With many insinuating that millions of Liberian dollars provided by the Central Bank of Liberia (CBL) through its micro-finance loan scheme initiated by former Governor Dr. J. Mills Jones was wasted, the presidential hopeful has provided updates on the current status of the loans.
According to Mr. Dee Maxwell Kemayah, Chairman of the Movement for Economic Empowerment (MOVEE), who spoke on behalf of the Governor, propaganda against the CBL micro-finance scheme is being perpetrated by those he described as distractors who want to see the Liberian masses in perpetual poverty.
The CBL in 2015 began a 5-year micro-finance loan scheme when a total of LD$644 million were provided to three micro-finance institutions. These included the Microfinance Network of Liberia, which later became the Network of Microfinance Institutions, the Liberia Credit Union National Association, and the National Apex of Village Savings and Loan Associations. These were provided with the funds for onward lending to their many members across the country.
Since the inception of the scheme many, especially government officials, have criticized the scheme indicating that it was politically motivated. The critics said that the manner in which the scheme was carried out would make it difficult for beneficiaries to repay their loans.
MOVEE yesterday provided an update on the bank’s loan scheme during the tenure of Dr. Jones. According to MOVEE chairman D. Maxwell Kemayah, out of the 644 million Liberian dollars loaned out under the microfinance program, as of December 2015, a total of LD$94,367,366 (over 14%) has been repaid, despite the significant impact of Ebola, which also led to a significant increase in non-performing loans in the commercial banking sector.
In what was a direct response to recent comments by Professor Wilson Tarpeh, who described the scheme as organized chaos or romantic finance, Kemayah said the intent of the scheme, which is changing lives across the country, is being misconstrued.
“People like Professor Tarpeh are troubled by the loan scheme program of the bank spearheaded by the Ex-Governor,” Mr. Kemayah said. “Dr. Jones was aiming at improving access to finance for the poor and those with low income to help them lift themselves up to a better standard of living. They called it politics, simply because they saw that the program was being well received by the poor people.”
Chairman Kemayah, however, disclosed that two structures for repayment of the Microfinance loans of the CBL were set up as an integral part of the Microfinance Program and credit unions on the one hand, and the village savings and loan associations, on the other.
According to him, the former are to repay on a quarterly basis, after a six-month grace period; the latter on a yearly basis. The MOVEE chairman said the CBL, under Dr. Jones, also gave a number of dispensations to commercial banks to help cope with the difficulties brought by the Ebola Virus crisis.
He wondered why certain officials and others are focusing on the repayment of the loans which is more of a threat to the financial system, non-payment of the microfinance loans or nonpayment of loans made by the Commercial Banks. “We believe that it is another way of showing lack of care about the poor, considering, for example, that we don’t hear from those who talk about microfinance when it comes to talking about the repayment of the US$5 million that the CBL was asked to arrange for certain rubber planters who even now are having difficulties repaying,” he said.
Mr. Kemayah said MOVEE led-government would be committed to doing what is necessary to strengthen all sectors of the Liberian economy.
“Had Mr. Tarpeh taken time to investigate, he would have known that the CBL did not use any funds from the Liberian dollar account of the Government that would have to be repaid by tax payers,” he said.
This brings us to the economics of Mr. Tarpeh’s argument, that is, the Microfinance Program promoted by Dr. Jones resulted in too much Liberian dollars being put into the economy, thereby causing the depreciation of the Liberian dollar and high inflation.
“Here are a few facts that disproved all that Mr. Tarpeh has said. The nominal gross domestic product of the Liberian economy is reported to be about two billion United States dollars.
“What Mr. Tarpeh and others like him would want the public to believe is that a total of 644m Liberian dollars loaned out to market women and other poverty stricken Liberians over a three year period is the mighty tail that is wagging this United States two billion dollars dog (normally, it is the dog that wags its tail; but in Tarpeh’s fantasy world, it is the tail that wags the dog); that 644 million Liberian dollars or the equivalent of 7.58 million United States dollars at the exchange rate of L$85 per US dollar, roughly the exchange rate during the period concerned, is causing inflation in a 200m United States dollars economy,” he said.
He called on Mr. Tarpeh to bring out his mathematical formula that shows how the microfinance loans of the CBL are causing the depreciation of the Liberian dollar.
“What Mr. Tarpeh failed to note in his cheap talk to falsely impress is that the CBL initiated under Dr. Jones a policy of selling Central Bank Notes for the purpose of controlling Liberian dollar liquidity in the economy,” he said.
Furthermore, during the tenure of Dr. Jones, a liquidity framework was established for use by a joint technical team comprising CBL and the Ministry of Finance. “The work of the team helps to inform decisions regarding liquidity management. It should also be known that the CBL during the tenure of Dr. Jones also developed the framework for the sale of Liberian government Treasury bills; and that program is ongoing,” Kemayah noted.