Home Featured Story We Are at it Again, Just Another Loan Scheme

We Are at it Again, Just Another Loan Scheme

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Liberia is a strange place, it’s a country where the laws are broken at every echelon of the society or the laws are never applied in any sector or flouted for every reason. Perpetrators hardly get punished. The country, anyone can safely say, runs on impunity. Yet the weirdest thing imaginable in this part of the world is that loan, a key revenue generating plank for most financial institutions is a huge risk for loss in Liberia. Here debts hardly get repaid.

On December 19, 2018, the government of Liberia through the President George Weah showboated at the country’s largest business district in the City of Paynesville launching a US$3 million loan scheme. The President was quick to remind would be borrowers that this was not “free money” and that they needed to repay their debts. Why should they have to repay? Because this is going to be a revolving fund. The President made that clear that repayment will afford other potential, eventual borrowers to access the loan.

Although there is so much publicity stunt made about this loan, it’s not the first of its kind in the nation. There have always been loan schemes in Liberia, especially since the establishment of the  Liberia Bank for Development and Investment (LBDI) and loan cushion remains at the bank. However, it has gone for only the privilege. In 2006, a few months after the late Harry Greaves took over as head of Liberia Petroleum Refinery Company (LPRC) he borrowed US$400, 000  to construct his upscaled PA Rib House in Sinkor. Also a few months after this government came to power, Presidential Minister, Nathaniel McGill loaned US$200, 000 to purchase a private residence. There is where the money has always gone.

In the 1980s under President Samuel Doe, a meeting of Liberian businesses was held on live television about how to help market women and small Liberian businesses compete with foreign businesses. Meanwhile, a few months before the late President had authorized a small business loan scheme for local businesses. A market woman stood and told the President they small business people needed help with money. President Doe asked the LBDI head about the loan money. He said it was loaned to Liberian businesses. And the market woman retorted, ‘you took the loan yourself’ referring to the banker. He just stood there with a poker face, embarrassed.

This is the story of our lives. The bureaucrats ask for the loan money in the name of the ordinary people and loan it to the rich, influential and powerful. Another case in point is the James Kollie managed loan at the Ministry of Finance under Ellen Johnson-Sirleaf. That was never a loan but a bounty shared to friends and cronies. Or maybe we needed to mention the loans from Poverty Doctor, Dr. Mills Jones formerly of the Central Bank of Liberia when money was distributed from the national coffers under the guise of helping Liberian businesses but directed at political supporters.

And here, we are at it again: US$3 million loan money reportedly being made available for Liberian businesses. What we have yet to know is the requirement to access the loan. What we do know is that it does have the same ease access like simple interest and collateral free conditions. We have no doubt this will be another loan to the rich, influential and powerful with no repayment and no penalties. We have serious doubt that this money would not go to political supporters, friends, cronies, and public officials. We shall hold this doubt until we find that money is disbursed to people who have good innovations for manufacturing or owners for businesses who are not related to public officials, linked to the ruling party or forced to give kick back.

2 COMMENTS

  1. Dear Mr Momolu Dorley,

    Thanks for penning down this beautiful article on your webpages. I appreciate you for this work. But it is necessary for me to provide certain cogent clarification and facts regarding this loan scheme. Clarification number #1, this loan is not the same as the PSDI loan which was totally controlled by the Government of Liberia through the office of the then Deputy Finance and Development Planning Minister Dr. James Kollie, who solely approved and authorized the disbursement of funds to all of the beneficiaries of the loan.
    Facts #2, this loan a pull of revenue owned jointly by the Liberian Bank for Development and Investment (LBDI) and the Government of Liberia. It is worth noting and this is very important, that the Government of Liberia contributed US$1 million to this fund, while LBDI contributed US$2 million.
    Facts #3 this Fund is managed totally by LBDI and this is another very important point that you should take note of….and the Bank will vet beneficiaries and it will be considerate to certain extent on the issue of collateral requirements for would be borrowers because it is widely established that vast majority of micro-small businesses, especially, those operating in the informal sector of the economy, do not have properties to offer as collateral. And because these very small businesses are very critical for poverty reduction, they Bank will vet and deal with most of them through community and registered loan organizations established across the country.
    Facts #4, the interest rate on these loans is not more than 7% per annum. This is very very important in my mind because if you do the mathematics, you will come to realize that a borrower would pay around 0.58% interest on their loan per month in contrast to 1.5% per month or 18% interest required by some of the financial institutions around here. So, as you can see, this is not business as usual as the Bank is in full control unlike in the past where the contrary was the case.
    Another fact worth noting is that this fund will be loaned to only Liberians owned businesses in the 15 counties in the areas of agriculture, services, trade, etc.
    Momolu, you’re welcome to contact me so that I can give you a copy of the fact sheets on this loan. Thanks for now and please forgive me for any misspelled words or run on sentences as I am penning this clarification on my mobile phone and in the night as well.

    George D. Kennedy
    0777967121

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