At Globe Afrique, we cherish the opinion and perspectives of all irrespective of race, gender, social status and religious affiliation. As Gandhi perfectly puts it, we believe through this process, we can help in making societies pure and healthy.
With recent revelations of a pending $536 million loan deal by defunct Eton Finance Private Ltd. of Singapore and the Government of Liberia, the inaugural remarks by President George M. Weah of Liberia that his country is “Open for Business” is quickly turning into ‘Liberia is up for sale.’
Perhaps, it would have been easier to place the country on the auction site eBay and ask for the highest bidder to come in and siphon off the country’s resources, than to purport a sketchy loan deal. The opinion offered here is that the government should construct good roads that it can afford but do so in partnership with “real” existing entities and with an expected outcome that is far greater than costs.
The loan shows the President’s closest advisors are either unsuitable for their job or are not seeking the President’s best interest in a just society. More importantly, it shows they are not seeking the interest of the Liberian people. The offer shows the Government of Liberia (GOL), especially the legislators, lack the wherewithal to investigate foreign entities in order to make informed decisions.
This bad deal will be in blatant violation of Liberian laws; it shows the government’s inability to perform feasibility and impact analysis and a lack of adequate planning. Finally, this deal shows President Weah must replace his second division players sooner rather than later, lest inflation and a lack of jobs will lead to protest marches around Monrovia, the capital of Liberia.
Eton Finance Private Ltd. purported offer plays on the suspicions Liberians have of their government which is heard in a song by the well-known Liberian rapper Jonathan Koffa (aka Takun J) called “They lied to us” where the government fails to deliver on promises made to the people. Here, the Executive and Legislative branches are about to lie to the Liberian people.
While the loan guarantee is not an immediate debt on the government’s balance sheet, it is structured in a way that the IMF will have no choice but to treat it as a debt. Moreover, the repayment terms will lead to economic collapse and cause the country to fall into a deeper recession when payments come due. This bad deal perpetrated by a fraudulent and nonexistent company on the Liberian people will be the foundation for future civil unrest.
Who Investigated Eton?
The first recommendation to President Weah is for him to terminate his relationship with the individual(s) who introduced him and the Government of Liberia to Eton Finance Private Limited. These individuals have shown they either lack a basic understanding of due diligence and know your client rules or their main aim is to deceive the administration – perhaps, they have a side deal with partners at defunct Eton – either way, they are offering poor advice to the President. It is well-known that a President’s inner circle usually leads the president down the path of failure.
An elementary search of the Singaporean Government’s Unique Entity Number (UEN) website shows Eton Finance Private Limited has been “Deregistered” and the company, at one time, operated purely on a local level. Hence, the idea behind this type of financing is then to sign the Government of Liberia or a private entity into a deal which the company will quickly sell its ownership rights over to another private entity.
Furthermore, some of the principles of the company have either been embroiled in lawsuits in the United States (California), Japan and China or they are no longer allowed to participate in business activities in the United States. A simple search using Google Earth shows a hospital is currently being built at the address the company initially had listed with the Government of Singapore.
How will the Government of Liberia Repay the Loan?
Without first offering an impact analysis to show how the benefits of such a loan are greater than its cost, it is incredulous to learn that the government is even considering such a deal. Whether this deal comes from a ghost private entity like Eton or another funding agency, it is imperative that feasibility studies and financial or social impact analysis are conducted to understand how the benefits (social or financial) exceed its costs.
Where will the Government of Liberia obtain $242 million to make its first loan payment?
At $536.4 million over 15 years at 1.46% per annum, the scheduled payments will equal $3,320 million per month. Since interests and principal payments are deferred for the first 72 months, the GoL must be prepared to pay a whopping $242 million on its very first payment date. This repayment amount is approximately 43% of the country’s yearly budget or nearly 12% of its GDP. Will the GoL be able to make the first loan payment? Where will the Government of Liberia obtain $242 million to make its first loan payment? If they will or do have access to that level of capital, why aren’t they tapping into that access at the moment? Or, is the GoL about to put Liberia’s mineral rights up for sale?
Considering the immediate shift in the Government’s balance sheet once the loan comes due, international lending agencies including the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) will look at Liberia’s previous debt forgiveness and debt levels and reject any form of a bail-out.
So, if the Weah-led administration and the legislators want to break the law and borrow from a shady ghost company, let the government describe how it intends to repay the loan and allow payments to occur during Weah’s term in office- that is, during the first 24 months of this administration, rather than kick the proverbial can down the road for the next administration.
There should be no ratification of any loan deal until all government officials declare their assets!
The interdependence of economies shows the ensuing trade war between the United States and China will have an adverse global impact that is expected to reach Liberia. Furthermore, history has shown that the risk of falling rubber and iron ore prices and the threat of Ebola could once again devastate Liberia’s economy. The possibility that these events could occur in the future should be factored into every impact analysis with a clear strategy on how to address them.
Spending over half a billion dollars on a project that may generate revenue of $30 million per year shows a thorough lack of understanding of capital budgeting, impact study and financial analysis. While President Weah’s political campaign offered little or no viable policy agenda – the administration’s lack of preparedness is beginning to show with its poorly evaluated fiscal and economic policies or lack thereof.
Will Liberian Lawmakers Sanction Violations of the Procurement Law?
Perhaps it is time for all good Liberians to hold their lawmaker’s accountable and pursue a recall process. A recall process is a procedure initiated through a petition that allows citizens to remove and replace lawmakers before the end of their term in office.
The recall process is necessary because every lawmaker who subscribes to violating the laws of the Republic of Liberia by pushing through the purported $536 million loan deal should pay a political price. The loan violates Part IV of the Public Procurement and Concessions Laws of Liberia, and it ties the government of Liberia to a ghost corporation whose true intentions are still unknown. Did anyone ask why Eton Finance Ltd. does not have a history of lending to other countries? Perhaps it is time that Liberia gets off the list of being first in a series of bad decisions. Without a true system of checks and balances, Liberia will edge towards being a failed state.
It is without a doubt that many Liberians are sick and tired of being lied to – the election of George M. Weah and the ouster of the Unity Party was to be an end to nepotism, shady back-room deals with lawmakers, and the beginning of a people-first agenda. But it seems like the more things change, the more they tend to remain the same. The deal with a defunct, ghost entity is a bad deal for the people of Liberia. If this deal were to be ratified by the Liberian legislators, the people would come to realize that nothing has changed in Liberia and they have been lied to by their beloved King George.