The Central Bank of Liberia (CBL), like many of its counterparts across the globe, does not do its work in public or in the media, but as a silent, methodical influencer and with Governor Milton Weeks at the helm, the bank is on the verge of rolling out a strategic plan to ensure that Liberia’s economy is vibrant and booming in the not too distant future.
Governor Weeks, who has kept a low profile since taking over from his illustrious predecessor, Dr. J. Mills Jones, acknowledged that the public might not be aware of what the bank is doing to improve the current state of the economy. He said however, much is being done behind the scenes focusing on economic diversification and financial inclusion that will allow ordinary Liberians access to financial services.
Speaking to a team of Daily Observer reporters and editors in an exclusive interview at his CBL headquarters in Monrovia yesterday, Governor Weeks noted that the prevailing economic situation clearly indicates that there is a need for the country to restructure its economy, in order to ensure stability, inclusion and improvement of other key economic indicators not just on paper, but in the lives of ordinary Liberians.
“We have to restructure our economy, and deviate from the traditional model of depending on traditional commodities of the extractive industry to a more sustainable model, with agriculture at the center of our efforts. We have been talking about this for decades but have been doing little to have this realized,” he said.
Among programs that the CBL is pursuing is the facilitation of the establishment of banks dedicated to industries that require long-term loan facilities, such as with agriculture and housing.
The Governor noted that the current banking profile of the country does not encourage investment in agriculture because loans are on short-term basis with high interest rates. “As a result we need a bank dedicated to the agricultural sector, to help our farmers get access to loans,” he said.
“Commercial banks have a short-term lending profile, which is not the right vehicle for agriculture. So we have commenced discussions with potential investors for the establishment of an Agriculture Bank here,” Gov. Weeks disclosed. However, he said that the Agriculture Bank would not be the same model as the defunct Agriculture Bank of the pre-war years, which was owned by government and was laden with political undertones.
Governor Weeks added that the CBL is working with the Ministry of Agriculture to develop a funding structure that will see investment in agro-processing plants established across the country. Looking at the low level of investment in the agriculture sector, Liberia is yet to come close to the Maputo Declaration—a continental framework that calls for ten percent of every national budget in Africa to go to agriculture.
“When we talk about prioritizing agriculture it doesn’t necessarily mean everyone will return to the soil, but we must encourage value addition that would also help create jobs. We are therefore working with partners to fund the establishment of processing plants across the country,” he said.
Speaking on the price of goods and services in the country, the Governor also noted that the global economic downturn poses tremendous challenges to the Liberian economy but the government has been doing well to manage the situation rather than defending it. Due to the state of the global economy, there is volatility in the exchange rate, putting more pressure on prices and inflation.
He also noted that one of the factors in the inflation rate in Liberia, which currently stands at 8.4%, is that many Liberians are not included in the financial structure of the country. “The majority of our people don’t have access to it. If we can change that, it will have a positive macro effect on the economy. Financial inclusivity can address inflation,” he said.
“The role of central banks is evolving,” the Governor said. “The first function of central banks is to focus on price stability, but some have to also take a developmental approach.”
For example, he said a mortgage structure is needed to enable people to afford modern housing, and that the CBL is working with the national legislature for the establishment of a mortgage law. “We have developers coming to Liberia willing to build modern houses, but they want assurance that people would have access to funding to afford the houses. We don’t have that now, and we need to get it,” he said, adding that building a house block by block inhibits proper city planning, and also undermines the equity of the property because by the time the house is completed, most of it would be already well depreciated.
“The way we build in Liberia is not sustainable; we need to find ways for people to own homes or properties and this can only be done through a vibrant and sustainable loan scheme,” he said.
According to him, there is a need to focus on providing funding for housing in the country, indicating that the CBL is working on the development of a viable and sustainable mortgage scheme that will encourage housing developers to invest in the country.
Meanwhile, the Governor noted that he finds his new job very challenging, he expected it to be so when he accepted to take charge. “I consider it positively challenging, and I don’t take it lightly. Despite the challenges, I am very excited because of the opportunities to effect
change,” he said, adding that the position presents him the opportunities to contribute to the betterment of Liberia.
A series of articles on the interview with the CBL Governor will be published in next week’s editions of the Daily Observer.