LIBERIA: ANALYSIS OF EXECUTIVE ORDER 103

Dr. Clarence R. Pearson, Sr.

(Warning: This article is lengthy so as to allow for in-depth coverage of the subject)

UNLESS FOR PUBLIC APPEASEMENT, I strongly believe that the publication of the Executive Order 103 (E.O. 103) is nothing but a political smokescreen meant to make an impression on the general public that the government is taking action to address the current economic challenges facing the Liberian economy. Sadly, this is nothing but another deliberate political fiasco or a clever maneuver of current national financial managers to mislead the President to think that they are working when they are not. Don’t get me wrong, I am not one of those who are hate-blinded, hardcore opposition personality, or woe crying critics. I simply look at the facts on hand. For example, Compare the E.O. 96 and 103 and tell me it is not a cut and paste document with nonessential or insignificant alterations in the preamble by introducing just the first paragraph (citation: WHEREAS, to solidify the gains realized under Executive Order No. 96 and to continue to stimulate economic growth in the Liberian economy”) and an omission of a phrase in count 6 of the E.O. 96 (citation: “by the completion and submission of the Import Notification Form (INF)”). First of all, the introductory paragraph is very out of touch with reality. What gains realized? What economic growth? given the condition that the economy is in at the moment; and second, why is the E.O. 103 necessary if there is no significant modification or revision to the E.O. 96? Technically, a presidential executive order once issued remains in force until it is canceled, revoked, adjudicated unlawful, or expires on its terms. Also, I agree that the President may revoke, modify, or make exceptions from any executive order, whether the order was made by him or a predecessor. However, none of these factors apply to the E.O. 96 as it does not contain an expiration date, has not been challenged by the legislature nor the Supreme Court for which the President has to republish a twin-version or replica, and nor does it contain any significant revision. This was a complete waste of time. Notwithstanding this frustration, permit me to fulfill my promise to look at the substance of the twin-document E.Os. 96 and 103.

AS PROMISED, THIS ARTICLE SEEKS to analyze the E.O. 103 in relations to E.O. 96 to explore the following concerns as discussed below:

1. On the overall, looking at the E.O. 103, is it a viable step to providing relief to the current stress that the Liberian economy is experiencing? The answer is emphatically NO after critical consideration of the facts at hand relative to the actual problems facing the economy. Just for the record and clarity, some of the fundamental challenges to the Liberian economy including but not limited to: a) Lack of a clear understanding of the scope of the Liberian economy so as to effectively balance and regulate the supply of local currency within the economy, b) Very poor financial management within the existing financial architecture and fiscal structures that are void of quality empirical financial data to guide financial policy development, planning and implementation, including fiscal management, c) Bad governance and systemic corruption that continue to undermine investors and public trust, which negatively affect the banking sector, and d) Over-reliance on foreign aid and loan or credit without a longterm strategy to propel the economy to self-reliance by taking the economy from a consumer-only economy to a productive economy. Instead, they are trying to eradicate symptoms instead of the root causes of the problem.

Other questions we hope to address in this discussion are 2. What are the good, bad, and ugly propositions of Executive Order 103, and 3. What are some economic necessaries that were overlooked by the framers of Executive Order 103? These concerns are inclusive in the discussion provided below:

First, the E.O. 103 is citing instability of prices on the international market with regards to rubber, iron ore, timber, and adoption of ECOWAS Common External Tariff (CET) as the primary factors affecting the economy resulting in a protracted downturn in economic activities and slow growth of the economy. Whilst these might be some of the core factors, this explanation does not cast an exhaustive analysis and diagnosis of the economic challenges of Liberia. Let’s be clear, the industries mentioned above have always functioned to the detriment of the Liberian economy. All along, for over 173 years, these industries have been more exploitative than beneficial. The benefits Liberia has to show for these precious resources have been nothing but an economic mirage that left the country underdeveloped and its citizens impoverished. Don’t get me wrong, fluctuation in the international market value of iron ore, rubber, and timber does affect the Liberian economy, but it is not the actual problem. The problem is that Liberia has always been at the tail-end of the economic chain reactions of resource-extraction and manufacturing. Valuable raw materials are extracted from the country at a low value and with minimum incentives to Liberians and finished products of those very raw materials manufactured outside the country return as imported products at a higher consumer value. That is one of the major problems that need to be addressed;

Second, the E.O. 103 in count 6 speaks to protecting domestic manufacturers and producers with reference to instituting a surtax on goods imported into the country that are in competition with local manufacturers and producers. Again, whilst this economic strategy may have its place in promoting local entrepreneurship, it is not best suited for the current economic situation of the country for a number of reasons which time cannot allow to cover individually. But one consideration could be the fact that such measures must take into consideration the capacity of local manufacturers and producers relative to the supply and demand of the commodities in question. This consideration is necessary because increased taxation on those commodities will naturally affect the price of those commodities unless local manufacturers or producers can meet the supply and demand of those commodities. Given the economic challenges in the country and the manufacturing capacity issues, can local manufacturers and producers meet such demands? If not, importers will simply transfer liability from taxes on the commodities to the consumers who happen to be ordinary citizens, thereby increasing hardship. In my expert opinion, rather than increasing taxes on competitive commodities, strengthen local manufacturers' and producers' capacities to compete in an open market system. Local manufacturers and producers with increased capacities to ensure quality products, increased productivity, accessibility of products, and best prices of their products on the Liberian market will not need to worry about imported brands, which also is necessary to ensure that consumers have alternatives to buy different grades of products as not all Liberians are locally based with the same consumer interest and purchasing power. That is the best approach. Empower local manufacturers and producers while maintaining an open market system to encourage competition and not try to stifle it; and

Third and finally, it is unfortunate that the financial advisers of the current administration see the ECOWAS Common External Tariff (CET) regional agreement as an impediment to the economic growth of the country, when in fact the agreement was adopted in October 2013 during heads of state summit in Dakah to do quite the opposite. The inability of our national financial managers to productively utilize a highly necessary sub-regional financial instrument doesn't necessarily mean the instrument is bad for business. I say this because the E.Os. 96 and 103 framers leave readers with the impression that the ECOWAS CET implementation is depriving the government of revenue, which is not the case unless they are reading the spirit of the agreement wrongly. (Citation: “WHEREAS, the adoption of the ECOWAS CET effectively limits Liberia’s ability to use import duty as a tax policy instrument to protect local industries from unfair competition and dumping”). Quite to the contrary, the ECOWAS CET was and is intended among other things to facilitate member countries having a uniformed tariff at all borders in the sub-region. Additionally, during a recent meeting on November 21, 2019, hosted by the Director-General of Customs within the member states of the ECOWAS held in Abuja, Nigeria to review the application of the ECOWAS CET, Hon. Tei Konzi acknowledged that facilitating the smooth flow of goods across the various corridors and borders of the sub-region in a reasonable time has always been a challenge and that the CET framework alongside the Interconnected Transit Freight Management System (SIGMAT) would go a long way to boost trade in the sub-region. This is a reality. How can this not be beneficial to Liberia should we have the right minds and mechanisms in place to make use of such opportunities?

IN MY PROFESSIONAL VIEW, as I conclude this discourse, I must state here without hesitation that our current economic problem is compounded and made even worse by the fact that the President Dr. Dr. George M. Weah has the wrong people around him who do not have the requisite knowledge and technical capacity to deliver an impactful solution to the prevailing economic challenges. Until the right people are called in to deliver much-needed results, we as a nation will continue to suffer economically.