Liberia’s Economic Diversification Bill: It’s Better, But Seems too late

By Samuel Goteh
Beijing Normal University, Beijing PRC


The Perspective
Atlanta, Georgia
December 27, 2015

                  



 
 
 
 

This article provides an autopsy of President Sirleaf’s recent bill for economic diversification in Liberia. In the past centuries, Liberia’s model for economic development has been predominantly natural resource-driven and revenues generation for government’s operations have mainly come from the sales or trading of rubber, iron ore, timber and recently with the discovery of oil. In other words, Liberia’s economy and generation of revenues is dependent on the mercy of foreign aid donors, the White House, International Monetary Fund (IMF), World Bank and other donor agencies in the world. As Africa is the second largest recipient of official development assistance (ODA) in the world after the Oceania region in 2013, Liberia also categorically broke record as one of the largest recipient countries of foreign aid in Africa (OECD, 2015).  One study suggests that every year the economic values of natural resources that evaporate on the continent amounts to US$333 billion (Burgis, 2015). This is far more than the amount Africa receives in foreign aid, which is just about US$15 billion. To equate it to the Liberian context, if one tries to measure in monetary terms the economic values of rubber, iron ores, timbers, crude oil, gold and diamond, and other exploited resources that leave the country annually to western countries and local thefts/looters, it will automatically surpass the total costs of exports in West Africa. This unequal balance and unfairness in trade between and amongst foreign companies, insider looters/thefts and local citizens has made Liberia to lag behind for nearly two centuries now. Tom Burgis (2015) described this situation in his recent book as “outsider-insider” corporate looters and thefts of Africa’s wealth and in Liberia the actions of this ‘corporate theft’ continue to undermine national socio-economic development and subject over 65 percent of the Liberian population to abject poverty with over 85 percent surviving on less than US$1.25 per day.

Few months ago, President of Liberia, Madam Ellen Johnson Sirleaf forwarded an economic diversification bill to the house of parliament which was approved with immediate effect after reviewing such document. Even though the entire content of such bill is yet to be made public, but press releases found on the government’s website revealed that the proposed bill will spur economic growth through agro-processing and manufacturing ventures, agriculture modernization, localization of production and opening up of eco-tourism and other important sectors that will promote growth. Despite the prospects for this farsighted policy for economic growth and development, I believe that this is coming too late within twelve years in power and more empirical investigations have to be conducted in order to deeply understand the cost-and-benefits especially for the downtrodden population. Studies have come to approve that an economic model that is built around the export of raw materials such as oil, rubber, timber, iron ores and other natural resources will in effect experience a “resource curse” that lead it to fall into a “poverty trap” with economic shocks. In post “closed door” economic era, before the adoption of the “open door policy” that ushered in modern economic development, Liberia experienced a fast-speed and dramatic growth rate at 11 percent gross domestic product (GDP) per capita. Subsequently, owing to corruption and government inability to build proper institutional and policy frameworks that would have sustained such growth phenomenon; the economic development model of Liberia was classified as “growth without development”. In political economy, ‘endogenous growth’ (i.e., growth from within-building manufacturing companies/factories, investing in agriculture modernization, innovation, science & technologies, and opening up other sectors can sustain the economy even when faced with shocks-recession) than exogenous growth (i.e., foreign aid, relying only on exports-and-imports, oil/rubber and other raw material, cutting expensive, ignoring infrastructure development). Past regimes and this government in particular have failed even after ten years of recovery period to diversify the economy and promote investment in local production, manufacturing, enforcing laws and policies that hold corporation entities and government officials accountable to its citizens and affected concessionary areas.

On another hand, in Liberia most policies adopted by central government have failed to create impacts in the livelihoods of large proportion of the population due to the fast-tack nature of policy formulation and development planning. Policy formulation and national development agenda setting are not carried out through evidence-based analysis and policymakers most often ignore contextualization or injecting the views of local people, (for example: farmers, entrepreneurs), into policy documents, but rather adopt politically motivated and interest driven development agenda and they often trash out previous policies formulated by their predecessors without evaluating said documents (lack of policy succession). In the terms of Professor Amartya Sen (1997), any national development agenda that does not consider contextualization, localization and encourage the participation of local citizens as well as provide economic freedoms and remove barriers to access education and healthcare cannot be considered as sustainable.

In so doing, I argue here that President Sirleaf’s recent economic diversification policy will not be sustainable and it will fail to achieve its objectives of spurring sustainable economic growth and infrastructure development and to lift people out of poverty, especially in poor rural areas and hard to reached hinterland regions. This policy would have made significant impacts if before entering the house of parliament for concurrence, a policy research, empirical studies and/or cost-benefits analysis was conducted to inform the policy formulation process. Although I hail to some extent, the President’s farsightedness to promote market reform, entrepreneurs development and domestication of production which will potentially create more employment opportunities, but I suggest that we should now transition to base our policy and national development agenda on facts through understanding local context, to predict what is feasible or otherwise and what whether in short or long-term strategies can put Liberia amongst leading middle income economies in the world.


About the Author: Samuel Goteh is student of International Development & Public Policy at the Beijing Normal University, Beijing PRC.  He can be reached at: Sgoteh029@yahoo.com and +8618401651787


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While reading your post, I came to know about the Liberia’s model for economic development. I need to know more on this topic. Hope you will update it as soon as possible. I am eagerly waiting for your updated post to know more.dish network packages
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Niki
The Economic Diversification bill can be very helpful for the people in the society as it helps in making the life better. The economic development can help in utilizing the resources to the maximum and conserving it when necessary. Hope the bill is passed by the government. hotels in catalina island hotel metropole
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