A Simple Economic Guide to Fix Liberia

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A society cannot develop in the absence of adhering to the basic tenets of nation-building. The concept of developing a pluralistic society must be planned with an exceptionally higher degree of consideration for the rising complexities of the state and the needs of the people. Development is an economic construct with growth connotations; this concept applies and utilizes technical knowhow and available resources to spur economic growth and advance the standard of living in that location.


By Ansu O. Dualu, Contributing Writer


The drive for a higher quality of life must be balanced against sound policies that fit the times and aspirations of the people. Note, however, that this endeavor to develop must be balanced against time tested economic and developmental principles that have worked in countries with similar challenges as ours. Liberia’s aspirations must be met with Liberian centered solutions.

Setting Developmental Standards

To practicalize your developmental theories, leaders must strategically recruit the best and brightest of its citizens, especially those who have mastered their craft and upped their expertise to production levels. Setup a committee entirely dedicated to head-hunting the best Liberian Professionals from around the world – pay them competitively but tie their compensation to production and targeted output.

Development is entirely about producing results that benefit the society at large; it has nothing to do with loyalty or “party discipline”. Focus your efforts on your plans and how to achieve them – understand that there is campaigning and there is governing; the latter must take precedence far above everything else. Governing is an inclusive action; it aims to promote and accommodate a peaceful coexistence of different groups with competing interests. 

Moreover, your developmental standards must be tailored to our local conditions; do not blindly employ foreign methodologies simply because they appeared to work in other countries. There must be an infusion of local cultures and traditions for any strategy to work. A Liberian Think Tank comprising of experts must approve and ensure developmental concepts meet the “Local Benchmark Test” before implementation. 

The first step to begin fixing Liberia is to clearly define a National Development Master Plan that must be followed by successive administrations. Enshrine this into laws, ensuring no president can alter these national plans in a major way without legislative approval. New administrations can make minor changes and the national legislature can improve on these plans provided they align with the overall developmental vision defined in the original documents. The national plan must detail and clearly define sustainable infrastructural goals and systems for education, health care provision, roads, railways and transportation, security, sanitation and water supply, energy and electrification, national economic structure, telecommunication, industrialization, geopolitical strategy, etc. This should be our national roadmap that guides our development. There must be a forceful commitment to the national developmental agenda; new administrations should have little to no discretion on already set national plan. These guidelines must be strictly followed.  

Demarcate regional blocks for targeted development. Create regional economic zones with local plurality. Utilize and improve local knowhow to build and market locally available and produced commodities. Promote regional specializations in specific areas and grow those areas to develop local infrastructure. Your ideas must be generated locally by local people who truly understand and can clearly define their needs. 

Macroeconomic Stability

Monetary and fiscal policies are primarily meant to reduce volatility, enhance market efficiencies, and provide a stable platform to promote economic growth. However, the type of indicators used to gauge macroeconomic stability to include price fluctuations, interest rate volatility, growth in real GDP, current account changes, health of government finances, employment volatility, taxes, etc., must be closely monitored to avoid the inefficiencies that cause a collapse in that economy. Remember, economic stability is the absence (and control) of excessive fluctuations in domestic market forces. Authorities must design policies that ensure constant production levels and a balance in market forces to avoid inflation and uncontrolled market variations.

Part of a government’s job is to maintain a balance in market forces while at the same time growing the economy for the betterment of a large majority of its people. To achieve that growth, administrators of government must implement a proven strategy that has passed the local benchmark test, but at the same time infused with sufficient innovation to be on par with the times – there must be a design of strategy that considers a whole host of things that are in line with time-tested economic principles.

Take for example where the country is and where it should be given available resources and options:

  • Has the government considered its current unemployment numbers and the social vulnerabilities to its bottom line?
  • How is it contrasting its exports and import against our balance of trade?
  • Has the government adequately factored in the informal economy and how it impacts the overall domestic market – how does it intent to bring it into the formal sector for accountability and tax purposes?
  • What are the short-term and long-term valuations – do they fit in the overall grand strategy?
  • Has it taken local capacity into account and do local people possess the expertise for the government growth strategy it plans on implementing?
  • What are the barriers to entry and access to capital – are interest rates competitive? 

Consider that your goal is to maintain an increasing rate of economic growth and output, higher income, and a higher standard of living for your people, increased revenue, stable inflation, and low unemployment. All your decisions must be weighed against these measures while at the same time ensuring efficient government utilization of available resources. Know that people cannot rise above their capabilities; continuous education and training are vitally important for growth.

 Increase and direct a huge portion of your tertiary education budget towards targeted, hands-on skill development across the country; limit degrees in social sciences such as political science, sociology, etc. The intent here is to develop the specialized skillset required to get the kind of results and the human capacity development the country needs to begin true development. Organize this strategy in a way that proportionally supports each region and its need for growth. Track and measure growth in the regions and adjust accordingly.     

Create and implement regional economic strategy with specializations suitable for each region of the country – establish local diversification plans that support your overall national vision. Design plans in a way that ensures each region is specialized in certain markets/commodities while at the same time developing synergy amongst the various regions to achieve oneness of purpose. Think of it as a division of labor, or in our case a division of specialization as described by Adam Smith in “The Wealth of Nations”.

Expand regional financial institutions – banks, increase government subsidies to ensure easy access to capital. Promote competition especially in areas with the greatest opportunities; discourage monopolies and limit political influence in the free market system. Let fair competition guide and strengthen the process. Your goal here is to build a robust system that can withstand the tests of time but at the same time making each region a self-sustaining, economic hub.  

Moreover, diversifications will help counter against national inflation, create a strategically balanced economy with regional support and ensure we gradually limit our reliance on the extractive side that has never helped the country in any meaningful way (Read “Close the Mines in Liberia: All of Them). Keep in mind that developing countries without strong and independent governing institutions are always on the receiving end of the negative effects of extractive industry to include poverty and inequality, environmental degradation, dispossession and the loss of livelihood, violence, never-ending conflicts, etc.

Nevertheless, government macroeconomic strategy details should outline how it intends to gradually limit importation and expand exportation of regionally produced commodities. There must be realistic timeframe to halt all importation of food products such as rice, flour, sugar, poultry, fish, and other “everyday items” that can be locally produced. This strategy must include the development of new industries and the beginning stages of manufacturing; make sure we entirely control and own the process. Deregulate regional restrictions, increase women participation; ensure local administrators make most of the decisions for their locales. The people must own the strategy for it work – tie it to their identity!

The Simple chart below will give you a better insight on the different areas to focus your policy strategy; nation-building and economic development must be an intentional endeavor, and a continuous process that is guided by expert hands.

Policies for Nation Building and Economic Development

Strategic economic development plans must focus on generating market understanding, convergence of skills and specialization, revitalization, and policy positioning. The national vision must be pursued in oneness to get the maximum effect and the transformation that is needed for development. National self-sufficiency and true economic independence can only be attained if there is a uniformity of purpose across the country. Call a nation-wide “Coop” (cooperative) to build the country!

Law and Justice

Institutional governance is the one surest way to build a pluralistic and economically balanced society (Read “Institutional Governance is the only Hope for Liberia”)! Outside of law and justice, we will have nothing but a collapsed system and a kleptocratic arrangement like the one we see being manifested in Liberia today.

To achieve economic vibrancy, the rule of law must be the central pillar in all policy design. Everything must be built around our reliance on judicial independence and strict adhering to the rules that ensure stability in an equitable fashion.  Liberia stands zero chance for economic transformation if decisions are not guided and protected by the rule of law. To get the process of nation building to work, there must be total citizen involvement – all hands on deck.   

The issue of corruption and the chaos that follows can only happen in a location where the rule of law is only on paper and not enforced. Define a serious anti-corruption agenda that is administered with total independence – this includes full prosecutorial powers, constitutionally granted to an anti-graft institution that entirely controls its own affairs with its own court headed by five judges. There should be no jury trials for corruption cases, except where special, strict standards are established for jurors in these cases. Our country is too poor with a very high illiteracy rate, most potential jurors will not understand the full ramification of these cases. However, document all such cases in the public domain including television coverage. Limit the frequency for appeals to the supreme court, except in cases where it is obviously clear the judicial guidelines were not followed.

Get ahead and prevent theft of state resources by expanding financial transparency measures, heavily scrutinize the awarding of public contracts, strengthen both your political and financial institutions, assess the depths of corruption and how to counter it. Institute political financial reforms with total openness for all public offices without restrictions except in the cases of national security, employ more technology in the fight against corruption, and push to have a system that is governed by independent institutions.

Know that the lack of law enforcement and corruption threaten national security and economic development; by default, they increase poverty numbers, limit opportunities, weaken democracy, and deny our children any hope for a meaningful future. Furthermore, corruption limits and, in some instances, denies the country of every possible economic advantage. For these fixes to work, the rule of law must be aggressively enforced without fear or favor!

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References:

Lee, K. Y. (2000). From Third World to First: The Singapore Story: 1965-2000. United States. HarperCollins Inc.

Smith, A. (1776). The Wealth of Nations. London, England. W. Strahan & T. Cadell.

Acemoglu, D. & Robinson, J A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York. Crown Publishing Group.

About the Author: Mr. Dualu is the author of a series of articles that focus on finding solutions to some of Liberia’s pressing national issues. Some of those papers include “Common Sense Economics for Liberia”, “A Guide to Increasing Liberia’s $500M National Budget to Over $2B in Ten Years” and “Leveraging Liberia’s Resources to Lift the Pro Poor Agenda”. The author works as a financial professional out of Massachusetts.   

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