Businesspeople across the country are poised to vent their frustration today, January 30, over the unprecedented surge in the rate of exchange between the Liberian dollar (LRD) and the US dollar (USD). The business owners, including market women, petty traders and some small businesses have agreed to embark on a protest, suspending all sales to the public until government can arrest the situation.
Hard to control
While the Central Bank of Liberia (CBL) publishes the daily exchange rates in several local newspapers and through its website, the published rates seem to be observed mainly by government entities and commercial banks. Very few beyond these entities observe the published rates.
In the general business arena, the escalating exchange rate appears to be without control as the rate varies vastly around Monrovia as well as other parts of the country. In Montserrado County, the province of the nation’s capital, the rate of exchange is between LRD 106 (Johnsonville) and 120 (Caldwell) depending on the specific locality. Central Monrovia (includes downtown and Sinkor) records LRD 110 to 112, while the rate at RIA records LRD 108. In Ganta the rate in stores is LRD 108 to 110 while on the street, the rate is LRD 106 to 107. In Gbarnga the rate is LRD 107.
Some of the business people, who spoke to the Daily Observer in an interview expressed disappointment in the lack of policies by the government to institute measures to stabilize the foreign exchange market in the country.
Korpo Charlies, who trades in vegetables at Water Side Market, said that the current increase in the prices of various commodities on the market is contributing to extreme hardship among Liberians and foreign residents.
Ms. Charlies explained that the issue of transportation is one of the key factors responsible for the high increase in the costs of goods and services; something she also observed is a direct result of the demand for US dollars on the Liberian market. “Most people are buying goods outside the country, so you will always experience the high demand of foreign currency as there are more Liberian dollars chasing few US dollars,” she said.
There are varying degrees of understanding among ordinary Liberians about the drivers of the exchange rate among petty traders, which add to the frustration of ordinary people. For many, the bottom line is that many Liberians simply prefer using the US dollars rather than the Liberian currency on the Liberian market.
Kula Kiazolu, a mother of three who has traded in wholesale bags of oranges at the Duala Market for the past five years, aptly expresses the dominance of the US currency in the Liberian economy: “Look, we pay school fees in US dollars, we normally pay rent also in the same currency and worst of all, we pay medical bills in US dollars,” she said.
Maima Fofona, a mother of six who sells food stuffs at Caldwell Market, believes that due to the uncontrollable rate on the market, as well as the lack of bad economic policy, the US dollar will continue to control the market until government can put a strong system into place to address the situation.
She stated that there is a serious need for the government to give its fullest attention to the matter as it is affecting ordinary citizens. “It is a shame knowing that this government, with all the overly qualified individuals occupying key positions, failed to work around putting a system into place to bring this situation to an end,” said madam Fofana.
For Fanta Pascal, a spice or pepper seller, the dominance of the US dollars on the Liberian market has caused serious setback to the country’s economy, leaving the ordinary people as victims of the situation. “Presently, if you carry L$500.00 to the market it cannot even buy food for you and your family, we are in total hell over this current state of life,” she said.
In an interview with the Daily Observer following his appointment in August 2016, CBL Governor Milton Weeks said that to avoid financial crisis, Liberia needed to increase and diversify production, process what is produced and wean the economy off of concessions.
Recently, the global prices of Liberia’s historically key foreign exchange earners, rubber and iron ore, took a nearly simultaneous nosedive. The effects of this were exacerbated by the Ebola epidemic of 2014, which saw many foreign investors scale down operations that have yet to resume.
When the Daily Observer first learned of the planned protest, it was described as mainly an action by those selling in marketplaces across the country. But further investigation revealed that other petty trader groups and even members of the Fula business community were considering joining the protest.
When contacted yesterday, the president of the Liberian Marketing Association, Madam Lusu Sloan told the Daily Observer she was not officially aware of the planned protest. “I am not [much] aware of the planned protest, because those who are protesting told me about it lately.
“And I told them that since that was the case, I am not going to be part of the process. If they wanted me to partake in the process, they should have informed me ahead of time, so that we can properly plan with the people (business community). But I am not aware,” she said.
Kelvin Z. Sambola, president of the National Association of Forex Bureaus of Liberia, the organization officially recognized by CBL to conduct foreign exchange activities, also said that he was not aware of the planned protest and neither would his organization participate. However, he immediately rejected notions that forex bureaus are responsible for the hike in the exchange rate.
“I am not aware of the protest,” he said, “and maybe tomorrow I will issue a very strong statement on the recent statement made by the Finance Minister Kamara and Commerce Minister Axel Addy on statement that the Money changers are the problem for the increase in the USD rate.
“How can we be the problem, when we are not producing USD on our own? The thing is just simple, because the people are calling for USD more than the Liberian dollar.
“Nobody is going to use us as a scapegoat, so Monday morning I will be appearing on several radio stations and as well as circulate a press release debunking the statement made by the two ministers. We are not the problem and will never be the problem, because the thing is just a common economic problem, the demand for foreign exchange is very high on the market,” he added.
Also efforts made by our reporter to reach the president of Petty Traders Association of Liberia (PTAL), Madam Comfort Duyan did not materialize to up to press time.