The Ebola crisis has had a dampening effect on the Liberian economy particularly the microfinance sector and those who live and work in rural Liberia. The crisis has led to a loss of markets for goods and services arising from travel restrictions and quarantine measures, amongst others. But the Board of Governors of the Central Bank of Liberia (CBL) has decided to take steps to revitalize the rural economy by having the CBL work with the Rural Community Finance Institutions (RCFIs), the Liberia Credit Union National Association and the National Apex of the Village Savings and Loan Associations (VSLAs) to enhance access to finance for rural Liberia.
In a strong, well-articulated speech delivered in Monrovia on Tuesday, December 30, the Executive Governor of the CBL, Dr. J. Mills Jones, announced four key measures for the revitalization of the rural economy during this Ebola crisis.
They include the introduction of a six-month grace period to beneficiaries under the CBL microfinance program to allow members of the rural non-bank financial institutions and businesses to rebuild their businesses; recapitalization of some beneficiary institutions to restart and enhance economic activities of group members and the extension of new loans intended to inclusively impact businesses in rural Liberia.
Governor Jones also announced a decision by the Board of Governors to withdraw the remaining funds from a bank, name withheld, and have the funds channeled through its microfinance program involving credit unions and the Rural Community Finance Institutions, among others, in order to expedite the disbursement process, especially for businesses seeking loans up to the equivalent of US$7,000.
The Governor noted that the Board of Governor’s decision is on account of the slow pace of some commercial banks, particularly the unmentioned bank, in the disbursement of funds for on-lending to Liberian businesses under the CBL’s stimulus initiatives.
It is generally agreed that the microfinance institutions have been constrained to limit their operations due to the Ebola epidemic.
“Loans have ceased, resulting in the inability of many Liberians to access capital,” said Governor Jones. Reports from the field [rural Liberia indicate that many farms were not harvested as a result of the Ebola epidemic.
Farmers have missed out on their income from the harvest season and will likely not have the finances to prepare for a new farming season if nothing is done to remedy the situation.
The CBL boss noted, “Liberians in the marketing associations all over the country have experienced difficulties and significant loss of income. Most cross border traders have been unable to travel to obtain goods.”
He explained that members of credit unions and VSLAs who took loans for business purposes are now generating income far below subsistence levels or are not generating income at all.
According to the CBL boss, individuals who were previously engaged in some income generating activities are now unemployed and without a means of income. He said this situation is undermining the Government’s efforts in the fight against poverty.
“There is no question that it is in the interest of the national economy that we continue to pay attention to all segments of the population. The more people we have with income above the subsistence level the better our ability to generate and sustain economic growth from within; hence, the importance of access to finance for those outside the formal sector of the economy,” he said.
The outspoken CBL Executive Governor called on the government to make sure that its economic recovery effort benefits all Liberians.
“Our national economic recovery effort must be an economic recovery effort for all Liberians — our farmers, petty traders, transport union members, tailors, teachers, furniture makers, marketer, etc.,” he stated.
Dr. Jones disclosed that the CBL has liberalized entry to the mobile money business. This is unlike the previous framework which was restricted only to banking institutions. The Governor noted that this is a furtherance measure to promote access to affordable and convenient financial services.