Can Gold Industry Save Liberia’s Economy?

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3023
Samuel W. Thompson

-Liberian economist believes proper sector management can do the trick

Liberia faces escalating  economic crisis which is severely impacting the ability of most Liberians to make ends meet daily. President Weah, in response to the economic meltdown has announced that his government is crafting policies and strategies to address the current economic malaise which he will announce in the not too distant future. And there has been no shortage of ideas and suggestions proffered by various individuals as recommendations which, if implemented could provide solutions to the problems.

Among those who have proffered solutions is former Deputy Governor of the Central Bank of Liberia, Samuel Wonwi Thompson, who claims the crippling effects of the economic downturn can be mitigated if the government can rigorously regulate and manage the extractive industry, especially the gold industry.

At a press conference in Monrovia yesterday, Mr. Thompson called on President George Weah and his lieutenants to put stringent measures into place to properly regulate the sector, which he believes will help to breach the current balance of payment gaps Liberia faces.

Many, especially economic experts, agree that the Liberian economy, which is heavily import dependent, could fare better if the country can add value to and increase the volume of its exports, mainly processed or semi processed products. This, according to him, will help ensure a favorable and healthy balance of payment regime.

Experts agree the current slump in export value of Liberia’s traditional exports, mainly natural rubber and iron ore, could be reversed if value is added to principal exports. In addition, they believe stronger regulatory measures should be applied particularly to gold which, according to Thompson, is being air-lifted by helicopter out of the country as gold bullions by the Bea Mountain Mining and the Millennium Gold corporation.

Mr. Thompson, who is also a former Managing Director of the National Housing Authority (NHA), however noted that the gold industry could be that magic wand that could help stabilize the economy by bringing in the needed foreign exchange for the time being to strengthen the country’s balance of payment as the government strives to invest in long term solutions such as the agricultural sector and industrialization.

He said that Avesoro or Bea Mountain Mining Corporation (formerly Aureus Mining) and the MNG gold mining companies are producing and flying significant quantities of gold bullion out of Liberia every week by helicopter while our currency continues to depreciate.

Mr. Thompson senses something sinister about the operations of these gold mining companies in the country from which the Liberian people are receiving no significant benefits.  “The highly secretive way this was done in Liberia with those mining concessions suggests that we the Liberian people are being shortchanged of significant foreign exchange benefits from our God-given heritage, by a few greedy and corrupt persons,” he said.

“God has blessed us with several large gold deposits, but we learned from the Panama Papers about the alleged use of “bearer shares” by certain government officials and their cronies, to hide their ownership of gold mining company shares plus other illicit payments in offshore tax havens,” he said.

However, from a combined investment of at least US$500 million, the IMF estimates that the value of gold exports will average between US$200 million to US$300 million every year from the Liberian gold mines. This excludes the Hummingbird gold concession in Southeast Liberia that was recently rejected by President Weah.

“These are foreign exchange [opportunities] that could help strengthen our economy. This gold is being exported and we don’t know what is coming back into our economy. This is frustrating for a country and its people who would  have benefited immensely from our natural resources if the proper things were done. But our leaders are so selfish and greedy—and want everything for themselves.”

He called on President Weah to thoroughly monitor the sector so that the country can start to benefit from what it is due so that the masses can be relieved from the current deteriorating economic situation. He cited as example, the Hummingbird Resources whose financial statement shows that its Dugbe operations in Southeast Liberia is capable of producing at least 125,000 ounces of gold each year while reserves are put at 4.2 million ounces. Further according to Hummingbird, the gold will generate export revenues of US$163 Million every year while the deposits are worth at least US$ 5.5 billion.

Mr. Thompson commended the President for his astute and timely decision to reject the deal.

He however wants the President to exert efforts to prevail on these major gold mining companies (Avesoro and the MNG Group) to reveal the names of past and present officials holding bearer shares as a condition to continue mining operations.

“Furthermore, all such equity percentages identified by the probe should be attached and transferred from those economic criminals into the name of the Government of Liberia,” he said. The World Bank Group is understood to be a shareholder through the IFC and he wants this global body help any probe that may be commissioned by the President.

“A wise use of our national heritage will go a long way to improve CBL’s foreign exchange reserves and to strengthen our national currency,” he said. Mr. Thompson also noted that the leadership of the country needs to be wiser and more transparent in the way it utilizes valuable resources like gold, to significantly improve the country’s foreign reserves and strengthen its currency, citing the example of  Botswana, which derives at least 50 percent of its budget from diamonds.

Weah Must Prosecute Perpetrators of Economic Crimes

Mr. Thompson has also called on President Weah to investigate and prosecute those who might have been found robbing the country. He said this will give prospective investors the required confidence to come and invest their money here.

“To improve the climate for foreign investment as well as the country’s economic situation, there is an urgent need to end the culture of impunity for economic crimes committed against the poor citizens of Liberia by people in positions of authority,” he said.

He called on the President to set up an economic crimes body to speedily investigate and prosecute those Liberians who have betrayed their country and set Liberians up for continued poverty, suffering and social unrest through the bearer shares.

This mandate, he said, should extend to all other major economic crimes and should include concerted efforts to retrieve and repatriate the illicit wealth of all those adjudged guilty.

That as a further measure to end the culture of impunity and corruption in the allocation of extractive and other concessions in Liberia, the government should outlaw the use of bearer shares in the capital structure of all corporate entities operating in Liberia.

Thompson noted that restructuring the Hummingbird Agreement into a transparent PPP to produce gold in the Dugbe region will help to gradually improve and sustain Liberia’s foreign exchange reserves.

He also called on the US government help stamp out the culture of corruption and impunity by prosecuting Liberian economic criminals.

9 COMMENTS

  1. I wonder George Weah can still remember this man of respect and Honesty? Mr. President you need to get the finest Liberians with integrity and knowledge to help you move the country forward.
    Mr. President, you can vividly recalled when the Lone Star team used to visit Abidjan, Ivory Coast and this man is one of those that used to host the team?) At that time he was the Resident Vice President for CITI bank for over a decade. Now retired from that bank and then became Managing Director for ECobank in Ghana.
    Today the economy is in bad shape and it is because of this and many other hardships the Liberians are faced with that this seasoned banker and economist is trying to suggest and help out on the state of the economy.
    He is is a seasoned Banker and a Fulbright scholar. Very smart and his peers know him good. President Weah please do me and other Liberians a favor, to bring the best of brains on board your ship as its captain. Mr. Thompson and others could be of great help to this country.
    It is about who loves their
    country and willing to sacrifice their knowledge to develop this country. We need leaders that can be held accountable for their bad behaviors.

  2. Maybe, the gold industry can help. But I am a little skeptical. Why? Because the help we need is an immediate one. We certainly need a sensible guick fix, a short-term solution that redeems us out of the mess we find ourselves in. My brother George Weah will try. When I get to Liberia, I will try my best and suggest some things to him.

    Our economic situation is severely challenged. We’ve got lots of foreign business people (mainly from Asia) in Liberia who pocket the money. Liberians need to keep some of the money that Liberians spend everyday. Our country men and women need to be financially empowered in order to compete with the foreign business people. To all readers, I’d like to make it clear that I am not promoting hatred. I am not xenophobic. The truth must be told. And that’s all I am doing.

    When one takes a look at the Grocery Stores in Monrovia, (Super Markets) none is owned by a Liberian. None. Guess what? Who patronizes the grocery stores? Liberians, of course. In my humble opinion, the stablization of our country’s economy starts by creating small business loans for our lower to middle-class Liberians.

    Finally, the Ghanaian economy is not as good as others would have us believe. The last time I took a look at their economic situation, the Ghanaian economy was not filled with an over abundance of steam. For them, just hot air. A country of over 30 million inhabitants, a recent report shows that the country possesses 55 ambulances. Of the 55 ambulances they’ve got, half of them do not run due to gas issues. Frankly, I do not want to see Liberians wish for the Ghanaian way of Life. Yeah, educationally, they are okay. But that’s it.

    We Liberians should duke it out and come up with solutions that are in our own best interest. A born Maryland county Liberian such as I, I will forego dunku and kinken in a heartbeat in order to eat henu-blah (palm butter over rice) and collard greens, cooked the Liberian way.
    I am very optimistic that our economy will stop its downward spiral soon.

    • F.Hney,
      Ghana is currently positioned as the world’s 7th largest and Africa’s second largest producer of gold (now that’s impressive). Comparing Ghana’s infrastructure with Liberia,Ghana is far ahead (ofcourse due to a number of factors ; democratic maturity, relative good governance, and so forth). There are a number of lessons we can draw from our neighbor Ghana to improve our economy and yes , we can do better than Ghana and also draw from lessons learned from other countries around the world as well as innovate/come up with our own unique solutions (why not?). There are many reasons why we should reference Ghana, due to our geographic proximity, we share some social,economic and cultural similarities and if they were able to manage their gold industry very well, I think we should filter, copy and paste as well as add on to some of their expertise that leading to their success. Ghanaian way of life is another issue (we are unique in many ways), but we could still learn something from them and this could also apply reciprocally in other areas.

      I don’t have any geodata detailing Liberia’s gold reserves, but in any case we can still do better with whatever amount of gold we have under our rivers, mountains and soil at large!

      By the way, we need experts in various fields working along with Geographic Information Systems (GIS) specialists to survey the entirety of Liberia ,detailing what we have under our “sandals”.

  3. we have to start from some where. yes, gold can do it. when the US had its recession in 2009, I heard economists talked about investing in gold. Liberia is rich in natural resources, all we have to do is put the right people in power, who will care about the country”s well-being, and not self aggrandizement.Put Liberia First, people!

  4. Honorable Thompson’s got an excellent point here. It’s really a shame that the Liberian government cannot regulate the gold mining sector. Apart from Bea Mountain Mining Corporation and the MNG gold mining companies, we have a lot of illegal gold mining going on in the South-East and other parts of the country. We have foreigners illegally mining all over the place and the government can’t even do a thing. Only in Liberia I’ve seen government so stupid!

    • Pewu! Illegal gold mining happens in many parts around the world, but like you suggested/implied the government could regulate the sector.

  5. Our country is getting deployed by illicit mineral minders . Mr President you have the power to review their agreement the government. I recommend that Mr. President, please stop U S in the market and let bank control it. I mean no one sell in U S D or buy in U S D except in the banks.

  6. Mr. Call Me John Doe,
    I was active somewhere else and that’s why I did not respond to your comment immediately. Yeah, we need the expertise of many educated people, but we ought to know what it is that we really, really need. Just because something is good for the Ghanaians does not mean it is good for us. Ah, we can do the gold stuff, but I am sorry I need Mr. Call Me John Doe to lecture to me on other things. Ghanaian economy?

    The mining of gold was not done originally by the Ghanaians, but rather, by foreign business investors or maybe exploiters. Ghanaians do not process the gold as one would think. What can we really, really learn from them? How many bullions do they have in reserve?

    My dear fellow compatriot, the Ghanaian economy is not the best! Like ours, they experience their own head winds. I will not be envious of their economy. Never! Some Ghanaians chuckle when they hear news about the goodness of their economy. And why do they chuckle? They know something that some of us, don’t know.

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