Gripped by Fear and Opportunism
By Geepu Nah Tiepoh
May 17, 2002
The Liberian economic crisis is being compounded by a synergy of fear and opportunism. The general climate of fear in the country, nurtured by constant acts of political repression and rebel warlordism, has provided a platform and pretext for economic opportunism. Agents of profiteering designs have found in this climate a much needed alibi to subject the economy and people to instant exchange rate fluctuations and price extortions.
The present wave of such exchange-rate and price hikes followed the latest strikes by rebel warlords seeking to replace Liberia’s incumbent warlord regime. Various reports relayed from the Monrovian press paint a worsened macroeconomic situation. The Liberian dollar sharply depreciated, falling from L$50:US$1 two weeks earlier to a record low of L$71:US$1 this week. Prices of essential commodities, including rice, the national staple, also increased abruptly. The price of rice jumped by 55%, from L$1,100 to L$1,700 per bag, while a gallon of gasoline now costs L$225, from L$165 last week (a 36% price hike). Transport fares also rose significantly.
In a dependent and vulnerable economy, as the Liberian case, financial capital is usually hypersensitive to unstable events and is always on edge, seeking to manipulate and exploit the money market. There has been chronic incidence of unscrupulous commercial behavior on the part of local traders (mainly Lebanese), hoarding the US dollar and refusing to accept business in Liberian dollars. This was one key factor contributing to last year’s depreciation of the domestic currency and higher prices, which prompted the Central Bank and the Ministry of Commerce to intervene by injecting foreign exchange into the economy. While these efforts seemed to have succeeded in stabilizing the exchange rate, it is not clear whether they were accompanied by adequate regulatory measures aimed at curbing the unscrupulous commercial practices.
Some commercial interests have the tendency to inflate their prices, using a lower dollar as a pretext, even though they too contributed to such depreciation. This is opportunism! Thus the norm in the Liberian situation seems to be that even traders who have no connection with foreign trade are always anxious to adjust their prices to any slightest movement in the exchange rate. And those firms linked to foreign trade do not even allow any reasonable time lags between events and possible government responses. Everyone appears to be on the edge ready to take advantage of the next events. Even the Liberian president, Charles Taylor, this week cautioned such business people, calling them “opportunistic hyenas and vultures”. This confirms that the regime itself is clearly aware of the opportunistic tendencies feeding the national economic crisis.