Liberia’s Economic Woes: Turbulence or Structural Dysfunctionality?
Liberia is now facing an unprecedented economic downturn that is inching towards political and social crisis if urgent meausres are not put in place to mitigate the fallouts. For the first time, since the late 1980s, the country is totally and absolutely on its own. Gone are the days when Libya’s dictator Moammar Kaddafi and US Ronald Reagan laid the red carpet for Liberia for their geopolitical interests. Gone also the days when the international community spent billions of dollars to keep Liberia on life support for almost 15 unbroken years.
From the end of the war in 2003, until 2017, Liberia enjoyed the benefits that come with heightened international attention, initiated by US President George W Bush when he called on Charles Taylor to step down and the United Nations deployed some 15,000 troops, with a support system and staff. The international community became almost a state within a state, and even more. Its budget was far larger than the state’s budget. It provided high paying jobs that attracted many Liberian professionals. Hundreds of non-governmental agencies flocked in, working on everything from peacebuilding to road construction and rehabilitation of war victims.
For 15 years, the country appeared to enjoy economic stability that sustained a sort of political harmony. However, that economy was a bubble, like a balloon floating ready to blow up, or a mirage. It was not real. The economy was not based on the strength of local ownership of means of production and distribution but a market where people brought merchandise from all over the world – tomatoes from Morocco, furniture from Malaysia, pepper from Guinea and Ivory Coast, and steak from Argentine! – for Liberian consumers. Monies from remittances and high paying international jobs were not invested to create a sustainable economy, but rather to buy goods produced elsewhere. Cash coming in through the big door was flowing out through many open windows.
It was and still is believed by many that the billions of dollars promised through concession agreements would actually make their way into the local economy, but to the contrary, concessions only paid for the labor and made no investments in the economy because there was rarely or ever any local content in the agreements. Furthermore, a concession promising to invest $1 billion may take 10 years to do so, often using revenues from their initial investment.
In the 1990s, the Liberian’s state stopped functioning and the nation was lived on hand-outs. The dependency mentality started to set in and by the time peace came, Liberia was a receiver-nation, that had lost control of its own destiny, economy, and politics. This situation deepened after the 2003 peace settlement. The 2005 elections compounded the dependency and reliance on the international aid system. This may have caused more harm than good for the long-term development of Liberia. Now, nothing seems achievable, politically or economically without the intervention of the international “troika”, the donors and the bilateral partners. They have a say in everything and at times. Politicians, both government and opposition are always “calling” on partners for everything. Now, Liberia looks more like a colony of the international aid system. The current palava about the MCA is just an example of that dependency. The MCA is not a solution to Liberia economic issues, far from it.
The Ebola pandemic partly exposed the cracks. By the time elections took place in 2017, the “mirage” was fading away. The many budget shortfalls were not only caused by administrative failures but also the intangibility of the national economy. The departure of the UN system and the many agencies and institutions that came with it had two consequences: hundreds of well-trained Liberians were put out of job and the millions of US dollars that poured into the economy simply disappeared. The bubble blew up and exposed the incapacity, neglect and denial of the realities by policy makers. Unlike Sierra Leone, Cote d’Ivoire and Rwanda, Liberia failed to take advantage of the flow of “free money.” The Ebola pandemic only made things worse, associating Liberia’s name and image with another disaster.
With the election of a new administration, Liberia was hit a third time. As it always happens in developing countries, elections were followed by a time of “wait and see.” Working within its populist ideology, the Weah Administration attempted to deviate from the path of the previous administration. It attempted to borrow money through unconventional means to carry out development projects to meet the expectations of the electorate.
In an attempt to mitigate the expectations of the people, the Weah administration embarked on actions and policies that further exacerbated the perception of ineptitude and corruption. The false promises of ETON, EBOMAF, President Weah’s unexplained real estate acquisitions, his inability to ensure thar his appontees declare their assets, the removal of a Supreme court Justice, the mystery surrounding the LD16 billions and the US$25 million to mop up the excess cash in circulation to curb inflations all contributed to give an image of regime that doesn’t seem to have a development agenda.
The current economic crisis is not a passing turbulence, it is part of Liberia’s make-up, the original fallacy. It goes to the core of the structural defaults of the nation. The transformation of the economy goews beyond a cosmetic infusion of cash.
The current political turbulences will only worsen as the economy continues its downward trends. If the economy is not restructured to be sustainable, based on local control of means of production, distribution, and consumption, the structural dysfunction will only grow bigger.
Can the Weah administration restore public confidence and erase the negative perceptions? Politics is driven by the economy and the economy is powered by confidence. How long will the turbulence last? Is the administration armed to carry out the deep structural changes?
The economy is the weakest or strongest link in any political settlement and for Liberia, it is now the most urgent threat to national security. Crumbling of export commodities, lack of local production for consumption, donors’ fatigue and a perception of ineptitude and corruption are major issues that cannot be wished away. Time does not stop and with economic difficulties, the less likely that voters would stay on the same side of the fence.