(Globe Afrique) Without a doubt, President-elect George M. Weah of Liberia will face a host of economic and social issues as he accepts the office of President of Liberia. From an anemic economy to a rising national debt, high unemployment, and a weak health care system, inadequate education system, food insecurity, border protection, and of course, the development killer – corruption. Compound these challenges with the fact that the first year of any new African President’s administration is chaotic, especially one with a coalition of political parties.
To help the new government, patriotic legislators will have to do the right thing by fast-tracking the cabinet confirmation process. Then again, the best approach President-elect Weah may take is the ‘Botswana approach.’
Here’s a quick look at 4 of the top challenges:
- The Economy & Liberia’s Debt Crisis:
Over half a century after their independence, many African countries, especially Liberia, have seen their economies surpassed by the economies of countries that were once worse off in the 1950s (Kennedy, 2016). Is addressing Liberia’s economic performance and its dual currency system the first major challenge of George Weah’s presidency?
According to the World Bank, Liberia’s real GDP growth in 2016 stood at a shocking -1.6 percent – far worse than expected. This drop in economic performance was only surpassed by the stunning revelation that outflows of foreign currency far exceeded inflows – due in part to Liberia’s reliance on imports and a high amount of remittances leaving the country.
Data retrieved and analyzed from the Central Bank of Liberia (CBL) shows the net inflows of foreign exchange to Liberia have declined by roughly 30½ percent from fiscal year ending 2016 to fiscal year ending 2017 – partly due to a reduction in net inflows of foreign aid and a lack of economic diversification – something President Ellen Johnson-Sirleaf spoke of many times in her annual messages.
The outflows of foreign currency and a decline in the Liberian dollar triggered an immediate spike in local food prices – in September 2017, data from the CBL and the World Bank showed inflation soared to around 13 percent – a 4 percent hike in just three months. As day-to-day operations of the Mount Coffee Hydroelectric Dam improves, and investors begin shifting to gold, Liberia should expect to see a slight boost in economic development. However, President-elect Weah and his economic team will need to employ some intervention policies to boost economic activities.
The Liberian economy remains fragile due to its reliance on foreign aid (which U.S. President Donald Trump plans to slash), and the country’s reliance on commodity prices.
How will Weah’s administration boost economic activities?
Moreover, while all eyes were focused on Liberia’s presidential election, the Government of Liberia quietly asked the International Monetary Fund (IMF) to waive the required 2016 and 2017 economic performance criteria and reduce its structural benchmarks so Liberia would gain access to additional credit facilities or borrowing. This request leads to the next challenge – Liberia’s debt.
According to data published by the CBL, Liberia’s external debt stock, as of end-June 2017, stood at $582 million. On the other hand, data posted by the International Monetary Fund (IMF) paints a different picture. The IMF’s data shows Liberia’s external debt stock, as of end June 2017 stood at US$736 million or 35 percent of Liberia’s GDP. The immediate question is – which number is correct – the CBL or the IMF?
The World Bank reports Liberia’s total debt, as of June 2017, stands at US$1.1 billion dollars. Liberia cannot sustain this level of debt without the risk of missing a payment, thus endangering its access to additional credit facilities.
How will the new administration handle Liberia’s economic woes and its impending debt crisis?
On a trip to Brussels, President Ellen Johnson-Sirleaf said, “Youth unemployment is a major threat to peace and security in Liberia which, unless addressed, could see the return of conflict to the West African country following a decade of peace.” Roughly 52 percent of Liberia’s population is under the age of 30.
According to data from the United States Federal Reserve Bank of St. Louis, the World Bank, and the United Nations, the real unemployment rate in Liberia stands at around 85%.
The new administration must be smart in creating jobs for the youths, who overwhelmingly elected Senator George Weah. How will the new government create employment for youths who lack marketable skills?
Between 2011 to 2013, three years before the West Africa Ebola outbreak, the United States government spent roughly US$649 million on international development projects in Liberia. Out of this amount, about US$71 million was allocated to healthcare projects. During the Ebola crisis, Liberian doctors and nurses died because, in some instances, hospitals did not have sufficient latex gloves in stock. Today, the ratio of doctors to population stands at 1:15000 – far below the 1:1000 recommended by the World Health Organization. The Ebola Virus Disease established Liberia has a weak healthcare delivery system.
Will the administration tackle healthcare in its first 90 days?
Luckily for the new administration, the World Bank and the U.S. Health Resources and Services Administration have awarded a renewable US$1.2 million in the form of two grants to support and strengthen medical education and health management in Liberia.
President-elect George M. Weah has seen many formidable challenges. He was elected because the people are aware of his ability to overcome challenges and succeed.