July 5, 2011Doug Hadden
Liza Benkovitch, FreeBalance Washington
Liberia has ‘risen from ashes of war and destruction’ and evolved into an emerging democratic nation, one that has made considerable progress in debt management and good governance. Under President Ellen Johnson Sirleaf’s leadership, the Republic of Liberia has been forgiven a $4.6 billion dollar debt to the World Bank and IMF and has also been cleared of a $1.4 billion dollar debt to Paris Club creditors. In return for this generous debt relief, President Ellen Johnson Sirleaf launched a new Anti-Corruption Commission and is seeking partnership with local civic organizations, law enforcement agencies and international support networks, to put an end to corruption in West Africa. The debt pardon would also enable Liberia to acquire financing from foreign investors and “help deliver [critical] services necessary for Liberia’s prosperity,” said IMF First Deputy Managing Director, John Lipsky. And he is right – so far, Liberia has attracted more than $100 million dollars in foreign direct investment since 2009. So, how did Liberia transform itself from a war torn country with a ruined economic infrastructure, into a fiscally responsible and credit worthy state?
In the past two decades, Liberia endured fourteen years of civil war, one that is known as Africa’s ‘bloodiest’ civil war. When President Ellen Johnson Sirleaf assumed presidency in 2006, Liberia was in a state of an economic freeze. The demand for ore had significantly declined in the global market and natural resources were heavily exploited by former warlord president Charles Taylor, who used the export revenue to finance illegal arms trade and ‘line the pockets’ of his government officials. In 2003, the United Nations Security Council placed an export ban and arms embargo on Liberia, accusing Taylor of igniting further conflict in the region through the “guns for diamonds” trade Diamond mining was a very profitable revenue source and timber logging alone, had been forecasted to deliver $80 million a year in sales, of which $15 million would go to the government.
It goes without saying that President Sirleaf had assumed political power at a very difficult time. The sociological landscape was turbulent, and characterized by banditry; children had very few educational opportunities and turned to combatant groups as means of survival. A few years have passed, yet this is still true today. As Sirleaf addressed the audience at the U.S Institute of Peace, she reflected on the role of youth in Liberia’s present and future. Child soldiers are a growing concern –from a security and educational standpoint. First, she said, “[we] need to train police to deal with low level crime that disrupt the sense of security [in this country].” Secondly, “[we] need to make children into productive citizens,” she continued. Unemployment is a challenge, so is the lack of skillsets. More labor intensive industries are needed and the country must cease to rely solely on its natural wealth of resources.
What needs to be done? “Raise the educational standards; promote better governance, which had been eroded and boosted this culture of corruption… take approaches that are systematic and preventative,” said Sirleaf.
What has been done? In Monrovia, the infrastructure improvements are quite visible. New roads, bridges, schools and even city lights are examples of the transformation that occurred in the last five years. “When we first turned on the streetlights – children danced and did their homework, because some do not have lights at home.” This goes to show, how very little can go a long way.
Lastly – how was this done? In the last five years, Liberia achieved accelerated economic growth and advanced quickly into the next stages of economic development. According to Sirleaf, financial aid from international donors was “put to good use,” and the Liberian government worked hard towards transparency initiatives. In fact, in 2010, Liberia selected FreeBalance Accountability Suite software to aid with fiscal revenue management. FreeBalance Accountability Suite created an automated process of all public finance budget transactions (i.e. public spending, reporting, and payroll) within the Ministry of Finance, Civil Service Agency, General Audition Commission and has linked all sites to the Central Bank of Liberia. In the words of Honorable Tarnue Mawalo, Deputy Minister of Administration, “FreeBalance Accountability Suite will serve as a tool to support reform initiatives and will provide the foundation for economic growth and transparency. By building a more transparent government, public trust for Government of Liberia will only increase.”
And, this is true. In FY 2010-2011, the Liberian government was able to allocate 60% of its budget to Poverty Strategy Reduction Goal, and its expenditure for health and education increased by 10%. Liberia has moved 51 places (since 2008) on the Corruption Transparency Index and has been the first country in Africa to become fully compliant with Extractive Industry Transparency Index (EITI). In fact, in 2010, Liberia has filed a second EITI report, which is looked upon as an “affirmation and a testament to the commitment expressed by the President. It also enhances the reliability of the data and expands the sectors covered [such as] disclosure of payments by agriculture concessionaires.”
Liberia has indeed evolved into a “country that is no longer looking for handouts, but rather a nation in search of a true partnership.” Within the last year, the country’s GDP has grown 5.1% and with a few more years of foreign assistance during the transition period; Liberia plans to be on the path of a self-sufficient and sustainable nation.