The free flow of traffic on Carey Street was obstructed for hours due to a stage-managed forum that pro-Government apologists predominantly attended. The Center for the Exchange of Intellectual Opinions (CEIO) fleetingly became a fortress of falsehood and a refuge for political relics. The Minister of Finance and Development Planning, Samuel D. Tweah, had trooped at CEO on August 11, 2021, to spew out loaded lies which have zero links to microeconomic fundamentals.
The poor, incoherent, and deceptive presentation of Minister Tweah seemed more of a “salvo of subterfuge” than any “relief of economic recovery.” Tweah misapplied the fundamentals and misplaced the variables. As a result, the Minister could not proffer/postulate any sound economic policy, especially on the fiscal side (e.g., tax rates, government spending, borrowing, budgeting, etc.). Instead, Tweah premised and abridged his deliberation on mere politics and propaganda. Is Minister Samuel Tweah an economist or a sophist?
This technical analysis is going to expose his lies and deal with them consequentially. So, let’s begin with lie #1.
Lie #1: “The Liberian economy is safe, sound, and secured.”
Does Minister Tweah know what it means for a country’s economy to be “safe, sound, and secured”? Unfortunately, the Liberian economy remains recessed and stressed after three consecutive years of negative growth. ACCORDING TO THE INTERNATIONAL MONETARY FUND (IMF), total GDP fell from 2.47 percent in 2017 to 1.22 percent IN 2018, then down further to negative 2.28 percent in 2019 and down to an astonishing negative 2.87 percent in 2020 according to the World Bank (source: GDP growth (annual %) – Liberia | Data (worldbank.org)).
Though Minister Samuel Tweah woefully chose to throw out cooked numbers and manufactured data, here are my sources to prove how Liberia’s Economy, in terms of growth outlook, has weakened/failed under Pres. George Weah: https://www.imf.org/en/News/Articles/2019/06/11/pr-19208-imf-executive-board-concludes-2019-article-iv-consultation-with-liberia and https://www.imf.org/en/News/Articles/2020/12/21/pr20386-liberia-imf-executive-board-first-second-review-ecf-approves-us-million-disbursement.
No economy that continues to grow far below zero percent and without any real prospect of rebound can be described as “safe, sound, and secured.” Unfortunately, to date, the Liberian economy is yet to recover from this weak position during a very tight fiscal space.
So, when will it even stabilize amid job losses, increased debt stock, fall in remittances/inflows, high tariffs on imports/exports, business failures, zero FDI, liquidity crisis, and budget deficits with civil servants remaining unpaid for several months.
Additionally, the country depends on receiverships (IMF ECF and RCF), fall in net import/export (e.g., the balance of trade is still negative), depreciation of the local currency, decrease in purchasing power, COVID-19, etc. Amidst these constraints, the projected “4.1% growth recovery during 2021-2022” remains an illusion (daydream).
To quickly quell or subdue the first lie of Minister Samuel Tweah, let’s reference several recent reports on the poor state of the Liberian economy even though Tweah said that the economy is “safe, sound, and secured”:
- A research survey was conducted in 190 countries on economic migration by the World Bank. The outcome of this research shows that Liberia has the highest percentage (70%) of youths in West Africa who are opting to permanently migrate to another country through irregular means due to poor employment conditions and extreme hardship. Please click here and see Figure A.11, Panel C, Page 33 of the World Bank 2021 Report: https://documents1.worldbank.org/curated/en/727521626087761384/pdf/Of-Roads-Less-Traveled-Assessing-the-Potential-of-Economic-Migration-to-Provide-Overseas-Jobs-for-Nigeria-s-Youth.pdf?fbclid=IwAR3d9vdYlHw-aOUKmZzopB0U41USJWjzXNqySEhhkpRF2J3L2OIbmVhy7xQ.
Where are the 1 million jobs that Minister Tweah promised in the Pro-Poor Agenda for Prosperity and Development (PAPD)?
How many has the government provided after almost four years in power now? Minister Tweah could not even quantify or give any specific number in terms of job creation, and he could not cite a single data source during this presentation. Even though Tweah claims to be an “economist,” his deliberation was never quantitative and scientific. Probably, Tweah thinks that all Liberians are clueless and cunning like him.
- The World Bank just released another report on “Doing Business” in 190 countries. Does Liberia have a feasible economic climate for business and investment? Not at all, according to this report. Liberia has declined from 172 in 2017 to 175 in 2020, according to “The Doing Business Report” of the World Bank. Liberia flunked or dropped by 3 with a score of 42.3 because of two fundamental reasons, according to the World Bank:
- Paying Taxes: Liberia made paying taxes more costly by increasing the employer-paid social security contribution rate.
- Trading across borders: Liberia made trading across borders more expensive by requiring traders to obtain Cargo Tracking Note certificates, thereby increasing the cost of documentary compliance for exports and imports.
Data Source: Please click and read Page 4 and Page 109 because it is important to note why businesses in Liberia are failing and why investments are not pouring in: https://documents1.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing-Business-Regulation-in-190-Economies.pdf?fbclid=IwAR3YMoHvVfQcrix3jJUcF4PWDcGNlZBuI9v2-tqJZ_3v2CE5_n7yUMDeBiw.
- The World Bank also released a report a few months ago suggesting that an additional 526,000 Liberians are at risk of falling into poverty. The report further indicated that people living below the national poverty line increased from 55.5 percent to 68.9 percent. Click here and read: https://www.worldbank.org/en/news/press-release/2020/07/30/amid-covid-19-pandemic-liberia-has-a-chance-for-a-robust-recovery-says-new-world-bank-report.
- According to a June 2020 Afrobarometer Research Survey, Eight in 10 Liberians (80%) say the country is going in “the wrong direction.” This is almost double the proportion recorded in 2012. Click here and read: https://afrobarometer.org/press/liberians-hold-gloomy-views-economy-and-countrys-direction-afrobarometer-survey-shows. This report also says that Liberians hold a gloomy view on the state of the economy.
- NAYMOTE in partnership with OSIWA and with funding from UNDP released its 2021 Report on the overall performance of the Weah-led Government in various sectors including the economy. Based on available data and records, out of 113 promises made by the government of Pres. GMW, only 9 promises have been completed so far, and this constitutes just 8%. Click here and read: http://naymote.com/2021/01/19/naymote-releases-the-president-meter-project-3-years-report/.
Let’s move to Lie #2: “The rate of tariff in Liberia is less than any other country in Africa except Nigeria.”
The only unfortunate part is that the journalists who moderated the forum could not put Minister Tweah in check. So, his lies were barefacedly touted as they sailed through without any rebuke. Here is the latest report on the tariff rate as released by the World Bank: https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS?end=2019&start=2019&view=bar.
Liberia has a weighted mean applied tariff of 9.5, which is far above more than 20 African countries, including:
Malawi 4.2, Zimbabwe 5.0, Zambia 3.4, Uganda 8.1, South Africa 5.4, Senegal 9.1, Nigeria 8.5, Niger 9.5, Mozambique 4.2, Morocco 3.6, Mauritius 1.1, Mauritania 8.0, Mali 7.2, Madagascar 7.5,Lesotho 3.2, Eritrea 5.4, Burundi 8.5, Burkina Faso 5.8, Botswana 1.0, Angola 6.5, Cote D’Ivoire 7.7, and Namibia 1.1.
How to calculate “Weighted mean applied tariff”? Just divide the total tariff revenue by the full value of imports. In other words, Liberia is charging and collecting more taxes on imported goods and services than many other African countries. Did Samuel Tweah have to spew out lies to prove his frail narrative? What was even annoying is that those in attendance were clapping for Tweah without any clue about the real facts.
Lie #3: “The economy has been stabilized because our microeconomic fundamentals are in place.”
Microeconomic stability must not be rhetoric but practicalize. Does Tweah really know what microeconomic stability entails? In the first place, an import-based and foreign-dominated economy like Liberia is always vulnerable to shocks (e.g., endogenous or exogenous). COVID-19 has even imposed harsher consequences on the Liberian economy by disrupting trade, growth, investment, employment, etc. Liberia is yet to recover from the shocks that COVID-19 has created. The country is still struggling to even bounce back to a positive growth rate of even 1 percent. So, how can the economy be stabilized when it has not even recovered in the first place?
For instance, these stats are from the Central Bank of Liberia as of April 2021. Click here and read – https://tradingeconomics.com/liberia/exports:
- Imports (US$95.79 million) exceeded exports (US$72.72 million). Exports declined from US$90.93 million as of March 2021 to US$72.72 million as of April 2021. Whenever exports decline, it is a leakage to the Liberian economy because this shift negatively impacts the inflow of foreign currencies and is also minus to microeconomic stability. Hence, this shock can also affect inflation.
- The current account is negative (-17.25 million USD) while the Current Account to GDP is negative (-17.80 million USD). Click and read: https://tradingeconomics.com/liberia/current-account and https://tradingeconomics.com/liberia/current-account-to-gdp.
- The interest rate in Liberia is still very high. It has been fluctuating between 25 and 30 percent, according to the Central Bank of Liberia. Click here and read: https://tradingeconomics.com/liberia/interest-rate. Additionally, the local currency (LRD) remains unstable. In December 2020, the exchange rate was LRD 161.4, but it has climbed back to LRD 171.6 as of July 2021: https://www.theglobaleconomy.com/…/Dollar_exchange_rate/. So, where is the macroeconomic stability?
- In the 4th Annual Message delivered by Pres. George Weah, the total debt stock of Liberia at the end of December 2020 was put at US$1.580 billion even though Pres. GMW inherited a debt stock of US$874.1 million from his predecessor Ellen Johnson-Sirleaf. Click here and read: https://www.emansion.gov.lr/doc/ANNUAL%20MESSAGE%20-%20January%2027,%202020.pdf. How can a country’s economy be stabilized when almost at an unsustainable debt level (debt distress)? The fact is that Liberia under GMW is debt-ridden.
Tweah needs to know that macroeconomic stability is a product of five variables: Low national debt relative to GDP, low long-term interest rates, low and stable inflation, currency stability, and low deficits.
Lie #4: “It is because of harmonization that we are here.”
The Minister of Finance could not precisely say “where we are.” Tweah’s best and only economic policy that he bragged about during his presentation was “salary harmonization.” It is unimaginable, to say the least. Tweah’s so-called harmonization led to the forceful retirement of 2,154 employees from 14 entities (https://www.mfdp.gov.lr/index.php/media-center/press-release/government-begins-handshake-payment-to2-154-retired-employees).
Furthermore, the “harmonization” drastically reduced the salaries of 10,200 employees, primarily low-income earners, including teachers, nurses, security personnel, office assistants, etc. The Senate even halted Tweah’s messy harmonization (https://allafrica.com/stories/201908280389.html#:~:text=The%20Liberian%20Senate%20wants%20the,halted%20immediately%20until%20otherwise%20ordered.&text=the%20Tubman%20University%20in%20county,salary%20for%20August%20without%20reduction).
Tweah’s failed “harmonization policy” is a direct opposite of the real meaning of harmonization. What Tweah did is called salary cut and not “salary harmonization”. There is a difference between “Salary Harmonization” and “Salary Cut”:
- Salary Cut (SC) – is the reduction or the decrease in one’s pay or income. It is also called salary deduction or wage cut. Salary Harmonization (SH) – means equal work for equal pay across government or same position for the same salary. SH mainly focuses on equity or bridging salary disparities and imbalances.
What did Tweah do? He cut down the salaries of civil servants/employees who were even making between US$100 and US$175. It is a violation of the 2015 Decent Work Bill. Whether in the public and private sectors, no skilled employee should make less than US$180 per month. The minimum wage in Liberia is US$6 per day (8 hours). Let’s do the math: US$6 x 30 days = 180. Civil servants that are below the minimum wage (US$180) were also harmonized. Is this harmonization or salary cut? The latter is an unopposed fact. There have been periodic cuts in the salaries of civil servants since this so-called policy of harmonization was introduced.
Some public entities/agencies are unable even to pay 100% in salary. Instead, they are paying only 70% (https://allafrica.com/stories/202107080601.html). This is exactly where we are, but Tweah chose to deceive the Liberian people. Do Liberians need an economic genius to tell them that the economy is failing? The upsurge in mass protests across Liberia is sufficient to trash or side-brush Tweah’s weak and weird presentation that the “economy is on a steady course.” Amid this malaise, international sanctions are seeping in.
Lie #5: “Growth rate is steady and stable.”
Probably, Minister Samuel Tweah does not know what “GDP Growth Rate” entails. Growth in this context constitutes Consumption (C), investment (I), Government Spending (G), and Exports minus imports (X – M). So, a simple formula to determine or derive growth is:
GDP = C + I + G + (X – M)
Now, Household Consumption under Ellen Johnson-Sirleaf was 137.7 percent in 2017. It dropped to 133 percent in 2018 and to 112.3 percent in 2019. It’s at 130.9 as of 2020. So, consumption is yet to hit pre-Weah status (137.7%)—source: https://www.theglobaleconomy.com/Liberia/household_consumption/ and https://data.worldbank.org/indicator/NE.CON.TOTL.ZS?locations=LR.
How will households even consume more goods/services when prices are skyrocketing? Tweah claimed that inflation has fallen even though prices remain very high. I conducted a brief survey relative to market price(s). Here are my results as opposed to prices under GMW’s predecessor EJS:
- A Gallon of Gas – GMW L$635 while EJS L$370
- A Gallon of Fuel (AGO) – GMW L$655 while EJS L$370
- A Cup of Rice – GMW L$60 while EJS L$25/L$30
- One Can of Soft Drink – GMW 150 while EJS 75
- An Egg – GMW L$40 while EJS L$15/L$20
- A small bottle of Argo Oil – GMW L$100 while EJS L$45
- One Strip of Paracetamol (500mg) – GMW $50 while EJS L$15/L$20
- One sachet of plastic mineral water – GMW L$100 while EJS L$65
Furthermore, government spending (budget) has consistently been in negative. For instance, it was -5.40 percent in 2018 and -4.50 percent in 2019. It’s now -3 percent, according to the Central Bank of Liberia (https://tradingeconomics.com/liberia/government-budget).
For Balance of Trade (X – I), Liberia’s BOT is still negative (-1.95 billion USD), while investment is rarely seen or felt by ordinary people. Why didn’t Tweah quantify the investment portfolio under his watch as Finance Minister? He could not state any serious foreign or local investment company that the Weah-led government has attracted/created. In fact, pre-Weah investment companies, including NGOs and INGOs, have been scaling down or shutting down due to a failing economy.
Lie #6: “Inflation dropped by 8% in 2021.”
As of 2020, inflation was 16.95%. In 2021, it shifted downward 10.86%. So, let’s compare the previous year (2020) to the current year (2021). The variance here is 6.09% and not 8%, as Tweah claimed a few days ago. This means that the rate of increase in prices or the cost of living moved downward by only 6.09% or dropped by 6.09%. Here is my proof: https://www.statista.com/…/inflation-rate-in-liberia/. The Finance Minister did not cite any source, but people were clapping for him.
Technically, inflation has not even dropped under Tweah’s watch, and here’s why: Year 1 inflation 2018 – 23.55%; Year 2 inflation 2019 – 26.97%; Year 3 inflation 2020 – 16.95%; Year 4 inflation 2021 – 10.86%. So, the average inflation rate here is 19.5%.
During the last 4 years of Ellen’s term, inflation was averaging 9.72% (e.g. 2014 – 9.86%; 2015 – 7.74%; 2016 – 8.84% and 2017 – 12.44%). Even during Ellen’s first four years in power (2006 – 2009), inflation averaged at 11.45%. Comparatively, average inflation has increased under GMW by 9.78%. So, Tweah did not reduce anything or any inflation. He needs to STOP lying.
Lie #7: “The Weah-led Government inherited a 30% inflation rate.”
What was the rate of inflation in 2017 under EJS? It was 12.44%. Under Minister Tweah, it increased to 23.55% in 2018. Comparatively, this is almost 100% increment. The highest inflation rate that Liberia has ever incurred since 2006 was 26.97% in 2019. This was also under Minister Tweah’s watch as Finance Minister. EJS had the lowest in 2012 (6.83%). Please reference my citation for more details: https://www.statista.com/…/inflation-rate-in-liberia/.
Was Minister Tweah compelled to lie at CEIO? The forum at CEIO was a funfair loaded with lies and gimmicks. Truth be told, Tweah is more of a sophist than an economist. Why did he even block the free flow of traffic on Carey Street? His presence at CEIO was a complete waste.
Tweah deceptively bragged and said, “we have built markets and roads.” But he fell short of stating the total number of roads and markets they have built or the types of roads and markets they have created. The indisputable fact is that the CDC-led government has not even paved more than ten feeder roads and more than six low-grade markets. They are yet to pave a single highway road. Pres. GWM has not even done 3% of what former Pres. EJS did in terms of road construction. I provided a brief analysis of roads in January 2020. Please read here: https://kmtvliberia.com/president-george-weah-stop-bragging-says-exile-former-student-leader-martin-kollie//.
How can they even keep building low-grade markets when thousands of Liberians are losing their jobs every day. Who will buy from those that are selling? The sellers have even become far more due to job losses which have negatively impacted demand/consumption, purchasing power, and household income. More Liberians have lost their incomes. Is Minister Samuel Tweah aware that income is a determinant of demand? For instance, see how many Liberians have been downsized from just 4 companies under Pres. GMW:
- One thousand one hundred forty-seven workers were downsized at Fire Stone Rubber Company in Margibi County.
- Eight hundred workers downsized at Arcelor Mittal in Grand Bassa and Nimba Counties.
- Four hundred forty workers were downsized at Golden Veroleum in Sinoe County.
- Two hundred fifty workers were downsized at MNG Gold Co. in Bong County.
The Minister of Finance, Samuel D. Tweah, needs to organize another forum because his latest presentation at CEIO was a “load of lies” and a “salvo of subterfuge.” This is what makes him a sophist, even though he is claiming to be an economist. We will chase him at any forum. Tweah needs to stop feeding on rhetoric and gimmicks. Economics is not horseplay.
If Tweah ever thought that his lies would never be fact-checked, he needs to think again. If he ever thought that no one would have responded to his frail analysis, then he must be building a castle on planet Pluto. The Liberian people deserve an economist and not a sophist or a rhetorician.
Note: A sophist is someone who uses deception and lies to present an argument.
About The Author: Martin K. N. Kollie is an emerging economist and an exiled Liberian activist. He graduated with a B.Sc. degree in Economics from the University of Liberia on December 11, 2019.