The government of Liberia has come to the rescue of rubber planters in Liberia with the continuous nosedive recently in the rubber industry in terms of price on the World Market. The government through the Central Bank of Liberia has put together a credit stimulus package in the amount of US$5Million and LD$129,750,000 to facilitate the resuscitation of the Liberian rubber sector.
Making the disclosure to representatives of the Rubber Planters Association of Liberia (RPAL), CBL governor Dr. J. Mills Jones on Friday, June 27, 2014 said the action was predicated upon the dire straits created by the fall in the price of rubber, which is having a toll on rubber planters and workers in the industry.
“Recently the rubber sector, which is a very important part of the Liberian economy contributed significantly to the employment and growth has experienced a sharp drop in income due mainly to the fall in the price of rubber,” said Dr. Jones.
Continued the CBL Governor: “This has posed a serious challenge to the Liberian rubber farmers in maintaining their operations. In view of the serious implications on the economy, from the fall in the price of rubber, the government of Liberia saw it fit to timely assist the affected rubber farmers. Accordingly, the government through the Central Bank of Liberia, is arranging and I believe we’ve almost concluded the facility for the commercial banks in the amount of US$5Million as a credit stimulus for on-lending to active farmers who are members of the rubber planters association of Liberia RTUL.”
Stressing the importance of resuscitating the rubber industry at such a time when the industry is serious need, Dr. Jones said the government has a responsibility to keep key contributors to the Liberian economy in a stable condition that will ensure sustained growth, which will have a positive impact on the citizenry.
“Let me state that these programs are necessary to ensure that the private sector is given the needed support through the banking industry to keep the economy of Liberia on a path of sustainable growth as well as protect the large number of our citizens from losing their jobs.”
“Additionally, the CBL has made a placement with the Liberian Bank for Development and Investment, in the amount of L$129,750,000 to facilitate further lending to the Rubber Planters association of Liberia.”
Also speaking during the occasion, which was held at the CBL edifice on Warren Street in Monrovia, the Chairman, National Investment Commission Michael Wotorson said the government had to act swiftly to avert a potential national emergency.
“The government of Liberia and in particular the President H. E. Madam Ellen Johnson Sirleaf, saw that the crisis was brewing and extreme condition requires, extreme responses; the president decided that it was prudent that the government respond in a decisive way,” he said.
“This has been and is a perfect example of interconnectivity; when our people are hurting, this government decides it is important to respond quickly, respond forthrightly and respond decisively and that is what is happening. It is the government’s way of showing its firm support to the rubber planters and a firm support for the industry.”
Responding to the GoL’s effort to respond to the needs of rubber planters across the country, the head of the RPAL Mr. Billy Garnett said the industry continues to face huge challenges due to the drop in the price of rubber and industry, which is on the mends following years of civil conflict that also left scars on the sector.
“We’ve made many attempts at the RPAL along with the banks, especially LBDI, the national bank to ensure that we could secure financing for the farmers. While we were in the process of doing this, the world market slummed again and this began in 2011, rubber prices peaked at about US$2500 per ton,” said Mr. Garnett.
“During that time, most of the farmers took the surpluses and reinvested these surpluses in new planting in new housing, sanitation for the workers. So, no one in their wildest dream or farmer for that matter thought that we were going to be prepared for such a major crisis and when this crisis came, it came suddenly. The price continues to come down, but beginning November of last year, it just took a deep fall.”
He said the rubber industry in Liberia continues to contribute in its export of raw rubber to factories around the world, but Liberians are still not feeling the impact of profits earned by these companies even though the country is a major contributor to the rubber industry. He said throughout his life he has only known Liberian rubber sector workers to be static in a particular state with not an improvement, something he said that has to change. He thanked the government for the intervention calling it timely.
“It is not that the industry is not making money, the rubber industry is making money; if you check the world market, the tyres companies are making a huge windfall profit right now, but unfortunately we in Liberia are not feeling that impact because this profit is not being passed on,” he said.
“We are a major employer, we are a foreign exchange earner if we didn’t do something we would see this sector fall. We have all of this rubber that is now maturing and we have a situation where we do not have a medium to long-term financing and governor, I must admit to you, this is the first medium to long-term financing that we’ve seen for a long time.”
Speaking on the challenges faced by the industry Mr. Garnett said the last major planting of rubber in Liberia was in the late 1950s and since then there has been not been a significant amount of financing to the sector. “There has not been much after the Coup in 1980 and after the war financing for the sector basically became non-existent (medium and long-term),” he said.
“Of late, Firestone came in in 2006 after the election of this government and began what we call the rehabilitation process and since that process began we have planted approximately 40,000 acres of new rubber. If you go into the central belt upper Montserrado, Margibi, Bong, Nimba you’ll be surprised to find the amount of rubber (not on the main road but) in and all this requires financing.”
The head of the Liberian Bank for Development and investment which will serve as the facilitator for lending the money to rubber farmers, Mr. John B. S. Davis said the farmers will have to repay the loan over a period of time in order to sustain the program.
“Our appeal to your workers and the stakeholders who also depend on you for sustainability is that we hope and pray they will continue to give you the support, so that what is being initiated today, as a small stimulus facility of around one and a half million US dollars equivalent will grow into tens of millions of dollars and will see the full resuscitation of the rubber sector not just in the context of producing rubber.