The Perspective
Atlanta, Georgia
April 24, 2019

Liberia, a nation of over 4.7million people with one of the lowest electricity access rates in the world (at approximately 12%, USAID). Ethnic, religious and political issues have skyrocketed to an all-time high. Infant and maternal mortality are among the highest in the world. Education and health systems have practically collapsed. Infrastructure, where it exists is broken and neglected. Yet this year, the government spending more 90% of the entire budget (US$591.2M) on recurrent expenditures (salaries, allowances, purchase of vehicles, stationaries, gasoline, etc.) than on power, roads, education, police and health care combined. This perverse prioritization is indicative of the political economy of today’s Liberia – and the tough choices facing President George Weah.

At stake is whether Liberia remains a political system that falls short of democratic standards, but contain contested elections and alternation of power between different political groups (Feckless democracy) or real, people-driven democracy. It might interest Liberians and our friends to know whether the current leadership has the character, vision and will to defy vested political, former combatants and business interests to govern decently and develop the economy.

A review of Weah's 14 months at the helm indicates that this is unlikely to happen. Weah's politics of deliberate division by labeling his critics as “Enemies of State” and the ruling party, Congress for Democratic Change (CDC) intolerances of opposing views has pitted Liberians against one another to the point that obtaining the cohesion and social harmony necessary for economic development will be difficult in the short and medium terms.

The election of October 2017 is over, but the economic and political tensions in the country are frightening. The increasing protests for war crimes court, protest of allegedly missing $LD16 billion protests, strikes by teachers and the proposed June 7, 2019 protest as well as the recent pronouncement of ex-rebel generals giving a member of the national legislature 72 Hours to report to their command have placed Liberia at a crossroads once again. It is up to the president to either make tough choices; to either muddle through the next four years - or to continue with business as usual, with the risk of propelling our politics and economy towards disaster.

According to the Central Bank of Liberia (CBL) 2018 annual report, Government’s fiscal operations during the year recorded a fiscal deficit of US$225.5 million (7% of GDP). The report also revealed that government revenue including grants declined by 12.7% in 2018. Total government revenue in 2018 amounted to US$402.2 million which is 12.5 percent of the GDP. International trade taxes also poorly performed. In 2018, Liberia experienced a fall of US$154 million (20.7 %) in the collection of taxes and duties on imports. Taxes on income and profits also dropped by 5.2% (US$129.9 million) due to the slowdown in tax receipt on households’ income and profits. Both international trade taxes and taxes on income and profits constituted 86.9% of total tax revenue, according to the CBL.

The CBL further reported that from January to December 2018, total government expenditure including interest payments on loans and other charges amounted to US$627.7 million (19.5% of GDP). This reflects a 4.9 percent decline in public expenditure compared with the amount reported in 2017. Payments on loan, interest and other charges fell by 21.4% to US$411.8 million. At end-December 2018, recurrent expenditure increased to 5.8% of GDP, from 3.9% of GDP in 2017, mainly due to the increase in compensation of employees. On the other hand, capital expenditure witnessed some improvement from 0.2% of GDP to 0.8%.
CBL also noted that the total external debt stock as at November 2018 rose by 18.8% to US$722.6 million (22.5% of GDP) compared with the stock reported at end 2017. The rise in external debt position was driven by increases in borrowing from both multilateral and bilateral creditors. Multilateral debt surged by 15.2% when matched with the stock reported at end December 2017. The World Bank and African Development Bank were the two leading multilateral creditors to Liberia in 2018, accounting for 75.6% of the total multilateral debt, while Kuwait’s debt to Liberia constituted 53.1& of total bilateral debt during the period. External debt made up the bulk of total public debt in 2018, accounting for 73.2% of total domestic debt stock stood at US$265.2 million (8.25 of GDP), slightly reduced by 0.3%, from US$266.1 million (8.1% of GDP) in 2017.

No one can point to an effective health care delivery system, educational system, new inter-county road during this profligate period except those few initiated by the previous administration which the President seem committed to completing. Worse still, Liberia 's budget for 2018/2019 (approved by the legislature) shows that the 90% revenue projections for the year are geared toward recurrent expenditures and still will barely pay the salaries and running cost of the government of Liberia.

This is in a country where estimates show the majority of the young people have no jobs – a demographic time-bomb waiting to explode. There is little or no investment in physical and human capital, even with the Foreign Direct Investment (FDI) previous Sirleaf’s the administration enjoyed at the time and President Weah’s administration is continuing in such direction. The result has been renewed threats of protests, armed robbery, land disputes, etc. in the country.

But what should be Mr. Weah’s focus?
Obviously, Macroeconomic stability should be his first priority. Food prices have been rising due to over climbing US dollar rate and rental levels escalating in response to the cartelization of building materials production, importation, and pricing in Liberia. The Hobson's choice before the CBL  is either to defend the value of the Liberian dollars and lose reserves faster than the one we have experienced so far or allow the exchange rate to float,  reduce purchasing power and exacerbate inflationary pressures. Under Weah's watch, fiscal expansion, policy reversals, and falling exchange rates have pushed inflationary trends upwards, left the economy unproductive and scuttled domestic and foreign investments in many sectors.

Addressing infrastructure deficits is also an urgent priority. Electricity shortages have crippled both small businesses and multinational corporations. Yet more funds are allocated to run the legislature (US$49.2M in 2018/19 budget) and the office of Ministry of Finance and Development Planning (US$49.6M in 2018/19 budget) than on investments in electric power provision or school subsidies. Virtually every infrastructure deficit suffers the same depreciated attention.  Liberia as a country has no functional road networks, railway system; seaports. The few roads we have are decrepit and inefficient - and in need of massive investment and yet, there is no sense of urgency in government to attract much needed private investment in these critical sectors – and to take advantage of the employment opportunities they create. The result is one of the most underdeveloped infrastructure systems in West Africa – and one of the most expensive countries in the world to set up and run a productive business.

Internal security is another area the administration has to deal with.  Ex-rebel generals resurfacing and former rebel leader roaming the street of Liberia with impunity and the regular protests fuelled by politicians,  youth unemployment, worsening economic conditions, land disputes, ethnic and religious divisions across the country point towards a failed state. Some have accused President Weah of deliberately exploited these divisions – some say Weah subtly encouraged them for political gain and his recent pronouncement labeling those opposing him as “enemies of the state” have refueled those allegations. Today, Liberia is a highly fragmented country. A movement away from the politicization of national security to the hard work of intelligence gathering and crime prevention will be more helpful than blaming innocent others.

Realistically, even if President Weah develops the vision and will to implement these urgently needed developmental strategies, he still has to contend with corruption, ineptitudes, and a broken public service. Corruption drives up the cost of doing business, derails government policy and is a major disincentive to foreign investment – which is critical to Liberia. An over-bloated, dysfunctional and poorly paid public service makes government both inefficient and costly! But does President have the wherewithal to fight corruption, after allegedly using state funds for the acquisition of new properties overnight including a church, real estates and those accused of corruption at some of the people that supported him? Does he have the impetus to induce the government to cut our recurrent expenditures drastically and invest in human development, increase capital expenditures and fight mass poverty on the one hand, and resist vested interests or others on the other?

Many of his supporters think the President's legendary work on the football pitch will somehow turn things around, but governance requires more than just skill on the footballing pitch. The immediate future depends on the choices the President makes. While many cheerleaders are optimistic, the records of last one year show otherwise. We have to wait patiently and see how things unfold. And as we always do in Liberia, pray. While we are praying, however, the signals are very scary.

Because of the nature of his ascent to power, President Weah is beholden to several vested interests from whose grip he may not be able to escape. Shockingly, and by all accounts, he spent the last 14 months pandering to those vested interests. The reality is that he may spend the next four years working for his re-election – and the entailing squandering of resources, including racking up massive debts. Just muddling through the next four years and preserving the nation he inherited may turn out to be a major achievement - if he is able to do just that.

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About the Author: Seltue R. Karweaye can be reached at s.karweaye1668@student.tsu.edu

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