The China Envelope: What It Means For Liberia

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Monrovia, Liberia- At 171 years old, and being the oldest African Republic, Liberia lags in development to a great extent as compared to other African nations. Not only are we underdeveloped, but extreme poverty has made the country to be listed as one of the poorest nations in the world, an analysis whom impact is visible upon entrance into the country. Since the founding of the nation in 1847, all Presidents have tried, or have said to have tried to lift the country out of poverty and enhance the nation’s infrastructural development, however, the reality has been and is still different.

Recently, the President of Liberia, His Excellency, Dr. George M. Weah and delegation were part of the Forum on China-Africa Cooperation, aimed at equal consultation, enhancing understanding, expanding consensus, strengthening friendship and promoting cooperation between African countries and China.  The Forum which lasted for two days, but extended the Liberian delegation stay due to further discussions and negotiations, saw many talking points originating as a result of some agreements reached.

At a press conference at the Ministry of Information on Tuesday, what Finance Minister termed as the China Envelope was officially opened and contents revealed. While some things in the envelope were welcoming, others seem somehow controversial, thereby initiating severe political debates and bickering between the government and the opposition. The Liberian Billboard takes an analytical look at contents of the envelope.

Speaking at the Press Conference, Finance Minister Samuel Tweh outlined the various negotiations held and agreements reached, beginning with the $54 million package for the construction of two overpasses (Interchange) and food assistance, which was not specified. He then went further by announcing what he termed as the most significant deal Liberia got out of the summit by indicating, a Natural Resources Swap Investment Facility worth $2.5bn to be remitted to Liberia over a 5-year period. Minister Tweh clarified that the amount is not a loan, and that a company with mining interest will arrive in Liberia to do a feasibility study before disbursements starts. In addition to the $54mil grant and $2.5bn facility, the Finance Minister also announced an agreement with a Chinese Agriculture company for the cultivation of 500,000 to 1,000,000 metric tons of rice; although no monetary valuation was given. Furthermore, he announced an agreement with an electrical company for the production of solar panel lights, street lights and traffic lights for Monrovia. The Finance Minister also restated the Maritime agreement signed between Liberia and China during the summit, a story The Liberian Billboard previously reported. Mr. Tweh lastly announced an agreement between Liberia and a Chinese Power Company for the transmission of power.

The Pros:

With Liberia at a very low end in infrastructure development, the agreements signed above points toward high end developments that Liberia has never seen before. Firstly, the $54million grant for the construction of two overpasses will be a great relief to traffic congestion on the Tubman Boulevard which links the ELWA, SKD Boulevard/Somalia Drive and Paynesville Areas. Not will the two overpasses only serve as traffic congestion relief, it will also beautify the City of Monrovia to a great deal.

As President George Weah has desperately been looking for funds to carry out developmental projects, especially roads construction, the $2.5bn Natural Resource Facility is a great accomplishment in that direction. With the Ministry of Public Works announcing last month that Liberia needs a little over $3bn to carry out all her major road projects, a $2.5bn facility, intertwined with the World Bank initial commitment of $500m will push various road projects a long way. In addition, the amount will also help other much needed projects either get off the ground, or come to full fruity. Road development is pivotal to any nation’s development, and as such, if a bulk of those sums are directed toward that goal, Liberia will be on its way to a Rwandan-like makeover.

One of Liberia’s major problem over the years has been self-sufficiency. The country hasn’t been able to feed herself for long periods; maybe since independence. Our staple food has almost always been in short supply, and this situation has initiated chaos, as well as provided avenues for importers to exploit the population for decades. The agreement with an Agricultural Company from China to cultivate 500,000 to 1,000,000 metric tons of rice is not only welcoming, but a great step toward self-sufficiency. If both nations pull this off, this will be the first time that Liberia will basically be able to feed herself, void of outside dependence for her staple food. Furthermore, the job creation as a result of this agreement will be overwhelming, and it will bring significant economic relief to many Liberians.

In addition to roads, no nation can adequately develop without dependable and sustained electricity. This is why the agreement signed with the electrical and power transmission companies is also a significant achievement on the part of the President and the government.  As it will also create jobs, this agreement will attract important investments and serious business ideas when implementation is completed. Liberia’s developmental stall can be attributed largely to the lack of dependable and stable electricity, a problem the country has suffered for a very long time.

Lastly, the Liberia-China Maritime Agreement Renewal is a “Win-Win” for both nations. While Liberian Flagged Ships will be treated as Chinese Flagged Ships and Chinese Flagged Ships will be treated as Liberian Flagged Ships, this agreement will employ many Liberians as well as alleviate some of the hurdles Liberia face in the Maritime Industry. Liberia will also benefit from Chinese technology, and at the same time coordinate with her Chinese counterpart on waterways transportation and operations.

The Cons:

It is no secret that President Weah has made and is still making tremendous efforts to see Liberia get on a fast pace developmental trajectory, however, it is also imperative to point out risks involved with certain agreements as well as concerns from all sides.

Firstly, the food-aid portion of the $54m grant has not been specified or clarified. There were no explanation as to how much of the amount is going toward the construction of the two overpasses and how much is going toward food-aid. The type of food-aid which the funds will provide has also not been explained.

Secondly, and like Minister Tweh, we also want to say most importantly, the $2.5bn facility has some serious unanswered questions. In an answer to a question posed by journalist Smith Toby of OK FM, the Finance Minister said all of Liberia’s resources are included in the Natural Resources Swap Investment Facility. The big question is, how was Liberia resources valued at such amount? In essence and a layman term, it means, all of our natural resources will be used as collateral for the facility. Although the Finance Minister said that the amount is not a loan, however, in business, there is always a catch. The Chinese can use the agreement to easily undervalue our natural resources, thereby extracting more than what the $2.5bn is valued at. Except the government has another explanation, but this seem like mortgaging our sovereignty.

The 500,000 to 1,000,000 metric tons of rice cultivation agreement does not have any monetary value attached to it. There is no clear indication how this will work: who pays for what, and how much the investment or agreement will cost. Details of the power transmission agreement were not clear and are kind of scanty.

The questions will keep coming as we go along.

The end-result:

The President should be applauded for all the efforts he continue to make, aimed at putting Liberia on a developmental path. However, in the process of making these efforts, negotiators should proceed with caution and not give in too much as a means of protecting our sovereignty.

Recently in Zambia, a Chinese company had to take over the country’s national power distributor due to failure to service loans. While all of these agreements seem welcoming, Liberia should also be careful with the terms and conditions. The government has signed agreements with the Chinese in almost every major sector in our economy. We pray and hope that the fruits will be seen as soon as possible. At the end, all we can hope for is the best.