Harnessing our collective strengths to advance Liberia’s development should be our focus as we work to devise and implement a detailed road map for spurring sustained, market driven, private sector led growth that creates jobs and lift living standards for all Liberians.
RESPONSE BY THE COLLABORATING PARTIES (ANC, UP, & LP)
TO PRESIDENT WEAH’S STATEMENT ON THE ECONOMY