By Prof. Tom Kaydor, Jr
Around 2010, the Global Community waived about 4b USD debt for the Republic of Liberia. That was a promise fulfilled in lieu of the Government’s commitment to meeting the Heavily Indebted Poor Countries benchmark. The IMF and World Bank launched the Heavily Indebted Poor Countries (HIPC) Initiative in 1996 to ensure that no poor country faces an unmanageable debt burden. In 2005, to accelerate progress toward the United Nations’ Sustainable Development Goals, the HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative. By the end of 2023, the Liberian Government had again recorded a total debt of about 2.6b USD. This constitutes both foreign and domestic debt for the Government and People of Liberia. The President Boakai’s Government which came to power in January 2024 recently completed its National Development Plan, the ARREST Agenda for Inclusive Development (AAID). We are informed that the five-year AAID is costed at about 8.4b USD and will officially be launched in January 2025. This means that the Government needs to cut down on wasteful spending, drastically crack down on corruption and invest in diversified economic growth corridors to grow the economy so that the resources are availed to fund the AAID.
All these need to happen as the global community encounters and addresses global extreme poverty and pandemics like Mpox, etc. Global poverty has reduced because of the growth achievements made by India and the People’s Republic of China (PRC). However, extreme poverty persists in Africa where this researcher hails from. In Africa, poverty is a widespread phenomenon, with about a third of the continent’s population living in extreme poverty. The World Bank predicts that Sub-Saharan Africa will be home to the majority of the world’s poor by 2030. Liberia is Africa’s first independent Republic and therefore needs to lead by example. The COVID-19 pandemic deepened poverty across all countries and regions. However, the global economy is predicted to grow. Africa now faces yet another pandemic, the Mpox that seems to be under control. Official Development Assistance (ODA) is significantly helping Least Developed Countries (LDCs) to cope with growing development demands from citizens.
ODA impacts extreme poverty in numerous ways, although empirical evidence is required to claim causality. However, the fundamental question is not whether ODA works, but rather how can it be made more effective and efficient? Without peace and stability, fragile states, including the Republic of Liberia, cannot grow their economies to embark on sustainable development. Stability cannot be guaranteed amidst widespread poverty. Pandemics add even more worries to poverty situations when they occur. The extreme poor really suffer the most during pandemics. Therefore, pandemics, instability, fragility, and poverty seem to be positively correlated and they are symbiotic. Hence, they need to be addressed urgently and expeditiously as a global public good. Thankfully, global attention concertedly focused on an end to COVID-19 and the most recent Mpox pandemic so that states can return to a linear development trajectory.
Why I contend that advanced economies need to forgive poor countries’ debts because some of the debts have made no quantum impact on national, regional, or global development, I urge the Government of Liberia and other developing countries to sustainably mange the countries’ debt. In some instances, political elites benefit from donors’ monies more than the poor people themselves. Hence, developed States that provide ODA need to be smart in effectively providing aid. They need to increase their share of ODA to assist LDCs and Middle-Income Countries (MICs) to achieve strategic pro-poor and inclusive growth to help alleviate extreme poverty and engage in wealth creation.
AS I SEE IT, the provision of development assistance does not mean that developing states like Liberia must singularly rely on Official Development Assistance. They need to become innovative to grow their own economies and remain accountable and or transparent in handling development assistance. In some instances, donors need to deploy their citizens or nationals and companies in poor states to implement infrastructural development projects and to address economic growth challenges in receiving states so that the assistance does not easily get corrupted. China and Japan have done this before in Liberia where China bult the Ministerial complex directly, and Japan constructed the Japanese Freeway directly using their companies. ODA receiving countries Liberia need to supervise the projects and program implementation processes by those foreign individuals and companies to mutually prevent corruption. In line with the Sustainable Development Goal (SDG) 16, institutions are deep determinants of growth. Therefore, to alleviate poverty, developing states including Liberia need to build inclusive and effective institutions that will protect the rule of law, property rights, ensure macroeconomic stability, as well as provide public goods and services, and invest in health, education, food security, peace, electricity and engage in infrastructural development to achieve sustainable growth. Both donors and recipients need to target development assistance towards economic growth corridors to help enhance and ignite economic growth. This might better serve the needs of the most excluded and vulnerable. The Government of Liberia should therefore sustainably manage the country’s debt portfolio.
About the Author: Prof. Tom Kaydor, Jr. serves as an Assistant Professor at the IBB Graduate School of International Studies. He holds a PhD from the Department of Government and European Studies, the New University, Slovenia where he specialized in International Development and Diplomacy (with Security Aspects). His dissertation topic was ‘Reconceptualizing Africa’s Regional Integration for Peace and Sustainable Development.’ He earned a Master of Public Policy (MPP) specialized in Development Policy or Development Economics with Distinction from the Crawford School of Economics and Government (now the Crawford School of Public Policy), Australian National University, Canberra, Australia. He also obtained a Master of Arts (MA) in International Relations (Highest Distinction) and Bachelor of Arts (BA) Magna Cum Laude in Political Science from the University of Liberia where his Minor was History with Masscom as is his Elective. Tom holds a Diploma in Leading Economic Growth from the Kennedy Graduate School, Harvard University, USA; and he holds other diplomas and certificates in professional fields from Italy, UK, Pakistan, China, and Israel. Prof. Kaydor is also an Adjunct Professor of International Development Studies at the AME University Graduate School. Dr. Kaydor is an evidence-based researcher, a blogger, a columnist, and a published author. One can reach him via (kaydorth@ul.edu.lr or thkaydor@gmail.com).
