Liquidity Crunch Hits Liberian Businesses

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Pres. Weah: "Our currency is in free fall, inflation is rising and... our foreign reserve is at an all-time low." (Above: Forex Bureaus around Monrovia show the exchange rate well above L$130/US$1. )

Exchange rate going up almost daily

A Daily Observer survey revealed that the ongoing liquidity crunch that few months ago hit banking and other financial institutions continues to bite hard across the country.

Initially, when the liquidity crunch set in, heads of financial institutions and independent experts laid blame at the doorsteps of the Central Bank of Liberia.

In a swift reaction to the claims of the commercial banks, CBL Governor Milton A. Weeks told a news conference in Monrovia that the bank gave the commercial banks US$5,000,000 intended to stabilize the ever growing demand for United States dollars by business entities in the country.

Well placed financial analysts recently told the Daily Observer that a practical strategy must be put in place by the Central Bank of Liberia to urgently address the current liquidity crunch that continues to adversely affect Liberians across the country.

The financial experts, however, alluded to the fact that the CBL has made some interventions in the financial market in Liberia to help stabilize the escalating U.S. dollar exchange rate against the very weak Liberian dollar.

Yet, the financial experts pointed out that such intervention has not made any kind of significant impact on the lives of ordinary Liberians whose purchasing powers continue to diminish by the day.

As a result of huge demands by bank customers seeking to withdraw funds from their deposits, the various banks displayed great reluctance giving out huge sums of money though the requested withdrawals were genuine and legal.

Incessant mobile phone calls from rural and urban businessmen and women continue to speak of unbearable hardships in several parts of the country.

According to various reports gathered by the Daily Observer in both urban and rural areas of the country, the prices of essential commodities such as petroleum products, cement, rice, construction materials have hit the roof.

As a result ordinary citizens, especially those in the lowest income bracket, are finding things very difficult as the uncontrolled and escalating prices continue to impose extreme hardship on Liberians in many parts of the country.

Business entities contacted in rural Liberia on Wednesday through mobile phone intimated that their businesses are running out of critically needed goods such as rice, cement, steel rods and flour.

Businessman Sam Koboi Mulbah, wholesale and retailer of steel rods and cement in Voinjama City, Lofa County said that three of his warehouses are now out of those essential goods.

Besides, Mulbah disclosed that due to increased use of the alternative business route from Voinjama to the Guinean commercial hubs of Macenta and Nzérékoré, local business people in Guinea increased their currency’s rate against the weak Liberian dollar.

“Our Liberian money has been reduced to the extent that we, Liberian business people, are unable to buy the kind of goods that we need in Liberia for our customers in Voinjama City and its environs,” Mulbah lamented.

As a rural business person, he added, it is Mulbah’s hope that the incoming Liberian Government will meticulously look at the business climate in Liberia and prioritize the welfare of the Liberian business community.

From Kakata City in Margibi County, businessman Barkolleh Yarkpai told the Daily Observer this week that the foreign exchange business is like finding gold and diamonds to buy large quantities of goods from Monrovia.

“I want to stress to the incoming Liberian Government to prioritize and even work harder to first and foremost stabilize the exchange rate in our country or else many Liberians will run out of business,” Yarkpai emphasized.

Bong County businesswoman Elizabeth Naomi Sumo pointed out that most of the Liberian business entities in Gbarnga are on the verge of closing down due to lack of American dollars to buy goods like cement, rice, flour and onions from Monrovia.

“We are eagerly awaiting the incoming government to take serious action about the bad exchange rate and its corresponding effect on most Liberian businesses in our country,” Madam Sumo stressed.

In Monrovia, it has been observed that as soon as a rural business person enters a store and asks for imported goods, the discouraging response is that all goods are now being sold in United States dollars or its equivalent in Liberian dollars at prevailing market rates.

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