Liberia’s former Finance Minister, Professor Wilson Tarpeh, says the issue of dual currency, if not properly addressed, could be “chaotic”, because this is the same situation that led to the first civil war in 1837, and also the 1980 coup d’état that toppled the William R. Tolbert government.
Citing historical references, Prof. Tarpeh said Liberia’s tumultuous past could be linked to bad economic policies especially related to the issue of dual currencies. At the time, the locals in 1937 had decided to trade only in “tobacco heads” as legal tender and not foreign coins, Prof Tarpeh had stated. The offshoot of the confusion accordingly brought about a war that saw Maryland being forced to join the Commonwealth. Expounding further, Prof Tarpeh said the introduction of a single Liberian currency for the first time in the mid 1980s actually strengthened the country’s economy, to the extent that infrastructural and socio-economic developments started sprouting around the country. Liberia’s economic growth rate, Tarpeh said, spiked more than ever before since independence, especially after the introduction of a strengthened local currency that spurred national development. The advent of mechanized agricultural interventions around the country; and the construction of modern infrastructure facilities, were all successful outcomes of the de-dollarization policies of government at the time, Prof Tarpeh asserted. The learned Liberian economist made the claims yesterday at a convening of Civil Society actors and donors on Illicit Financial Flows and the attendant impact on Domestic Resource Mobilization. The convening, premised on the objective of examining the challenges associated with domestic resource mobilization and the attending impact on growth and development in Liberia, utilizes crosscutting regional experiences and lessons to curb illicit financial flow. As one of key panelists at the Institute for Research and Democratic Development (IREDD) – sponsored convening, Prof Tarpeh addressed core issues on how dollarization of the Liberian economy spurs illicit financial flows. He said government’s decision to pay civil servants in two currencies – Liberian and United States dollars - was a “chaotic” policy, similarly as the decision to pay money transfer recipients 75% in United States dollars and 25% in local currency. Citing the impracticability of the government’s money transfer scheme, Prof Tarpeh stated that the only way such system is workable if citizens are equally charged in proportionate dual currency denominations when they transact businesses with government. The payment of passport fees should be proportionately charged in local and foreign currencies, similarly as in accordance with civil servant pay scheme and the attendant money transfer regime. “The excess percentage extraction in such transaction could be interpreted as Illicit Financial Flow, since in fact the government of Liberia fails to show how the 25% conversion of transfer payments will be utilized locally towards development initiatives,” a local financial expert asserted in confidence to this paper. Dr. Lester Tenny, another panelist who shared the table with Prof Wilson Tarpeh, equally lamented illicit financial flows as recipe for chaos. Most insurgencies in third world countries, he said, are sponsored by multinational actors who feel their economic interests are threatened by government policies that favor their interests less than the citizenry. In the case of Liberia, Tenny said, in his empirical estimation, the country has lost $6.4 billion to illicit financial flows due to the passage of bad concessions by the National Legislature alone. “Just imagine, we only need $2.2 billion to connect all roads within the 15 counties of Liberia with modern four lanes,” Tenny said. If this is true, the math is simply outrageous.