LIFTING THE ECONOMY: GOVERNMENT’S INTERVENTION FROM THE AGRICULTURE PERSPECTIVE
The State of the Liberian Economy
The economic reality in Liberia is a nightmare that everyone is wishing to be just a dream. Sadly, the economy is a rude awakening that we must react to. Our response will determine if the shock received from this rude awakening is prolonged or overcame. The descriptions of the current state of affairs of the economy have become redundant and overused. This goes without saying that we have since realized that we are in trouble. What is bewildering is that we are yet to arrive at a solution that will tell a different story. We are still reeling at the fact that we have been awakened in a rude manner.
At this stage, it is needless to mention that the economy is in a decline and the Liberian Dollar is in a free fall. The IMF prediction of a 0.4% GDP growth rate has been overly cited. It appears that the IMF figure might even be an underestimation given the recent trend of events. Companies are either laying off staff or shutting down; local productions (flour, cement, et al) have slowed down and civil servants salaries have gone into backlog. These are troubling signs for which urgent and well-intentioned actions are needed.
Truth be told, the government has announced some actions to salvage the situation: salary harmonization, zero balance budgeting, and IMF direct intervention among others. The thought of these actions are welcomed but the sustainability and the efficiency are questioned. The implementation of these measures is short term initiatives that will only keep the economy afloat but without progress. That is if the measures are taken with utmost sincerity and honesty. The harmonization could deliver equality and build the prospect of individual growth while depoliticizing the civil service. The zero balance budgeting if achieved could bolster responsible financial governance and the contributions of the IMF could spur the respect for integrity in the public service and strengthen the fight against corruption. However, until we take sustainable actions to move the economy forward, we will always end up in a declining economy. The economy needs to grow from the public service to the private service, it needs to grow from import to export, it needs to grow from donor-dependent to self-sufficient and above all the economy needs to grow into agriculture as well.
Agriculture, the forgotten cornerstone
For too long Agriculture has been overlooked relative to economic growth in most countries. This notion with, the passing of time, has proven to be counterproductive and unfair to the important contribution agriculture continues to make in the developing world (including being a major contributor to real GDP). Most governments in developing countries still do not consider agriculture as a sine qua non to development and a catalyst for enhanced economic prosperity.
Liberia has vast arable land space, good soil to grow a variety of food crops including its staples rice and cassava. Liberia grows amongst other crops rice, cassava, cocoa, coffee, bananas, plantain, etc. Nonetheless, Liberia has only been limited to small scale subsistence farming because of the lackadaisical attitude of government toward the issue of self-sustenance in food production.
Recognizing the importance of Agriculture to the nation’s growth and development, the Samuel Kanyon Doe Administration launched Liberia’s version of the Green Revolution in the 1980s. As part of an effort to encourage agricultural productivity, the government encouraged citizens to go back to the soil, provided subsidies to the University of Liberia for the provision of tuition free education to students of the William R. Tolbert College of Agriculture and Forestry. The intent was to train professionals in the field of agriculture in order to enhance food production. The government did not muster the political will to sustain the program.
In a country with approximately 49% rural population, it is no doubt that there will be great yield for our growth if we invest in the needed technology and develop better policy prescriptions toward agriculture. One of the problems Liberia as a developing country has faced over the years leading to the stagnation of our growth process is the heavy reliance and dependence on the extractive industry. After many years of iron ore mining, we are yet to add value to the product instead we cocontinue to export crude iron ore and other mineral resources. Given that the prices of these crude ores are dependent on world prices, we are left reeling over our loss. After being the third highest exporter of iron ore worldwide (over 50 years ago), we have not produced a single iron product nor point to the benefits of mining.
But with agriculture, we could become self-sufficient in food production and begin exporting the excesses to our neighbours in the region and other parts of the continent. For example, most of Eastern and Southern Africa are familiar with the plantain plant, food that grows in West Africa and is abundant in Liberia. If Liberia should develop sustainably, she must prioritize agriculture by investing tremendously in the sector. Agriculture must not be treated like a forgotten cornerstone. The share of the budget allocated to the agricultural sector is infinitesimal and needs to be augmented in order to enhance economic growth. Agriculture is a major source of economic growth in developing and developed countries. Liberia must seize the opportunity.
Impact of agriculture on the economy
Agriculture is the science and art of cultivating plants and animals. The International Labour Organization provided a much simpler and clearer definition in its July 2011 publication “Safety and Health in Agriculture”. It defined agriculture as ‘all forms of activities connected with growing, harvesting and primary processing of all types of crops, with the breeding, raising and caring for animals, and with tending gardens and nurseries.’ Without saying, this definition explains the very essence of survival.
According to the World Bank’s estimates, agriculture makes up an average 32% of the GDP of developing countries. As per the IMF’s World Economic Outlook Database, April 2018 and April 2019, the United States is the world’s best economy with a nominal GDP and PPP of $19.39 trillion recorded in 2018. Per the US Department of Agriculture, agriculture, food, and related industries contributed a whopping $1.053 trillion of the GDP in 2017 amounting to 5.4 percent of the economy. The Department also reports that 11% of the employment in the same year amounting to 21.6 million jobs were provided by the agricultural and food sectors. These stats tell us that agriculture remains a major source of economic growth and foreign exchange earnings and despite the full functionality of the US economy, it still looks towards agriculture. It is noted that the means and wherewithal of enhancing agricultural activities in the US may be well ahead of Liberia but there are massive opportunities that Liberia can exploit.
The contributing factor for the excellent performance of the US and other developing African countries’ economies is the balance of trade. Liberia’s balance of trade is at a trade deficit and we seem to be light years away from moving over to trade surplus. However, we can reduce our trade deficit by taking appropriate actions which will, in turn, reduce FDI and then provide the necessary stimulus for the economy to grow. Such appropriate actions lie in agriculture. We must invest in Research and Development (R&D) to incorporate new ideas. Every country that has a strong base in agriculture, is faring well along the economic ladder. Nigeria is Africa’s economic powerhouse due in part to its agricultural activities. Nigeria is currently the highest producer of cassava in the world. It is no doubt that we have one of the best climates globally and as such we can boom our economy through agriculture.
Salvaging the Liberian economy through agriculture
Noting that the Liberian economy is in shambles and agriculture is a bolster for any economic success, we need to urgently turn to agriculture for a solution. Through will power, commitment and collective effort, we can lift our economy through agriculture. Government’s intervention is essential in this regard.
The initial goal of this agriculture initiative will be to feed ourselves. There is a great potential to achieve this given the vast arable land space. We can engage in the production of rice and cassava as part of this national agenda. This focus will ensure the amounts spent on importation of rice from Asia could be redirected to other policy areas that could spur economic growth. Investment in animal husbandry could also bring needed foreign exchange earnings and help government in its drive to reduce unemployment. Beekeeping, an untapped sector, should also be considered.
A farm should be established in every county with joint ownership between the government and the county. The government provides the starting capital and the county provides the labour. As an incentive to encourage locals to contribute their labour, their kids should be provided quality education at the public schools with start-up packages (copybooks and pencils) in addition to the minimum wage provided them. The government should also construct a county storage facility that will store produce when harvested and also products of those wanting to engage in private initiatives at no cost.
With this effort, there will be 15 national farms producing either rice or cassava and or honey and meat. The products should be sold at a reduced cost with the county of production having first purchase right. The proceeds reinvested and profits divided 70 – 30 with the government and the county. The government’s 70 percent can go for budgetary support while the county’s 70 percent go for processing of additional products. In no time we will have addressed our feeding needs and begin to engage in exportation to other parts of West Africa where rice and cassava are largely consumed. This measure will in no doubt reduce our trade deficit and balance the economy. Also, this effort will help de-congest Monrovia as those wanting to engage in farming will have a gleam of hope for success. Storage will not be their concern as well as transportation, which the government will provide when transporting the county produce.
The initial capital to be provided by the government can be generated from the limited available SDF and CDF. The controlling laws regulating these funds can be amended to address this cause. The government can raise additional resources by selling off shares to interested Liberian businesses or individuals. A clear and practical policy should be put into place as a governance framework for the initiative. The policy must have strong accountability mechanisms that will serve as a guarantee for potential partners. Agriculture can be used to lift the Liberian economy. The government must make a decision and play a leadership role here. Howbeit, private individuals are also helpful in lifting the economy. It is high time we call time on our showboating and put on our patriotic gown by engaging in initiatives that will develop our country rather than waiting for the government to do it all. The government is expected to exhibit leadership but that does not preclude private intervention. Let us use agriculture and lift our economy.