Liberia: Commercial City of Ganta Struggles Amid Exchange Rate Uncertainties
Ganta, Nimba County – It’s over two weeks since President George Weah’s address to the nation on the state of the economy, asking Liberians to be patient while disclosing series of new measures to help fix the economy.
Report by Alpha Daffae Senkpeni, [email protected]
Before Weah’s speech, the Liberia dollar was aggressively declining, causing prices of major commodities to skyrocket by the day.
The President’s statement on July 13 was intended to neutralize the growing apprehensiveness ordinary Liberians were absorbing. So far, the problem has not been remedied, but it is obviously a sign of relief.
The Exchange rate between the United States dollars and the Liberian dollar looks pretty much stable at LD$150/US$1 on the streets of Monrovia. However, the situation is not the same in other commercial cities across the country.
In the Northeastern commercial city of Ganta, Nimba County where cross-border trade with the Republic of Guinea has flourished over the years, the local economy on the Liberian side is feeling the pinch as uncertainties about the fragility of the Liberian dollar lurks.
There are also visible fears about counterfeit Liberian dollars plunging the value of the local currency. The recent arrest of a Nigerian man with over a million worth of fake bank notes validated their concerns.
In the meantime, several grassroots and established entrepreneurs in the city are relishing the President’s call for Liberians to take over “their own economy” but there are hovering inklings of failed government policies.
Weah’s message resonates with entrepreneurs in this thriving commercial city of Ganta, but as the message navigates through the streets and the walls of new hotels, some say are calling on the government to turn deeds into action.
Prince Howard, a famous businessman in the city, says several policies adopted by past governments fell short of implementation in order to empower Liberian businesses.
For him, adopting a one currency regime in Liberia would significantly resuscitate the weakening economy.
“Our government needs to work and make sure that we regulate our Liberian dollar in a sense where we prioritize our Liberian dollar, reduce the amount of Liberian dollars on the market,” said Howard, while stressing the unprecedented overflowing of the Liberian dollar on the market as an alarming problem.
The CEO of Alvino Hotel claims that there are three different currencies now on the market which he alleges creates problem.
“Our currency is the Liberian dollar, why can’t we value and use it,” he said, suggesting that all importers and foreign firms remit money only through the Central Bank
Many critics of the government are concern that the monetary policies are failing, but Howard says the new government can learn from the past government failures by instituting a one currency policy.
“Not only the President, lawmakers need to work along with the president to make sure that we have one currency in circulation on the local market,” he said.
Compare the current business environment of Ganta with the situation two years back, you would easily fathom the severity of the prevailing economic decline.
It is hurting small-scale Liberian importers, the local hospitality industry and even local money exchangers. The instability of the exchange rate is triggering these uncertainties.
“Today, the man sells at the rate of LD$160; tomorrow to buy, the rate climbs up to LD$170, and he has to source some more money to keep his business afloat and then it becomes difficult for his business. At the end of the day, we conclude that Liberians cannot do business,” explains Jestina Yormie, owner of retail and wholesale merchandize store in the city.
Since entering the market in 2013, this is Yormie’s toughest year – putting the future of her small investment in jeopardy.
She recalls her recent struggle with foreign importers in Monrovia. These importers, she said, are rejecting Liberian dollars, so she was constrained to exchange all her Liberian dollar to US dollars at a “very high rate” before purchasing her goods.
“We need to use our own money [Liberian dollar] to go and buy goods from the various stores,” she insists.
“Can you imagine when you go to Vai Town [in Monrovia] some Lebanese [business] man will look at you and say ‘I don’t even want to see Liberty [Liberian dollar].”
Like many other traders in Ganta City, Jestina is resolved that the US dollar is a nemesis, so adopting single currency [Liberian dollar] would get local business back on a blossoming track.
“You [traders] will not have to exchange money to go Monrovia and buy goods, you will just sell in LD and go buy in LD,” she said.
On the streets of Ganta, petty traders and money exchangers are expressing mixed views about the sharp decline of the exchange rate.
King Hitler, a dealer of electronics, says the situation has brought both relief and anxiety in the city.
“I just came from taking goods from Monrovia with LD$165/US$1 exchange rate, I should expect myself to experience some losses,” he said.
For Madam Comfort Paye, a rice retailer, the instability of the exchange rate is “killing her business” since foreigner importers are rejecting the Liberian dollar.
“So when we sell the rice the money we get we will be forced to find US dollars before we can buy rice, which is a major problem for us,” she said.
Cross-border traders in the country are also enduring their share of the challenges; some of them have turned to purchase in Monrovia instead of crossing over to Guinea.
Yar Gborweah traded textile she bought from Guinea but she no longer crosses the border. She says the uncertainties are making life difficult.
“You cannot change money with 163 to 165 and buy goods and people cannot buy; we are calling on President Weah to help us reduce the rate,” she said.
“The people are using their currency, they are not dwelling too much on the high currency like the US, so their economy can absorb the shock but in our country, we have the US dollar and the Liberian dollar circulating on the market,” adds Howard.
“There are many Liberian businesses that are suffering; he said mentioning a colleague who was forced to shut down his business due to increasing US rate. The grassroots are the main people suffering from this so we need to give this thing keen attention if the presidents really want his dream to come true.”
Howard says printing of a new legal tender to save the economy from the current wave of counterfeiting of Liberian dollar could be a smart move by the government.
Meanwhile, Yormie is optimistic that Liberian entrepreneurs can take control of the economy if they are given the “financial strength” by the government including the access to long-term “good interest rate loans” and the reduction of the “heavy” 4% income tax levied on Liberian businesses.
“If you paying 4% to the government, it means you are paying your entire principal to the government…, this identical [tax] law is too much for the Liberian businesses,” she said.
Amid these challenges, entrepreneurs like Yormie are worried about the future of domestic investment in the city.
“If they [government] do not work on this condition, I don’t think things will get better so our President says pro-poor so he should really meet up that agenda for us so that we can be successful.”