Much has been said about the controversial loan scheme undertaken by the Weah Administration to finance road development projects in the country. Many have argued that the loans were contracted out of the well-known channels of the Bretton Woods Twins, the IMF and World Bank. But it is possible we could be running too fast to judgment so, we may need to give President Weah a chance.
Major concerns have been centered on the transparency of the arrangements as well as the ability of the country to repay the loans once they fall due. The IMF and World Bank as expected have not given their blessings to the contract of the loans.
They argue that such may worsen the country’s debt to GDP ratio since the loans are been contracted outside the ambit of Liberia-IMF/World Bank relations. Additionally, this newspaper shares the general public concern about the secrecy surrounding the source of the loans as well as the kind of sovereign guarantee being requested and shall remain so until these concerns are adequately addressed.
On the other hand, this newspaper believes that there is a need for Liberia to seek development financing from sources outside the World Bank and International Monetary Fund(IMF) if at all the country’s development needs are to be met. The IMF/World Bank is known for imposing difficult and strangulating structural adjustment policies on borrowing nations which call for the cutting of social spending to meet debt servicing requirements.
These structural adjustment policies have proved to be disastrous for developing and under-developed countries as they contribute to the deepening and entrenchment of poverty. In many ways than one, the World Bank, as it would appear within the context of our situation is complicit in the exploitation of the country by multinational companies and by extension the deepening of poverty in Liberia.
The open pit gold mining concession in Kinjor, Grand Cape Mount County for example has forcibly displaced thousands of people from their traditional lands including burial grounds and sacred groves. Additionally, chemicals, mainly the highly poisonous cyanide used to leach gold from the soil have polluted their drinking water sources and caused itching skin diseases among others.
Under the concession agreement, over 943,000 ounces of gold will be extracted during the life of the operation. At today’s market price of US$1,280.90 per ounce of gold, the Kinjor gold reserves estimated at 934,000 ounces is worth US$1,196,361,000 (one billion, one hundred ninety-six million, three-hundred sixty-one thousand dollars United States Dollars).
The World Bank through the International Finance Corporation(IFC) has invested 10 million U.S. dollars in the mine from which 17,172oz of gold at a value of US$21,995,614 (twenty-one million nine-hundred ninety-five thousand, six hundred, fourteen U.S. dollars) in 2015. But the people of Kinjor, despite the huge mineral sources which they rightly own, remain in abject poverty and have benefited almost nothing from their resources.
Similarly is the newly signed Hummingbird concession agreement granting exploitation rights in River Gee, Sinoe and Grand Kru Counties to mine 14 trillion ounces of gold. This agreement like the Bea Mountain (Kinjor) agreement is one of several agreements that President Sirleaf unsuccessfully tried to pass into law before leaving office.
The World Bank is also financing this venture. Yet this is the same World Bank that we have historically been running to for development financing. Our leaders, both past and present have consistently failed to create a sovereign wealth fund based on Liberia’s vast endowment of rich natural resources.
Instead they have pursued policies that have virtually mortgaged the country’s future for a pittance. Whether President Weah’s outreach to non-traditional sources of development financing is the beginning of a move towards a development paradigm shift may be too soon to tell.
It is possible that he may be well meaning in his desire to bring development to his people and has, as such, plunged into uncharted territory replete with unknown dangers. But he has to be aware that his dream could possibly run aground given the constellation of characters, some being very unsavory, who may lack the patriotism and commitment to country that he may be possessed of.
Perhaps President Weah was fully aware that IMF/World Bank policies have tended to create poverty debt traps out of which no escape seems possible. And perhaps such concerns were the main drivers responsible for his determination to seek development financing outside the World Bank/IMF. In this regard, this newspaper believes that President Weah may be setting a precedent, the core of which is non-dependency on the IMF/World Bank for national economic survival.
Unlike President Weah, former President Sirleaf slavishly embraced World Bank/IMF diktat, pushing the country further into the grip and control of multinational corporations who have continued to exploit the country resources for little or nothing. For example, despite all the bad things that may be attributed to jailed Liberian President, Charles Taylor, he did one good thing which only what a nationalist leader would do.
For instance the 2002, Petroleum law crafted under the Charles Taylor administration provided for a 20 percent stake for Liberia in concession agreements in addition to the 10 percent set aside for Liberian participation in the oil industry. Under President Ellen Johnson Sirleaf, all of these provisions were squashed placing Liberia completely at the mercy of denizens of international capital.
She removed or caused to be removed all such legal provisions concerning the concessioning of Liberia’s mineral resources. In the end she succeeded in awarding iron ore concession agreements to shady companies like Elenito, hitherto, a mere scrap dealing company with no history of mining anywhere.
President Weah should avoid retracing his predecessor’s footsteps mortgaging the resources of this country on the cheap. From our perspective, most Liberians, hungry for long denied development, are indeed supportive of the move to source development financing outside traditional World Bank/IMF sources.
What they (Liberians) remain wary of, though, is the chance that most of the loan money may end up in private pockets and their dreams of development in the form of excellent road networks may not be realized.
In conclusion, we cannot help but sound a note of warning to World Bank/IMF policy makers that their structural adjustment policies which have only succeeded in creating poverty traps for poor countries like Liberia will face growing rejection by the new breed of emergent African leaders.
President Weah may lack the sophistication and finesse of his predecessor but he may not be as bereft of empathy as his predecessor and it is likely he may very well turn away from her embrace of the Bretton woods twins whose structural adjustment policies have so much harm to African economies.
Against this backdrop, we can only urge Liberians to give George Weah a chance for this move may just be a precursor of things to come. We can only hope and wait!