Liberia: Agriculture, Harper Basin Bid Considered Paramount to Economic Recovery But Lawmakers Express Concern about Underwriting Cost
Monrovia – President George Manneh Weah used his third Annual Message Monday to lay out what Senator J. Milton Teahjay (Unity Party, Sinoe) would later describe as an ambitious undertaking. “The presidential address was to some extent comprehensive, the ideas the President has laid out are ambitious, but I am not sure we have the kind of economy to underwrite those ambitions,” the Senator averred.
Report by Rodney D. Sieh, [email protected]
But for a little over one hour and fifty minutes, the President expressed confidence that the New Year would see some positive projections for his administration, now in its third year, especially with a new emphasis on the agriculture sector which has been lying dormant for years and plans to open up the Harper Basin in bidding rounds in April.
Roads Will Complement Agriculture
“With these foundations in place, we see no reason why the year 2020 cannot see positive growth. We will work with determination, vigor, and focus, to stabilize the macroeconomy, reduce inflation and put Liberians to work in agriculture and other key sectors.”– President George Manneh Weah
Said the President: “Liberia cannot realize full economic transformation without a vibrant agriculture program. Agriculture is critical to the kind of development my government strives to achieve. This is why the sector remains a major pillar of the country’s development agenda,’ the President declared while foreseeing positive growth this year. “With these foundations in place, we see no reason why the year 2020 cannot see positive growth. We will work with determination, vigor, and focus, to stabilize the macroeconomy, reduce inflation and put Liberians to work in agriculture and other key sectors.”
This is why Mr. Weah emphasized the issue of road connectivity, he says should complement the agriculture sector. “With the program to connect the various communities and counties through quality paved road networks now fully mobilized, funded and underway, the next big push by my administration this year will be to reorganize the agriculture sector and put it at the front burner of our national development initiatives.”
A greater investment in the sector, the President noted, will not only guarantee food security, but will also provide jobs and a source of livelihood for thousands of families across Liberia.
The President explained that his emphasis on the sector and the vision he has for Liberia, was a key reason why he delayed naming a new Minister of Agriculture. “That is why my vetting and selecting of a new agriculture minister was comprehensive and thorough. I believe we have found the right person to lead this charge. The nominee is a woman whose track record, competence and dedication match my vision for agricultural transformation in Liberia. I hope that you will share my view, and grant her speedy confirmation so that she can urgently embark upon the great task that is before her. If she cannot do it, then I do not know who else we will find to do it.”
Last two week, the President named Mrs. Jeanine Cooper as his new minister, succeeding Dr. Mogana Flomo, who was relieved of his duties on June 29, 2019.
In order to get the sector moving again, the President said his administration, in the coming months, intends to harness both local and international support and resources to lead the new agriculture drive, which will focus on the entire value chain – from the remote farmlands to the sprawling marketplaces across the country. We will exert every effort to subsidize the works of more farmers and local cooperatives with the objective of enhancing productivity.
While the country has traditionally focused on rice production, in previous years, he said, the new emphasis will not be shifted toward working with authorities in the sector and international counterparts to look at ways we can fully cultivate other cash crops, such as cocoa and coffee.
Citing example in neighboring West African countries gaining international acclaim for the production and exportation of cocoa and coffee, the President said, Liberia should be following suit. “Their natural endowment is not that different from ours. Therefore, we will join ongoing efforts by the European Union and others to revamp and make the coffee and cocoa sectors viable and profitable. We will assist farmers to increase their yields through new farming methods and mechanization.”
Where Will Money Come From?
This is where critics say the coming days, weeks, and months could prove pivotal, matching Senator Teahjay’s concerns about underwriting cost.
Funding of the sector has always been a key detriment to farmers. For example, the draft National Budget for the 2018/2019 fiscal year was US$488.8 million, with US$8.3 million being appropriated for agriculture, amounting to 1.69% of the total National Budget of Liberia, while 62.1% went to recurring expenditures, the bulk of which pays for huge salaries and allowances and logistics for top officials.
On Monday, the President said, working in close collaboration with the legislature, they have been able to pass a credible National Budget at Five Hundred and Twenty-six Million United States dollars (US$526 million. “This budget brings public spending closest to the revenue received in the 2018/19 national budget. In executing this budget, we have taken steps to control spending so that we significantly reduce the deficit by the end of the fiscal year.”
Under the new Budget, agriculture was further slashed to US$6,208,754, Infrastructure and Basic Services: US$33,350,005 and Industry and Commerce account for US$6, 066362.
Nevertheless, the administration is promising a big push on the sector with plans to release some money through commercial banks to local rice producers. The current budget has some $1.7 million for public sector investment in agriculture. This money is intended to guarantee flexible lending to local rice and good crop growers. The Government is working to scale up investment in agriculture beyond the 1.7 million. The World Bank has agreed to pull in more money for agriculture.
On Monday, the President urged lawmakers to also take another look at forestry, mining and fisheries laws to inject new and innovative thinking, to include viable strategies for expansion of productive capacity, best practices for better returns and gains, as is the case in other jurisdictions.
Over the years, he said, millions of dollars were put into agriculture with very little result to show. This time around, he says, the new drive will tap on available knowledge and experience, while working with international partners and local farmers to lead a new program that empowers Liberians, through agribusinesses, in order to grow the economy.
This is where he says he will be leaning on his new appointee. “We expect the new minister (if confirmed by the Senate) to bring harmony to the various efforts in the sector for efficiency and greater productivity. We will be seeking the help of Your Honorable Legislature in this regard, working with the appropriate committees of both Houses. We have already secured the commitment of key local and international stakeholders who are supportive of our new drive to upgrade agriculture so that the country can reap its full benefits.”
For President Weah, leapfrogging the process would be key. “Traditional economics tell us that agriculture surplus should lead to industrialization, but our government plans to leapfrog this process through the Special Economic Zone Concept. It is our intention to promote labor-intensive light manufacturing through the establishment of Special Economic Zones. We are cognizant of our infrastructure challenges which pose certain hurdles, but with a well-organized Special Economic Zone program, domestic production by small and medium enterprises will get the needed boost to spur economic growth.”
Rekindling Harper Basin – Bid Opens for 9 Oil Blocks
“I am pleased to announce to you today, that the Government of Liberia, through the Liberia Petroleum Regulatory Authority (LPRA), will open up the entire Harper Basin during the next Licensing Round beginning in April. Nine (9) offshore blocks will be put up, allowing competent and reputable international oil and gas companies to bid with the hope of recommencing exploration programs, following years of inactivity. Details of the Licensing Round will be made available in the coming weeks through a partnership between LPRA and NOCAL.”– President George Manneh Weah
The President says, the Special Economic Zone, a vehicle that will create job opportunities, will also increase personal incomes and add value to unprocessed raw materials for export.
Another sector, the President has his eyes set on rekindling is the oil and gas, announcing Monday, plans to lift the lid on a number of offshore blocks. “I am pleased to announce to you today, that the Government of Liberia, through the Liberia Petroleum Regulatory Authority (LPRA), will open up the entire Harper Basin during the next Licensing Round beginning in April. Nine (9) offshore blocks will be put up, allowing competent and reputable international oil and gas companies to bid with the hope of recommencing exploration programs, following years of inactivity. Details of the Licensing Round will be made available in the coming weeks through a partnership between LPRA and NOCAL.”
The nine (9) blocks referenced by the Authority (LPRA) for sale are located in the highly prospective Harper Basin and include blocks 25, 26, 27, 28, 29, 30, 31, 32 and 33.
The bid rounds (or licensing round as its sometimes referred to) allows a single oil company or a group of oil companies (joint venture) to apply for a Production Sharing Agreement (Petroleum License) in a competitive and transparent environment giving them the right to search for commercial deposits of oil. Liberia’s last bid round was concluded December of 2014 with over $60 million dollars in commitments but concluded unsuccessfully due to political wrangling between the Executive and Legislative branches of government.
Since the departure of Exxon and Chevron from Liberia in 2016/2017, there have been no exploration work offshore Liberia and the sector has been hanging on by a thread. Experts say the importance of Liberia’s next bid round cannot be overstated and will determine all future successes for Liberia’s fledgling oil sector. The decline of oil prices in 2014 resulted in billions of dollars lost for exploration programs worldwide but with the resurgence of new investment and development monies, Liberia’s bid round will be held in a very competitive environment of over sixty (60) countries offering blocks to only a handful of oil companies. Liberia will only have one opportunity to put its best foot forward.
A potential bottleneck here could lie in a possible breach of the petroleum law by the LPRA surrounding DEECO Liberia Limited, a subsidiary of Nigerian registered DEECO Oil and Gas Limited which applied to the Authority for a Reconnaissance License for an area in Gbarnga, Bong County and the payment of one hundred United States dollars ($100,000.00USD) to the Authority for the rights to do so.
The LPRA granted DEECO a Reconnaissance License (No. LPRA-001) to collect preliminary geological and geophysical data within the Jorquelleh District contrary to standard oil and gas practices and in violation of the Petroleum Exploration & Production Law (2014).
Without drafting or publishing the Regulation for Reconnaissance Licenses, the pre-qualification requirements or conducting technical and financial due diligence on DEECO, the Authority (LPRA) collected $100,000USD and deposited the funds in its own account instead of the Consolidated Account as required by the Public Finance and Petroleum E&P Laws.
Shortly after issuing the License, on June 1, 2019, DEECO issued a press release to the Heritage Newspaper that it had found oil in Gbarnga. The Authority (LPRA) and DEECO subsequently refuted the claims of finding oil in a press release published by FPA and the Daily Observer on June 10,2019.
FPA has learned that a Reconnaissance Licenses does not allow drilling making it impossible to discover oil yet in the FPA and Daily Observer articles, DEECO head is quoted as saying “I re-iterated that it is only after we have conducted seismic survey, and hopefully drilled exploratory wells that a test may confirm oil in commercial quantity,” not realizing that his license does NOT allow for the “drilling of a well”.
Despite his plans to rekindle interest in agriculture and the oil and gas sector, the President is likely to face stiff challenges over declarations made Monday regarding loans.
Senator Eyes Probe Over Loans
In his message, the President said, during the course of the year, his administration was able to negotiate and sign Sixteen (16) financing instruments with various development partners, amounting to nearly Two Hundred and Seventy-Four point Thirty-Five Million United States dollars (US$274.35 million). “Approximately One Hundred and Ninety-Four Million United States dollars (US$194 million) of this amount are loans, and about Seventy-Nine Million United States dollars (US$79 million) constitutes grants.”
The President said, the loans and grants are allocated as follows: One Hundred and Twenty-Five point One Million United States dollars (US$125.1 million) for road construction linking Barclayville to Sasstown, Voinjama to Konia, and Sanniquellie to Loguatuo; Forty-Seven Million United States dollars (US$47 million) for improving results in secondary education; Twenty-Eight point Ninety-five Million United States dollars (US$28.95 million) for improving urban water supply in Monrovia; Seventy-One point Eight Million United States dollars (US$71.8 million) for improving agriculture; and Six point Five Million United States dollars (US$6.5 million) for youth empowerment and employment.
Ironically, Senator Nyonblee Karnga Lawrence(Liberty Party, Grand Bassa) told FrontPageAfrica afterwards she has some concerns. “As co-chair on Ways, Means and Finance of the Liberian Senate, the President spoke about many loans and grants and I don’t recall those loans and grants coming through the Liberian budget and I am going to do some investigation to know how those appropriations were made.”
Nevertheless, the President told the nation Monday, that government’s public debt has increased, largely because the country has had to finance major infrastructure projects over the last several years. “As at end-December 2019, the total stock of public debt amounted to One point Twenty-Seven Billion United States Dollars (US$1.27 billion). This represents an increase of Two Hundred and Eighty-Two Million United States Dollars (US$282 million) or Twenty-Eight-point Five percent (28.5 %) of our debt stock, compared to the Nine Hundred and Eighty-Seven point Eight Million United States dollars (US$987.8 million) recorded at the end of 2018.”
According to the President, the increase in the debt stock was mainly driven by disbursements from the World Bank , the African Development Bank, the International Fund for Agricultural Development, the Saudi Development Fund, and other creditors which totaled One Hundred and Twenty-nine point Five Million United States dollars (US$129.5 million). “These were loans signed and ratified by the previous administration. As part of the IMF-supported program, the Government of Liberia has now fully reconciled and rationalized all Government obligations to the Central Bank of Liberia. As of January 1, 2020, total government debt to the Central Bank of Liberia has been put at Four Hundred and Eighty-Seven Million United States dollars (US$487 million).”
The President explained that 7.8% of that amount, or Thirty-Eight Million United States dollars (US$38 million), represents borrowing by the current administration in the previous two fiscal years. “The Government has agreed to pay interest at the rate of Four percent (4%) per annum to the Central Bank on the principal amount owed, with a grace period of 10 years on principal payment.”
Dillon Points Out Contradictions
The President added that another major driver of the increase in debt stock was the effort by his administration to consolidate accrued obligations by State-Owned Enterprises, and exposure to local commercial banks totaling One Hundred and Eighteen point Five Million United States dollars (US$118.5 million). “These include NASSCORP, and seven commercial banks, including LBDI, Afriland Bank, Ecobank, IB Bank, UBA, GN Bank and GT Bank. Debts owed to the commercial banks include longstanding government obligations of Sixty-Five point Two Million United States dollars (US$65.2 million) which was the result of pre-financing of Government’s Heavy Fuel Oil infrastructure projects; Government’s guarantee to the Rubber Planters Association of Liberia in 2014; direct payments made on behalf of the Government, and loans given to companies for pre-financing of various Government infrastructure projects.”
Last year alone he said, the Africa Export Import Bank approved a bond discount facility that will disburse some Fifty-Two million United States dollars (US$52 million) to commercial banks as settlement of the Sixty-Five point Two Million United States dollars (US$65.2 million) owed by the Government. “This flow will provide strong relief for commercial banks, which faced serious liquidity challenges in the year under review. The domestic debt profile given above does not include domestic debt owed to vendors and businesses who have supplied goods and services to the Government over the years. I am reliably informed that, as far back as 2006, the Government of Liberia conducted an audit of domestic debt owed to vendors. Yet, up to today, this situation remains unclear.”
He said his administration will conduct a new round of audits in 2020 to determine a rationalized and fully-reconciled domestic debt figure to complete our domestic debt profile. “A payment framework will be developed after this reconciliation, which may include packaging the debt as a bond for issuance to local and international financial markets.”
In a year expected to be dominated by the upcoming Mid Term Senatorial elections, President Weah faces an uphill task in shoring up finance and support to support his ambitious agenda, even as the IMF, the World Bank and other international stakeholders work with the administration to avert a financial meltdown, some political observers took issue with the Presidents contradictory calls on Liberians to work with him to achieve his goals.
Senator Abraham Darius Dillon(Liberty Party, Montserrado County), a fierce critic of the President told FrontPageAfrica Monday, after the speech, some of the President’s declarations had holes that need to be filled. “The President was at one point calling on Liberians to work with him and on the other side calling Liberians dissidents. The president said we should not judge him by his eloquence but by his decision but his actions have been poor. I had hoped that the President would have spoken about the recent health outbreak in China and how prepare is our country to respond. If the President is honest about asset recovery let him show us his assets and demand his officials in the spirit of transparency to do the same so we can know how they acquired their wealth.”
For Senator Teahjay, there’s still hope and light at the end of the tunnel. “He(the President) has extended a hand to the opposition and we welcome that. We all hope to get the best out of all the issues he talked about.”