Monrovia – The World Bank says it has offered to support the George Weah-led government in its effort to explore potential sources of funding for the development of roads in Liberia.
Report by Rodney D. Sieh, [email protected]
Responding to a FrontPageAfrica inquiry, the bank in a statement to FPA Monday said the Liberian government expects to raise close to US$500 million with potential contributions from development partners, including from the World Bank Group; and by mobilizing private financing through guarantees and other instruments. “The government is already working with the World Bank on developing a similar financing model for the proposed South-East Corridor Road Asset Management Project (SECRAMP) to support the construction of the Ganta – Tappeta – Zwedru road,” the statement noted.
Last Thursday, the government through Mr. Lenn Eugene Nagbe said it was in discussions with the World Bank to source a US$500 million loan deal for the implementation of road projects in the country that it has made a top development priority.
In an apparent reference to concerns over the controversy dogging the government’s quest to secure loans through Eton Financial Private Limited and the Burkina Faso-based firm, Ebamof, Nagbe suggested in his address to journalists last week that the President had given the bank an ultimatum: “If they do not want him to borrow in the commercial space, they should bring money for his development agenda.”
The US$536 million arrangement with Eton Financial Private Limited is geared toward the construction of a coastal corridor connection of counties’ capitals road project, via the construction of the Buchanan-Cestos City to Greenville to Barclaryville Road, the Barclayville to Sasstown Road and the Barclayville to Pleebo Road. Other roads to benefit from the loan include; the Medina to Robertsport Road and the Tubmanburg to Bopolu Road. Also to be constructed are ‘rest stops’ and ‘roadside service areas.’
The US$420 million loan aims at financing the design, construction, and supervision of road corridors in Monrovia(Somalia Drive-Kesselly Boulevard to Sinkor) and northeastern Liberia – Tappita-Zwedru Road, including Toe Town to La Cote D’Ivoire and Zwedru-Greenville.” The transaction, according to the document obtained by FPA has been labeled “The Loan” is between the Liberian government and Mr. Mahmadou Boukoungou’s road construction company, EBOMAF.
Both loans drew concerns and criticisms on the Weah-led government with many questioning the government’s decision to seek loans outside the traditional World Bank and International Monetary Fund(IMF) framework.
The Executive Board of the International Monetary Fund (IMF) emphasized that future Liberia debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects. The IMF is concerned that acquisition of new debts is not being done transparently. The Fund demands transparency. “Directors emphasized that future debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects”, directors noted in their report.
The administration also drew ire amid concerns regarding conflict of interest. Ebamof is owned by Burkinabe businesman Mr. Mahmadou Boukoungou, who has been described by President Weah as a good friend who happens to have borrowed the Liberian leader a plane for his presidential travels, a clear violation of the code of conduct and a conflict of interest.
The Ebamof agreement states that the Government will finance the loan by issuing a “Eurobond” at 6.5% interest, a proposition analysts say makes no sense since the government is the borrower and isn’t providing the money to make the loan. The agreement also talks about repayment of the Eurobond rather than repayment of the loan so the two concepts are jumbled together. Presumably, analysts say, it’s intended that the “Eurobond” is in fact the loan extended to the Government by EBOMAF, something the government has so far not been able to clarified.
Assuming the Eurobond is the same as the loan, economists say, the interest rate is stated to be 6.5%, which seems to be a random number as interest is waived for the first five years of the loan, which makes no commercial sense and is not something an ordinary lender would ever agree to unless it’s factored into the 6.5% payable in years 6 through 15.
The administration has also come under fire over the lack of transparency and proper vetting of Eton, which on paper presents itself as a Singapore-based financial company. Investigation by FrontPageAfrica previously established that several weeks before the Liberia Loan arrangement, Eton Finance Private Limited, on May 7, 2018, re-applied to the Accounting and Corporate Regulatory Authority (ACRA) to be reinstated under the same name and Unique Entity Number, 200510984K, and re-naming the same shareholders and directors (Receipt Number ACRA180507174296).
A further query by FPA of the Singaporean Business Registration Portal (www.bizfile.gov.sg) using the Unique Entity Number obtained from the Eton Finance Private Limited, 200510984K, shows that the company status is still listed as “Struck Off”, raising more questions about their capability to raise the money for the Liberia loan.
The World Bank’s intervention comes as the 50-banking-day deadline for both the Eton and Ebamof deal elapsed.
The Eton contract stipulates that “the first tranche will be disbursed within 50 banking days after ratification by the National Legislature and the issuance of Sovereignty Guarantee by the Central Bank of Liberia. The final disbursement will be given 60 days after the first tranche disbursement or such amount of time agreed to in writing by Eton and the GoL, after the Sovereign Guarantee is issued by the Central Bank of Liberia in the form of substance satisfactory to Eton”. Similarly, the deadline for the US$420 million from Ebomaf has also elapsed with no update on what stage the government is at regarding the arrival of the money.
Last week, the government’s chief spokesman, Minister Nagbe said development partners had promised to come back after several consultations and urging from President Weah. “So, they have come back. Now, the World Bank and the consortium of other partners will give Liberia a concessional financing arrangement that we as a government are looking at positively of a total of US$1billion dollar.”
According to Nagbe, President Weah has pitched to these developmental partners including the World Bank, a maximum of three-year timeframe for the targeted roads to be built, which means his government expects the bank to expedite the deal for the availability of the fund.
The bank’s statement however did not provide a timeline as to how soon the money will be available or how soon the projects will take off.
The World Bank’s response to FPA however noted that over the past decade and a half, the bank has mobilized more than US$450 million under the Multi-Donor Trust Funds and the International Development Association (IDA), an affiliate of the World Bank Group, to finance the rehabilitation of about 500 kilometers of paved roads, including the Cotton Tree-Bokay Town-Buchanan road, the Monrovia city streets, the Monrovia-RIA road and the Monrovia-Gbarnga-Ganta-Guinea Border road.
President Weah who has made road connectivity the centerpiece of his presidency has slammed critics raising questions about both controversial Eton and Ebamof loan deals as “enemies of the state”.