‘Bad’ Liberian Economy: Stop Depending Heavily on Extractive Industry
LIBERIA’S ECONOMY IS bad; thanks to the TWIN SHOCK: slump in the prices of the country’s main natural resources on the world market and the impact of the deadliest Ebola outbreak in the World. The prices of iron ore and rubber have been bad over the course of three years, and were even worse as Liberia struggled to recover from the scourge of the deadly Ebola outbreak.
THE LIBERIAN GOVERNMENT has heavily depended on the extractive industry which includes iron ore, diamond, gold, rubber and logging for revenue generation.
WITH THE LOW demand for iron ore on the world market, multinational companies like Arcelor Mittal, BHP Billiton, China Union, Putu Mining and others have either shut down or slowed their operations in the country.
THE BY-PRODUCTS of these decisions are hitting the already struggling economy which now has an inflation rate at 8.5%, according to Trading Economics.com.
AS THE FESTIVE season nears, the exchange rate on the local markets shows that the Liberian dollar is now trading with the US dollar at LD$102.00 to US$1.00.
WE BELIEVE ALL of these are happening because the country heavily depends on the extractive industry. This makes our economy a ONE WAY ECONOMY, and once the extractive sector is struggling the economy will continue to go south.
“WITH DIVERSIFICATION INTO value addition through small and medium scale manufacturing and value addition to primary products, we are regaining the lost momentum,” said President Ellen Johnson Sirleaf in late October this year when she visited South Africa.
WE BELIEVE THE time is now for the government to put that plan of ‘DIVERSIFYING THE ECONOMY’ to work if it is serious and want to savage this dwindling economy.
MAKING SALIENT PRESENATIONS at international events about improving the economy must now be implemented and most of all, adopting a more practically approach like our neighbor, Ivory Coast. Ivory Coast recorded robust growth of 8.3% of GDP in 2014, driven by domestic and external demand despite the Ebola outbreak in West Africa, according to the African Development Bank.
OUR NEXT DOOR neighbor is set to become the fastest growing economy in Africa owing in part to growing political stability and efforts by the government to lure investment. A crucial measure implemented by the Ivorian government has been a series of tax breaks for cashew producers to increase domestic processing in the country.
LIBERIA IS ALSO enjoying its fair share of political stability and it is time that our economists show their real social scientific prowess and rejuvenate the economy.
DIVERSIFYING THE ECONOMY means all the necessary strategies must be effectuated to enhance value addition of raw materials and also significant investment in the agriculture sector – mainly food production.
WE BELIVE ONCE Liberia starts exporting finish products, and is capable of producing food for its population; the economy will be stable and will even blossom. Attracting private companies to explore the agriculture sector will enhance the production of food and the subsequent exportation or will limit the importation of basic food commodities like rice.
LIBERIA NEEDS TO ADD value to its crude products instead of just exporting raw materials like the days of the 1920s when Firestone started operations in the country; and they continue to export tons of rubber.
WE BELIEVE THAT in this dispensation, countries that are not producing finished products will continue to import when the very raw materials are turned into processed products in other countries, thereby strangulating the economy.
WE SAY IT is also time for the government to exploit the potential of the Mount Coffee Hydro power plant by providing power to Small Medium Enterprises (SMEs) in the country. Building a vibrant middle income country by focusing on agriculture and SMEs can obviously strengthen the economy, thereby relieving the pressure from the extractive industry.
IT IS NOT TIME to score political points with the hydro project, instead government must exert more efforts by ensuring businesses are connected to the power grid to ensure they limit the use of private generators which is very costly for the production of goods and the provision of services.
US AMBASSADOR TO LIBERIA recently said: “Connecting homes and businesses to affordable and reliable electricity is a priority for the Liberian Government, and it is one of the surest ways to drive sustained economic growth.”
WE STRONGLY AGREE with Ambassador Christine Elder, and want the Government of Liberia to show more commitment to DIVERSIFYING THE ECONOMY, and also adopt their policies.
EXPERTS ECONOMISTS SAY “the rapidly increasing population in Monrovia requires stronger urban policies to reduce congestion and improve the quality of life in informal settlements and continued effort to increase economic opportunities in rural areas.”
POLICIES MAKERS MUST now roll-up their sleeves and work to resuscitate this ONE WAY ECONOMY into a DIVERSIFY ECONOMY in order to achieve the national growth and the development of infrastructure and human resource capacity Liberia craves.