Mr. Scott refers to the staff of the CBL as economic illiterates. He is entitled to his opinion. However, the fact remains that the CBL has some of the best economists in Liberia, trained at major universities around in the world. Nevertheless, we would welcome Mr. Scott to provide the staff with whatever education he may wish to pass along, given what we can only presume is his vast knowledge of economics and central bank operations, including the foreign exchange business.
Before going further, it should be stated that Mr. Scott is totally wrong to say that the CBL is charging a registration fee of US1,500 to foreign exchange dealers. The license fee is US$150 for Category B operators and US$200 for Category A operators. The CBL also requires Category A to have a minimum deposit in a bank of their choice of US$5,000 and Category B operators US$2,500 to serve as working capital for said businesses. Other countries in the region require minimum deposits also. The funds belong to the businesses. The intent is to set standards for engaging in foreign exchange operations. This is not an activity that everyone can engage in just by standing on the street corner. Mr. Scott would agree that he would be hard pressed to find countries where the foreign exchange business is free for all and, therefore, anyone can stand on the street and engage in the business. In both developed and developing countries, there are certain minimum standards that must be met to be a recognized foreign exchange operator, even though standards may vary.
We find it disingenuous that Mr. Scott will refer to attempts by the CBL to reform the financial sector of the country as a means to stifle Liberian entrepreneurs and perpetually consign them to the dustbin of poverty. Mr. Scott may be aware that in recent years, the CBL has stood tall in promoting Liberian entrepreneurship. One clear example is the “Credit Stimulus Initiative for Liberian-Owned Business” that was launched by the CBL in 2010. This Initiative is geared towards making the cost of borrowing more affordable to small scale Liberian-owned Businesses and enabling them to access loans on maturity terms that are more favorable. More than 54 small scale Liberian-owned Businesses spanning across more than 9 sectors of the economy have benefited from this Initiative, affecting more than 2,600 individuals either as direct employees or independent contractors. The micro finance credit program that the CBL launched in 2012 is another example of its commitment to support small entrepreneurs.
As Mr. Scott should know, the CBL has the legal mandate to regulate both bank and non-bank financial institutions as well as non-bank financial services institutions, which includes foreign exchange operators. Over the last two and a half years, the CBL has held several consultative meetings with operators engaged in the foreign exchange business as part of its reform agenda that is aimed at strengthening the financial system and bringing the foreign exchange business into the mainstream of the financial system. In the longer term, this will be beneficial to the Liberian economy as well as those engaged in the foreign exchange business. As such, the CBL issued an amended regulation in 2011 on the Licensing and supervision of Foreign Exchange Business which, among other things, requires that anyone wishing to engage in the foreign exchange business must obtain a license from the CBL. The requirements were clearly made known to the public and interested applicants through both the electronic and print media. There are many operators to whom the CBL has issued licenses under this new regulation.
The CBL has encouraged/recommended small dealers and operators to merge/consolidate their capital to create larger and sustainable foreign exchange bureaus, emphasized the need to modernize their operations to become like other countries in the sub-region, and assisted in reorganizing the Association of Foreign Exchange Bureaus to ensure a broader representation of the operators. Moreover, the CBL has hosted seminars for foreign exchange operators to strengthen their capacity. Meanwhile, registered Category A operators participate regularly in the foreign exchange auctions held by the CBL. Considering these auctions, along with the initiatives mentioned above, it is difficult to see how Mr. Scott could reach the conclusion that the CBL was unfriendly to poor entrepreneurs.
Also, it is very wrong for Mr. Scott to quote from a local daily saying the CBL said that the “hike in the exchange rate was caused by foreign exchange bureaus not registered with the CBL.” The CBL was clear in what it said, stating that there are illegal operators (money peddlers) along the streets who are trying to undermine the foreign exchange market by quoting artificial rates that are not consistent with the economic fundamentals. Mr. Scott may be aware that when a foreign exchange operator stands on the street corner offering a highly depreciated exchange rate for the Liberian dollar relative to the US dollar this implies that he/she sufficient Liberian dollars to serve a client who seeks to exchange his/her US dollar for Liberian dollars. However, the CBL on numerous occasions tested those who were offering such depreciated rates, only to find out that they couldn’t supply the Liberian dollars at the rate being quoted.
In conclusion, the CBL welcomes constructive criticisms and suggestions; but we should also be cautions in how we address issues of economic management in the country. Simplistic answers may play to the crowd, but may lead to irresponsible results. Sometimes the burden of leadership requires that we lead from the front rather than by putting our fingers in the wind to see which way it is blowing. Also, resorting to invectives is not the way to proceed. We hope Mr. Scott will agree.