A Strong Case for Government to Subsidize Private and Public Institutions
By Martin K. N. Kollie
University of Liberia
Looking Inside Liberia
Liberia as Africa’s oldest independent nation is yet to rise above the devastating manacles of poverty, ignorance, and disease. The country has been through series of unpleasant incidents. Even though this sovereign state is greatly endowed with abundant human and natural resources, but these resources have not made any substantive impact in terms of economic growth, political development, and social refinement. The status of Liberia amongst comity of nations in Africa and the World is not only humiliating, but very embarrassing. Nationals from other countries continue to devalue and exploit Liberia simply because of bad governance, unpatriotism, patronage, and elitism.
Liberia is still a low-income and food-deficit country deeply dependent on external aids and grants. For more than three decades, foreign handouts have been a major source of economic strength for Liberia. The recovery plan of Liberia after fifteen years of civil turmoil is far from achieving its fundamental objectives as citizens continue to wallop in a state of peril. The rate of poverty is skyrocketing even after two successive democratic elections as most young citizens have no choice, but to become mere gamblers, prostitutes, drug-addicts, beggars, criminals, and sycophants. The collective hope of Liberians is windswept day after day due to the poor implementation of government’s decentralization plan. The recovery roadmap of Liberia is far from achieving its primary pillars of development as current realities further amplify an imperative demand to ensure inclusive transformation.
Unemployment is a serious challenge today in Liberia. The number of persons without jobs is too scaring even though there are multi-million investment companies operating in different sectors of Liberia. The huge export of iron ore, rubber, timber, diamond, gold, cocoa, coffee, and other resources from Liberia has been unable to revive its broken economy as hardship and hunger continue to shrink the destiny of the citizenry. The presence of international business entities like Arcelor Mittal, China Union, BHP Billiton, Chevron, Anadarko, APM Terminal, Golden Verolem, Sime Darby, Cavalla Rubber Corporation, Putu Mountain, and other foreign firms is yet to make any genuine impact in Liberia. Access to massive employment opportunities and basic social dividends still remains a nightmare.
With the recent discovery and sale of 17 deep-water oil blocks from the continental shelf to water depths of 2500m to 4000m, there are still persisting and prevailing indicators of sharp economic inequality and decline. The auctioning of Liberia’s hydrocarbon resources to foreign oil companies even during Ebola speaks volume. Some of these companies have not even met the minimum financial, legal, and technical requirements of operating a single oil block, but they have been awarded Production Sharing Contracts. Due diligence no longer matters, as looting of our extractive assets intensifies. The need to renegotiate existing PSCs is critical to national growth and sustainable development.
Rampant Corruption has been and continues to be Liberia’s greatest enemy since 1847. There is a high-level of ill-transparency and unaccountability almost everywhere, especially in public service. In 2013, Liberia was rated as the most corrupt country in the world by Transparency International. The absence of political will to impartially prosecute all economic pillagers has been a major problem since 2006. As a result of this, socio-economic dispossession is glaring, while massive adversity escalates. The spoil system has taken precedence as nepotism undermines public performance and national output. After 10 years of fragile peace, this generation of Liberians is very desperate for inclusive change in their lifetime.
Liberia before Ebola
The pre-Ebola status of Liberia was driven by hopelessness, uncertainty, and socio-economic insecurity. Liberia before Ebola was painful and disastrous as well. Even though the country was not experiencing a major health tragedy like now, but it had to endure huge economic downturn. The country’s financial system was gradually crumbling with over three (3) successive years of budgetary shortfall and fiscal indiscipline. The price of basic commodities was increasing very fast as a result of high tariff, inflation in exchange rate, hoarding, reduction in UNMIL manpower, capital flight, and other factors.
Before the Ebola outbreak, it was visibly evident that many Liberians were living far below the benchmark of poverty. Youth unemployment was high as government failed to live up to its promise of providing twenty thousand (20,000) jobs annually. The extreme anxiety for massive job creation was out of control and it was so apparent to an extent that almost every jobless citizen of working class became restless. The rate of unemployment was 85% while the number of people living in poverty accounted for 80%. The cost of living was too high, especially for those with low purchasing power.
The rate of inflation was 6.8% with an exchange rate fluctuating between 85-90%. Household income or consumption by percentage share was 10% while budget deficit was -2.7% of GDP. The importation of goods was far above export. The subjection of many citizens to acute suffering was obvious as there were several calls from key government stakeholders for international assistance. The inability of national government to fund key public programs was evidently known. There were series of public strikes and secret discontents from civil servants, especially health workers.
Some parents could no longer afford to keep their children in private school due to sharp increment in registration and tuition fees. Hunger was also increasing with food insecurity eating up almost half of the country’s population. There was limited and/or no access to basic social services such as electricity, safe drinking water, health care, social security, etc. These were few existing economic realities before Ebola, and these situations have even worsened as a result of the multiplying effect of this deadly disease.
Liberia during Ebola
Since its existence as a sovereign state, Liberia has not encountered any severe health disaster like the ongoing Ebola outbreak. The advent of this life-threatening virus through Lofa County in March 2014 was first of its kind. This unknown guest (Ebola) brought an atmosphere of fear and panic to citizens and non-citizens residing in Liberia. The ravaging effect of Ebola is so huge and costly to an extent that no one government or nation can totally overcome it. The fight against this plague requires joint regional coordination and global partnership.
The delay to immediately respond in combating this lethal enemy when it was first recognized in North-western Liberia has left Liberia in a state of ruin. The economic burden Ebola has created is even more than our previous perception. The weak health system of Liberia was overrun by Ebola. The non-existence of a national disaster management plan and an effective disaster response agency was also a contributing factor to the widespread of Ebola. The manpower, health facilities, and medical equipment were also insufficient to quickly contain this virulent virus from its onset.
As of early November 2014, 46 percent of those working at the start of the Ebola crisis became jobless. The increment of social vulnerability and job insecurity was sky-rising. The rate of unemployment went above its existing height as many inhabitants; especially youngsters became less-busy and idled. Those working in the formal and informal sectors were badly hit by this outbreak as regional trade was seriously hampered due to the closure of border points. There was an alarming rate of destitution due to good shortages, rising prices, falling incomes, and transportation restrictions.
The price of 25kg bag of rice jumped from $US14 to $US20 as people applied diverse strategies just to stay alive. The number of children selling cold water increased drastically while others found themselves in different locations hustling to survive. It was not an easy experience especially when Liberia was toping Guinea and Sierra Leone in the total number of Ebola cases and deaths. Businesses were shutting down. With Liberia gradually defeating Ebola, it would take an extraordinary effort to reach a ‘zero case’ level, but we can get there only by observing those stringent preventive measures.
The Impact of Ebola on Liberia
The negative impact of Ebola in Liberia is beyond imagination and a post-Ebola era would be too hard to embrace and explain if appropriate steps are not taken. Airlines and foreign businesses as well as local firms have shut down operations. Furthermore, many lives have been lost as a result of this plague. Up to date, Liberia has incurred a total of 3423 deaths. Today, there are many orphans, widows, and widowers whose hope has been taken away by this killer disease.
The Ebola pandemic continues to amputate almost every sector of Liberia’s economy. The crisis is resulting in flat or negative income growth and creating large fiscal needs. The GPD growth estimates for Liberia in 2014 have been revised sharply downward. According to the World Bank, the projected 2014 growth in Liberia is now 2.2 percent as opposed to 5.9 percent before the Ebola outbreak and 2.5 percent in October. As this disease permeates Liberia, there will extreme pressure on the government in 2015 to deliver and act fast in terms of speedy economic recovery.
As investor aversion takes a further toll, 2015 growth estimate is 3.0 percent in Liberia down from pre-Ebola estimate of 6.8 percent. Liberia has been hardest hit fiscally amongst the Mano River countries. Relative to pre-Ebola forecasts, revenues are down $US86 million while public spending has $US62 million, a combined impact of more than 6 percent of GDP. Although the resulting fiscal deficits in Liberia, Guinea, and Sierra Leone have so far been financed by inflows from development partners, governments have also cut public investments by more than $160 million across the three countries, damaging future growth prospects.
The need to finally contain ebola and promote a conclusive financial recovery plan in order to restart business activities and bring back investors is crucial to national development. According to the World Bank, there are some incipient signs of economic recovery with reduction in the number of new Ebola cases. According to a latest survey, 51 percent of wage earners are no long working 64 percent are self-employed. In focus interviews conducted by Mercy Corps indicate that there has been 60 percent reduction in household income. Investments in commercial agriculture remain on hold, including a US$10 million oil palm mill.
According to the World Bank, fiscal impact has been acute. Revenues have been hit by the sharp reduction in economic activity and lower tax compliance. Expenditure has been driven up by the costs associated with the epidemic. For Fiscal Year 2015 (July to June), government had anticipated tax and non-tax revenues of $US499 million; expected revenues are now only $413 million. At the same time, expenditure projections have risen from $US718 million to $779 million, with $US174 million on the recovery program, pushing the overall fiscal deficit from an original projection of $159 million (then 7.1 percent of projected GDP) to $US306 million (14.3 percent of GDP). The composition of spending has also shifted. Prior to the crisis, a strategic push on infrastructure lay behind a planned $US276 million capital spending; that figure is now expected to be no more than $US168 million. Combining these measures of falling revenues, increased spending, and foregone investment, the fiscal effect of Ebola on Liberia in Fiscal Year 2015 is of the order of $US250 million.
A Messy Educational System
Before Ebola, President Sirleaf described Liberia’s educational sector as a mess. The poor learning atmosphere in Liberia has even discouraged more students and parents. Lack of facilities and qualified manpower has been a major challenge since 2006. Many parents were transferring their kids to public schools because of poor financial strength. Overpopulation, unequipped libraries, lack of research equipment (computers and internet), and laboratories have been also contributed to the massive failure in schools as well.
As a result of this strange phenomenon (Ebola) from March 2014 up to present, schools have been shut down for about six months now. Students from academic and vocational institutions have been unable to attend regular classes while school employees have not been paid since September 2014. With the recent pronouncement by Government that normal academic activities will resume in February 2015, what can we do to get students back into private and public schools and discourage poor enrollment? Do school administrators and parents have money to facilitate the reopening of all schools right now? Of course, the answer is NO! Considering all these economic shortcomings, what can we do as a country?
My Case for Subsidy
It is easy to predict Liberia’s educational future if legitimate precautions are not taken to protect it from bribery, collusion, corruption, malfeasance, and all forms of academic crimes. Obviously, parents, guardians, and students will be financially overburdened to meet the high requirements and demands of both private and public institutions if government and its partners do no act promptly to restore lost economic hope caused by the Ebola crisis.
It is no secret that registration and tuition fees will even double if timely interventions are not made to substantively subsidize all schools in Liberia. I hope we have not forgotten that Education is a right and not a privilege, as such, no one should be deprived. Let it be known now and all through this year that this disease has emptied the pockets of most parents who were once sponsoring their kids to obtain education.
Every fabric of our nation was affected by Ebola and no one should give blind eye to this reality. Times are really hard and jobs are not available. Several families are in search of survival every day. It is difficult for some of them to even have a meal to eat some days. Ebola has reduced them to nothing as begging has become a way of life for some of them. It is time to make this sacrifice, because it will help our nation so greatly to advance its human capacity. These are four proposals I am recommending to this government and foreign partners for immediate consideration:
I know it may seem costly to fund these plans, but it is not impossible if we truly intend to rebuild a vibrant educational system in Liberia for all, especially those who have been economically robbed by Ebola. As a young patriot, I am willing to volunteer my expertise for us to design a comprehensive and workable strategy or plan to ensure subsidies are provided to all private and public institutions.
How do we get funding?
Liberia is a friend to many great nations around the world, some of which include: United States of America, China, Germany, Great Britain, Cuba, Australia, Norway, South Africa, Nigeria, etc. It is time for our government to use its power of persuasion and good relationship to generate foreign resources. The World already knows about our current condition and I am confident if our government exerts more effort and earnestly request assistance, the issue of providing subsidies to private and public schools will be resolved.
Furthermore, Liberia is a member of international financial institutions and trade organizations such as African Development Bank, ECOWAS, MRU,WAMZ, World Bank, IMF,WTO, Group of 77. I am sure these institutions are standing bye to assist us upon request, because they are our partners in progress. Liberia is qualified under HIPC arrangement to put in for loan, grant, or aid. During this fiscal year, it is important for government to also increase budgetary allotment for education and cut down on extravagant spending.
Appreciation to our foreign friends
It is my incumbent duty to congratulate all of our international partners who stood with us during those darkest hours. You are indeed our real friends, because you did not abandon us when we were galloping helplessly in a pool of confusion and mourning. We appreciate all of your support you gave and continue to give.
As our country continue to experience drastic decline in the number of Ebola cases, I feel obligated to laud the sacrificial effort of all health workers who risked their lives to get us this far. Surely, they are the real giant-killers. Our success today can be attributed to their hard work and commitment. My gratitude to all citizens and non-citizens who have been actively involved in this fight. We must end this fight together by doing what is right everywhere, even when our various schools are reopened.
About The Author: Martin K. N. Kollie is a Liberian youth activist, student leader, an emerging economist, and a young writer. He is currently a student at the University of Liberiareading Economics and a member of the Student Unification Party (SUP).