"Who Benefits from the $157m Loan World Bank Approved in June 2021 for Liberia?" - Zaza Questions World Bank President
A Letter From J. Yanqui Zaza To World President Malpass
The Perspective
Atlanta, Georgia
December 12, 2021
December 9, 2021
Honorable David Malpass
President of the World Bank
1818 H Street, NW
Washington, D.C. 20433
Re: Who Benefits from the $157m Loan World Bank Approved in June 2021 for Liberia?
Dear President David Malpass:
The public would want to know why the World Bank is serving as Liberia’s economic adviser and at the same time serving as Liberia’s largest money-creditor. The Bank should focus on making profits from lending money to poor countries and abandon its 1945 original vision to fight poverty, disease, and ignorance.
The suggestion that the Bank should focus on profit is not new; others have offered similar views. For instance, employees of the Bank had advised Dr. Jim Young Kim, the former President of the World Bank to focus on profit-making or go back to the World Health Organization (WHO), where the fight to reduce poverty is the priority, according to Mr. Andrew Rice:(https://foreignpolicy.com/2016/04/27/is-jim-yong-kim-destroying-the-world-bank-development-finance/). In his article called “Is Jim Kim Destroying the World Bank - or saving it from itself,” Mr. Rice stated that some employees had advised the former President of the World Bank, from 2012 to 2019, to leave the World Bank and return to the United Nations World Health Organization (WHO). Dr. Kim who served as Director of WHO’s HIV/AIDS department from 2003 to 2005 was “…a vociferous critic of the Bank, and also blamed the World Bank”… for the economic hardship in many countries such as Peru, his home country, Mr. Rice stated.
Many critics of the World Bank, relying on empirical evidence, have stated that the economic policy of the World Bank and its affiliates, in many cases, does not benefit its clients. A case in point was the operational evaluation conducted by the Operations Evaluating Department of the World Bank in 1999. The author of the study found within this link (www.inweb90.worldbank.org) concluded that nongovernmental agencies owned by the World Bank performed at a rate of 33% unsatisfactorily when governments funded projects financed by money borrowed from the World Bank.
Where are the anti-poverty policies for Liberia, if the World Band implemented recommendations from its internal Division? Liberia continues to import food, and at the same time cash crops investors (rubber trees, palm oil trees, etc.) are driving away residents from their farmland. Or how come Liberia’s economic adviser (W/B) did not encourage Firestone (i.e., established in 1926) to finance public high until 2006? Or how come the W/B did not help Liberia to use donors’ USD 5 Billion to finance social programs, according to Liberian Citizens Guide for fiscal periods; 2012/13 through 2018/19? Would not have the World Bank given prudent advice if it was not involved within the money-lending industry?
Business creates relationships, and some relationships might be unfavorable to weaker parties. And in most cases, the party with influence dictates who wins and who losses. In the case of the World Bank, big business has the leverage. It owned 82% of the total assets of the International Bank for Reconstruction and Development (IBRD), one of the five subsidiaries of the World Bank, according to page # 14 of the 2020 Audited Financial Statements of IBRD, played a role. Certainly, Liberia, with good advice, could have used the USD 5 Billion to finance different industries such as food production, education, healthcare, etc. Well, such developments might have encouraged stakeholders to ask good questions and subsequently request for a fairer share of the dividends of the country's natural resources. Unfortunately, big business dictates the policy of the World Bank, and by extension, policies for Liberia.
Propping up or lending money to corrupt government is an economic arrangement that big business uses to manipulate poor countries. For example, big business welcomes or embraces corrupt officials since stolen and/or mismanaged money has to be replaced. For example, the Editorial of the Daily Observer-Liberia implicitly stated, in June 2021, that the World Bank approved USD 157M loan to Liberia to make profits. It makes more profits by discouraging the government to play a limited role in managing its natural resources; and it earns more profits when corrupt bureaucrats do not use the revenue to improve programs, rather, they acquire personal wealth.
The public wonders how Liberia accumulated USD 1.5 Billion debt when money-lenders canceled USD 4.7 Billion debts in 2010. This is the question since donors gave Liberia about USD 5 Billion from 2012/13 through 2018/19. However, the World Bank can help Liberia to fight poverty, disease, and ignorance if it is not a de facto subsidiary of big business by ending its borrowing money from big business and lending money to poor countries should be the beginning of instituting good policies. I recommend that the Bank reviews and reconsiders the following items below even if it were to recuse itself from money-lending activities:
- That the Bank should advise Liberia to share in the revenue of its natural resources in order to generate cash to finance social programs as governments do in Angola, Algeria, Botswana, Nigeria, Germany, Japan, etc. Those countries that waive 100% of ownership and management of their natural resources to multinational corporations might end up relying on loans to finance their budgets. For example, many Africa countries that institute this kind of economic arrangement usually get minuscule revenue because tax based on profits is calculated after questionable deductions such as administrative expense, royalty fees, management fees, etc.
In fact, the African Union Committee Illicit Financial Flows, headed by the former President of South Africa, Mr. Thabo Mbeki stated that multinational corporations are responsible for 95% of the USD 60 Billion stolen from Africa each year, according to the 2014 investigation. In the case of Liberia, our government awarded 66 fraudulent concessionary agreements of the 68, according to the 2014 Investigation concluded by Moore Stephens Forensic Audit Firm based in Europe. International
If Liberia and the World Bank continue to do business as usual, the debt picture might not be different from the country’s USD 4.7B debts, which donors canceled in 2010.
The total debt was USD 2 Billion in 1989 when the civil war began, but it increased to USD 4.7 by 2010. Why so? Interest payment was high. For instance, the principal for banks was USD 713 Million, while the interest was USD 1.7 Billion, according to page # 47 of the 2017 CBL Annual Reports. For Nigeria, the interest and other charges were extranormal, according to The New York Times. The writer stated that “…Nigeria borrowed USD 5 billion, had paid USD 16 billion and still owed USD 32 billion,” stated Mr. Victor Oguejiofor Okafor, Ph.D. (www.laits.utexas.edu).1. That the Bank ends its function as an owner of nongovernmental agencies, according to Global Policy Forum. (www.globalpolicy.org/component/content/article/177-un/31512-the-world-bank-a-ngos.html). Global Policy Forum stated that the Bank does not only use its power and money to substantially influence activities of non-Bank NGOs but “…it can cause splits among non-Bank NGO coalitions.”
2. Finally, Liberia should end the practice of adding Special Drawing Rights (SDRs) as cash and owned by the Liberian government, thereby, encouraging officials and third parties to believe that the country has good cash positions. For example, while Liberia was indebted to commercial banks of USD 260M in 2016, President Ellen Johnson Sirleaf reported that Liberia had USD 153M excess cash in reserves. Page # XV of 2009 Central Bank Annual Report that Liberia’s excess cash increased from $49.6M in 2008 to USD 269M in 2009.
IBRD 2020 AUDITED FINANCIAL STATEMENTS
https://thedocs.worldbank.org/en/doc/521601597072122154-0340022020/original/IBRDFinancialStatementsJune2020.pdfThanking you in advance for your understanding.
J. Yanqui Zaza
New York State Certified Public Accountant (NYS CPA)
J. YANQUI ZAZA, MPS CPA
VOA PAYNESVILLE, LIBERIA
011-231-776-491-322
jyanqui@aol.com
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