Liberia: tailoring the economy for growth
Liberians are still desperately impoverished and impatient, having endured decades of bad governance, mismanagement, corruption and deceptive politicians. The Sirleaf administration should level with the Liberian people and explicitly confirm that no amount of foreign generosity or support can sustain our social transformation and/or economic development, or can substitute for our self-reliance as a long-term development strategy, given our huge debt burden, stubborn international sanctions, and an international donor community bent on infrastructural development and debt rescheduling, rather than on sustainable growth and development.
An economic strategy...
The Sirleaf administration should now invest its political capital in mobilising domestic resources and capacities in order to achieve tangible and realistic development objectives. It must implement a bold new privatisation programme that encourages private foreign investment in parity with indigenous investors.
In addition, international standards and business practices should be established to create an enabling investment climate to grow the economy. For example, incentives to create employment, set manageable regulations and reduce taxes should be implemented without delay. A one-stop-shop for business registration and licensing should be established to avoid the discouraging layers of multiple agencies performing duplicate tasks that create unnecessary roadblocks for investors.
The country's trade policy should also be directed towards reducing the trade imbalance through improved import management, export promotion and diversification. To make the economy more competitive, tariff rates should be lowered and the currency exchange rate fully compatible in parity with the US Dollar. Quantitative restrictions and the import licensing system should be abolished to allow for congenial investment within a friendly economic environment to help promote industrial development and make products more competitive. Export procedures must be simplified and bonded warehouse and duty drawback facilities be introduced across the board to make trade more competitive.
After years of conflict, Liberia still potentially enjoys one of the highest GDPs in Africa. Liberia's export base is very small in relation to the level of imports, due to levels of economic disruption caused by conflict. However, the imbalance of trade is offset by substantial natural resources, which remain abundant. The Sirleaf administration should prioritise free trade, investment, employment and training while it goes forward with its current strategy to downsize institutions, which is necessary to streamline the public payroll after years of patronage and factional political debacle. However, to realise social transformation, the government should immediately liberalise the economy, formulate policy to open foreign investment to secondary markets, and harness the indigenous entrepreneurial sector to direct foreign capital towards regional growth. In addition, wider ranging financial reform measures should be carried out in order to strengthen the liberalisation of the economy.
Liberia is still classified as a least developed country (LDC) on account of our low per capita income, low contribution of manufacturing and service sectors to GDP (less than 10%) and low index in the social indicators of development. Conversely, since the election of Ellen Johnson Sirleaf as president in 2005, Liberia seem to have started programmes for planned economic development, including targeted growth, regional development, concession review, gender-balanced manpower and infrastructure development.
The Sirleaf administration should express its strong commitment to achieving optimum growth in national production - and its equitable distribution. New policy measures need to be adopted in line with a free- market-oriented liberal economic policy to stabilise the economy and pave the way for accelerated economic and social development. In addition, it should enthusiastically open its doors wider to private foreign investment to alleviate the massive unemployment and economic dislocation that is about to emerge in the formal economy before the economy gets back on track.
The country's monetary policy must immediately be fine-tuned to increase domestic resource mobilisation, enhance efficiency of capital and provide credit to the priority and productive sectors. Steps must now be taken to maintain satisfactory balances in internal and external payments. In the field of industry and commerce, the Sirleaf administration's policy should be aimed at giving the private sector, including indigenous investors, a dominant role. Private enterprises should be allowed to increase efficiency and productivity in industrial, service and commercial operations.
The Sirleaf administration's role should be as the facilitator providing infrastructure facilities and a productive environment in which the private sector can perform effectively. In this respect, the Sirleaf administration must move quickly to encourage private investment in the development of infrastructure, operation and management of services like road, transportation, water supply, waste management, telecommunications, agro-business, etc.
Liberia has an easily trainable and keen work force. Unskilled labour is cheap and abundant. Semiskilled and skilled labour are available in sufficient numbers. The government should immediately take advantage of two-year community-based college courses to develop skills at technical level in civil and electrical engineering, electronics, air conditioning/refrigeration, general mechanics and auto mechanics. One-year community-based technical institution-courses should be geared towards industrial and vocational training in wood working, carpentry, bricklaying, metal working, plumbing, general fitters and tailoring. Programmes in entrepreneurial and managerial development should be established to groom average Liberians for managerial positions in both public and private sector industries. Most existing two-year colleges will have to be relocated form the city centres to other communities where they can be most effective in improving the social order.* Francis Nyepon is a policy analyst and Vice Chair of The Centre for Security & Development Studies. He is a political economist who has written extensively on the socio-economic and political development in Liberia. He serves on several boards of humanitarian and human rights organizations in the United States and Liberia. He can be contacted at francis.nyepon@Gmail.com.