By Moses Uneh Yahmia
As we predicted, the 25 million foreign notes auctioned by the Central Bank of Liberia (CBL) on June 20, 2018 has been swallowed by the high demand for foreign currency in the Liberian economy! The CBL’s rate, which is set based on data collected from the commercial banks, parallel market and the licensed forex bureau, has once again started to increase with the speed of light, thus developing the potential to butcher the already declining purchasing power of workers, civil servants, farmers, petite traders, etc. This is akin to doing more of the same things and expecting different results. Someone once said such is nothing but the product of insanity.
According to the CBL, the buying rate in the last week of July was LD150:USD1.00 and the selling rate was LD151:USD1.00. This was the foreign exchange rate that was set by the forces of supply and demand after the auctioning of USD25million by the CBL. As the result of this traditional monetary intervention, in mid-July, the exchange rate dropped from LD162:USD1.00 (buying), LD163:USD1.00 (selling) to the aforementioned numbers.
Apologists of the ruling political elite who survive on the crumbs from the predominantly recurrent expenditure fiscal budget of government bombarded the local mainstream media with the cliché that “The pro-poor agenda will succeed” and that opposition voices have “24years to write and talk profusely”. Such propaganda that the monetary intervention was enough to deliver socioeconomic good to the mass of people was never foundation on scientific and objective reasoning but has in it all the trappings of scandalous sycophancy and sheer opportunism.
For us, to prove that the action of the government is an exercise in futility, we did an analysis of the foreign currency demands of just the first big five companies that import commodities into the Liberian market and we thus drew the conclusion that the 25 million auction by the CBL was nothing but a drop in the ocean, and a temporary respite rather than a solution for the economic paralysis which has bedeviled the country. Petro Trade, a company involved in the importation of petroleum products has an annual import value of more than USD100million while Aminata and Sons, another petroleum importing company has an annual import value of more than USD40million. These objective facts make it obvious that the much heralded foreign currency auction, which is not a novel monetary intervention in the backward Liberian economy, would have done little to salvage the economic malaise crushing the mass of people.
It has gone not even a month in the implementation of the CBL’s intervention, it seems that the USD25million has been voraciously eaten up by high demand for foreign currency by companies that purchase goods in the external markets for importation into the predominantly import based Liberian economy, thus the reproduction of the socioeconomic contradictions continues unabated. The CBL’s buying rate on August 3, 2018 was L$151.1096/US$1.00 while the selling rate was L$152.4087/US$1.00. Yesterday, August 8, 2018, the CBL published the following foreign exchange rates: LD152.1046/USD1.00 (buying), LD153.9006/USD1.00. The rate is rapidly reverting to status quo and would later accelerate at an increasing rate! Obviously, pundits’ prediction of the exchange rate being at LD200:USD1:00 by December, 2018 is imminent and inevitable.
So the business man who out of the thirst for private profit (the cruelty of capitalism) did not decrease the price(s) of his commodity (ies) when the exchange rate was reduced will continue to increase prices to compensate for the increasing exchange rate. Those who conformed to the shift in the economy then and lowered the prices of their commodities will also increase prices to react to the upward mobility of the exchange rate. Who becomes the highest hit? Obviously, the mass of the people who are called once in every six or nine years to elect bureaucratic parasites with no public spiritedness to sacrifice for the common good are the greatest fatalities.
We have long argued that the solution to the socio-economic crisis in the homeland cannot be found in the traditional monetary intervention. Adhering to such monetary intervention that has exhausted its progressive potentials is Voodoo Economics! What the administration should focus on is to use our budget, which is the greatest fiscal tool, to mitigate the situation of extreme trade deficit (Import greater than export) – the underlining reason for the depreciation of the Liberian dollars and thus general rise in the prices of goods and services. To use the budget as the greatest fiscal tool to mitigate extreme trade deficit entails allocating government’s spending to sectors that have deep constraints to capital investments in the local production and distribution of basic commodities. These sectors include but not limited to expansion in the supply of electricity, massive investment in infrastructure, education, health and security.
The allocation of huge capital in these sectors has been a challenge because the private sector and external sources of funding cannot widen government’s revenue projection beyond USD570million. While the country has witness stagnation in foreign direct investment due to the global capitalist crisis of overcapacity, available investments predominantly in the extractive and not industrial sector are also scaling down productive activities in the economy. There is also an unprecedented donor fatigue being experienced since the drawdown of the United Nations Mission in Liberia and the closure of some International Non-governmental Organizations. Worst of all, an approved budget of 570million has an 89percent recurrent expenditure – a spending that covers a wage bill of US$310million. This is an overwhelming disproval of capital expenditure especially to the sectors that have constraints to private or public capital investment.
According to an analysis made by the Center for Policy Actions and Research (CePAR), in the 2018/2019 approved envelope, the budget of the office of the President increased from 15million in the 2017/2018 fiscal year to 21million in the 2018/2019 fiscal year while there is zero public capital investment in electricity expansion to household and businesses. 80percent of the education budget goes to operational cost while nothing substantial was allocated to improving learning outcomes and increase in access to education. While there is no fund allocated for the expansion and improvement in technical and vocational education, USD1.5million has been allocated to the office of the First Lady, Clar Weah.
Access to road connectivity still remains a huge challenge as government struggles to seek external funding from loan sharks like ETON and EBOMAF as well as the Bretton Woods Institutions (World Bank and IMF) to construct roads. Also, the possibility of the government meeting its 2018/2019 revenue forecast remains elusive as it begs MNG Gold Mining Company for a 10year advanced tax payment. There are reports that similar proposal is also being presented to other multinational corporations such as Arcelor Mittal, Golden Veroleum Liberia, Sime Darby Liberia, etc.
Walter Rodney, that remarkable Pan African scholar of glorious memory taught us in his book “How Europe Underdeveloped Africa”: “The overall tendency was towards increased production, and at given points of time the increase in the quantity of goods was associated with a change in the quality or character of society.” Rodney analyzed how this universal application of the principle of quantitative/qualitative change transformed Chinese society from living at the mercy of nature to living at the mercy of the people’s increased understanding of nature as well as at the mercy of putting such understanding into practice by devising tools for the massive production of goods and services. So, for china to have increased production (quantity) from the period of primitive communalism to advanced capitalism, the quality or character of the Chinese society had to be changed. And that is increasing the people’s capacity to deal with the environment. And that was done through massive capital investment in manpower development, infrastructure, healthcare, etc.
Such feats in China provided the impetus for the Asian Country to become a more attractive country for capital investment which increased the production of goods and services. Today China has the second largest economy with the highest purchasing power parity in the world. This was also the case with all the Eastern European countries that witnessed colossal economic growth and development after the Cold War. State capitalism in Eastern Europe, although implemented through an authoritarian and corrupt bureaucracy, increased investment in human resource development, energy, solid infrastructure, etc. This change in the quality of Eastern European society provided the economic premises for industrial expansion after the Cold War. This universal principle of quantitative/qualitative transformation can also be attributed to other third world countries that are making tremendous strides towards economic growth and development.
For Liberia, Dr. H. Boima Fahnbulleh in his paper “Interdependence: A Key to Economic Growth and Development” summarized its case as “This concept of development which invested lavishly in parastatals gave birth to gross inefficiency, unproductive apparatuses, corruption and indebtedness. The wastage from the state sector and its parastatal appendages forced the political elite into borrowing and thus accepting the unreservedly the dictates of the Bretton Woods Institutions. This brand, with its dependent elite engaged in conspicuous consumption – sought investment only for the purpose of increasing primary commodities and importing the luxuries of the West. In this milieu, the political elite joined in the consuming escapades with prestige projects which had no relevance to the development of the people. Indebtedness increased and with it the attendant consequences of stagnation, poverty, and the marginalization of the people.”
On top of the fiscal indiscipline vividly spelt out in the 2018/2019 budget- a policy tool which has no determination to take away constraints to capital investment in the industrial sector or change in the quality of the Liberian society in order to pave the way for increased production of goods and services, the CDC – led government keeps creating conditions for additional reckless, worthless and fruitless expenditure through recurrent by-elections. Calls for Sitting Representatives Saah Joseph (District 13 Montserrado County) and Marvin Cole (District 3, Bong County) to not contest in the senatorial by-elections in Montserrado and Bong Counties fell on infertile soil. The two lawmakers, insensitive to the economic crisis confronting the country, contested in the by-elections on the ticket of the ruling party. President George Manneh Weah, the captain of the government’s so-called pro-poor agenda did not intervene but was publicly seen urging residents of Montserrado County to vote Representative Saah Joseph. Similarly, Vice President Jewel-Howard Taylor did the same for Representative Marvin Cole in Bong County.
In Bong County, the people were conscious enough to have disallowed another waste of tax dollars when they democratically rejected Cole and elected Dr. Henrique Tokpa, an independent candidate who was supported by a coalition of opposition political parties. In Montserrado County, despite less than 10percent of the total registered voters going to the polls on July 31, 2018, Representative Saah Joseph was elected as senator of the county. Thus, this has created a vacancy in District 13, Montserrado County. The filling of such vacancy which could have been avoided by the ruling party will cause the already depleted national treasury about USD300, 000.00. Such fund could have been allocated to increasing access to technical and vocational educated in order the increase the capacity of our young people to change nature and change themselves. If this is not an approval that the ruling party is an anti-thesis to the people’s aspiration, this writer does not know what it is.
Associate Justice Philip Banks reached the constitutional retirement age and resigned from the Supreme Court Bench on August 8, 2018. In less than 24hours, President Weah nominated Senator Joseph Nagbe of Sinoe County as a replacement for the well learned counselor at law. If the Liberian Senate confirms the nomination of Senator Nagbe – something which will unarguably happen due to the spinelessness of such a legislative body, a senatorial vacancy will be created in Sinoe County and thus causing the struggling national treasury approximately US$600,000.00 to conduct a by-election. There are also reports that President Weah is asking Representative Dixon Seboe of District 16, Montserrado County to step down in order to be appointed head of the Liberia Revenue Authority (LRA).
If this happens another vacancy would be created in such constituency, thus causing the national coffer almost half a million to conduct a by-election. These funds could be directed to the purchase of laboratory equipment for public school science labs in order to improve learning outcomes in the country’s appalling education sector. But again, these and other actions further solidify our claim that individuals like President Weah have demonstrated extreme callousness and do not have the national interest or the interest of the mass of people at heart. They have no public spiritedness and thus cannot sacrifice the self for the collective. They have shown no conviction in terms of service to the people. They see the nation state as a bank vault that must be industrially looted. This is the tragedy that has engulfed the homeland.
These counter-productive actions from the President and the ruling party are motor force for the sharpening of the contradictions in Liberia. The people have already started drawing revolutionary conclusions. Hence, the eking masses in the famous Red light Market booed President Weah on June 29, 2018. Partisans of the ruling Coalition for Democratic Change (CDC) boycotted the much publicized “Pro-poor Day Celebration” on June 30, 2018. A KMTV’s interview with marketers in the Waterside Market in Monrovia showed to the world, the people’s disappointment in the six-month old regime of the ex-striker of AC Milan. The masses adhered to the call of the University of Liberia campus based Student Unification Party (SUP) and refused to celebrate the 171st Independence Day Celebration of the republic on July 26, 2018.
The Senatorial By-election in Bong and Montserrado Counties were unprecedentedly boycotted by the people as less than 10percent of the total 778k registered voters turned out to vote in Montserrado while less than 20percent turned out to vote in Bong County. The people’s six-month experience with this farce has given them a clear understanding that a Weah’s Presidency is determined to work in the neo-colonial structure. No effort to mobilize and develop the productive forces with the involvement of the people. No determination to increase the people’s capacity to deal and change nature and change themselves. No signpost for the changing character of the Liberian society to enable a quantified production of goods and services in the domestic economy. There is only effort being exterted towards the continuous development of underdevelopment.
This is why we must organize against this travesty which is a superstructure of neo-colonial capitalism – a system of economics that has no progressive capacity for neo-colonial states. Nature and politics abhor vacuum. If we refuse to organize the right revolutionary institution with a progressive leadership and program, another reactionary right-wing tendency would present itself as an alternative to the national calamity taking place. This was the objective reality under Ellen Johnson Sirleaf. But the lack of an organized social-democratic tendency led to the production of an empty populist regime in George Weah. It is a tragedy and at the same time a farce. We must not sit passively and allow the repetition of history. STRUUGLE OR PERISH! The former is the way!
About the Author:
Moses Uneh Yahmia is a student of the University of Liberia. He studies Political Science and Economics Major and Minor respectively. He is also a staunch member of the Movement for Social Democratic Alternative (MOSODA). He can be reached via email@example.com.