Sensing Merits In Resources-For-Infrastructure Formula
Analysis By Sherman C. Seequeh
The stings of poverty, underdevelopment and backwardness facing Liberia require the leadership of the day to think—and to act—outside of the box. Business as usual—doing the same thing over and over while the remedy is farfetched and expecting a different result—is folly.
Bequeathing our resources to multilateral and transactional companies for peanuts and committing the peanuts to servicing our huge national development agenda has not paid off for 171 years. We have borrowed colossal foreign monies with the conditions that we pay back with huge interests. And out of the same money, we are expected to run a government, to build roads, to build hospitals and addressand respond to deep-seated poverty. It has worked.
For 171 years, our model of borrowing to develop our country and at the same time to pay back our debts has not worked.It will not work. It fact, studied critically, cash-for-cash borrowing model is a supreme culprit in development quagmire. It has long made underpinned our woeful underdevelopment andmakes us slaves to our borrowers.
While we are here playing politics with this vexing problem infrastructure deficit, how many of us know that most of our neighbors and compatriots in Africahave been thinking and acting outside the box—moving far ahead with benefits from the Resources-for-Infrastructure formula.
The last time I checked, there were several Africa countries that benefited or have been benefiting from the R4I financing model. In 2011, Ghana got two separate deals, each at US$1.5b for“Infrastructure for oil extraction, and mining andagriculture”. Also in 2006, Guinea entered into a US$1b R4I deal for the “Construction of Souapiti Dam”.
Similarly, Angola has hugely benefited from the R4I formula. In 2007, for the Construction of schools and hospitals, and investment in energy and water, Angola bagged US$2b.TheDemocratic Republic of the Congo in 2007 and later renegotiated in 2008/9, a R4I deal worth US$3b for “the development of cobalt and copper mines, and construction of infrastructure.”
The list is long. In fact, Nigeria, in 2005 got up to US$20b for the “Construction of power plants, railways and roads” in R4I deals. In 2006 and as later renegotiated in 2007, Gabon signed into the R4I formula for the “Construction of Belinga Iron Ore Mine and of Infrastructure” at the sum of US$2.2b.
It is clear from those instances that Liberia is not the first country to take advantage of this new paradigm of international development financing. It seems like tacit consensus amongst African countries that it’s now time to jump out of the furnace unmerciful and cruelinternational loan schemes, some call it a syndicate, which over the decades have sustained and perpetuated misery and conflict.
So, with Liberia’s US$2.5b in R4I deal, it is assured and clear that we too are we moving and breaking away from the 171 years of resource curse; we are on our way for the first time to see the tangible fruit of our God-giving natural endowments.
Because, for far too long, our timber, bauxite, ore, diamond, gold, rivers and other resources have been given out on near gratis. LAMCO, BF Goodridge, Bong Mines, Arcelor Metal and the rest of them have looted so much. What much is there to gain? What can we point to? Huge holes and disasters. In fact right now, our natural resources are still under unguided pillage and loot. The miscreants are foreign companies. Someone just told me that a crowd of Ghanaians and Burkinabes have disbursed themselves into the countryside of Liberia, setting their huge dredges and other machinery, raking gold and diamonds for little or nothing.
Yes, in the past and even now, we have got millions from our “traditional partners” (and please don’t ask me to call names—much of it being loans with interests as well as grants. With all that, don’t we see how the bulk of what is loaned and granted taken back the home of origin by the lenders and grantors in salaries, housing and other overhead costs?
A serious radical departure is need. Before we lose the leftovers of our cherished natural endowment, it’s time retire complacency and imprudent thinking. And doubtlessly, the Resources-for-Infrastructure or R4I formula isthe God-sent option. It is the groundbreaking option promises to salvage Liberia’s unending vicious cycle of borrowing without impact. It heralds the most plausible solution to our resource curse.
All that this formula seeks is a barter of some of our resources—to exchange some of what we have as a natural endowment for the defrayment of our critical infrastructure deficit. Unlike current normal, where we have had loans exposed and vulnerable to roguish hands and pockets, both the value of what the R4I model offers to directly benefit us as a national and people in the form of critical infrastructure as well as the value of the debt to be repaid would be in kind, not cash.
For one to fully appreciate the importance of this arrangement it requires that one must first fully appreciate importance of improved infrastructure; it is important that one understands that infrastructure deficit is a clear and present danger—a vicious enemy standing in the way of our country’s transformation, development and prosperity.
For instance, nothing prevents Africa, including Liberia, from exploiting, manufacturing and exporting its own vast natural resources than infrastructure deficit. Infrastructure is THE enabler—not is AN enabler—of growth. It is the fulcrum of national development and progress. This is known even my non-economists.
The market woman down Waterside understands and feels the impact of infrastructure deficit as she struggles to get her produce to the market.
The pregnant woman in remote Bestman Town, Sinoe County, understands and feels the impact of infrastructure deficit as she is ferried away inhammock to a distant referral hospital for an urgent operation.
The journalist on Broad Street understands and feels the impact of infrastructure deficit as he struggles to expand his helplessly tight readership to Lofa and Grand Gedeh.
Moreover, it is very important to note that the infrastructure deficit we face has over the years limited the negotiation power of our governments—from the days of Firestone—to negotiate a fair deal with international investors. Some conservative economists have put the losses our country has incurred from poor negotiation to over hundred billion United States Dollars.
How long shall be go with this?
The concessionaires that have invested in this country, particularly since the civil conflict that exacerbated our infrastructure woes, have negotiated with unmatched powers and huge gains at the disadvantage of our governments. They have argued, and justifiably so, that our infrastructures—technical, professional and physical—are in tatters and it would require additional unspecified capital for them to invest here. They often then seize the moment to dictate the negotiations at our disadvantage.
How long shall we go with this?
It is also clear that even the impoverished majority of Liberians—the masses of our people—are seared by the impact of our infrastructure deficit on the daily basis. They also do pay for the infrastructure deficit in that the unending rise of the prices of goods and services is inextricably tied to deficit. Merchants would continuously keep prices high, and the silent majority of Liberians pay, to account for deficit in bad roads, lack of public electricity, water, amongst.
How long shall be go with this? The R4I model, for its part, offers to free us from, and empowers us to overcome, our chronic infrastructure deficit that has petered out our powers to negotiate investment deals towards the development our country. It empowers us to sit at the international dinner table not merely as “a waiter serving the dinners or as the food to be eaten, but as a dinner” to quote from legendary orator Patrice PLO Lumumba.
One thing must be known—and take or leave it: the remedy to incessant infrastructure impairment everywhere marks the beginning of earnest liberation from, and permanent goodbye to,the social, economic and political subjugation we have endured for nearly two centuries.
It takes only people who, knowingly or unknowingly, are seeking the perpetuation of such the subjugation and the poverty and conflict it breeds—and those who benefit from it—tooppose a deal that promises liberation and prosperity for a long backward people and country.
I am not oblivious to the fact that the R4I formula ricochet in the discourse the issue of negotiation—the inability of our Government to negotiate a win-win dealsince we don’t have the “human infrastructure” to determine or pre-determine the worth of the resources targeted for the barter. In fact, all studies done on this development financing model have found this particular inadequacy—the imbalance in negotiating R4I deals—the only outstanding snag to watch and obviate.
However, it must be considered that the option to find escape route to this snag far outweighs the snub or rejection of this redemptive model—a model that have the unprecedentedly clearest potential connect our capital cities, assure food security and underpin national growth without being subjugated to the whims and caprices of ruthless creditors.
It doesn’t require an ace economist to know that a better deal can be negotiated once the political way is there do to. And it is such a will that any well-meaning Liberian can seek and press for.
After all, there are negotiation experts all over the place, even if they can’t be found in Liberia. In our recent history, millions of US Dollars was used to pay a public relations expert to enhance the image of a single president. Committing money to get skilled international negotiation teamto do our R4I deal can do the trick.
Indeed, we have no better option. All other options have failed since 1847, the R4I represents our best way out of deep-seated poverty and underdevelopment and the conflict and misery that come with it.