Mike Mueller on Liberia’s Woes: ‘Unstable Governmental Environment’ Drives Investors Away
Washington – Mr. Michael Mueller, Vice Chairman of the Board of the European Federation of Liberian Associations and co-chairman of the All Liberian Conference for Dual Citizenship says any country with a strong dependency on foreign direct investment and war criminal steering political affairs in an unstable governmental environment will fall short of attracting international investors.
Addressing the All Liberians Diaspora Conference Saturday, Mr. Mueller said Liberia, a country heavily depending on Foreign Direct Investment, remains a fragile, post-conflict country with weak capacity and limited physical and human capital accumulation.
The conference brought together dozens of Diaspora, international organizations, Local, and state officials, recognized Liberian experts, and notable friends of Liberia, joined by representatives of U.S. government, and international agencies in a bid to unite the Liberian Diaspora on major issues affecting Liberia.
The two-day affair was sponsored by the leading umbrella Liberian Diaspora organizations representing the various regions of the world including the Union of Liberian Associations in the Americas (ULAA), The European Federation of Liberian Associations (EFLA), The Federation of Liberian Communities in Australia (FOLICA), Conference of Liberian Organizations in the South Western United States (COLOSUS), the United Liberian Association Ghana (ULAG), and the Coalition of Concerned Liberians (CCL). The major Liberian Diaspora organizations are united under the aegis of the All-Liberian Conference on Dual Citizenship (ALCOD), representing over 500,000 Liberians in the Diaspora.
Citing political instability and sanctions as key detriments to Liberia’s survival, Mr. Mueller said, Liberia is currently on the sanctions list of the Office of Foreign Asset Control of the Treasury Department of the United States of America. “Political stability in connection with Foreign direct investment plays a major part of the risk for any investor. Countries with an uncertain political situation will be a significant disincentive. Economic crisis, combined with economic sanctions, will be a major factor in discouraging foreign investment,” he averred.
Level of Corruption a Deterrent
The EFLA leader declared that the key component of political instability is the level of corruption and trust in institutions, especially the judiciary and the extent of law and order.
Liberia, he added, has always tended to give long-term concession right to multi-national corporations in extracting natural resources without visible benefit to the overall economic growth, respectively, without creating a human capital brain gain. “The opposite happened and the reality is taking place into today’s economic environment. We created an economic environment with cheap labor and with the sole benefit of the authority and the multi-national corporations.”
In contrast, Mueller said, offshore companies were established without knowledge to the public to backchannel additional cash for the ruling elites.
Despite Liberia’s vast national resources which include Iron ore, rubber, mining industries and precious wood, the economy built on bankable asset respectively finished products, remains indispensable to growing our marketplace as well as our labor skills.
Mueller explained that the reign of former President Ellen Johnson-Sirleaf was blessed to be elected after a devastating civil war and the peace agreement signed by the international stakeholders offered an opportunity for Liberia to receive the highest-ever number of UN peacekeepers deployed worldwide.
With the peacekeepers on the ground, he said, a lot of other international organizations followed creating job opportunities for Liberians. “This situation stood steady throughout her reign of Sirleaf with various economic studies placing UNMIL’s total local expenditure at over USD550 million, with a cumulative local impact exceeding USD850 million.
Mueller said the contributions of Diaspora Liberians can never be underestimated. “One should also not underestimate the remittances from us, the Liberians in the Diaspora, which still is constant factor in supporting Liberia’s GDP growth. With the given political “stable environment” and international support, the Sirleaf government was able to attract billions of Foreign Direct Investments. But also, under her leadership, what happened in our past economic history continued.”
With the inflow of money, Mueller said the Sirleaf government gave long-term concession rights to multi-national corporations. However, he adds, greed, abuse of resources and the lack of transparency and accountability were on the daily agenda although Sirleaf and her team managed more or less very well keeping it all under the carpet professionally.
Mr. Mueller explained that the Sirleaf administration, having easy money to its disposal paid deaf ears to transforming the country’s economy to a robust economy driving by bankable assets and finished products. “When it became time for turning over to the Weah-led government, last January, he said, the UN estimated that more than 90 percent of the GDP lost during Liberia’s 14 years of conflict was regained. However, as the last troops were leaving in June 2018, the annual economic growth forecast was slashed from 4.7 percent to 0.4 percent.”
By the time the UN mission left he said, the speculative economy dissolved and revealed huge structural issues in Liberia’s actual economy. “Such problems, which include inadequate access to credit, a lack of infrastructure to support sector growth and the dominance of a concession model where the government allocates large swathes of land to foreign companies for resource extraction, especially rubber, palm oil and iron ore. Such actions leave no potential for local value addition to the detriment of the local workforce.”
Weah’s Govt coming up short
“To date, the current government has not given a full account of these monies, which accumulated to the reasons for the lack of confidence in the government by the international community. Meanwhile, Weah has reportedly constructed or reconstructed over 49 personal buildings for himself.”Mr. Michael Mueller, Vice Chairman of the Board of the European Federation of Liberian Associations
Mueller said the Weah government has so far been unable to do well when it comes to economic planning. “Whatever assumption the Weah government made before taking over is best known to them. The facts are that before taking over from the Sirleaf government, the prices on the international markets for Liberia’s export commodities were already in the downturn.”
He cited the missing USD 100 million and another USD25 million from the Central Bank of Liberia shortly after President Weah took office as key impediment to the administration’s progress. “To date, the current government has not given a full account of these monies, which accumulated to the reasons for the lack of confidence in the government by the international community. Meanwhile, Weah has reportedly constructed or reconstructed over 49 personal buildings for himself.”
Mueller said while the government has launched its pro-poor agenda for prosperity and development focusing on physical and human capital accumulation, policy uncertainty and slippages, have imposed a significant toll on the economy over the past two years. “Notably, higher fiscal deficits and accommodative monetary policy have led to the rapid depreciation of the Liberian dollar and increased inflation, eroding the purchasing power of the already poor.”
Mueller said as a result, the near-and medium-term outlook under the baseline scenario is very, very challenging. “The IMF is now emphasizing on significant fiscal adjustment. They underscored that efforts should focus on mobilizing domestic revenue and rationalizing spending, especially the wage bill, while securing needed space for social and capital expenditure.”
A Fix Idea: Formulate Realistic Budget
To fix the problem he said, the Weah administration must formulate realistic budgets and to implement a sound borrowing plan that ensures debt sustainability while advocating caution in engaging in non-concessional borrowing. “They are called for further progress in public financial management reforms to improve the quality of spending in the resource-constrained environment.”
Mr. Mueller also stressed the importance the contributions of Diaspora Liberians are making to keep the local economy afloat. “Additionally, and notwithstanding the economic engagement with the Liberian Diaspora is essential underlining the Diaspora’s first call to be addressed in the form of Dual-Citizenship. Right now, as we speak, it is still the Liberian Diaspora assistance that offers one of the only chances of survival. USD 433 million representing 31 percent was contributed to Liberia’s Gross Domestic Product according to the World Bank information for 2018 alone.”
With the current situation on the ground and the unemployment staggering at a rate of over 80 percent, Mueller said, Liberians are still returning from abroad with access to foreign capital which he expects will increase the strength of Liberian competition in the business arena.
Dual citizens he said, would also help to create various forms of capital and infrastructural development, including land improvement and development within the private sector. “Liberians in the diaspora’s role in the economy could provide thousands of jobs for the unemployed Liberians. Some studies have shown the African Diaspora send more money to their respective countries than all the foreign aid combined. In all of these, I have yet to hear any concrete argument suggesting how the proposition of a “Real” Dual Citizenship could hurt the Liberian economy,” Mueller averred.