Recent developments, particularly the freeze of aid from the United States under President Donald Trump’s administration, have heightened the urgency for the country to reassess its reliance on external support.
We agree with President Joseph Boakai that Liberia must end its dependence on foreign financial assistance. Where we disagree is the strategies and approaches to getting Liberia truly self-reliant.
Why? A president that wants to end aid cannot run a large government, spending more than 80% of the national budget on salaries and other nonessentials items that do no back economy growth and prosperity.
According to recent budget analysis, only a small percentage of Liberia’s national budget, around 18.91%, is allocated to development or capital expenditure, categorized as the “Public Sector Investment Plan” (PSIP) in the budget. This means the majority of the budget is spent on recurrent expenditures like salaries and operational costs.
Ending aid dependence in Liberia is not merely an aspirational goal. It is an achievable reality grounded in prudent governance and strategic economic reforms.
How? Liberia should put premium on the following: domestic resource mobilization, streamlining government operations, and responsibly managing its abundant natural resources, Liberia can build a robust economy resilient to external shocks.
The message from Washington presents the imperative for Liberia to explore practical strategies that prioritize domestic resource mobilization, efficient governance, and the prudent management of natural resources.
Strategies for Self-Sufficiency
- Enhancing Domestic Resource Mobilization:
Liberia must focus on increasing its revenue generation capabilities. This can be achieved through robust oversight of financial inflows and reconciliation of import and export receipts. A thorough examination of trade reports will help ensure that the state receives its fair share of earnings from natural resources and trade activities. Strengthening tax collection mechanisms and implementing fair taxation policies will fortify the financial base necessary for sustainable development.
- Reviewing Expropriation Rules for Profits:
To attract responsible foreign investment, Liberia should reevaluate its rules regarding profit repatriation by businesses and multinational corporations. Currently, Liberia permits 100 percent repatriation of funds and does not have currency exchange restrictions. Ensuring that a reasonable proportion of profits remains in the country will enable re-investment into local development initiatives. Crafting policies that demand greater corporate social responsibility will not only nurture community development but also stimulate economic growth and foster public goodwill.
- Streamlining Bureaucracy and Ensuring Efficiency:
Optimizing government operations by reducing the number of bureaus and ministries can significantly minimize waste. A leaner government structure can result in more efficient use of resources, allowing for an increase in capital spending that directly stimulates trade and private sector growth. Supporting local businesses through targeted grants and incentives can create jobs, boosting overall economic participation.
- Salary Adjustments for Public Officials:
Addressing Liberia’s pressing challenges—including health, education, and social services—requires a reassessment of public officials’ salaries and benefits. Reducing these costs can free up funds that could be redirected towards social programs that provide essential services to citizens, thereby enhancing the overall quality of life and human capital.
- Effective Management of Natural Resources:
As Liberia sits on a wealth of untapped mineral resources—including lithium, neodymium, silver, and nickel—it is crucial to implement rigorous natural resource accounting. Properly monitoring and managing these assets will ensure that income generated from this sector significantly contributes to national revenue. Discouraging the culture of rent-seeking will promote transparency and equity, fostering a more sustainable economic environment.
Capitalizing on Natural Resource Riches
With President Joseph Boakai announcing the discovery of significant new minerals, Liberia must strategically position itself to maximize these assets. By fostering a transparent regulatory framework, prioritizing local content in the mining sector, and ensuring that communities affected by extraction activities are genuinely beneficiaries of the wealth generated, the country can create sustainable pathways to self-reliance.
Investment in education and vocational training in resource-rich areas can empower local populations, enabling them to participate in the economy.
Moreover, seeking partnerships with reputable corporations that demonstrate a commitment to ethical practices and corporate social responsibility can enhance local capacities and ensure that Liberia’s natural wealth translates into tangible benefits for its citizens.
The nation stands at a crossroads, where the choices made today will shape its trajectory towards sustainable growth and self-reliance in the future.
