CBL Defends Rural Financial Loan Scheme

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The Central Bank of Liberia (CBL) has defended its rural financial loan schemes. The Executive Governor of the Bank, Dr. Joseph Mills Jones, told a crowded news conference in Monrovia Tuesday that CBL’s Loan Extension Availability Facility (LEAF) and the Village Savings and Loans Associations (VSLA) initiatives are programs intended to enhance financial access to rural residents who have no access to loans from commercial banks because they lack formal collateral required by banks.

 He said the program is mainly ongoing in non-banked communities in the rural parts of the country. Governor Jones is under fire for allegedly using public funds for political purposes, but has also openly challenged his critics to adduce evidence to their claims.

The national legislature recently amended the Act establishing the CBL and the Financial Institution Act of 1999 banning the governor, his deputies and other board of governors from contesting any political seat for three consecutive years after the expiration of their tenure.

The lawmakers also removed and gave themselves the powers to issue banknotes, supply legal tender and mint coins.

 Apart from that the legislators removed from the CBL’s board of Governors and gave to themselves the sole right to decide as to whether a breach has taken place at the Bank and to impeach any member of the board if they see fit. The lawmakers have said that their action is intended to protect the CBL’s coffers, even though the bill itself failed to say how.

Though it is not clear where this bill is currently, the lawmakers have received a backlash from the public for enacting such a law, they believe, that grossly violates the Liberian Constitution.

The matter is currently registered before the Supreme Court of Liberia by the Citizen Solidarity Council of Liberia represented by its legal team headed by veteran constitutional lawyer, Cllr. Theophilous Gould.

Reacting to claims that CBL’s loan initiative has political motive for him, the CBL strongman clarified that the initiative has no political link, as is being speculated by some people in the public.

He accused those who go around spreading lies about the program of “empty talk.” Governor Jones rather noted that the program was supported by President Ellen Johnson Sirleaf and the government of Liberia.

“This initiative shows that the CBL is doing what the government of Liberia says it should do in the Agenda for Transformation (AfT). The government and people have spoken on this through the AfT. And the policies of the CBL are consistent with that Agenda.”

 According to Pillar Two of the AfT, “the CBL will continue a credit line for commercial banks’ on-lending to micro small medium enterprise (MSME) and will implement proposal for modest credit lines to non-governmental microfinance institutions and the Afriland Bank for small holder tree corps with them bearing the credit risks.”

 “How did this initiative turn into misuse of the county’s resources or a political agenda of the management of the CBL,” he wondered.

Dr. Jones hinted that an economy such as Liberia needs affirmative action that requires a ‘visible hand’ for public sector stimulus.

“We believe in free enterprise. Our economics training was done against the background of the free enterprise system. We worked all of our professional life in institutions that believe in the free enterprise philosophy. However, even in the most advanced economies, it is recognized that there are times when there is a need for the visible hand; for affirmative action; for public sector stimulus,” he stressed.

The CBL boss insisted that it is necessary for the government to do something to make things happen. “If you try one way and it doesn’t happen, common sense says, try another way.   If there are no commercial banks in the towns and villages to serve our poor fathers and mothers, sisters and brothers, what should we do”? He asked.

The governor reminded the public that commercial banks are not charitable institutions.

“Their objective is to make a profit; and their ability to make profit is linked, among other things, to the level of economic activity in a given area.  If the concept of “collateral” as understood in the formal banking sector is difficult to apply for the majority of Liberians, what should we do”? Dr. Jones once again asked.

Putting up further defense for the CBL’s loan scheme, Jones disclosed that in 2012, the United Nations (UN) Women provided US$40,000 to support loans to village savings and loan associations (VSLA).

The UN Women, he declared, also supported the expansion of the VSLA program in 12 counties, providing over US$450,000 in contract funds to non-governmental organizations to help organize and train women.

“This,” he added “suggests that funds are not just being handed out by the CBL without some care. Presently, there are 15,450 women in the 15 counties involved in the VSLA Program.”

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