Local politics have seemingly subsumed the Liberian government’s effort to do more with less. In this exclusive interview with African Leadership Magazine UK, Liberia Minister of Finance and Development Planning, Honorable Samuel D. Tweah, talks about the Country’s efforts towards building a sustainable economy, job creation and the fight against Corruption.
According to a recent report titled Liberia Economic Update, about 68.9 per cent of the population are at the risk of falling into poverty due to the COVID-19 disruption. What is the government doing to minimize this projected impact?
I think what the report is underscoring is the Liberian economy’s acute vulnerability because of the lack of economic diversification. Liberia as a country has been commodity-dependent for decades due to a variety of factors, such as infrastructure constraints. When you look at agriculture that employs about 70% of the people, you would realize that much of it is still subsistent. So, any shock, whether it is a global driven shock or commodity price, will see a significant impact on the agriculture sector. We’ve not been able to develop that sector until this Administration came. We are now focusing on and looking at the model we’ve used to grow Agriculture.
The President has said the model is unsatisfactory; the sector has many resources in concessional financing and grants from the World Bank, African Development Bank, USAID, US government and different NGOs have put money in the sector in the last decade. But then we’ve not seen the commensurate level of reduction in food insecurity in the Country. So there is a missing link. If we don’t move very fast, then it does seem that we’re going even to erode any gains we’ve made in the last decade and exacerbate the poverty situation. So the aim now is to change the way we deliver agriculture to move agriculture from subsistence to Agribusiness to making it a commercially viable entity. So even if you are a smallholder in a village, you are not just producing to eat. You’re producing to take advantage of value chains that exist. This is what is going on under the new plan in the post-COVID-19 era. Big focus on agriculture. We are looking at crucial crops; rice, cassava and other crops, which should add value, and the possibility of even exporting some of these; it’s a whole new model where we are reorganizing to address this problem. But yeah, this is a very significant challenge in the way the Country has developed its agriculture.
For example, we want to learn from Nigeria, where in the last six years, we have seen a massive turnaround in Nigeria’s agriculture. I was in Nigeria, I ate rice, and I could not tell whether it came from Nigeria or China or Vietnam, and I think we can do the same in Liberia. So we’re drawing on expertise from Nigeria. The Nigerian and Liberian government have reached a partnership, which COVID only disrupted. The two countries are going to work together to help develop the infrastructure sector and the agriculture sector as well.
Recently, you launched some government project to fight Corruption which is seen as a significant problem not just in Liberia but across Africa. Can you tell us a little bit more about the project?
I think Corruption is a significant thing in Africa, and the perception of Corruption is also there.
Sometimes people perceive something is happening that evidence the politicization of Corruption’s debate can make people believe that there is more Corruption when something may not be happening. Let me put this in the Liberian context; what we’ve had in the last two years is a significant reduction in physical resources. So you would see that even though resources have reduced, the government has done a little more with the small amount of funds. For example, in this current budget, what the President has pushed us to do is do a study tour and a program to ensure that we don’t spend money that we don’t have and use resources that we have for productive activities. For example, the President has declared free public college education. These both cost around $3 million a year. So three million dollars a year will pay for college education for people who go to the University of Liberia and all the public colleges. This is money that was previously available to be used in any other way, but that is no longer available to be used discretionally but to be used for educating our youths. The President has also gone to pay the fees for the West African Examination of every eligible Liberian every year. This bill is around $ 2 million every year.
So, You’ve got five million that could have been used to do something else in the government used exclusively to pay education expenses. You can also see that a significant amount of kilometres of roads have been done, with resources from the government. We’ve done community roads. Many projects are going on while the Country is in a tight situation which sometimes raises the question about how you are doing more with less, and the reason is the discipline. So this year and the President has said we are no longer going to borrow from the bank. We’re probably the only Country that is not doing that. Suppose you hear that no government in Africa has refused to involve the bank. We have a no Central Bank borrowing policy. So usually, this is how countries do, countries monetize the debt, and when they face fiscal constraint, they go to the central bank to bail them out. In the last fiscal year, despite significant fiscal challenges with salary because of the reform process, we were rolling out, Liberia’s government borrowed zero dollars from the central bank and still ended up with the budget surplus. Our story is simply the priority of the fight against Corruption. We’re going to look at audit reports from the past Administration. We have to begin to implement them.
We want to help the population to understand Corruption. There’s a lot of perception even though the government is doing more; people believe that monies are not being used in intended purposes and ask for the evidence. So there’s no evidence of that, but there is just this perception. So there’s a conversation going on in the Country about how do we categorize Corruption? What is Corruption? Does the government need to do more? Does the government need to fund integrity institutions such as the Liberian anti-corruption commission the general order commission? Is it more a matter of funding, or is it a matter of executing or implementing what is recommended in this report? Is that debate going on? And you’re going to see the whole discussion of Corruption rusted up to a high level as we’ve done recently with the anti-rape movement. The President convened the entire government Civil Society to discuss the question of rate. There’s been a surge in the incidence of rape in Liberia, and it does seem that we develop a two-year roadmap. We may have to move toward a two-year roadmap on Corruption. I think we will allow the conference to play itself out. So we’re looking for a game-changing way of dealing with all of these things. Still, our Administrations is committed to ensuring that every dime of public Revenue that is spent it is spent is on productive, transformative purposes.
I like that the general perception is different from the reality on the ground. What you say is remarkable; that the government has a zero borrowing policy from the Central Bank and doing more with less. I think one of the challenges may be communication. What do you think about communicating this, especially outside of Liberia?
Most times, public opinion is moulded outside of Liberia. I believe that you also be considered by the government.
In the last two years as a new Administration, one of the things that we probably didn’t do well is to manage expectations by communicating effectively. So you’ve got the government, and you’ve got the previous Administration that ran for 12 years, and they were voted out of power. A new Administration is coming in, and what is the expectation of the people. And so the expectation was humongous that immediately upon the ascendancy, we were expected to switch things up. Transform the economic space, agriculture, and jobs in six months, but, you know, that is not possible. But I think that what the government didn’t do, was to set expectations that this would require time and why we’re about to do that expectation setting the market economic headwinds just brushed on us.
The exchange rate began to move in a volatile way that the Liberia dollar lost a lot of value because most of the United States dollars was leaving the Country while authorities were putting more Liberian dollars outside the banking sector. So it looks like it was an explosive mix; decline in the US dollar and Liberian dollar going out, so definitely it’s less US Dollars chasing or more Liberian dollars chasing fewer, and that’s an inflationary combustible combination. That’s what we saw, and people began to react to that, and the government had to respond using the available tools at the time, the Central Bank of Liberia.
All of that is what we went through in the last two previous two years. So while we’re deep-diving into these problems, you know, trying to put together a super communication framework externally. Then you had the politicization of what was happening in the Country by the opposition who had campaigned against the President and didn’t believe the President could win. Now he won, and then six months, they were throwing everything. So it’s like it was, though. And then we had the propaganda around sixteen billion missing with absolutely no such amount of money was ever missing in Liberia. Still, the news went out, it was on the BBC, on CNN, and the world was agog. It was like, how can sixteen billion, which is about a hundred million or so, disappear into thin air. That’s the conversation that was happening externally and here in Liberia. With that kind of evolution of events, it isn’t easy to control the narrative. We are in a position where we are now about to set the record. Still, the public generally understands now that it’s not possible to deliver transformation in two years when that transformation did not happen in 12 years. There is the politicization of everything, and the President needs to be given a chance.
Let’s be clear; Liberia is on the positive territory. In the medium term, we look at three to four per cent of growth, and with all of the big things on investment climate reform the business climate, we’re going to fight against Corruption. We are looking at big agriculture; transformative agriculture is what we’re looking at now. So all of that is happening in the space of two years. When you look back, you see like we were in a different stratosphere where we’re not where we are. Still, the fundamentals would have been solid, the market economy is excellent, and all of the parameters are changing positively. So I think that’s the story that has to be told to the outside world. So this is the right time for communication, and I think it’s about timing. Sometimes you don’t communicate at the wrong time. You speak at the right time. So this time is a time for getting complimentary messages out to the world.
A report also says that productivity-driven growth and diversification will be central to Liberia post-pandemic recovery. Can you share some of this plan for us, are there plans in place by the government to promote the twin concept; the pro-poor agenda for prosperity and development in Liberia is part of the President’s Flagship program 2018-2023.
I think productivity is a critical thing that is going to be happening. Liberian agriculture has two sectors; you have the food crop sector, and you have the cash crop sector. The cash crop side, which is cocoa, rubber, coffee, are the traditional crops. Rubber has been the mainstay of the Liberian economy for generations. You already know Firestone was the highest producer of rubber. So we’ve got lots of rubber smallholders. The challenge with that sector now is that rubber’s commodity price is down than what it used to be back ten years ago. So all of the farms are suffering. All of the farmers are struggling even to meet salary payments. The government had to come in, so we’re looking at the whole Firestone model itself. Oil Palm has been hit as well. With some facing challenges of land with the Oil palm plantations. One of the biggest ones is sold out to a new Company motto Incorporated. So the fundamental plan is to make sure that we are paying attention to the challenges in the cash crop sector so they can export so that the Country can earn the foreign changes needed.
But at least it’s a cash crop sector that is way ahead. We want the food crops sector to get to where the cash crop sector is, right? We want rice agriculture to get up, so that means that investment in making sure that the whole culture models change in enhancing productivity in the cultivation, in the value chain are all happening in that sector. Our manufacturing sector is affected by electricity challenges. As you may be aware, Liberia has a dam, but that dam is one of the River. So in the rainy season for six months, it’s okay. In the dry season, it runs down to around 20 per cent that means a significant power outage, and we don’t have the relevant infrastructure to connect most of the households in the urban area. So in the last 12 years we’ve been doing that, I can say in the next two months you will see a significant transformation in that space. The power lines running through Cote d’Ivoire, Guinea, Liberia and Sierra Leone are going to be completed by next year. They were delayed, It should have been this year, but because of COVID, we’ve extended. So that means that you will have the opportunity or the ability to import cheap power from neighbouring countries, like Ivory Coast, so that could potentially bring our electricity Tower down from 35 cents per kilowatt-hour to about 15 cents near the Regional average. This will significantly impact the cost of production and the cost of doing business in the Country. All the hotels are charging high because they have to run on costly fuel. So imagine if we reduce the cost of power generation, that could amount to more jobs for our people. So you’re going to see in the next 18 months significant changes there. If an agribusiness is trying to move into Liberia, they will be looking at the cost of power, and I think that would be a game-changer once we do that. So it is just a matter of time that you’re going to see all of these developments with growth moving in the positive direction with the infrastructure challenges electricity space being resolved. The infrastructure challenges in the roads space being resolved. All these small business economy issues, the regulatory topics will also be determined. There’s no doubt that the productive frontier in the Liberian economy is going to move outward.
Liberia was recently admitted as a member of the Asian Infrastructure Investment Bank. What opportunities does this membership open to Liberia, and how has that relationship been nurtured?
New possibility to major transformative infrastructure, projects both at the national and the regional level. You know we have Sierra Leone, Guinea, and Cote d’Ivoire. These are our neighbours we need to collaborate with them on big Regional projects. Guinea is already a member of the Asia Infrastructure Bank. With Liberia now being a member, we can do joint projects at the regional level in electricity and roads. We can also do some significant projects here in agriculture, infrastructure in Liberia with the bank. The bank is prepared to work with the Country on doing some big things—the big thing we want to work with the bank it attracting private sector players. Africa’s real challenge is Africa’s ability to attract private capital from the West to do private investment. Now, the analysis is that the Africa investment climate is not where it needs to be. So, you know, people don’t want to go. Economically, we know that people wish to return for their resources. There’s some defect with the model we have. Still, I think that’s what the conversation with the World Bank, the International Finance Corporation and all our multinational partners should be around. How do we get flows of pension monies of saving in the US and China and America and Europe to come to Africa through PPPs – Public-Private Partnerships, The share of resources that Africa gets is minuscule of PPPs. It’s concentrated in just around five or six countries.
Uganda, Nigeria South Africa, are the few countries taking the lion share, while the rest of the 54 African countries don’t get much. In countries like Liberia, I think the significant PPP we have is the port infrastructure, which is now managed by a concessionaire APM terminal. We have three other ports we want national investors to take over as well in a way that develops and opens the economy. So I think that’s the direction that we want to go to open up investment in Liberia. So to the extent that we want to work with the Asian infrastructure Bank; to enhance Regional integration in the region. To look at PPPs in agriculture where you can have many grades and to look at starting establishing productive economic zones in the agricultural space were within the defined region you have so much going on in roads, agriculture, electricity. Such that it brings in value and provides jobs for people. It is also partially funded by an investor, along with the government having a share. Those are the models we want to explore with the new institution. It is quite an opportunity because sometimes you reach your limit within other multilateral institutions like the world bank. And so if you have new opportunities, particularly in a way that is not driven by domestic debt or in the national debt. Because even at a concessional level, you still are running up your dead numbers at a lower interest rate. I’ll be looking forward to visiting the bank once we move beyond the post-recovery stage to present to the bank’s management.
President Weah’s Administration, upon assumption of the office, promised to transform the lives of Liberians. For me, I think if what you say what it is, I think he’s doing good, but let me see, asks, how have you fared?
The President Weah-led administration was hit hard by the macro shots, which we inherited in 2018. The PAPD was launched by September-October 2018. We’re a bit ambitious at the beginning, but then we have the macroeconomic headwinds. Remember, Liberia came from Ebola to the macroeconomic shock, to then COVID. So all of these happening in the space of four years, that’s a lot. And so we are taking a more realistic picture in the post COVID period to ensure that the PAPD produces in areas of the economy and jobs. We are talking about the roads, infrastructure space, agriculture, governance and transparency, which is the talk around the whole thing around the business climate. We are also looking at the fight against Corruption, integrity and all of that.
We will also be looking at insecurities with the whole question about the Country’s fragility; if Liberia continues to deepen its peace, we need to tell the story. , for the first time in Liberia’s history, there are no United Nations troops, no troops here anymore. And this is both physical security and independent market economic security because they were spending money in the Country. We depended on some of that money, but now they are no longer here, and we are on our own. But physically, our police and our soldiers are the ones that are in charge of the Country. We’re doing an aggressive youth empowerment program where technical vocational training is a conduit to getting young people to the job. So I think it’s about the data. The former Nigerian Finance Minister once told me about a year ago that it’s all about the macro; if the macro is not correct, you will struggle to get anything, the development plan would be off track. I advise countries and ministers to contact your macroeconomics right, and things will follow it.
We are deep-diving into the other aspects – health and education. The critical challenge there is improving the people’s reading skills, reducing the number of girls who are dropping out of school, reducing the number of women who are dying because of childbirth. The ratio is pretty much higher right now, and we want to compare ourselves with Rwanda. There are very targeted programs explicitly looking at these kinds of indicators—no under-five mortality in children. For example, we have statistics that say that about 35 per cent of the Country’s population is stunted due to malnutrition. And how do you turn that number around? I think this is where we’re working with all of our partners all over. When I speak at this forum, one argument I’ll be making is that the private sector has been left in the Lurch in Africa since the end of the Second World War.
It seems like development has focused on just specific sectors to the exclusion of the private sector. We take this for the fundamental market economic theory; we think that markets will develop incentives to structure themselves, and private actors will seek a grant. Those things are not happening in Nigeria; they’ve not happened in Liberia; they’ve not happened in Cote d’Ivoire. We argue that in a large informal economy such as Africa, you can’t bring your classical paradigms here. You have to work to handhold these countries using aid as a conduit to help the private sector situated in supporting agriculture and manufacturing and then after that the government.
So one of the problems we are facing in Africa is using data to tell our story. For example, I mean like in the employment space, how do we know how many jobs we are creating every month. You don’t see that statistics in West Africa; you hear that statistics only in the West, where you hear of job growth every year, labour statistics everyone month comes up jobs with the American economy. Yesterday, we had a significant discussion with all of the critical government stakeholders around just this aspect to mention how we measure positions? For example, in the PAPD, how are we able to quantify the jobs that have been created? What infrastructure do we have in place to do that? The infrastructure is entirely inadequate to deliver that. We’re working on that. So the way we do it is to look at ongoing projects; launched this agricultural project, we are improving rice production levels.
You mentioned Ebola; I’m sure there are lessons learnt in helping Liberia deal with COVID from the Ebola. What were those lessons so that others can work with and learn from your experience?
Ebola seems like we had a lot of resources because, you know, the three countries were affected. The rest of the world was focused on those three countries. So it was a bit of a different story. Enormous flows of resources to Guinea, Liberia and Sierra Leone, right? It seems like a lot of those monies was spent on the emergency aspect of the epidemic here rather than converted to solving problems in long-medium term Healthcare strengthening. So, after Ebola subsided, we returned to a typical situation with inadequate Health infrastructure. The lesson is that whatever resources we have, we also have to split it between the Emergency Management of COVID and long-medium term strengthening of the Health Care System; that’s a vital lesson that we all work together to own. And apply both the development partners and the government, as well as the NGOs.
They are working to ensure that we don’t forget about the hospitals, their capacity to manage cases, drug supply, all of that is now is that on the table, its critical lesson. And I think we’ve done well; Liberia is performing exceptionally well in COVID. It is not just about the resources but about the coordination of the collaboration of what has happened and the ownership at the community level. I think we have brought the community along, and it does seem like that combination is working quite well, and we saw the same with Ebola. We have more recoveries; almost most people have recovered. So it’s just a fantastic story yet. I think this is why the President has refused to shut the economy down, and it’s more about the race to recover the Revenue growth. The President is also more about solving problems.