Senate scrutinizes CBL Governor, Deputy -Both vow to make CBL a development bank

The Senate Committee on Banking and Currency, yesterday, Thursday, July 8, 2021, took time to grill the re-appointed Governor of the Central Bank of Liberia (CBL), J. Aloysius Tarlue and his deputy for economic policy, Dr. Musa Dukuly, during the confirmation of the two top bankers at the Chambers of the Liberian Senate.

The two top bankers who were appearing before the senate for the second time after their reappointment recently by President George Manneh Weah made separate presentations on their achievements over the years and the focus on the new direction of the Central Bank of Liberia under their stewardship, the development which they promised to upgrade to reposition the apex bank so as to fulfil its mandate and meet the challenges ahead.

Speaking earlier, Governor Tarlue told the Senate of the progress that has been recorded during the short period of time he served the bank beginning with confidence that has been rebuilt within the banking system from the public through measures instituted to mitigate mainly the rising currency outside the banking system.

“The first challenge we had was how to win back the public confidence for the banking system that has lost the trust from the people. We took far reaching measures that directly impacted on decisions of the management of financial institutions to make sure that they operate within the framework that will win the trust of their customers”, Mr. Tarlue said.

He said the introduction of the CBL short-term bills with an attractive and effective rate as was captured by the Central Bank of Liberia Annual Report 2020 rate of 25% intends to incentivize businesses and individuals to move away from holding idle cash. He mentioned the pending minting of a new family of bank notes for full replacement of the existing banknotes. He said it is the wisdom of the management of the bank that the reforms provide a golden opportunity for the bank to strengthen internal control, ensure transparency and accountability in the domestic currency management process, especially with technical assistance being provided by development partners.

Governor Tarlue also spoke about the efforts put in place by his administration to digitalize the economy with the intent to move from cash based transactions to a cashless one. He said the cashless payment system can be a worthy undertaking for places like the rural parts of the country that do not have a functional banking system. He cited the mobile money payment system that is being used to facilitate ease of doing transactions from one end to another.

“There is a huge advantage when you digitalize the economy because it enables you to track every transaction that goes along with it. But when a transaction is done from hand to hand like the kind of transaction that takes place in the market space, you have a serious challenge to track or trace the transaction. We need to encourage the cashless society where people use various transaction wallets to carry out businesses such as using devices to make payment, as well as transferring or withdrawing money from one’s account in the bank or from mobile money payment platform”, Mr. Tarlue said.

He stated that the CBL will in the next 2 years put emphasis on implementing the digitization project where there will be less reliance on cash and more dependence on digital space. He added that the CBL is undertaking a project to build 4 additional banking hubs in the country to support the financial inclusion program of the bank in areas that lack banking infrastructure to support and enhance trade and other economic activities.

When asked what could be the possibility of reactivating and recapitalizing the Agricultural and Cooperative Development Bank (ACDB), given the major role it played in the past in boosting agricultural production that positively impacted on the economy, Mr. Tarlue said that there is an urgent need to have an agricultural bank to support the agriculture sector which has the potential to immensely turn the fortune of the economy around.

“Yes I do agree with you and that could be more than 100%. But not only an agricultural bank, we also need a manufacturing bank to cater to the real sector of the economy. Unfortunately, we do not have the capital to do so right away. We are leveraging the cooperation of our partners in that direction”, he said.

Mr. Tarlue said under his management, the CBL will play its role more as a development bank than a traditional regulatory financial institution. He expounded that there will be meaningful development in the country when the apex bank begins to get involved in funding capital projects like what other central banks are doing. He mentioned the Central Bank of Nigeria that has funds set aside to spend on projects in agriculture, manufacturing, education, water and sanitation, environment as well as giving stimulus packages to SMEs as a way to generate employment, income and revenue.

For his part, Dr. Musa Dukuly who is seeking confirmation as Deputy Governor  for Economic Policy said that why he served in the position he worked with the Executive Governor and management of the bank to formulate policies and programs that have repositioned the largest financial institution in the land to an enviable place.

He spoke about the series of reforms that have been taking place at the bank including the pruning down of the workforce when 274 persons were laid off to have a lean and productive force, an exercise he termed to be painful, adding it was because of God’s intervention, the situation did not escalate to confrontation like in other workplaces.

Dr. Dukuly whose job description makes him a key man in the engine room at the bank said that the new direction of the institution was driven by the resolve of the management to push policy initiatives based on thematic research.  He said the bank has decided not to deal with any policy design that is not aligned with research based evidence that will influence robust decision making.

“So far the analyses about the economy from the bank have been encouraging; they are evidence based; I have been fortunate to supervise these analyses that were done”, Dr Dukuly told the Senate Committee.

He said as part of the achievements since his appointment, the CBL was able to meet most of the benchmarks set out by its partners such as the International Monetary Fund (IMF) and ECOWAS.

Amid thunderous cheers and laughter, Dr. Dukuly reeled out his achievements as a major contributor and crafter of policies, that  the CBL was able to manage the inflation rate at single digit to conform with the ECOWAS benchmark, Liberia’s debt to GDP rate did not exceed 70%, a sound monetary policy to reduce pressure on the Liberian dollar, forming a synergy with the Ministry of Finance and Development Planning to develop a workable debt management strategy, working with the IMF to enlist Liberia in most of its recovery program, complying with initiatives that discourage CBL to borrow money to government as well as spending on government projects, etc.

When asked how the CBL has been able to help SMEs in terms of financial package, the tough talking top CBL executive said that it has been involved both directly and indirectly and noted that the bank has put forth the setting up of Rural Community Financial Institutions (RCFIs) to boost agriculture and strengthen the capacity of SMEs in the rural communities where financial institutions do not exist. He also corroborated with his boss that Liberia needs an agricultural bank to address issues related to the sector and promote mass production of food for both consumption or attainment of food security and export to generate revenue. He in a like manner, lamented the lack of funds to make this work.

Checks by The Analyst Newspaper reveal that the team currently at the helm of affairs of CBL recorded some landmark achievements during the period under review despite the many challenges the country is faced with.

For instance in 2020, the financial sector remained resilient amidst relatively high non-performing loans (NPLs) and liquidity constraints partly due to COVID-19 which has significantly affected the cash flows of businesses and households to service their obligations to the commercial banks. The CBL, working with the commercial banks and mobile money operators implemented several policies to mitigate the impact of the pandemic on businesses, households and the population in general.

According to the recent report of the bank, it also encouraged banks to explore more options of digital banking and reached consensus with mobile money companies to temporarily reduce charges. The introduction of these measures witnessed the relative easing of pressure on commercial banks and wider usage of mobile banking for payments.

“To ensure financial deepening, the CBL continued to support the establishment of agent banking, especially in areas with limited presence of commercial banks with 73 agents for three banks approved for operation. As at end-December 2020, the agents of commercial banks were visible in the Central Bank of Liberia Annual Report 2020 3 in 8 of the fifteen Counties. Despite the macroeconomic constraints, commercial banks continued to lubricate the engine of the economy by providing credits to critical sectors,” the report said.

Legislative watchers who are versed with the inner workings of the upper chambers of the national legislature told this paper at the end of the confirmation hearing yesterday that the two top bankers are expected to be confirmed to their respective positions given the way the senators were receptive to all the answers to the questions asked and more besides from performance reports the bankers provided at the hearing which drew the admiration of the lawmakers.

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