Post on 13-Apr-2018
Republic of Liberia
Governance Commission
REPORT ON SCOPING STUDY
ON
LIBERIAN ENTREPRENERS’
PARTICIPATION IN THE LIBERIAN
ECONOMY
Governance Commission (GC) 9th Street, Sinkor, Monrovia, Liberia Web: www.goodgovernanceliberia.org
February 15, 2016
ACRONYMS
AFT Agenda Fo Transformation
CBL Central Bank of Liberia
LBDI Liberia Bank for Investment and Development
LCC Liberia Chamber of Commerce
LIBA Liberia Business Association
LPRC Liberia Petroleum Refinery Corporation
MFDP Ministry of Finance and Development Planning
MLM&E Ministry of Lands, Mines and Energy
MOA Ministry of Agriculture
MOCI Ministry of Commerce and Industry
MOL Ministry of Labor
MPW Ministry of Public Works
NASSCORP National Social Security and Welfare Corporation
NBC National Bureau of Concession
ODP Open Door Policy
PEL Port of Entry Laws
PPCC Public Procurement and Concession Commission
SBA Small Business Act
SBA, Inc Subah-Belleh Associates
UNDP United Nation Development Program
USAID United State Agency for International Development
1.o EXECUTIVE SUMMARY
1.1 Introduction The GC engaged the services of Subah-Belleh Associates to investigate the
circumstances and factors that explain or can contribute to understanding the absence of any substantive involvement of Liberian entrepreneurs in the Liberian economy. Near absence of noteworthy Liberian entrepreneurs has
been a characteristic over much of the country’s life. And in ten years after the conflict, it has not revived to the level reached in the three decades that
preceded the civil crisis. This slow recovery is indicative of the difficulties Liberian entrepreneurs are confronted with and which we need to subdue.
1.2 Study Frame
Motivation for the Study The concern is why for so long and in spite of several efforts, we, Liberians,
not built a powerful business class in our own meadow. The impetus for this study comes from the faith that we can find the policy and programme mix that will lend the quality of support to take us to and beyond that destination.
The Approach Adopted for the Study
The question that the study is challenged to answer is “why we have not succeeded, in spite of years of efforts?” The approach is to establish the real
challenges that have forestalled the achievement of such great aspiration. And then, on the second count, examine and match our policies and programmes over the years with the requirements established in the first instance in order
to pinpoint the culprit.
These are the discoveries of the exercise: 1.3 Key Findings:-
The review of policies and Liberian entrepreneur building efforts, of both the
past and current times, revealed that:
i. Our macroeconomic policies have been devised, without baseline and
little economic consideration, to serve political ends. Flawed at birth, they have been largely unresponsive to the plight of Liberian entrepreneurs and businesses; and their impacts have been, at best,
generally insufficient, and at the other extreme, inimical to the letter;
ii. Rather than employ full-scale review of the four score plus years old Open Door Policy (OPD), we have adopted insertion of modulations into our economic laws to improve their Liberian accent and sensitivity;
which just mitigate some of the ODP’s adverse effects; thus even key current economic policies that support Liberian business development
are inadequate to undo the damages and obstructions the OPD has posed to building a substantive indigenous middle class;
iii. Fortunately however, all the current key sources of macroeconomic
policies are committed to developing a Liberian business class; demonstrated by the efforts each is exerting within its jurisdiction; but
slackness in coordination amongst macro actors undermines cross-fertilization and consolidation of policy ideas into a comprehensive framework that gives greater effect and fluency.
1.4 Conclusions
From the above findings, we conclude as follow:
i. Funding and technical capability deficits are the paramount challenges
that Liberian entrepreneurs have, amidst several other difficulties, including a number of manipulations and unfair practices by some foreign competitors;
ii. Our responses remain focused on creating a stable, predictable and
enabling environment; and, though sector programmes and donors’ supportive interventions, creating markets and other investment opportunities which are, as a matter of fact, quite suitable for Liberians
-businesses and entrepreneurs; but
iii. Funding provided largely by CBL and other capacity development efforts
of sector ministries and donors are inadequate to service the investments required for capable Liberian entrepreneurs to take
advantage of these supply chains. 1.5 Principal Recommendations:
The primarily recommendations for building a Liberian business classes are:
i. Engage a process to build a national partnership of stakeholders and
government to work together on a new “growth for development”
economic policy paradigm; which will boldly seek, among other national objectives, to assist Liberians earn sizeable holds in their economic activities in their country; and
ii. Develop comprehensive supporting programmes, meticulously designed
to address the fundamental capacity deficits of Liberians. The Approach Recommended
Apply the World Bank’s formula for poverty reduction: where we engage
Liberians with requisite capabilities into opportunities and access mentioned above, and empower them through building critical capacities to overcome certain long known, but ignored, crippling deficiencies.
2.0 Study Frame
2.1 Terms of Reference and Specific Objectives of the Study The purpose of this Scooping Study is to perform diagnoses of economic
policies and key issues affecting development of a Liberian middle class -of Liberian entrepreneurs and Liberian enterprises undertaking large scale economic activities in the country. The specific key tasks are:
i. To identify the and examine economic policies and programmes over
the years, including now, to establish their strengths and weaknesses visa vie the development of Liberian entrepreneurs and strengthening their role and participation in the economic activities of their country;
ii. To pin point the fundamental challenges which the measures failed to
address; and consequently, they remain responsible for Liberian entrepreneurs inability to take strongholds in their own economy;
iii. To scrutinize other issues of internal as well as inter-agency coordination, policy alignment, etcetera, that may be contributing to the
setbacks to Liberian advancement in the economy; and iv. To provide clear indications of how, generally, we can build a
consolidated robust mechanism for supporting Liberians to assume larger roles and strong competitive positions in our economy.
2.2 Scope and Limitations of the Study
The study covered two main player-groups, namely:
2.21 Public sector actors -Policy makers and those responsible for implementing the policies constituted the primary target and were treated as key informants -to find out what guidance they are providing actors in the
economy and what their own actions are in respect to Liberian entrepreneurs’ role and in our economy.
2.4 Representatives of key beneficiary group as the Focus Groups to assess their own contributions to efforts, challenges, experiences and their
expectations of other key actors.
2.5 Methodology
The Study Approach comprised review of relevant documents of public,
donors and other partners on the subject or related to the subject; and interview of key informants (entities and persons knowledge about and contributors or capable of contributing to the objectives; and discussions
with focus groups, the beneficiaries or potential beneficiaries of both the on-going and other initiatives to evolve from this exercise.
Websites were the primary sources of information on efforts of donors and some public entities.
2.6 Organization of the Report
The report presents the purpose and logic of the study, to explain why and how it was undertaken in the first place.
It presents, in simple, regular report format: an executive summary laying forth the principal issues and recommendations on actions to take.
Then it presents the detailed discussion on the key issues, reviews and assessments of policy initiatives, in chronological order, presented in a matrix
for synoptic view and easy comparison; followed in literature to focus each period, their corresponding efforts to better appreciate why the failures over almost a century time span.
Interpretation of the efforts, conclusions and recommendations follow in
closing. Researchers – SBA research team comprised Francis M. Carbah, a
professional of long experience in economic management activities (team-leader) and Blamo Nelson, another professional of similar tenure of experience in several key areas of economic and development issues. Both served in
ranking positions in previous and the current Liberian government.
Table of Content
1.00 Executive Summary
2 00 Study Frames
2 10 Specific objectives
2 20 Scope and Limitation of the Study
2 21 Public Sector Actors
2 22 Representatives of Beneficiary Groups
2 23 Donors and Partners Representations
2 30 Study Methodology
2 40 Organization of Report
3 00 Issues of Liberian entrepreneurs and Liberian businesses
3 10 General Issues of Economic Environment
3 20 Endogenous and Internal Limitation
4 00 History of Macroeconomic Policy Development in Liberia
4 10 Matrix of Policy Analysis
4 20 Assessment of Policies Eras
5 10 Findings
5 20 Conclusions
5 30 Recommendations
6 00 Appendixes
6 100 Names of Entities Spoken With
6 200 Details of History of Microeconomic Policy Evolution
Bibliography
3.0 I Issues with Liberian Businesses
This scooping study is about finding out the issues, problems and factors that have retarded the growth of Liberian economic and business interests in their own economy, when they remain barely visible, evidently weak to to assume
and fulfill national responsibilities. Their performance has remained uninspiring, in spite of many endeavors made over the years to enhance it.
The obvious point of commencement is identifying and clearly setting out the issues. That will be followed by the examination of the different efforts in respect to the issues in order to establish why the situation has not improved
significantly; such that Liberians appear literally marginalized and operate barely at the fringes. What are the principal gaps in policies and programmes
before and now that can throw some light on this situation? Fortunately, these issues were not newly discovered by the study. They have
existed and been known from ever since; because they are factors that affect every business. They exist in two broad categories:- exogenous conditions which lie outside the control or influence of individual persons or businesses,
whether Liberian or foreign; and have the same effect, perhaps with different intensities, on every business, Liberian and foreign alike.
Their resolutions will pave the way for any risk-taker, foreign or Liberian, to fairly estimate future outturns and make intelligent selection of investment
options. They do that for everybody. However, even these exogenous conditions have improved to their best levels; Liberian entrepreneurs will still
not be in position to compete. They have internal shortcomings that undermine their preparedness to compete in an intense contest that a good business environment necessarily arouses.
The Business Environment
Exogenous Issues Internal Limitations
Macroeconomic Framework
Legal and regulatory regime
Performance of the economy;
Enabling Conditions o Availability– o Electricity o Water o Communication o Transport infrastructure Availability of trained, skilled and
discipline labor, etc
Access to Finance / credits;
Access Technology, including management capabilities professional / expert services; Basic business education to understand business as a “risk for returns” venture;
Access to markets; and
Attitudinal considerations- Poor credibility and integrity; Poor business attitude, etv
This is not to conclude that therefore bad or poor environment is good for Liberian business. Yes they are good for Liberian businesses as well. The argument is that they are not sufficient: even the best business environment is not enough for Liberian businesses to thrive.
Enhancing the general surrounding and atmosphere for business has to come with adequate parallel attention and efforts to assist Liberian enterprises
overcome the internal handicaps in order to be prepared for the strong rivalry that the desired good business surrounding will engender. Some working Definitions and Clarifications These clarifications provide how discussants and interviewees defined and explained what
emerged as Liberian entrepreneurs’ key deficits: Lack of funding, technology and access to
markets. Public policies and programmes can contribute to alleviating the three. The attitudinal
issues can only be screened out by a stringent due diligence structure, at operational level.
Lack of finance is referring to any one or combination of the difficulties in securing funding- Poor
or absence of accounting records; inability to prepare proper documentations; high interest rates
and short tenure of loans; delays experienced in processing loan applicants for Liberian businesses
visa vies foreign competitors, supposedly on account of the latter’s influence, direct or indirect;
and the actual inadequacy or absence of dedicated, and or long term funds.
The issue of technical incapacity is a milieu of lack of understanding of business generally, or of
specialized professional services, or of the knowledge, managerial capability, technical know-how
and equipment for the specific business type. There is broad absence of these needs, even for hire,
in several areas Liberians can excel. The limited exception is in the agriculture sector where such
assistance exists; but again largely for small undertakers, or medium undertakers who have some
access under concession plantations legal arrangements.
In the area of market access, the issue is more about the absence of technological capacity of
Liberians to produce and supply products and services at competitive prices and quality, than
direct market access problem. The situation can be stretched to being a matter of access to
adequate dedicated or long term financing to hire or purchase know-how, accompanying
equipment, etc. in order to be able to actually produce.
However and more really, direct market access is also seriously affected by undue influences of
some foreign competitors who endeavor to oust Liberians from supply lines, even in products they
demonstrate competence and strength; including daring, in some instances, to compete with
Liberians in businesses reserved for Liberians.
It is reported that only the Liberians directly affected in those cases find themselves standing up
to fend the obstruction and intrusion; with LIBA being the only entity credited for proving support
and assistance to embattled Liberian businesses. This will be clear verification of some
shortcomings in the enforcement of regulations.
It is with these factors, which are more endogenous, that policies must focus on with respect to Liberian empowerment. The factors are within the scope of each individual’s responsibilities to deal with. Foreign competitors come with
solutions from parent companies or affiliates. And when what they have does not work, they call head office, local sponsor company or some other
associates and get the newest applicable solutions. Liberians, on the other hand, have no such reservoir of solution packages.
Our education over the years missed out on providing us the full necessary preparation; and our macro-economic policies have undermined, more than
they have supported, our private business and economic initiatives. It is here that Liberians need some therapy or cure in order to rise up to the competition. We need some boots to rise by the straps on our own.
These limitations manifest themselves in various ways and produce combined, reinforcing impacts that both complicate and exacerbate situations
of Liberian entrepreneurs and businesses. And weak enforcement of regulations does not help the situation in many instances.
4. History of Macroeconomic Policy Development in Liberia There are actually six distinguishable broad policy periods that are briefly reviewed in this report. They are listed here with their declared titles or titles
that reflect their characteristics. Their origin, purpose and how they impacted the endogenous factors that most affect Liberian businesses are presented in
the matrix that follows for ready comparison, and easy follow through on their evolution. And the eras are as follow:
I. No Policy: Full Free Enterprise Era: Pre-Early Independence -1864; Port
of Entry Law: First Macro-economic Policy (1864 -193-)
II. A period of virtual closed door or rejection of foreign capital;
III. Open Door Economic Policy (ODP) Era;
IV. Public Sector-led Business and Social Development Policy -
Expansionary economic strategy -Application of SOEs and ADPs-;
V. Era of Confused Macroeconomic Policy (1980 – 1990); and
VI. Current Period- A Return to Open Door Policy
The Matrix that follows is an attempt to capture the basic facts
about the origin, purpose, affect of policies and associated actions
on the internal difficulties [access to finance, market and technical
support] of Liberian entrepreneurs and businesses.
The matrix is followed by brief restatement of the strengths and
weaknesses of the respective policies to focus their contribution to
the successes or failures to developing a Liberian business class.
4.1 Matrix of the Chronology Development of Macroeconomic Policies and Programmes
Policy & Era Purposes
Business Support (Main Features)
Strengths/Impact Weaknesses
Funding Market
Access Technical
No Policy: Pre-
Independence
to 1864
na na Limitless na Promoted initiative/
industry ; Thriving
trade in agri-products
No guidance to buttress
efforts of individuals
Port of Entry
1864 -193-
Establish authority
over interior
Collect trade taxes
Curtail natives’
economic progress
none Left markets
totally to
settlers
Suppressed
technology
transfer and
acquisition
Protected settlers’
businesses interests
Inhibited competition and
access to knowhow, etc;
Suppressed natives’ strive
for economic advancement
and political progress
Open Door
1932 —present
Lure substantial
American interest
in the economy of
Liberia;
Secure American
protection against
French /British
encroachment;
Extend control over
natives and
resources
Firestone
provided:
inputs
implements
and planting
technology to
rubber out
growers;
Firestone
was captive
market
Rubber
planting
technology
Farm
management,
Attracted FDI,
Raised GDP,
government revenues,;
Achieved good level of
physical development,
especially in roads and
bridges, public
utilities;
Education and skills
training, etc
Lacked any mechanism to
promote Liberian partici-
pation, even in business
opportunities that emerged
from large FDIs;
Encouraged alien
merchants flooded local
commerce,
Held off Liberian businesses,
Imposed competition with
stronger foreign rivals
1st Adjustment -
Operation
Production
Restore self-
sufficiency in
national staple
Public funds
Supported to
access market
by parallel
development
of transport
infrastructure
New Planting
Technology
New rice
variety
Land clearing
Introducing large scale
production with
potential for greater
productivity and
efficiency
Technology too advanced and
Targeted wrong breed of
farmers; Low Rice Price /
Remuneration did not
2nd Adjustment
USD1M Loan
Guarantee
Facility
To support Liberian
participation in
economic and
business activities
Funding
through
public
purchases
Public projects
and
procurement
Provided
ability to
procure
technology
Supported a few large
Liberian businesses
Funds were inadequate;
Access to facility not
transparent
4.1 Matrix of the Chronology Development of Macroeconomic Policies and Programmes
Policy & Era Purposes
Business Support (Main Features)
Strengths/Impact) Weaknesses Funding
Market
Access Technical
3rd Adjustment
Establish:
Liberian
Development
Corporation
(LDC)
To promote
industrial
development
through public
guidance / support
Contributed
equity to
partnerships,
or wholly
owned
corporations
Pledged the
domestic
market
Prepared
project
studies/
appraised
investment
proposals
Technical competence
and investment
support authority
General, none Liberian
specificity of special interest;
Access was not widely known
4th Liberia Bank
for Development
and Investment
(formerly Liberia
Bank for
Industrial
Development
and Investment)
To mobilize funding
and support for
industrial project
Project funding
Providing
credits
Domestic and
accessible
foreign
markets
Internal
capacity for
appraisal of
projects for
consideration
and credit
management,
etc
Developed Bank’s
internal management,
professional and
technical competence
technical competences
Not specific to Liberians;
Development of technical
competence limited to LBDI
and NIC (then LDC) alone
5th Amendment
Established
Monrovia
Industrial Park
Easy, ready access
to substantially
subsidized and
prepared sites for
projects
Site
preparation
and Infra-
structure
development
Encouraged
investment in
industrial and
value addition
Easy access to proper
sites for industries
Not specific for or to
Liberians;
Access process not
transparent
Public Sector-
led Business and
Social
Development
Policy 1971 -
1980 SOEs/ADPs
LPRC,LPMC,
LPPC, LCCC
LEC, LWSC, NHA
LIBTELCO,
ACDB, NHSB,
LIFZA, etc.
Diversify and
expand economic
output;
Raise employment;
Promote
development
Public
undertakings
–All funded by
government
For existing
markets , both
domestic and
foreign
Technical
capacity
development
was integral
components of
the projects
Created productive
capital;
Built Liberian
managerial expertise;
Raised economic
production and
employment ;
Driven by political
consideration than by
economic reasons;
Highly susceptible to
political manipulation;
No exit strategy to divest out
to private Liberian
entrepreneurs to assure
financial and economic
sustainability;
4.1 Matrix of the Chronology Development of Macroeconomic Policies and Programmes
Policy & Era Purposes Business Support (Main Features)
Strengths/Impact) Weaknesses Funding Market Technical
Current Period
Macroeconomic
Policy undefined
Economic
transformation
Silent on
funding
Silent Silent To be measured Failure to address Liberian
entrepreneurs’ role and
participation
Sector Auxiliary Policies abd Support Programmes
G
O
L
USD2M
Support to
reviving Liberian
businesses
Initial gesture Too small, no mechanism for
access
C
B
L-
USD5M
LIBA’s
Initiative
Access to low
cost, longer
tenure credit
Provides
funding as
intended
silent Limited level
expected of
supervising
entity
Funding for Liberian
businesses
Small to go around and
limited to LIBA’s members
-USD5M
Micro
Finance
Expand access to
money and credit
Funding for
micro projects
Assumed
existing
domestic and
external
Limited level
expected of
supervising
entity
Stimulating rural
savings, credit and
production
Narrow scope- for micro
business onlyand insufficient
for large scale investment
USD10M
Housing
To pilot mortgage
development
Access to
finance
Apparent
housing needs
none Providing funds for
housing
Limited sector and inacces-
sible by other growth sectors,
lacks technical support
USD25K
Community
Bank Capital
Credit-check
Provide access to
finance in rural
communities
Funding Too early to be
measured
Facility staff
training
(should
include Board)
Supports savings and
credit creation in rural
areas
Micro / SMEs only
M
F
DP
USD25-65K
Start-up
Projects
To increase
access for 1st time
investors
Funding
Given-
none Promote rural
investment
Provides venture
capital
Small for large scale operation
M
O
C
I
SBA
Expand business
opportunities and
market
Guaranteed
funds
Captive
market
Working on
SME center
Assures and expands
Liberian entrepreneurs’
participation
Limited to SMEs;
Definition of Liberian
business has potential to
support to foreign investors
4.1 Matrix of the Chronology Development of Macroeconomic Policies and Programmes
Liberia
Innovative
Fund for Ent
Development
Support youth
innovation /
creativity
Funding
Public
procurement
None Strengthen young
people to take
initiatives
Fits only small businesses
M
O
C
I
Policy & Era Purposes Business Support (Main Features) Strengths /Impact Weaknesses
Funding Market Tec Support
WTO Build Liberia’s
business
regulatory regime
to international
standards
none
Competitivene
ss raises
chances for
exports
To MOCI and
subsidiaries
Promotes stability,
predictability and
efficiency of general
business environment
Brings Liberian business into
sharp completion with far
stronger competitors
NIC Seeking a more comprehensive overarching policy framework and meantime actively promoting business concepts and projects for Liberians
P
P
C
C
Margin of
preference and
25% reserve of
public
purchase
Provide space and
economic
opportunities for
Liberian
businesses
Captive
market
provides
indirect
funding
Public
procumbent
Guidance in
preparation of
bids, etc
Has potential to
develop some large
Liberian enterprises
There is no supply side
support
N
B
C
Enforcing
terms of
concessions’
agreements
Create space and
economic
opportunities for
Liberian
businesses
Indirect
funding from
captive
market
privilege
Concession
serve as
provide
captive
market
Usually part
of
concession’s
terms
Has potential to
develop some large
Liberian enterprises
Not strong on supply side
support
L
M
&
E
Law reserves
classes of
mining for
Liberian and
partnership
with Liberians
Provide and
reserve
opportunities for
Liberian
businesses and
entrepreneurs
No funding Guidance to
achieve export
None Has potential to
develop few large
Liberian enterprises
No supply side support Lack
funding for capacity building
(acquisition of equipment)
M
P
W
Margin of
Preference and
25% pp
reserve
Reserve space and
opportunities for
Liberian
entrepreneurs
Indirect
funding from
captive
market right
Captive
(public
purchase)
market
Has potential to
develop few large
Liberian enterprises
No supply side support Lack
funding for capacity building
(acquisition of equipment)
M
O
A
Various
rehabilitation
projects
Revive agricultural
production
Various donor
sources
No extra
support
Skills training,
Advisory
Potential to develop
large Liberian business
For subsistent and low scale
farming
4.2 Assessments of Macroeconomic Policy Eras
4.21 Pre-conflict Era
The table speaks loudly for itself. Suffice it; however, to observe that throughout most of the years, economic policy formulation has been driven by either external
interest or political consideration, without sufficient relevant empirical data to build in national business interests and the socio-economic development of our
country and people. 4.211 The pre to early independence period of “totally free trade” strength:
Free trade, as always, encouraged and promoted creativity, industry entrepreneurship. Thus it opened access to productive capital through
partnership between Liberian business persons with foreign traders who had better knowledge and technologies. The gradual entry of the latter into the Liberian domestic economy, and co-operation with Liberian partners would have
led to some transfer of the technologies to enable some Liberians to excel in some areas, such as agriculture and alluvial mining, where technologies and production were not as sophisticated and capital intensive as now. Liberian
entrepreneurs and businesses would have grown and developed over time as the economy evolved.
The weakness was the absence of support to buttress Liberian entrepreneurs’ endeavors in order to ensure that they would rise to dominance above the foreign
counterparts in the competition in their own economy.
4.212 The Port of Entry Law 1864-193- (PEL)’s strength was that it left all economic and business opportunities to the settlers alone. It provided no extra support to ensure that they succeeded.
Weakness: PEL’s weakness was in the flipside of its success: closed up access to external knowledge and other productive capital, which was totally absent in
the country at those very early times. It let Liberian entrepreneurs pine within behind the closed door. It curtailed every conceivable potential for any sizeable
economic progress. 4.213 Open Door Policy’s strength was in attracting substantial US
investments and FDI from other external sources into to the primary sectors –agriculture, mining and forestry. The economy grew as rapidly as Japan at some point. The foreign enterprises, mostly extractive enclave, created thousand of
menial jobs, provided skills training for hundreds.
In addition, the rubber industry made further contributions to the economy. Further and through its out-grower scheme and for its own purpose, Firestone assisted with the establishment of several Liberian rubber farms along the roads
that led to the interior of the country. Besides rubber, Liberian entrepreneurs made inroads into other agricultural products, such as coffee and cocoa, oil
palm, poultry and fishing, including some on industrial scale. The introduction of several remedial programmes in response to the failures of the ODP, as noted
below, few Liberians made noticeable progress in construction, industry, including manufacturing.
The country itself also registered significant gains, among others, in the economic infrastructure, i.e., pipe-borne water and sewer system in the capital,
Monrovia; hydroelectric power in Monrovia up to about 70 miles away; with great networks of roads and bridges connecting the country; pavement of streets in Monrovia, two counties’ capitals and up 70 miles away into the central corridor;
and telecommunications, including postal service.
Weaknesses: The ODP failed to translate economic growth into socio-economic development as rapidly and large as the former. Far more than that, the ODP was a shattering of the floodgate, with rapid influx of foreign merchants and
imported goods; which together swept Liberian entrepreneurs and businesses in commerce and trade off their feet and severly suppressed indigenous innovation,
creativity and industry. Within about two decades of its launch, the country lost the ability to feed itself
and remains so even today. Even the mitigation interventions mentioned earlier, introduced were not very successful in promoting Liberian businesses, because they were directed or intended specifically for Liberian businesses and
entrepreneurs; plus the markets and the opportunities were already taken. Only a deliberate reversal policy could have altered the pattern of development.
4.214 Expansionary Economic Policy Era (1972-1980): The strengths of the adoption of SOE’s and ADPs was in building up productive capital –technology,
trained Liberian professionals and managers, etc. And of course increased and diversified economic production at industrial level, including manufacturing. It also added quality, skilled and unskilled jobs.
Rural Liberia and urban slumps experienced change of conditions in their immediate localities. The growth and diversification of the economy as experienced then were great and fast moving. But the process got under serious
strains and stress form increasing oil prices and falling prices of the Liberia’s primary exports, iron ore and rubber, similar to now. Growth slowed steeply as
local enterprises lost the buttress of the public coffers and private producers were losing markets from declining income in the country.
These successes and failures, are all, private and state-owned, under the bridge, owing to the depletion of the civil conflict. What is important is that the short-
lived success of the SOE’s, under Liberian managements, provide evidence of there being capable Liberians then. And there may be a few right now and even far greater numbers to emerge again!
Strengthens and Weaknesses of Current Economic Policies and Programmes
Policy level Efforts: The national economic vision is the achievement of middle
income country status by 2030. Government’s current economic management efforts have focused on developing a stable, predictable and enabling macroeconomic policy environment to support the efforts to that destiny.
Strengths: At the macro level, there have been great improvements in the general environment for business. From the fiscal policy perspective, the tax
regime is transparent and stable, which is a significant condition for the private sector to be able to fairly estimate fiscal obligations associated with various
investment options. Monetary policy has remained focused on price stability. CBL has managed the
significant macro prices, inflation and exchange rates, with prudence and great dexterity to keep them in close check. The relative stability has built sustained
confidence in the Liberian economy. The evidence is in the in the marginal variability of the rates themselves, the steadiness of the financial sector and the institutions in the economy.
From the perspective of general commerce, trade and industry, accession to the WTO speaks clearly of this administration’s desire and efforts to adopt international standards for the general conduct of business in
Liberia. The integration of the WTO and our regulations can only further improve the business surroundings.
This leads to a conclusion that, generally, the macroeconomic policy situation is stable, substantially predictable and therefore good for free and competitive business; which should further translate into lower costs of doing business and of goods and services on the market.
Weaknesses: The successes of the policies constitute the first policy weakness with respect to building a Liberian business class: the wide opened, free market space, that the policies have turned the Liberian
economy into, is a flood gate for cheap and very low priced products from anywhere that current and emerging infant Liberian businesses of any kind and size cannot match. This is because Liberian entrepreneurs and
businesses are restrained by serious deficits in their productive arsenal. They cannot produce at such very low, often manipulated prices offered by far stronger foreign and some internal competitors in many areas. The second weakness is that the policies provide no particular support to building sizeable Liberian enterprises to imbue thrust in their actions
when and, as they certainly will, respond to the market expansion.
Funding available are usually already sector or industry-earmarked and, or, directed at SMEs in most case. They are also insufficient to finance the size of capacity gaps in managerial and professional competences, technical know-how and the technology and complementary equipment
and such other assets. At Programme Level: At the sector or industry level, the inflection approach initiated during interterm phases of the conflict, continues expanding the space for Liberian entrepreneurs and businesses into existing supply lines and an even larger number of opportunities to
introduce whole new value chains. Projects in the real sector: agriculture,
mining, logging and associated secondary and tertiary activities offer vast opportunities for medium to moderately large operations that, with the right strategy and mix of capacity development support, Liberians can undertake with resounding success. The SBA’s reserve of 25% of public purchases from Liberian businesses makes a striking addition and
introduces further diversification potentials. The market expansion do not only create more opportunities; but the increased number of investment opportunities also create great visibility, inspires and challenges Liberians to step up to the plate –produce goods and services of quality and at prices acceptable to the market.
Preliminarily, it is obvious that there is a very strong need for some creative means to put more potent and vigorous efforts into building capacity of Liberian businesses and entrepreneurs to be able to meet the production challenges that the expanded market create. Otherwise, the improved general surroundings for business will, as desired and should be expected,
raise the competition above the readiness of Liberians. That means an exacerbation of their already existing internal dearth and effect increase in the chances for foreign businesses to have a run-over of the investment opportunities.
For example, do we have Liberian businesses the capacity to produce 25%
of the public sector demand for furniture of the quality and at prices that government will purchase? Without support to the appropriate capacity building support, Liberian entrepreneurs and businesses may not be in the position to supply them. Of course, we do not Liberians to just also import them, with abundant
wood to manufacture furniture. We want the benefits of value-addition: Most number of quality jobs per dollar outlaid, acceleration of economic growth, increase and efficient self-distribution of the values it creates.
5.0 Key Findings of the Study:-
What can be reported as findings out of this exercise? Scooping out Liberians entrepreneur building efforts of both the past and current times is about finding the faults or some reasonable explanations for failure of efforts exerted in the
different past periods such that this matter remains an issue as it is. The key findings of the exercise are presented here as follow:
i. Liberia’s macroeconomic policies in the way past were made to address
political issues that found solutions more in economic actions than other sources; and usually so pressing that their adoption negated proper and adequate consideration of their likely adverse impacts on the business
interests and total wellbeing of Liberians; and as a result, the policies were flawed from an economic perspective, unresponsive or inimical, in some
instances, to furthering the development of Liberian businesses and entrepreneurship.
ii. However and fortunately, all the current key sources of macroeconomic policies believe in and are committed to developing a Liberian business class; as each is exerting efforts within its respective jurisdiction towards
that purpose;
iii. But the efforts are both insufficient and undermined by slackness in coordinating among the macro actors; denying cross-fertilization, consensus building, and the alignment and consolidation of policy ideas
into a comprehensive framework. Consequently, there is not yet a declared overarching macroeconomic policy to guide the various sectors into
building the level of sturdiness and synergies necessary to give policies adequate effect and fluency;
iv. The Small Business Act (SBA), provisions in the Minerals and Mining Law, National Forestry Reform Law and PPCC Act, together with local contents requirements in concession agreements are the only Liberian business
development policies now in place. Together with on-going programmes and efforts of other state actors, donors and business partners provide an
excellent beginning; but by themselves alone, they cannot constitute sufficient support to building an indigenous business class of competence and consequence;
v. This underscores the interpretation of the findings: The need for a
purposely designed and organized complementary capacity building
support to provide the thrust Liberian entrepreneurs and businesses need to build competitiveness for entry into the now widespread market.
6.0 Main Conclusions:
i. Liberians themselves need to rise to the challenge: embrace and develop corporate enterprise mentality, think and act more partners-like; combine
resources and efforts to build large responsible entities, capable of undertaking mainstream economic operations in order to achieve higher,
more secure and sustainable returns; and they may then be able to convince their government extend them the support necessary for success;
ii. Building an indigenous or Liberian business class requires a daring and defiant macroeconomic policy, implemented through a robust consolidated multi-sector programme of strategic interventions in favor of both SMEs
and larger corporate-type Liberian enterprises;
iii. The endeavors will have to include GOL’s courageous leadership, broad-shouldered posture, demonstration of strong interest in, and visibly taking on of some of the risks; and
iv. Investment partners’ and donors’ understanding of, and acquiescence
with, the strategy will be crucial to harnessing their cooperation and contribution.
7.0 Principal Recommendations: The findings and conclusions speak well to what ought to come – a more
comprehensive macroeconomic policy accompanied by concerted efforts and coordinated robust supporting programmes.
The purpose for a reformulated comprehensive macroeconomic policy is to provide for the full scope of what the Government of Liberia intends to employ and how it intends to deploy those instruments to support Liberians earn entry
into and stay in the mainstream of their economy. Such policy clarity is important for the information, understanding and consideration of investors,
and for transparency and predictability of the general economic and business environment. It will embolden actors from all sides who share the philosophy.
The intent of the policy itself is to promote economic growth, first and foremost, as the best and fundamental source of acquiring the means to finance
sustainable and perpetual improvements in the quality of life of Liberians.
The approach will be to provide Liberians with the wherewithal to go beyond expanding existing supply lines, to taking head-start in reviving dormant, erstwhile successful sources, and to pioneering into developing new sources of
economic growth on competitive basis. Competitively, yes; because given the miniature size of our economy and market, we have to build an export oriented economy and target products we are most likely to have long term comparative
advantage.
Therefore, the primarily recommendations for building a real Liberian business class are:
iii. Engagement of a national dialogue process to garner inputs from the larger
stakeholders in developing a well defined and properly articulated new economic policy model; which boldly seeks, among other national objectives, to assist Liberians acquire sizeable holds in the economic
activities of their country. Such new policy should be widely publicized to provide guidance to economic actors and development partners; to serve as instrument to secure partners’ understanding and embrace; and for
rallying Liberians, ourselves; and
iv. Develop comprehensive supporting programmes meticulously designed to address the fundamental short-comings (of Liberians) that continue to retard their economic and business advancement, and seems to
permanently relegate them to the SME sphere. The programme should consider two crucial facilities, as follow:
A strategy to provide adequate funding for bigger corporate-type
enterprises; -Capital Assets Financing through a professional,
Self-governed Fund and a stock market, together or separate; with a exit strategy so that the latter over time replaces the former entirely;
Technical support, employing this time reputable private
professional business consulting firms to provide initial professional and technical coaching services that lead to accessing funding, and assume supervising authority over
funded enterprises to assure the success of the investments.
v. Encourage creative private sector participation in the development economic infrastructure to accelerate the creation of the enabling
environment, i.e., improve conditions and expand various infrastructure net-works- communications, roads, water, power, etc;
vi. Align our human resource development programmes with the direction of the economy; including the large education domain, and technical skills development, labor standards and practices, as will be defined in the new
comprehensive synchronized “growth for development” macroeconomic policy.
vii. Make honest and sincere efforts to attend to ourselves, in full awareness
of our interdependence in, and inseparable connection to, the global community.
Let’s get it from the front cover: we are not talking about acting Robin Hood here. The government, like all the other governments in the world, has been doing that
since it came into being in 1847, with little success. In our case, it has been far less successful because there is very little that accrue to Liberians out of the
aggregate annual result of the productive efforts of our country. And that is explained by our low contribution to generating the values, compared to the
foreign factor inputs. Wherefore, when the foreign factors are remunerated, for both the costs of, and returns on, their factor inputs, what we get are taxes, fees for little services, wages for the menial jobs we perform and salaries for a far
fewer number of supervisors of the menial work. Worse, in our case, like in the cases of many others, we are always accused of conducting the exercise in the reverse order.
We are talking about applying the World Bank’s formula for poverty reduction:
where we have some capabilities- few trained Liberians to commence with; we have created some opportunities and access points through the inflections we have made in the Open Door Policy (ODP); but empowerment is miniscule to
assist Liberians get to the desired, reachable level. The fundamental approach is empowering Liberian entrepreneurs and businesses through building critical
capacities to overcome certain long known, but ignored, crippling deficiencies.
Appendix 1: Name of institutions Spoken with during the study:
Macro-level Policy Institution Ministry of Finance and Development Planning
Central Bank of Liberia
Ministry of Commerce and Industry
Ministry of Labor
National Investment Commission
Public Procurement and Concession Commission
National Bureau of Concession
Sector Ministries and Agencies
Ministry of Agriculture
Ministry of Public Works
Banks
Liberia Bank for Investment and Development
Guaranty Bank, Liberia ltd
Access Bank, Liberian Ltd
Public Corporations
Liberia Petroleum Refinery Corporation
National Social Security and Welfare Corporation
Private Sector Representative
Liberia Chamber of Commerce
Liberia Business Association (LIBA)
A Focus Group of members of LIBA
Welfare Corporation
Donors
United Nation Development Program
United State Agency for International Development
Appendix 2: Detailed History of Liberia’s Macroeconomic Policy Evolution
4.1 No Policy: Full Free Enterprise Era (Early Independence to 1824)
There are no indications that in pre-and early post-independence, Liberian pioneering
entrepreneurs had any official or organized support from without themselves. Settlers or
aborigines, they were self-starters, self-driven, self-supported; thus they rose by their own
booth stripes. Perhaps the two public sectors offered only freedom, peace, internal
security, and whatever rudimentary technologies and infrastructure that existed – Canoe, Pathways and Monkey Bridges, and the likes.
Economic Results
Prior to the arrival of the free black slaves from America to settle on the west coast of Africa, the entire West African Coast was a trading hub for European merchants. As far back
as 1461, Portuguese explorers named the area now called Liberia the “Costa da Pimenta”
or Pepper Coast. Later it was called the “Grain Coast”. Indigenous entrepreneurs along
the coast traded with Europeans, producing and selling a wide range of largely primary
agriculture commodities, hardwood timber and gold. Further eastward, the territories
were named Ivory Coast, Gold Cost, etc., suggestively areas were named after the commodity prevalent in that area.
4.2 Port of Entry Law: First Economic Policy (1864 -192-)
A Virtual Close Door Period
In 1864, the Government of Liberia, instituted the Port of Entry Law (PEL) that restricted
foreign traders to conducting their businesses at “authorized ports of entry only, with
three-fold purposes: first, to exert government’s control, and affirm its authority over the
interior territories; second, to curtail the potential for natives to achieve economic
independence and undercut their resistance to the authority of the settlers’ Government;
and third, to collect revenues from duties levied by the Government on foreign trade for its fiscal operation.
That law became, in effect, a closed-door economic policy; since foreign business persons
were effectively denied entry and direct participation in the internal economic activities
of Liberia.
Impact of the Port of Entry Law (PEL): Close Door Policy
Consequently, although it apparently left the business opportunities in the local economy to
the settlers alone, the PEL was not fashioned with a complementary plan to improve the
capacity of Liberian business persons to utilize the opportunities that evolved behind the closed door.
Secondly, it shut out the native entrepreneurs completely: dried up the source of demand for
their products; and denied them access to all external resources, including technologies
that were available during that time.
The virtual free trade between indigenous and Europeans continued into the second decade
of independence when, in 1864, the Government of Liberia, more for political reasons,
instituted the Port of Entry Law (PEL); which restricted foreign traders to conducting their
businesses at “authorized ports of entry only”.
That law became, in effect, a closed-door economic policy; since foreign business persons
were effectively denied entry and direct participation in the internal commerce of Liberia.
Impact of the Port of Entry Law
The PEL was enacted for three-fold purposes:
First, to exert control, and affirm the government’s authority over the interior territories;
Second, to curtail direct trade of foreign traders with the natives, in order to undercut natives’ economic independence, strengthen and resistance to the
authority of the Government; which could otherwise increase the risk of
premature demise of state; and
Third, the economic reason was to collect duties levied by the Government for its fiscal operation.
Consequently, although it apparently left the business opportunities in the local economy to
the settlers alone, the PEL was not fashioned with a complementary plan to improve the capacity of Liberian business persons to utilize the opportunities that evolved behind the
closed door.
Secondly, it shut out the native entrepreneurs completely: dried up the source of demand for
their products; and denied them access to all external resources, including technologies
that were available during that time.
Therefore, its impact was disastrous. President Arthur Barclay observed, on his unsuccessful
attempt to repeal it, “that the 1864 Port of Entry Act had all but destroyed the economy”.
The primary reason for introducing the Port Entry Act was to affirm sovereign authority
of the settler government over territory; but it was introduced as law for revenue generation. It failed to increase Liberian traders’ wealth and the national capital to more
than they were in 1864. The exclusion of European traders did not prevent native wars
(resistance to settlers’ dominance). He recognized that presence and contributions of
Europeans were essential to saving and developing the hinterland which hosts, he
recognized, the wealth of the country. But he was defeated by a strong opposition in the
legislature.
President Barclay’s principal interest and intention was in getting the United States to take
substantial economic interest in Liberia; and that would put a strong check on British
and French encroachment on Liberia’s territory. Further, as the Chinese diplomatic and
political Open Door had given access to European into China, which in turn stopped their desire for further attempts to divide China; he though similarly that an economic open
door policy would allow Europeans entry into Liberia and thereby douse their incessant
drive to take away Liberia’s lands.
Though the President was defeated by strong opposition in the Legislature to his plan to
repeal the PEL, he extended citizenship to the indigenous tribes –to bring them and their lands and other resources under authority of the Government. Citizenship would also
obligate them to pay taxes. The thus imposed imposed the infamous “Hut Tax” on the
tribal people and established, charged and empowered a military force (the Liberia
Frontier Force) with responsibility to collect the hut tax.
Economically and with respect to building a Liberian business class, the closed-door policy
era was virtually loss if business opportunities.
In the late 1920’s President Edwin Barclay, who assumed power after the Fernandopo Crisis,
took after the previous Barclay. He succeeded in over-turning the Port of Entry Law; effectively opening up the Liberian economy to foreign actors and their capital. Later he
further declared the United States Dollar as the only legal tender in Liberia, expelling the
British Pound which freely circulated and served along with the US dollar as legal
currencies for Liberia. Apparently, the decision was taken to impress the United States, encourage increased American investments and curtail the growth of British economic
and commercial influence in the country.
He is reported to have been persuaded by the United States which, from World I, had
developed interest in some land in Liberia to plant rubber. Soon in 1926, Firestone
secured a concession and established in Liberia the Firestone Rubber Plantation, which was then the largest single rubber plantation in the world. Firestone had offered USD5M
loan and the bank-rupt, starving Government readily accepted. The loan added strength
to the new diplomatic relationship and intensity to Liberia’s political and economic
dependence on the United States.
On his inauguration in 1944, President Tubman formally declared the Open Door Policy, a
virtual invitation to foreign capital and entrepreneurs; not to Liberian business people.
The policy soon led to the granting of several mineral extraction and rubber plantation
concessions, and pulled in the mass of foreign merchants who have since dominated the
commercial sector of the economy.
The results from the Policy were dramatic on both sides. Just within the decade (by the mid
1950’s), the Liberia’s GDP grew impressively, as fast as Japan and Liberians had the
thousands of menial jobs. Commercial opportunities grew rapidly around and along
routes leading to the enclaves; but Lebanese merchants took them over just as rapidly.
The adverse impacts were also swift and devastating. Large pools of labor shifted from food
production to rubber plantations and to mining concessions. The economy followed on a
vulnerable two-product growth path of rubber and iron ore production –both primary
products; a risky economic structure and poor development course we have not been able
to change in a hundred-long years.
Within two decades of launching of the Open Door Policy, Liberia lost the ability to feed itself,
and since became a net importer of rice, its staple and fell off the track of entrepreneurial
creativity and industry into a serfdom of employees, ever dependent on bosses and
employers.
4.3.1 Mitigation Programs to the Open Door Policy
The Government reacted with a series of largely general economic diversification and growth
strategy, still sticking to the Open Door Policy. 4.3.1.1 It launched Operation
Production, to support food production, especially rice, at least to restore self-sufficiency.
That measure included establishing demonstration farms and experimental stations along the central–northern corridor and southern end of the eastern region. The Central
Agricultural Research Institute was the greatest achievement of the initiative.
4.3.1.2 Government also established the Monrovia Industrial Park (MIP) in 1962 to provide
sites for manufacturing plants and perhaps for proper management of industrial wastes and pollution. The MIP hosted a few manufacturing operations that included the Liberia
Petroleum Refinery Corporation (LPRC), a plant that then processed crude oil for the
Liberian market, Pioneer Biscuits and the Liberia Sugar Corporations, that processed
sugar-cane into sugar.
4.3.1.3 The Government also made USD1M loan guarantee facility through the Bank of Monrovia, subsidiary of the then Bank of New York, to support bankable local (Liberian??)
business ideas.
4.3.1.4 For the same purpose, the Government established Liberian Development
Corporation (LDC) and the Liberia Development Bank that is now known as Liberia
Bank for Development and Investment (LBDI). The former provided investment
promotion services, including technical assistance in developing business ideas into
investment propositions; and in some cases, it partnered with some investors to get businesses started and assumed full ownership in instances where the other partner
discontinued. The former was and remains a bank (the only local bank that survived the
crisis).
4.4.1 Impacts of the Open Door Economic Policy’s on Liberian Entrepreneurship
Development.
The Open Door very much favored the very large foreign interests which did not correlate with national business interest; as the concessions it created were
enclaves, with no linkages with, or impact on Liberian entrepreneurs and
businesses, or social development even in communities of operation, much less
country;
The economic efforts exerted involved no Liberian capital, as land and minerals
were not regarded as investments and consequently not rewarded adequately;
Distribution of the returns was based on capital (financial) input, which Liberians did not have to contribute and consequently enjoyed insignificant share of the
returns;
The policy created an avalanche of foreign traders who rapidly inundated the country and swept local entrepreneurs off their feet; knocked them down, out of
business in no time,
Establishment of the concessions removed and separated indigenous people from their wealth on or beneath the land which were given into concession; and
banishing them into permanent impoverishment; and
The psychological impacts were completely ignored.
4.4.2 Strength and Impact of the Mitigation Interventions
The Open Door Economic Policy (ODEP) was conceived and framed to favor foreign
businesses, and it did. However, the several mitigation interventions created some space that some Liberians with means took advantage of and ventured into sectors as
opportunities developed; such that from the early 1960’s, Liberian entrepreneurs had
acquired small, but noticeable, presence in every sector of the economy, even in some
capital intensive investments. They registered far greater successes than we currently
find in post-conflict Liberia.
Continuing in agriculture, where they began, rural entrepreneurs expanded and increased
coffee and cocoa production, in which the only concession ever, COCOPA, failed. Other
large Liberian-owned businesses emerged in oil palm production; while others dominated
industrial fishery, poultry, vegetables and fruits, both in production and exports.
By the second-half of 1980’s, owners of large rubber farms were hiring other trained Liberian
agriculturists as farm managers. The practice presented potential to eventually
professionalize farm management, contribute to building Liberian managerial expertise,
raise production and accelerate local value-addition.
In industry, Liberian entrepreneurs manufactured paint, toiletries and other laundry items, school uniforms and garments, home and office furniture; garden and agricultural tools
and equipment. They processed beverages and spirits, and various oil palm products,
some of which they exported. Some Liberians owned or held substantial holdings in large
logging companies.
In finance, there were even a few Liberian commercial banks, a host of insurance companies and other auxiliary financial enterprises.
Liberians also made significant strides in construction -both heavy civil works and
architecture: Liberian engineering and construction companies built some segments of
our major highways in late 1950’s through the 1960’s, including bridges. They hold credits for the architecture conception and construction of several high-rise buildings in
Monrovia at that time.
Though a small part in the commercial sector, Liberians owned or held substantial holdings
in some major trading houses; they were dealers of heavy duty equipment for road
construction and industrial uses. Liberians almost exclusively held the commercial transport sector, except the internal transportation of workers of the concessions who
transported their employees to and from work.
4.4.3 Weaknesses of the Auxiliary Mitigation Actions
A fundamental flaw in the corrective interventions was that, in the first place, they were not designed specifically to promote Liberian business interests; and secondly access to the
programmes and facilities was not transparent and available to Liberians across the
board. Only the few, usually cronies of the government, took advantage; therefore, the
positive impacts were confined to the elites in the Monrovia vicinity.
4.5 Public Sector-led Business and Social Development Policy -SOEs and ADPs
Early in the 1970’s, President Tolbert, who had served for nineteen years as Vice President,
recognized the principal shortcoming of the ODEP as its failure to translate economic
growth into development and social progress. He had observed capitalism at one its worst performances. Therefore on becoming President, he hoped for what he called “humanistic
capitalism”, expressing his vision in several powerful slogans, such as taking the poor
“from mats to mattresses”; the nation to “higher heights”; and building a “wholesome
function society”, etc.
He did not believe his dream would come through the face-less free enterprise system and so he opted for a more aggressive, expansionary economic policy, deploying a battery of
measures: He launched a Liberianization policy, declaring 17 small low-skill businesses
reserved for Liberians only. He followed up, in rapid succession, with a public sector-led
business development strategy as a vehicle for spurring development.
The Government eased the European partners, East-Asiatic Company, out of the Liberia
Produce Marketing Corporation (LPMC), a public-private partnership, which purchased
and shipped agricultural produce to Europe mainly. The continued success of the LPMC
monopoly commenced the spree of creating state-owned enterprises (SOEs) and
adoption of “Area Development Project” concept by the Government of Liberia as
mechanisms to address some of the chronic socio-economic deficits frustrating the country.
Then LPMC got split up in three separate entities, leading to creation of two other SOEs,
Liberia Cocoa and Coffee Corporation, (LCCC) and Liberia Palm Products Corporation
(LPPC). These were soon followed by three oil-palm SOEs - the Foyah Oil Palm in northwestern Liberia and the Butaw and Ducoris oil palm enterprises in the southeastern
part of the country.
President Tolbert furthered his public sector interventions with the Area (Agricultural)
Development Projects, which targeted farmer populations in pre-identified rural areas of
the country for capacity building support to increase production and household income. The projects provided farming tools and inputs; build rural economic and social
infrastructure; and assisted farmers organize into cooperatives as the key business
machineries for sustaining the development of entrepreneurs and business enterprises
in rural communities.
The Era ended very abruptly and disruptively, causing the loss of progress made in the area
of moderately large Liberian businesses; which had evolved out of the previous corrective interventions taken in the previous era to reverse some of the adverse outcomes of the
ODP.
But no sooner had the SOEs begun to impact development in the country that the regime
which dreamed and created it ended; thus they rapidly failed, owing to political
manipulation, loss of focus and poor business practices. Their failures brought enormous financial and social obligations on the government and made a hefty contribution to
swelling the public debt.
4.6 The Era of Confused Macroeconomic Policy
The military take over and tenure changed the major economic actors, seriously upsetting
progress made in advancing Liberian entrepreneurs’ participation in the economy.
Economic management lost direction.
4.6.1 Accentuation of Small and Medium Scale Enterprises (SME’s)
The last of the pre-conflict economic policy that was designed to support Liberians
entrepreneurs to gain entry into the mainstream of their economy was a well-designed
SME program launched in 1979. It was carved after a study in 1978 that revealed the
plight of a spread of struggling small Liberian business persons who were visibly stressed
and showed need for support. In fact, SMEs were at the center of economic discussions around the world at the time.
This programme comprised a loan guarantee facility of the National Bank of Liberia (NBL now
CBL), technical support from the Small Business Division of the National Investment
Commission (NIC), and advisory services provided by the Small and Medium Enterprise
Financing Organization (SEFO).
4.6.2 Impact of the SME Programme
That programme began to pay off, with noticeable progress in poultry, and wood-based
products, particularly furniture. Some SMEs began to produce assortment of farming
tools. At least two Liberian businesses manufactured some type of agricultural equipment. And by the mid 1980’s, other moderately large Liberian businesses also began
to resurface, in such areas as fishery, roads and housing construction and production of
some building materials, including clay roofing tiles.
The strength of the SME programme then was in its completeness as package. It as a full
composite business development strategy, providing: i. Technical assistance to convert business ideas into bankable business plans; ii. Funding for actual implementation of
approved plans; and iii. Advisory support for technical, production and management
development
The weakness in the programme was in the hugeness of the number of businesses it intended and attempted in practice to assist. The efforts were very thinly spread. It was
consequently inefficient, showing effect in a very limited number of businesses that were
alreadyintrinsically success.
But all of these efforts and progress were lost to the civil conflict that devastated the country
over a period of nearly two decades and brought the state to its worst situation.
What the past offers are lessons of the progress and setbacks that should serve and guide us
in forging ahead with our aspiration for Liberian business class.
4.7 Current Economic Policies and Programmes
Government’s current economic management efforts have for the longer period remained directed at developing a stable and predictable macroeconomic policy and building an
environment that is enabling. The vision is that by 2030, Liberia will be a middle income
country; with the appropriate development indexes -per capita income of – and so forth.
There is not yet a declared central strategy on substantive Liberian entrepreneurs’ role
and participation, which is a requirement and most healthy ingredient, in achieving the
middle-income country aspiration.
However, various public entities are exerting serious efforts to expand the space for Liberian
businesses in economic activities within their various purviews. The efforts are briefly
described as follow:
4.7.1 GOL’s Initiatives
The Government was the first to introduce funding when it allocated USD2M in the 2007/8
budget for Liberian businesses. The offer was not utilized, because there was no
mechanism for accessing it.
4.7.2 Central Bank of Liberia (CBL)
Then the Central Bank of Liberia (CBL) came with its “Financial Inclusion Policy”, placing
various funds with the commercial banks to finance defined private sector activities, such
as:
USD5M, “Micro-Finance” disbursed in Liberian dollars
USD10M for housing; initiate a mortgage programme
USD25 matching initial capital per community bank;
4.7.3 Ministry of Finance and Development Planning (MODP)
Also has a USD25K - USD65K funding programme for start-up projects
8% p.a., 6month interest-free grace period.
4.7.4 Ministry of Commerce and Industry (MOCI)
MOCI, as the entity responsible for private investment policy component of macroeconomic
policy development, has succeeded in
Business Act (SBA), providing reserved access to 25% of goods and services procured by
government and its subsidiaries, including public corporations and SOE’s.
To promote youth creativity, innovation and business development, the Ministry also has a
USD 100,000 available annually to fund the first ten best business proposals emanating
from youths.
4.7.5 National Investment Commission (NIC)
The Agency observed that there was need for a more comprehensive framework to guide the
development of Liberian business class and its participation in the economy. The
Commission views the inability of Liberian businesses to present bankable business
proposals as one of the fundamental setbacks and reasons why Liberian businesses do not access available funding. It stressed the need to reconcile the various sector policies
into a common stance and build their and other interventions into a joint front.
4.7.6 Public Procurement and Concession Commission
Similar to NIC, as a macro-economic policy implementation arm, the PPCC is demonstrating
very high commitment to fostering Liberian businesses within the scope of the PPCC Act and recent SBA of the Ministry of Commerce. It has developed and deployed a mechanism
that promises to be most effective, for implementing the 25% public procurement reserve
the SBA provides. And it is pursing it with unmatched passion and vigor.
This policy requirement provides access to large market that expands space for Liberian
business to grow and develop. However, it needs backup support for Liberian enterprises to meet the supply side or delivery challenge that the SBA presents.
4.7.7 National Bureau of Concession (NBC)
The NBC monitors concessions, which are large scale foreign investments, to ensure compliance with the terms of agreements they have with the Liberian Government. Most
have provisions requiring certain levels of local contents, which Liberian enterprises can
supply and should be empowered to produce.
The NBC has in place a monitoring apparatus to track Concession’s adherence to provisions
in their various agreements that make special provisions for Liberian business. It is working with and through various partners to follow-up on implementations of the
provisions.
It is however experiencing brisk moments with some entities of Government which have
power to enforcement compliance.
4.7.8 Ministry of Lands, Mines and Energy (LM&E)
The Ministry has the Minerals and Mining Law of Liberia (under reform) that reserves certain
classes of mineral exploitation to only Liberian businesses. The reform is targeting
expansion of the class to incorporate moderately larger operations, extend the provision to cover another class, and insist on some level of partnering with Liberian businesses in
other levels of mining operations.
4.7.9 Ministry of Public Works (MPW)
Ministry of Public Works oversees perhaps the largest area of public procurement of works
and services. Because of their nature and often large sizes, works seem to present the
most challenging, yet the best possibilities and greatest potential for rebuilding Liberian
enterprises to climb into the larger areas beyond just the 25% procurement reserve.
In addition to the 25% reserve, the Ministry also applies the 15% margin of preference in favor of local business and is endeavoring to promote partnering with Liberian enterprises
as a gradable factor in appraising bids of foreign firms for infrastructure projects.
4.7.10 Ministry of Agriculture (MOA)
The Ministry has a host of programmes that present opportunities for developing large scale
Liberian businesses from production through value-addition to tertiary economic
activities.
This unit manages and coordinates the various projects:
Agriculture Sector Rehabilitation(ASRP/AfDB)
West Africa Agricultural Productivity Project (WAAPP-1C Liberia)
Smallholder Agriculture Productivity Enhancement and Commercialization(SAPEC)
Smallholder Tree Crop Revitalization Support Project (STCRSP) funded Jointly by GoL & WB-(IDA)
The Climate Change Adaptation Agriculture Project( CCAAP)
Agriculture Infrastructure Development Project(AIDP/WB)
Agriculture Sector Rehabilitation Project (ASRP/IFAD)
West Africa Regional Fisheries Project(WARFP)
4.11 Impacts of Current Economic Policies and Programmes
Current macroeconomic policy development efforts, still focusing on creating a stable,
predictable and enabling surrounding, will work the same for all investors, foreigner and
Liberian businesses. Despite their peculiar difficulties, Liberian businesses will be in the
same competition with the foreign counterparts, who come with far greater advantages.
Therefore, except the macroeconomic policy arrangements provide some remedies for the
disadvantages that Liberians businesses have, general economic policies, such as what the WTO, actually pave the way for foreign businesses to move ahead in the competition
with Liberian businesses left behind by inherent extra huddles.
It is a little too early to make definitive statements on the ongoing sector policies and
programmes. Their objectives appear great within their respective scope of attention. For example, provisions in the Minerals and Mining Law, PPCC Act, the SBA and NBC
enforcement of concessions terms provide market opportunities for Liberian businesses,
but again of small and medium scale operations.
Funding provided by CBL and other supports, are also great initiatives, except that they are
also largely for small and medium scale enterprises; not for investments of the scale and significance that represent a business class in a national economy.
Paramount among the challenges that Liberian entrepreneurs have is lack of technical
capability or support that most Liberian entrepreneurs or would be entrepreneurs need
to present their business ideas or plans as a proper mechanism for accessing the available businesses opportunities and appropriate assistance. The foreign businesses do not need
any; because they come with one or a blue-print from parent company or the like.
Bibliography
Foreign Policy of Liberia 1944-1971(William V.S. Tubman) Author: D. Elwood Dunn
Liberia Past and Present