The vice president for financial affairs of the University of Liberia (UL), Prof. Wilson K. Tarpeh, has said that the debate over dual currency in Liberia is not anything new to the country.
According to him, the dual currency argument was raised a long time ago by past leaders of this county to address the problem but no solution materialized because the government itself refused to accept the Liberian dollar.
Prof. Tarpeh made the assertions yesterday at a one-day stakeholders’ roundtable discussion on the Economic & Constitutional Implications of Liberia’s Dual Currency Regime.
The forum, which was attended by several leading Liberian economists, bankers, government financial experts and politicians, was organized by the Governance Commission and the Constitution Review Committee. It was held at the Monrovia City Hall.
Among the politicians were the Speaker of the House of Representatives, Alex Tyler, and President Pro-Tempore of the Liberian Senate, Armah Zolu Jallah.
The purpose of the roundtable, according to Governance Commission Chair, Dr. Amos Sawyer, was to illuminate the monetary and related fiscal issues having to do with challenges faced by the citizens whose worsening plight could be alleviated through constitutional amendments.
The urgency of the forum, said Dr. Sawyer, came out of nationwide consultations by the Constitution Review Committee (CRC), headed by Counselor Gloria Scott, during which a cross-section of Liberians expressed grave concern about the dual currency. They said the dual currency, which means the use of the Liberian and United States dollars, was seriously hurting them. In the view of the vast majority of Liberians, said the CRC, “only the Liberian dollar should be used in local business transactions.” This view was consistently expressed in all 73 constituency districts across the country by 69.32 percent of those who participated in town and district level meetings.
“It also emerged,” said Dr. Sawyer, “that Liberian businesspeople who are constrained to sell their wares for Liberian dollars, largely due to the nature of the clientele they serve, find fluctuating exchange rates combined with weak institutional mediatory mechanisms that leave such businesspeople at the mercy of importers and wholesalers. When the transaction costs are considered, the Governance Commission Chair explained, “doing business, for them, becomes far more risky and far less profitable than it is for others.”
Professor Tarpeh, in his intervention, said the constitution provides enough flexibility for management of the economy to be conducted by the people.
He further suggested that if the dual currency should be used, Liberians need to accept the Liberia dollar and use it as the currency of choice.
Should the Liberian dollar be accepted by all, it will create an opportunity to promote economic growth and discipline in the country.
One of the key ways to accelerate the potency or strength of the Liberian dollar, said Professor Tarpeh, is to require all businesspeople, including all concessions to pay their taxes in Liberian dollars. This would immediately lower the rate of exchange and probably bring the value of the United States dollar to as low as 20 Liberian dollars.
Earlier, Senate President Pro-tempore Armah Jallah admitted that the current government payroll for senior officials is in both Liberian dollar and United States dollar components.
If the issue of dual currency should be addressed in Liberia, it must be through the constitution, said Sen. Jallah, describing it as the best alternative for Liberia’s economy.
Taking into consideration some intangible benefits, Sen. Jallah said there should be empowerment of small and medium size business owners who operate exchange bureaus, with all taxes levied from all institutions exchanging money going back to government.
Policy makers should not only seek to practice fiscal discipline, but government must closely monitor the level of dollarization, with data on dollarization calculated and published by the Central Bank of Liberia.
Sen. Jallah recommended a single currency regime in Liberia’s fiscal policy through the appropriate legislation to strengthen the nation’s economy and empower Liberia’s small and medium businesses in order to lift up the country’s middle class.
The president of the Liberia Chamber of Commerce, Francis A. Dennis, said the issue of pursuing the policy of a single currency has to be approached very carefully, especially since Liberia is an import-dependent country that needs strong foreign currency, such as the US dollar to buy from abroad. The answer to this, he declared, is to produce more goods, especially agriculturally, that we could sell abroad.
Mr. Dennis also argued that Liberians should take greater advantage of the benefit the Americans have given African countries by enabling them to export their goods to the USA “duty free.” Other countries, including Ghana and Cote d’Ivoire, are taking advantage of this opportunity, and so should Liberia.
For his part, the Daily Observer publisher and managing director, Kenneth Y. Best, said Liberia’s economy is predominantly in the hands of foreigners, which is hampering the growth of Liberian businesses.
“As long as Liberians are not in business in a serious way, they will continue to live in poverty in their own country,” he declared.
Mr. Best lamented that the Business College at the University of Liberia, like business colleges in all our universities, “do not teach marketing or import and export. So how can Liberian businesspeople ever learn to import their own merchandize when they have never been taught that? And yet, so long as they continue to depend on foreign importers, so long will Liberian businesspeople remain at the short end of the stick.”
Mr. Best further lamented that many of the speakers at yesterday’s forum were talking of a “gradual approach” to a single currency. The Observer publisher recalled that in 1973 the identical discussion on the currency issue was held in the auditorium of the University of Liberia. He recalled that during that conference, Harry L. Morris, then Liberia’s richest man because he owned the largest single rubber farm in the world owned by one man, cried when the issue of a Liberian dollar currency was raised. He wanted Liberia to remain in the US dollar regime.
Professor Wilson Tarpeh said he was only a high school student then, but he vividly remembered that conference. After that, he recalled, the government led by Finance Minister Steve Tolbert, and one his close associates, now President of Liberia, Ellen Johnson Sirleaf, and Romeo Horton, former Commerce Minister and founder of the Bank of Liberia, produced a document calling for a single currency within a few years. They also proposed the maximization of agricultural production so that Liberia would start feeding itself in rice and other produce and limit the amount of foreign exchange we spend on food.
This policy, said Prof. Tarpeh, remained on course even after the 1980 coup because even the military government saw wisdom in it. During that period the Liberia Produce Marketing Corporation (LPMC) was in full swing, buying produce from farmers, whose cooperatives in Lofa, Bong and Nimba Counties were booming and Liberia was exporting tens of millions of US dollars of produce abroad. The Agriculture Bank vibrantly helped to fund all this, Tarpeh said. But somehow Liberia lost its way, he lamented; and here we are today, over 40 years since that 1973 conference on currency, still “talking about talks of a single currency.”
Mr. Best stressed the need for Liberians to start producing their staple food, rice, and that would cut out nearly 75% of what we spend just on food imports alone. “This is why we need to empower the agriculture sector and small businesses as major components of resolving once and for all this dual currency crisis,” he added.
The president of the Liberia Marketing Association, Madam Lusu Sloan, said the Liberian marketers were at a very serious disadvantage having to pay US dollars for most of the imported goods they sell. Most of the time, she said, foreign importers demand only US dollars for their goods, or unbearable exchange rates if the marketers must pay in Liberian dollars. “This puts us at a very serious disadvantage,” she said, “and makes our businesses mostly unprofitable. And this keeps us living below the poverty line.”
Advent of the Eco in 2020
The ECOWAS Ambassador to Liberia, in brief remarks, said Liberia was the only ECOWAS country still using a dual currency. He urged the country to make a decision one way or the other; and hinted that if it did not, it would have to wait until 2020, when the Eco, the ECOWAS single currency will start being used by all ECOWAS nations, just as the Euro is being used in most parts of Europe.
The high level roundtable was also attended by Commerce and Industry Minister Axel Addy. The roundtable was moderated by Boimah Kamara, Deputy Governor of the Central Bank of Liberia, on behalf of CBL Executive Governor, Dr. J. Mills Jones.