Could you give us an assessment of Liberia's macroeconomic environment?
Liberia's macroeconomic program is typical of any post-war country. To some extent it's been a little more severe. As the result of the civil war, there were destructions at two levels. In addition to the loss of human life, two other phenomenons occurred. Firstly, the actual total destruction of all infrastructures. The second factor that's critical to Liberia is intellectual and professional capacity out of Liberia as the result of the war. So physical infrastructures as well as expanding and building capacity by either attracting Liberians back to Liberia couple with providing training for those that are here, are the present issues to be tackled.
What has been the impact of the brain drain on the country?
It's been very, very significant. However, there has been a gradual return of qualified Liberians and non-Liberians coming into Liberia to try to make their own contribution to the economic expansion and growth of the country. At the same time there's a personal desire to come and assess the situation. We are seeing a steady, slow return of expertise that left Liberia as the result of the civil war.
Could you further elaborate on your macroeconomic fundamentals such as your level of inflation, level of debt …
Just for the last three years we have seen a steady progress of economic activity. We have more or less relatively stabled our macroeconomic environment. As a matter of fact it's the most stable in the region. That's probably due to the fact that we have dual currencies. We have our own Liberian dollar being used along side the United States dollar and there is free movement of exchange rate. It's been very stable and we have managed to keep inflation under control. We have 5-5.5% inflation (it could be less). The largest problem we have in the macroeconomic perspective is the issue of employment. We do not have significant investment at this point in time to support employment sources. At the Ministry of Finance, our basic fiscal strategy encompasses both a financial aspect and an economic one. We want to expand our tax base so as to increase our revenue. That's very important to us. But we want also to provide opportunities that would bring economic benefits, putting people at work, taking them off the street, providing a source of employment and livelihood for them. Because of the environment as it stands right now, for each person employed you are literally feeding six to nine persons. Therefore, investment is critical and we have to encourage this trend. Most investors would assess risk before investing a dollar. We have several problems in that area. The issue of globalization is competition. So we are not just competing on the continent but globally with other Third World countries, and even with other Second World countries to attract foreign investment. We have to create and environment where potential investors can be ensured that we have an economic platform ready to support their investment. We must show that there is a decent labor force, and more important a judicial system that will allow legal recourse in the event something goes wrong. To do all of that takes capacity. And coming out of post conflict situation that is the largest challenge.
What would you say is Liberia's competitive advantage as far as its investment code is concerned?
We have re-examined and rationalized our investment code to make it as competitive as possible. This process has been done in concert with our new tax code to make sure that it's in line with our neighboring countries. We have a huge disadvantage because we are in a post conflict environment. So, we have to create the atmosphere that will be attractive such as an investor friendly tax code that would convince any investor that this is the place to invest.
To what extent is the Liberianization process in concert with your investment policy?
That's an interesting question because with Liberianization, we do look at it from a very honest, candid perspective. We can talk about Liberianization once the Liberian component is capable, ready and has the skills and tools on a sustained effective basis. As I mentioned to you earlier, we have a serious capacity issue. We have to be very careful as we implement the Liberianization program to make sure that the Liberian part of any partnership is strong and effective.
How successful have you been in attracting foreign investment?
It has been mixed. You have political disturbances that always caused investors to be more cautious. But at the same time, we have had some successes. We continue to engage potential investors on the mining side, which is our biggest potential right now. We have two significant companies coming from America to invest in mining. | Gold mining?
Yes. Gold mining. One is call FREEDOM GOLD and the other is AMLIB. They are both doing exploratory work in gold mining. AMLIB has invested in the rehabilitation of the former Bong Mining iron ore facilities and are creating employment opportunities in that area. They also have a huge pit, which is a potential for fish farming. They are looking at taking the old rail system and using it as a commercial rail to bring people and farm products from that particular area to Monrovia. In addition to that, they are looking at taking the old scrap to re-process steel products. As you are probably aware, we also have some investment on the timber side. However, we have not been very good at tooting our own horns about our accomplishments to the world from the economic and investment perspectives. We have to address the image problem, the perception that Liberia has been the bad boy or the bad nation on the West coast. Our own accomplishments have gone unheralded. It's something important to articulate here. From a development perspective, Liberia has not received one penny from the outside world. We have received quite a bit of assistance on the humanitarian side. The NGOs and other agencies are present trying to help with the provision of clean and safe drinking water, development and delivery of health care services as well as some other basic social services. But in terms of our own development such as building bridges, roads and so on, all of that have been done with our own meager resources. We have a lot of resources in the earth, but we lack opportunity and capacity to extract them to have the appropriate finance. All of the efforts, all of the progress we have made over the last three years have been with our resources and sweat.
What has been the initial investment of Freedom Gold and Amlib?
Several millions of dollars. The way it works is that you first do your exploratory work. Based on your own findings and evaluations of those results, then a large capital investment comes in. So we are talking about several millions of dollars in each entity for the exploratory work, which will be ending shortly. Preliminary results received are very encouraging. We are not surprised because we have always known that wealth has always been there. The next step will be to sit and look at the level of capital investment that's going to be needed for exploitation. Whilst we are doing this, one key factor we are going to consider is the impact on our environment. Now this is a dilemma that many countries like Liberia have to face. We have a dire need for our own development and uplifting our people and the eradication of poverty. At the same time we need to do so in a prudent manner so that we don't do it at the expense and degradation of our environment.
Could you elaborate on the new budget, its resources and allocations?
The budget is about US$95 million. We are optimistic that if we tighten our belt and beat the bushes on the revenue side it will hopefully hit a hundred million dollars. The sources of that revenue are primarily from our maritime program, taxes, duties, customs and collection. The lion share of our expenditures is going into government operations. We would like to see a more sizeable part of our budget going into primary education and health care delivery systems. Some portion of our revenue is also the result of small grants that we have received primarily from the Republic of China, who has been a staunch supporter and ally of Liberia. One of the major tasks for us is to try to find ways for incremental revenues. We need to be careful not to overtax the taxpayers. We are going to make sure we do tax application and collection in a fair and equitable manner. On the other side, we have tried to manage our expenses. We have to make sure we manage our meager resources as prudently as possible. The other challenge is the issue of fraud and corruption. It's an endemic problem. You have such a low capacity, low pay that it feeds on itself. So what we try to do is to improve our civil service, train and upgrade capacity and try to pay them better.
What would you say has been your main achievement?
Our main achievement is the continuous engagement of multilateral and bilateral communities in spite of the hard times. Second major achievement is the tax code and thirdly developing professionalism and effectiveness at the Ministry of Finance.
What is your biggest challenge?
Our biggest challenge is capacity development so that people know well what they are doing.
What message would you address to the readers of Far Eastern Economic Review?
The fundamental message is, this is an environment that is ripe with opportunities. It also has risks. There is an old adage, which says the higher the risk the bigger, the return. We are looking for long- term partners. We invite them to Liberia to sit and talk with us, and they will be surprised at what kind of returns they will get from here. |
MINISTRY OF INFORMATION, CULTURE AND TOURISM