CBL Blamed for Increment in Forex Rate

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Assistant Secretary General of the National Foreign Exchange Bureau of Liberia (NAFIBOL), Nimely Saye, is one of two contenders for presidency of the organization

But Ex SG of Money Changers Association Blames Supply and Demand

The assistant secretary general of the National Foreign Exchange Bureau of Liberia (NAFIBOL), Nimely Saye, has blamed the Central Bank of Liberia (CBL) for the high increase in the US-Liberian dollar exchange rate on the Liberian market, because of its inability to regulate the forex market.

Saye made the remarks yesterday in an exclusive interview with the Daily Observer at his forex bureau on Broad Street, when he indicated that the supervision and regulations department at the CBL has failed to work in the interest of legal foreign exchangers, thereby leaving the market open.

He said if the CBL does not put the situation under control now, the exchange rate would reach L$150 to US$1 by July, “because of the current open market situation.”

Saye, who has been in the forex business for over 15 years, indicated that the situation continues to hamper legal exchangers in paying their taxes, rent, salaries, and other fees.

He said despite a series of meetings with authorities of the bank to intervene in the ongoing situation on the Liberian market, they (bank authorities) appear unmoved by their concerns.

“We are not benefiting under Governor Milton A. Weeks’ administration, because there are many illegal foreign exchangers in the various street corners that are changing at their own rate, including cement depots, gas stations, rice depots, supermarkets, and stores thereby hampering the legal forex business,” Saye said.

According to him, the protection of legal exchangers by the Central Bank of Liberia can easily stabilize the exchange rate on the market in the shortest possible time.

He said, “We had a blissful time with the Dr. J. Mills Jones administration, because of his ability to listen and willingness to work with the legal bureaus and the association.

“This led to a stable rate on the Liberian market that would last for three to four months consistently without any daily or weekly increment, from L$88, 89, and 90 to US$1.”

According to him, there are many illegal forex businesses than legal ones which, he said, deserves serious attention by the government, particularly the CBL, adding, “We have only 103 registered bureaus across the country.”

“The CBL takes seven to eight months nowadays before coming to get rid of illegal foreign exchangers. The bank needs to get rid of them on the market or press on them to legalize their status and operate under CBL regulations.

“Everyone is changing money without any restriction, which has a serious consequence on the economy and the country. We are the middlemen between the commercial bank, Central Bank, and business people, but we are not given the opportunity to play our role well,” he said.

Saye said commercial banks, cement depots, gas stations, and rice depots do not have the right to engage in the money exchange business due to the lack of license from the CBL, but they nonetheless continue to do such a business, which is currently affecting the country.

He said the association is confident that the Weah administration will work to have the situation addressed, stating, “We can only get a better result in the country and the economy if the CBL takes action against illegal forex businesses.”

Saye called on President George Weah to issue an Executive Order, which he believes will help to reduce or stabilize the exchange rate and also ensure that those who are not licensed to operate as money exchangers in the country are barred from doing so.

“We all observed that few hours to President Weah’s State of the Nation Address, the rate dropped because money exchangers didn’t have money. If the business people hold on to their money, it will be a serious problem,” he stated.

“In 1999, the Central Bank of Liberia enacted a law establishing the Foreign Exchange Bureau and since the act was created, we have been protected according to the laws.”

However the first secretary general of the Liberia Money Changers Association, Mr. Idrissa Kaba has objected to the claim that the CBL is responsible for the high exchange rate of the Liberian dollar to the US dollar.

“Every student of economics,” Kaba said, “will realize that what is happening between the US dollar and the Liberian dollar is the issue of supply and demand and not because there are what someone will describe as ‘illegal money changers’ in the country.”

Kaba said “The supply of the US dollar is lower than that of the Liberian dollar on the market and that is the reason the demand for the US dollar has affected the Liberian dollar.” He added that if the Liberian government can provide dollars to all major foreign businesses, including the huge supermarkets, Club Beer, Coco Cola, CEMENCO, among others, the pressure would naturally reduce on the Liberian dollar and it will normalize the exchange rate.

Central Bank of Liberia in a release issued by Mr. Cyrus Wleh Badio, Head of Corporate Communications, said yesterday that despite an end-of-year press conference on December 21, 2017 on the state of the Liberian economy, stories still linger about alleged illegal capital transfers. These stories linger because the statistics that the Central Bank of Liberia (CBL) has released have been taken out of context and/or simply misunderstood.

“It is therefore important, that the CBL clarifies these stories to prevent speculations that have the propensity to undermine the credibility and stability of the financial sector and by extension present wrong signals to the public including our development partners, current and potential investors, among others.

“During the December 2017 Press Conference, the CBL disclosed that between November 2016 and October 2017, outward personal remittances amounted to US$449.41 million while during that same period, Liberia received US$545.78 million in inward personal remittance, representing a net gain of US$96.37 million.

“The US$449 million mentioned comprised all transfers in cash made by residents to non-residents and transfers between resident and non-resident individuals on one hand. On the other hand, it also comprised transfers of income of border, seasonal, and other short-term workers who are employed in the economy where they are not resident. It is the total of all monies remitted through Western Union, MoneyGram, Ria (another money transfer operator) and via SWIFT1 by individuals and/or businesses to the rest of the world.

“Furthermore, reporting that there was US$449.41 in outward personal remittance in 2017 does not in any way suggest that the money was transmitted directly from the CBL or transmitted to unidentified foreign accounts. The CBL wishes to emphasize that the sources of the monies that were remitted were not from the Central Bank of Liberia. In addition, nowhere in the CBL publication does the issue of unidentified foreign accounts arise.

“For the calendar year 2017 (i.e. January-December, 2017), provisional statistics show that the total outflows of personal remittances amounted to US$445.3 million. Of this amount, about 31.5 percent was transferred through Money Transfer Operators (i.e. Western Union, MoneyGram, and RIA) while the remaining 68.5 percent were through banks using SWIFT. Most of the SWIFT transactions (which constituted 68.5 percent of the total outflows) were carried out by businesses engaged in construction activities, rice and frozen food importation, auto parts, supermarkets and trading businesses, among others.

“Over the last 2 years, preceding the elections period, the total outflows of personal remittances grew from US$293.4 million in 2015 to US$304.6 million in 2016. The growth in total outflow in 2017 largely reflects responses within the economy to uncertainty that may have been associated with the then impending elections. Where there is uncertainty, there will be outflow of funds. It is important, however, to once again emphasize that the total outflow of remittances mentioned is an aggregate of personal remittances from various sources and NOT transfers made by officials of Government or to unknown accounts as is being wrongly perceived.

“The Central Bank of Liberia welcomes public scrutiny, especially from the media, but this must be done in good faith,” the statement said.

Author

  • Anthony Kokoi is a young Liberian sports writer who has an ever-growing passion for the development of the game of football (soccer) and other sports. For the past few years, he has been passionately engaged in reporting the developments of the game in the country. He is an associate member of the Sports Writers Association of Liberia (SWAL). He is a promoter of young talents. He also writes match reports and makes an analysis of Liberian Football.

7 COMMENTS

  1. The US dollar is one of the main reasons why Liberia became an envy of many, many people from the 50s up to the mid 70s. For some grotesque reasons, the Liberian dollar which was on a par with the US dollar is terribly experiencing hard times. In some situations, the exchange rate of the US dollar to its Liberian counterpart is 90:1, or 90LD to 1US. Something must be done immediately, otherwise Liberia risks a downward economic decline. Let’s not also gloss over the fact that Liberians have not used coins for well over 12 years. The presence of coins will make things much, much better. In monetary jargon, coins are coins and paper money is paper money. But in some cases, people refer to paper money as cents in Liberia! That’s rediculus. The government of Weah and Taylor is approximately two months of age. They do not deserve a blame for this ongoing mess. I certainly hope that the Weah-Taylor team will look into the “coins” issue pretty soon.

  2. Rab,
    That is a big question. I have been writing about this issue for a long time. I am not getting anywhere. But, I will not stop.

  3. Freeman,
    With all due respect, I disagree with you because there’s no reason for me to re-visit the 70s. In the 70s and years before, the Liberian dollar was concurrent with the USD. We used to have our own coins. When we had coins, we enjoyed some economic boom years. And yes, during those good years, Liberia did not have a distinction of being a coin-less country. During the 80s when Chase Manhattan and other US banks pulled out of Liberia, the Liberian dollar encountered severe head winds. Something went wrong during the Doe years and I am not sure if Doe was responsible. I am not into the blame game. All I am saying is this: Liberia has no coins. It’s about time that we had strongly considered the idea of using coins once again.
    We need coins because of many reasons. I am not in the position of stating the significance of coins from east to west. Doing so will amount to wasting my and your time. But keep this in mind…..our paper money should not get so dirty. The paper money gets dirty because there aren’t any coins.
    Hang in there, buddy. The 70s is gone. Let’s deal with innovative 21st century issues.

  4. The 70s are gone. Excuse my error. My phone committed the error. I will break my phone up into smitherens. It will not mess with me anytime soon.

  5. I am not an economist, but I did a little research on the LRD vs. USD. I came to conclude that the CBL should be blame. The CBL allowed the USD to be used as a “marketing commodity”. I am totally against the accelerated opening of foreign exchange bureaus in the capital, the USD is a legal tender in Liberia, that is, you use the USD to transact all businesses in Liberia, why allowing one business minded group to form a cartel in the money market? take a look at Montserrado county 98% of foreign exchange bureau owners are Fulani; therefore, they dictate the price of the USD on a daily bases. Worst of all the money from these bureaus is not entering the commercial banks thereby creating a very big leakage in the circular flow. Before the CBL took the decision to move/remove all petty money exchange boys ( Liberians) from the street in 2009, and asked all to proceed to the CBL to register as a legal Fx dealer with a fixed capital and an office space, which the Liberian boys cannot afford to provide, this lead to the Fulani with shops down waterside, Redlight, Duala to register separate business as FX where they will do more of buying with less selling, calling one another first in the morning to set the rate, from Broad street, Duala, ELWA ,REDlight and so on . Before this CARTEL there were competitors in the market, the Lib. boys were surprising the market forces by keeping the rate on the balance. Try this go to a small FX shop in Redlight for example, ask that you have USD50,000.00 to change in LRD, the guy will start calling from place to place and the money will be available but try the reverse by asking to buy USD50,000.00 from LRD he will tell you he cant.

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