The Liberian economy has slumped dismally since the ascension to power of President George Maneh Weah and his Congress for Democratic Change government last year.The GDP of Liberia is currently at 0.4 from 5.0 few years ago, according to a World Bank report on Liberia which also asserts that 51% of the population lives below less than 1.90 or less than $380 LD daily.
Major Causes of the slump
One major factor responsible for the slump in the Liberian economy is the shortage of the United States dollar on the market.
The shortage of the United States dollars on the Liberian market can be attributed to several factors:
One major factor is the slump in the prices of iron ore and rubber, the two major export commodities of the country, on the world market.
The companies that produce rubber and iron ore during the good old days, pumped huge amounts into the Liberian economy through the payment of taxes and social development funds.
As a result of the slump in the prices of rubber, iron ore and gold, several companies have slowed down production, while some like the Firestone which is the foremost rubber producer in the country, are on the verge of shutting down their operations.
Firestone recently laid off over 800 workers, while Sime Darby, a rubber production company in Bomi and Grand Cape Mount Counties recently laid off more than 300 employees.
In recent times, the media have been agog with stories about the layoffs of employees by rubber, and gold producing companies and the slowdown in their productions. In a similar vein, companies engaged in iron ore production like China Union have also slowed down their operations and laid off hundreds of employees
Another factor responsible for the shortage of the United States dollar on the Liberian market is the departure of the United Nations Mission in Liberia (UNMIL) which pumped into the Liberian economy millions of dollars monthly through the payment of salaries to its workers, most of whom were Liberian nationals.
UNMIL which came into the country in 2003 to help monitor and sustain the peace following 14 years of blood civil conflict, finally pulled out of the country in 2017.
Effects on residents and companies operating in Liberia
Due to the shortage of the U.S dollar which is used by the business commodity to import goods into the country from abroad, the exchange rate of the Liberian dollar against the U.S dollar which is used alongside the Liberian dollar in the payment of government salaries and allowances, has skyrocketed beyond expectation.
The exchange rate of the U.S dollar against the Liberian dollar which stood at 120 Liberian dollars to one U.S dollar in 2017 now stands at 200 Liberian dollars to one U.S dollar.
The hike in the exchange rate has prompted a sharp increase in the prices of local commodities to monumental proportions.
A bag of rice, the country’s staple food which was sold for 1,200 Liberian dollars per bag in 2017, is now sold for 2,800 Liberian dollars, while a cup of rice which was sold for 15 Liberian dollars has soared to 50 Liberian dollars.
The prices of all commodities have also soared in most cases by more than 100 percent.
The prices of other local produce such as a bag of pepper, bitter balls, okra, cucumber, potatoes, pineapple and eddoes have also continued to skyrocket, thereby causing serious hardship for residents in the rural and urban areas.
Another major commodity, gasoline and fuel which are used by vehicles for transportation have soared to monumental proportions.
A gallon of gasoline which was sold for about 300 Liberian dollars up to 2017 is currently sold for 650 Liberian dollars per gallon, while the price of a gallon of fuel which was sold for about 320 Liberian dollars in 2017 is now sold for about 675 Liberian dollars per gallon.
In the country’s interior, a gallon of gasoline that was sold for LD$540 is now sold for LD$ 840, while fuel is now sold for LD $800 per gasoline as opposed to the previous price of LD$480.
A 25kg bag of rice which was sold for LD $ 2,300.00 is now being sold for LD $ 3,500.
The hike in the price of gasoline and fuel has also given rise to an upsurge in transportation fares.
According to reports, transportation fares from Voinjama in northern Liberia to Monrovia which stood at L$2,500, now stands at LD $ 3,500.00.
Local commodities which are also transported from the interior parts of the country to urban areas have risen sharply.
For example a bunch of plantain which was sold for about L$250 is now sold for about LD $ 950, while a bag of peanuts which was sold for about L$2,500, is now sold for LD $ 4,500.
The prices of other local produce such as pepper, bitter balls, okra, cucumber, potatoes, pineapples and eddoes have also continued to skyrocket, thereby causing serious hardship for both urban and interior residents.
Due to the drop in its income generation capacity, the government is also finding it difficult to pay its workers and meet government operational costs.
As we speak, government is owing most of its workers nearly two months.
Medical facilities across the country are complaining of lack of drugs and logistics to operate to full capacity.
Other government-run institutions are also complaining of inadequate budgetary allocation to operate effectively.