Why Weah’s Near Billion-Dollar Loan is Necessary for Liberia’s Dying Economy

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In southeastern Liberia, for every 30 minutes, a baby dies while a woman with childbirth complications would die in every one hour due to lack of accessible medical centers,” Grand Kru County Senator Peter Coleman said Monday in Monrovia when the legislature conducted public hearings on the US$536million loan agreement with Eton Financing.

The senator’s shocking stats shed light on how many of our compatriots have succumbed to preventable deaths partly because the roads to hospitals and clinics have been lacking.

Comprising of five counties – Grand Kru, Grand Gedeh, River Gee, Maryland and Sinoe, the southeastern region of Liberia, for more than a century, has lagged in terms of development. Virtual absence of infrastructural development mainly roads has made the appalling socio-economic conditions there more pronounced. The story of the southeast is simply symptomatic of the general state of Liberia’s poor infrastructure that has long needed urgent attention, even more so now that it seems the best answer to economic recovery.

More than 90% of the country’s roads are impassable and this has been identified as the dominant contributor to low economic activities in the country. Such has occasioned increased rural to urban migration, an attending malaise.

In October 2017, the European Union reported that Liberia loses 3-5% of its GDP annually due to insufficient road safety and related traffic deaths and injuries.

During the 2017 presidential elections, then ruling Unity Party candidate and Vice President Joseph Boakai summarized his manifesto into one word, roads, a campaign mantra that underscored the country’s desperate need for such.

In a Bloomberg interview in Monrovia, Boakai was quoted: “my strong conviction is that there is no way this economy will expand or the health and education system will improve without good roads. It is a very crucial need. Nowhere in the world have you seen a country develop without roads. The Investment of $2billion into our road infrastructure programs will begin to see improvements in our economy and agriculture sector.”

Boakai did not win the elections to carry out his impassioned road construction plan but the victor, George Weah, has also seen the need and has tied his economic policy to road construction for development.

Thus, just five months in office, he is pushing for a cumulative near-one billion-dollar loan to finance his ambitious road construction projects that target the country’s southeastern region as well as the building of important access roads in Monrovia and other parts.

He has submitted to the legislature for ratification, two loan agreements totaling US$962.4 million to pave an aggregate 759 kilometers of road.

Of this amount, US$536.4M is being secured through Eton Financing, while the remaining US$426M comes out of a pre-financing loan agreement between the government and Group EBOMAF, a West African construction outfit.

Already approved by the legislature, the US$536million Eton Financing loan will be used to finance the pavement of an estimated 503 kilometers of roads that include Buchanan to Barclayville via Cestos and Greenville, Barclayville to Sasstown Barclayville to Pleebo, Medina to Robertsport and Tubmanburg to Bopolu.

Other projects targeted with this loan are the construction of a vocational training center in Greenville and the construction of mini soccer stadia in the southeastern cities of Harper, Barclayville, Greenville, Cestos City, Zwedru as well as Robertsport and Bopolu in the west.

As for the US$426M pre-financing loan agreement with EBOMAF, the money will be sourced through EuroBonds and be recouped after 15 years with a 5-year grace period and a 10-year interest only on payment, according to an Executive Mansion statement.

Roads to be built under the EBOMAF agreement include: the Sinkor to Kesselley Boulevard elevated road, Zwedru to Greenville, Toe’s Town to Liberia-Ivorian border, and Tappita to Zwedru.

According to administration officials and economists’ forecast, President George Weah’s infrastructural development projects would lead to the Liberian economy recording an estimated 15 – 20 percent GDP growth.

The international Monetary Fund backing the President’s economic development policy said at the end of its 13-day mission in March this year that the President’s capital project targeting road construction will drive growth and development.

“Over the next few years, the development plan of the new government, with large-scale road construction in its center, will act to expand and connect markets and spur economic development,” Mika Saito, who headed the IMF delegation, said

For us, the government’s macroeconomic policy that attracts more money to accelerate economic activities in an economy that has been stagnated since 2014 Ebola Public health crisis, is welcoming.

There is no better time than now for almost a billion dollar to be injected into the domestic economy, especially after the large scale drawn down and the final departure in a couple of weeks ahead of the United Nations Mission in Liberia (UNMIL) which had been pumping not less than US$20million monthly in the economy. The extractive sector has declined.

Since 2004, Firestone Liberia has spent more than $1 billion United States dollars into the Liberian economy through government taxes, salaries and pensions, local purchases and rubber purchases from local farmers, and has spent over $75 million in providing free education, healthcare, housing and security.

However in 2016, the company reduced workforce at the Harbel facility by approximately 500 employees, or roughly 7% of its regular workforce, citing “ongoing significant and unsustainable losses as justification. Continued low natural rubber prices, high overhead costs associated with the company’s concession agreement with the Government of Liberia, low production as a result of the inability to plant during the country’s 14-year civil wars, and the country’s uncertain business climate are the primary reasons the company gave for the continuing financial losses.

Based on these vexing issues facing the country and its new administration, it is our position that the loans being acquired will no doubt contribute to the economic growth and development of the nation state if prudently utilized for execution of targeted projects.

Resisting the acquisition of external funding at this time is opting for a civil unrest. Unemployment mainly amongst young people is a main driver of conflict. Should the current trend of poor economic activities continue, the nation could witness unsavory consequences of unimaginable proportions The health of our economy is tied to our national security strategy.

 

Adopted January, 2008, the National Security Strategy of the Republic of Liberia (NSSRL) is centered on human security development. Its vision is “to have a country in which all the population can live without fear of repression, and suppression, poverty, crime, hunger and unemployment.” The rule of law, harmonious ethnic and social relationships and economic wellbeing are considered internal security issues under the NSSRL. While threats and challenges that originate outside the country’s borders are called external security factors.

For the nation to be at peace with itself, it has to get more people at work with better take-home pay.

If we criticize the government for having a huge wage bill, we should also support its efforts to spur growth in the private sector to hire more people and reduce our national unemployment rate

The explanation from administration officials that local engineering firms with expertise in road construction will be at the heart of the government’s capital project execution is good news.

Prioritizing local construction firms in the awarding of contracts would no doubt mean that the national economy could be stimulated, sparking increased business activities across the country since the public spending will circulate and remain in the local market.

Our only advice to this administration is to avoid the mistakes of its predecessors that spent millions on roads that do not exist and according to the IMF concluded loan agreements without projects details being finalized, appraised or costed.

The General Auditing Commission claimed in its special procurement audit report released June , 2015 that over 52 road and bridge projects, which the Liberian government and the World Bank spent more than US$517 million on for three years (2010-2015) are incomplete, poorly constructed and do not demonstrate value for money.

To alleviate the problems facing our country, all patriotic Liberians, no matter what their differences are with each other or the new ruling party, must put aside those differences and join forces to build our common patrimony. The government is encouraged to respect the rule of law and uphold the principle of transparency and accountability in all its dealings.