Monrovia – Scores of Liberian petroleum retailers are gradually being put out of business due to confusion in the exchange rate between the Liberian dollar and the United States dollar.
Report by Alpha Daffae Senkpeni, [email protected]
New regulation by the Ministry of Commerce (MoC), Central Bank of Liberia and the Liberia Petroleum and Refinery Company (LPRC) is making it difficult for these grassroots Liberian entrepreneurs to keep their miniature investment afloat.
Sasay Sumo, a petroleum retailer in Paynesville, says for the past two weeks his business is struggling to cope due to the increment in the price of petroleum consignment by the LPRC.
The price of 500 gallons has jumped from US$1,300.00 to US$1,490.00, and it is also mandatory that buyers must only purchase in US dollars.
“Because of the US rate and the government cannot do anything to make sure the rate is stable, and even the MoC cannot help us, so everything is difficult,” explains Sumo, adding that the challenge is acquiring the US dollars based on the foreign exchange situation.
“We are just here this few time just to get food money, but we are not really making business,” added Archie Madave, another petroleum retailer in Paynesville.
The government insists that the retail price should remain at LD$325.00 at an exchange rate of LRD$103 to US$1.
But these retailers are arguing that the inconsistency in the exchange rate is detrimental to them because it is impossible to obtain the US dollar if they exchange at LD$103.00 to one US dollar.
With the ongoing situation, the Liberian retailers say only bigger businesses that are importing, distributing and retailing are making profits.
They claimed that the situation is strangulating Liberian businesses because all lucrative government contracts are awarded to big petroleum companies while small retailers are left without alternative.
“As I speak to you even my grandmother from Todee will not want to change her US dollar for 103 – she will complain,” argues Faray Varney, a petroleum dealer in Monrovia.”
“We are going out of business, most of our colleagues are going out of business – this situation makes us to just sell to maintain ourselves.”
These petroleum retailers are blaming the CBL, MoC and LPRC for the current situation.
They argue that the failure of the CBL to institute measures to ensure the rate is stable is a big part of the problem, and at the same time complain that the rush for the US dollars is high because Government Corporation like the LPRC is rejecting the Liberian currency.
“As you can see here, I exchange for 110 and you buy the (petroleum) product for US$1,490 that means the US rate is a problem,” continued Varney, who claims the MoC is ignoring the reality because they are not interesting in the plight of Liberian business.
Recently, the CBL warned against the arbitrary increase in the exchange rate and called on market players to avoid speculation and profiteering when dealing in the foreign exchange market.
“The Central Bank of Liberia (CBL) has observed with concern that some foreign exchange dealers and users have recently been in the practice of arbitrarily increasing the Liberian Dollar – US Dollar exchange rate by significantly increasing the spread between the Buying and the Selling rate,” a CBL released said.
Continued the release: “Given the current level of volatility that is being observed in the foreign exchange market, the CBL intends to continue to intervene in the market through its Foreign Exchange Auction Window, to smoothen out volatility.
However, in its interventions in the market, the CBL will give priority to key sectors of the economy and will encourage the use of foreign exchange primarily for essential imports.”
Regardless the bank’s pronouncement, many Liberian businesses are complaining about its failure to make the exchange auctioning widow open to all.
The head of the Liberia retailers union of petroleum product, Dorbor accuses the CBL of kicking them out of the exchange auction following the exit of former bank governor, Dr. Mills Jones.
Dorbor says a new circulation from the CBL to all commercial banks stresses that business should submit cash receipt, but no local cash receipt will be part of the exchange auction.
“We want to buy and sell in Liberian dollar but the MoC has denied our concerns – they are paying deaf ear,” he said.
“Whenever the MoC set up a kind of bad price it put the ordinary Liberian businesses out of the market. The Commerce ministry tells us that the CBL rate is legitimate rate but the exchange rate on the market is 110 but the CBL is saying the rate is 103.”
As the market condition worsen for these retailers and some of them have withdrawn their cash from sector due to the mandate from the government, some of them are accusing the government of crippling their livelihood in favour of big investors.
“They (government) want to use this situation to take us from the business because the big filling stations are having no problem – they continue to sell because the CBL can provide them USD,” added Varney.
“For us, we don’t get this opportunity and we are Liberians – this is the business we do and you can’t do business without earning profits.”
And Wilfred Seigan, who is now out of business because of the ongoing situation, says the circumstances surrounding the exchange rate are troubling for his limited resources he has to invest.
Out of business for over two weeks, Wilfred says if the government handling of the exchange rate is to keep them out of business, then he’s disappointed.
“If this is a strategy that the government has decided to take us out of business then it will not be good, because we are citizens and we must be doing something too,” Seigan said. “When it continues, maybe something will happen that will not be good.”
When FrontPage Africa requested more detail from the CBL over the current situation of the exchange rate which also gravely affects employees that are paid in Liberian dollars but at the CBL rate, the bank said many of its experts cloth with the authority of addressing the situation were preparing for a conference.
Good morning, Lennart,
Thanks for your interest in the subject matter, unfortunately, most of our directors, especially those with direct oversight over the issue of regulation are busy preparing for a conference abroad in the next few days, and may not be readily available for an interview.
However, the Governor has spoken extensively on the issue, and we’ll be happy to share with you the information which is also available on our website.
Thanks for your understanding
Cyrus W. Badio,
Head of Communications – Central Bank of LiberiaOn Mon, Jan 23, 2017 at 2:58 PM, Lennart Dodoo <[email protected]> wrote:
Good day Mr. Badio,
Compliments. I would be appreciative if you could help arrange for us an interview with the relevant authorities within the CBL on the regulation of the U.S. Dollar on the local market. The interview would also focus on the role of the CBL in salvaging the economy.
I would be highly grateful if the interview can be scheduled for this week.
On behalf of FrontPageAfrica,Lennart, 0770509509