As Global Economic Meltdown Continues

“For two months I have not been receiving money from my mother and sister in the States. Every month they used to send something whenever I called them; but this time no way,” 54-year-old Nathaniel Vaker, told The Journal at a commercial bank in Monrovia recently. He is one example of a direct victim of the global economic meltdown.

Nathaniel, a student of the teacher college at the University of Liberia, is part of a household of 11 family members, excluding extended relatives, who prior to the acute drop in remittances from abroad, used to benefit from overseas’ support. Since his sister became one of the many who recently lost jobs in the US, however, Nathaniel, like many other Liberians, has been directly – and negatively – impacted by the worldwide economic backwardness.

There is no more telling scenario that the 54-year-old teacher college student could highlight than when he took sick and only had L$300 to afford medication. He had to pay L$150 for lab test and other fees, and because the balance L$150 could not buy him the required drugs, he was compelled to credit from friends to meet his health needs at the time.

At the same token, banking institutions in Liberia, with whom customers both within the country and abroad transact businesses, are experiencing a drop in remittances – personal transfers of money from abroad, sent through businesses such as Western Union. This equally affects the banks’ operations as commercial financial entities longing to maximize profits.

In an exclusive July 23 interview with the Comptroller of Liberia Bank for Development and Investment (LBDI), John B. S. Davies, at his Ashmun Street office, the seasoned accountant confirmed that there is a drop in remittances coming into the country as a result of the global recession.

Though he could not give the exact percentage of the drop, the Comptroller said financial institutions also feel the impact, because once their clients are affected there is a trigger down effect on the commercial banks.

Mr. Davies attributed the global financial crisis to what he called “bad business practices accumulated over the years”. He said when the financial crisis first hit the world, it immediately affected developed countries because they have giant industries that manufacture raw materials into finished products shifted back on the world market.

According to him, it is now that the second wave of the economic marauding has begun to affect poor countries, including those in Africa, because, unlike the countries manufacturing finished products, developing countries like Liberia, Sierra Leone, and Rwanda, among others, depend their revenue generation on the resources exported abroad by investors. 

Photo credit: Nikki Whaites