Washington, DC - Finance Minister Augustine Ngafuan, at the head of a Liberian delegation to another joint International Monetary Fund (IMF) - World Bank Annual Meetings in the Federal American capital, has held what he termed as very productive meetings, stretching from multinational discussions with executives of the IMF and World Bank to bilateral discussions with other giant nations including the Asian nation of Kuwait and Saudi Arabia and other grant-issuing international banking institutions.
As one of the IMF governors, Minister Ngafuan and delegation were able to secure another huge assistance package for Liberia’s recovery program including aids from the African Development Bank (ADB) and the Bank for Arab Development and Economic Assistance that are now yielding fruits for the bidding process that will lead to the reconstruction and rehabilitation of the Monrovia-Gbarnga, Gbarnga-Ganta and the Ganta-Guinea border highways.
In this first in a series of a two-part’ exclusive interview, the young finance minister at the close of the Annual Meetings tells FrontPageAfrica of the significant progress to restore the country’s damaged energy sector and how the IMF and the Bank tapped on the recovering nation’s success story as an example to lead the world’s youngest nation in Southern Sudan as a crawling child to emulate.
Review Part Two >>
FrontPageAfrica: This is FrontPageAfrica with Liberia’s Finance Minister here in Washington, DC. Welcome, Mr. Minister to this interview.
Finance Minister Augustine K. Ngafuan: Thank you, Bayjay.
FPA: You head yet again another Liberian delegation to the US. What have these Annual Meetings put into place for Liberia as these meetings come to an end and what has been the country’s own case you’ve been pushing here?
Minister Ngafuan: Well, let me say that I have led the Liberian delegation to the Annual Meetings which comprised the Governor of the Central Bank, Governor Mills Jones, the Minister of State Without Profolio Honorable Tarnue Marwolo, and the Deputy Minister of Planning, Honorable Sebastin Muah. Liberia is a shareholder in both the World Bank and the IMF. The Annual Meetings create another opportunity whereby countries and their financial leaders engage with the Bank and the IMF on issues that relate to the economy. Since we came we have had some very productive meetings besides the meeting with the Bank, the IMF and their officials. We also had a lot of bilateral and multilateral closed door meetings. We had meetings with the technical team of the World Bank where we discussed a host of things that relate to the World Bank’s assistance to Liberia.
In the transport sector, I think you know that we’re getting the World Bank’s assistance for most of our roads including the road to Buchanan. We also discussed the bidding process that leads to the reconstruction and rehabilitation of the road that leads from Monrovia to Gbarnga and from Gbarnga to Ganta and from Ganta to the Guinea border. We have what is called the Liberia Reconstruction Trust Fund that I as Finance Minister co-chair with the World Bank’s Country Manager. So, one of the things that we did was to discuss issues of the Trust Fund. We’ve raised more than a US$100 million that will go towards the road that leads to Gbarnga and Ganta. The Buchanan road remains on course because sometimes last year we secured the full funding for it. If I’m not mistaken, we got about US$60 million or so. The project is on course. The only delay has to do with the rainy season but as soon as we get some dry season, we’re going to expedite the process. The companies are going to work on the both fronts-from the Buchanan side and the Boakay’s Town side. The intention is to finish that road as quickly as possible.
The bidding process for the Monrovia-Gbarnga, Gbarnga-Ganta and Ganta-Guinea border highways is on course. We’ve discussed what we can do to expedite it. You know the Bank has too many procedures. The Bank is a big bureaucracy. Sometimes the bureaucracy becomes an impediment to speed. We have this ‘dry-rainy season’. Road construction cannot be done in the height of the rainy season. We have been pressing on the Bank to do things quickly but not necessarily sacrificing any rules of the Bank but ensuring that whatever rules that exist, we can move faster in evaluating Liberia in accordance with those rules because the intention is to have these projects delivered and delivered on time.
We’ve been also talking about energy with the Bank. One of the top-most things that are going to be top on our agenda for the country for the next years will be how we can quickly rehabilitate the Mt. Coffee Hydro Electric Dam. The initial estimates put the Mount Coffee Hydro’s rehabilitation to a little over US$200 million-just the reconstruction and rehabilitation of it. And it would take an additional, I’m told, a couple of another US$200 million to construct a reservoir on the St. Paul River. That reservoir…what it will do…you know when we had the Mount Coffee operating before in Liberia we had a situation where during the dry season the water level was very low and we couldn’t get electricity. Bong Mines had to be supplying the LEC electricity. So the whole stretch of things to get the Mount Coffee running will cost almost US$500 million but what we are trying to do is to rehabilitate the hydro electric facilities first that will bring us some power. We would bring in the donors around this project including the World Bank that will give us some serious financing, the African Development Bank, and others. We discussed the Mount Coffee and the need to put together the resources around the Mount Coffee. But in the main time, the reconstruction will take some time so we are looking at what is called the Heavy Fuel Oil (HFO) option that will expand the generation capacity of LEC as an intermediary solution. We also are impressing on the Bank and other donors the need to support us in the transmission-because you can generate but you need to transmit and distribute the electricity. So how do you do that? So, those are big talks that we’ve been having with the Bank.
The Bank has technical people for energy, transport and we also met the technical people for forestry because we’ve been discussing the forestry sector and what we can do to take away some of the structural impediments to take away this sector. We’ve discussed the performance of concessionaries in the forestry sector and we are collecting some ideas as to what the Bank and ourselves can do to jump-start this sector which has potential for job employments and what have you.
But those were technical meetings but I also had the opportunity to meet the World Bank Vice President for Africa, Obigiali Ezekwisili and her team in which we reviewed Liberia’s relation with the Bank. We thanked them for increasing Liberia’s allocation on the new round of funding. The World Bank helps countries on what is called the IDA-circle (International Development Association). The World Bank has about five different sub-groups. IDA is the group that includes countries like ours that receive the grant of concessional financing-credits with practically low interests and low maturity. It takes some time before you leave the IDA-only terrain. Liberia, Sierra Leone and most other African countries are considered IDA-only countries.
On our poverty indicators, we’re still on the scale where we need significant grant assistance from the Bank and all-credits at low concessional rates. The Bank gives support --- the last time our IDA-allocation which goes for like three years was around US$140 million. But now it is increased upward to about US$185 million for the next three years. So, we used that opportunity to thank the Bank for increasing Liberia’s allocation for the IDA at the time where most other countries’ allocations were being strained-line downwards because of the global financial constraints. Liberia has impressed the World Bank and some of our partners have more incentives to make us to continue on this path of reform. We are going to be doing what is called the New Country Assistance Strategy to go alone with the new IDA funding. In that, we are going to be applying our IDA to energy, especially the Mount Coffee Hydro Plant and to transport and to other sectors like the health, agriculture. Those are going to be the new sectors that will benefit under this new IDA.
There have also been some talks on housing. We are going to put some money on housing. So these are some of the technical discussions we have had with the World Bank but I have been having some very productive meetings. We were recommended to the government of the Southern Sudan by the IMF and the World Bank. Yesterday, they met us. The Finance Minister of Southern Sudan, Kosti Manibe and the Central Bank Governor Kornelio Koriom Mayik essentially were eager to know how we overcame as a country; how Liberia as a success story is managing positive reforms and putting our country on par amidst significant challenges. One of the things I told them were one, the key has to do with a key leadership at the top who is reform-oriented, having strong institutions and a strong legal framework.
FPA: Excuse me, you mean political leadership?
Minister Ngafuan: Yes, I mean a strong political leadership and political will for reform. For us, it became easier because our president has been a champion of reforms. She led some of the big reforms that have led Liberia on this path of credibility. Firstly, we had to regain our credibility with the international community. Liberia was seen as a problem child in the international community. How we transformed ourselves from that to a post-conflict country? One, political will at the top; two, building strong institutions. We eluded to the autonomy we gave our General Auditing Commission, the establishment of an anti-corruption commission, a law reform commission, and we’ve done a slew of activities to help the reform efforts. We’ve allowed our democracy to work, meaning that the Judiciary is independent of the Presidency and the Legislature is also independent of the Presidency. We’ve allowed those democratic institutions to work. It may not be perfect but they are working. We have some tasks but at least we are making some progress.
The other thing I told them is that you have to also have good laws; one, for us in managing our finances we passed the Public Financial Management Law which has been a significant achievement that leads now to what is called the Public Accountant Standard which is the first time we have done so in our country. This is the first time ever, I am not saying post-war but since this country was formed. We will be producing public financial statements for government. These are things that have brought us credibility.
We also joined the Extractive Industry Transparency Initiative, the EITI. What that has done for us is that…..in fact, Liberia became the first country to be considered EITI-compliant. For a resourceful country like Sudan that has so much oil, it is an extractive industry. How do you create transparency such that the revenue from it will benefit the people? The EITI is an initiative that brings transparency to Liberia. That has been playing leading role in Africa, so I encouraged them to join the EITI. At the end of the day, we concluded that we will be having what is called staff-exchange whereby they will be coming to Liberia to see what we do and how we do what we do. And at times go by, we will be sending Liberian experts and technicians to Southern Sudan to at least engage them on a practical basis, what we know. We are not perfect. Perfection is not what we claim but at least we are better off than a lot of countries and we are proud that we can be recommended by the IMF and the World Bank to a young government like the government of Southern Sudan. And they were very happy. Their delegation comprised of 10 very significant individuals including the Minister of Finance and the Governor of the Central Bank.
FPA: The IMF and the World Bank recommended Liberia on the basis of similarity they are sensing the world’s youngest nation might be having with Liberia’s past of recovery. But all situations are not always the same and this might be just one. Did the Southern Sudanese government delegation have any other view to those you provided them?
Minister Ngafuan: It was not a meeting where we were disagreeing.
FPA: Probably where they said, ‘ok, we will take this but won’t take this because this one doesn’t fit our situation back home’.
Minister Ngafuan: No, for now we were just giving them a general feel of how we do things. It is not everything that we do that will fit the Sudanese example. We will work with them at the technical level on what I called a second-man program where they will send people at the Ministry of Finance to see what we do and how we do it in order to understand its relevance to some of their challenges.
Every country has its own challenges but there are generous trends. And we will be sending people there too as part of the plans. We have concluded similar plans with our Sierra Leonean counterparts on a reciprocal basis where we will send people there to critique them and they will do the same to us. Then we will know what is working best there. These are what we called soft-soft operations mechanisms whereby African countries learn from themselves first. We find it very, very useful.
Besides that, we’ve been meeting with some of our partners like the Saudi funds and the Kuwaiti funds. As you know, the Kuwaitis have been very, very generous to us. They have even given us some grants to do the feasibility study for the Gbarnga-Manikoma Highway. We have been consolidating our relationship with the Kuwaitis. At the end of the day we are going to put together what we call the consortium of financiers to assist us in getting the finances that we need for the paving of that Gbarnga-Manikoma Highway. We look to the Kuwaitis that would come in at that point.
But we also had good meetings with the Saudis and what is called the BADEA, Bank for Arab Development and Economic Assistance. So we’re trying to normalize our relationships with all of these Arab development associations because they have good credibility of giving what you call concessional financing. As Liberia enters a new phase of development, we need to invest significantly in powers, roads, port, health and in education. All resources cannot be raised from taxes from our people; otherwise we will tax them out of business or out of work. All resources cannot be gotten out of grants because the generosity of countries is coming at a downward swing as a result of the global economic crisis. But you can also get global financing credits at very low interest rates that the re-payment period can spend up to 40 years. Then what you do is crowd-in investments, make sure that you have the necessary infrastructures.
It is the necessary infrastructures that can attract good business and when you have businesses, they employ more people. And when they employ more people, more people pay taxes and the circular flow continues. So, overall it’s been series of good meetings and today again at 4 o’clock I’m meeting the First Deputy Managing Director of the IMF who will be replacing David Lipton who oversaw the Liberia portfolio. That deputy manager is the new fellow that is coming in to assist Christine Lagarde. There are a lot of changes at the top level of the IMF. We’re meeting the Deputy now who oversees Liberia to firstly congratulate him for his appointment and ask him that the good relationship be sustained.
(Pt. II of the interview is exclusively on politics: Ngafuan responds to oppositions criticism of a politically motivated civil servants increase in salary and why he thinks the UP deserves another term)