The Daily Observer in its Thursday December 20, 2018 edition reported the story of the launch of a US$3 million initiative, by President Weah to support and empower small Liberian businesses.
The Daily Observer reporter, Alvin Worzi, quoting President Weah said “My desire is to strengthen and support you, so that ordinary business people will be able to move from sidewalks to stores.”
In a restatement of his desire to see Liberians become active participants in the nation’s economy, President Weah said, “this is to help them move from the level of petty markets to manufacturing, and from being spectators to being active participants in the national economy…”
The Daily Observer welcomes this initiative by President Weah but however with caution and guarded optimism of its success. This guarded optimism is informed by past experience where such funding has been used to benefit mainly the shakers and movers who, as the records show are remiss in meeting commitments to repay their loans.
This newspaper recalls that in May 2014, the Ministry of Finance and Development Planning (MFDP) entered into a Memorandum of Understanding with the Liberia Bank for Development and Investment (LBDI) to partner in a loan scheme, through the Private Sector Development Initiatives (PSDI). It was meant to financially strengthen Liberian owned businesses, which were expected to repay, and the repayments would revolve or be disbursed to other Liberian businesses. In this regard, an account would be established through which borrowers would receive their loans..
Towards this end, a Memorandum of Understanding was reached between the MFDP and LBDI to run the PSDI loan activities together; however, customers’ evaluation-vetting was squarely done by MFDP.
But the money, rather than being given to actual small Liberian businesses, actually ended up in the pockets of individuals in positions of influence. Most of the loans were never repaid and the individuals involved were never made to account.
In retrospect, there were no defined criteria based on which qualified individuals could benefit. As a result, loans were given out to individuals based on friendship or on close connections to the President.
A 2017 audit of the MFDP conducted by the Internal Audit Agency revealed that 24 borrowers who received cash loans amounting to US$965,400 did not make any repayment.
According to the auditors, during 2014 to 2016, the project disbursed US$2,274,400 to forty-six (46) borrowers. The auditors found out that Dr. James F. Kollie, former Deputy Minister for Fiscal Affairs (MFDP), signed all the loan approvals while serving in the position.
The auditors discovered that out of an initial amount of US$1,991,900 that was disbursed to thirty-six (36) customers, only US$282,500 had been recovered. The recovered amount was re-disbursed to an additional ten (10) customers, thereby raising the portfolio to US$2,274,400. This meant that the initial disbursement of US$1,991,900 was still outstanding, the report stated.
For example, out of forty-six (46) borrowers, only Garson Incorporated, located on 11th Street, Sinkor, believed to be owned by Dr. James Kollie, paid its obligation of US$150,000 plus US$10,500 interest, amounting to a total repayment of US$160,500. Garson Incorporated’s account statement revealed that the institution had only an US$11.00 obligation outstanding.
Analysts point out that the recovery of those loans has proved to be a rather daunting task and there are credible fears that those loans may likely not be recovered because the individuals have not been made to account.
This behooves the LBDI leadership to put into place watertight but nondiscriminatory measures to ensure that qualified businesses are afforded access to financial credit — that is, if LBDI would be allowed to perform its due diligence on loan applications. But while the Daily Observer welcomes this initiative, there are concerns about the currency in which this money will be disbursed to the public.
For instance, will beneficiaries be paid in US dollars or in Liberian currency. Given the critical shortage of Liberian dollars on the market, will loan beneficiaries be required to repay the loans in US dollars?
Another concern is that of transparency and or the lack of it, which could serve to undermine the President’s stated objectives to lift Liberians out of poverty. Rules, regulations, etc to which beneficiaries will be expected to adhere must be clear and unambiguous. And there should be no bending of the rules.
The Pro Poor rice and the situation surrounding its handling, for example, provides reasons for concerns about transparency and accountability. Although the rice, according to the official accounts, was intended to be distributed equitably to poor families, It turned out to be not the case.
There are credible reports of government officials commandeering rice which according to official accounts was intended for the poor but which for the most part ended in the hands of big shots and speculators and is now being sold above the stipulated price of US10.00 per 25kg sack.
Tempered by this experience, questions are already being asked whether this new initiative like the one before it and now the Pro Poor rice, will not fall subject to behind the scene manipulations.
It must not be forgotten that the credibility of this government is at stake given all that has transpired particularly since the government announced that it had launched an investigation into the disappearance of billions of Liberian dollar banknotes.
This time around the LBDI should not leave the vetting of loan applicants to the Ministry of Finance. Since the Bank is contributing US$2 million to the loan scheme — twice more than government — it should assume a commanding role in the vetting process to ensure that the money will go only those deservingly qualified.