Home Economy Low Trust Affects Banks …US Gov.t Slams Liberia’s Investment Climate

Low Trust Affects Banks …US Gov.t Slams Liberia’s Investment Climate

by News Manager

By: Varney Dukuly

MONROVIA: The business climate in Liberia is said to be clouded with many vices that have the proclivity to scare away potential investors which could lead to widespread poverty, unemployment in the West African nation.

The latest assessment on Liberia by the American government is enshrined in the United States Department of State 2022 Investment Climate Report that depicted that Liberia performed decimally in multiple areas.

If the situation is not revised, it could undermine the placement of the country on a path of growth and development among the comity of nations.

The US State Department, in its 2022 Investment Climate Report indicated that Liberia offers opportunities for investments, particularly in many resource sectors such as mining, agriculture, fishing, forestry, energy, telecommunications, tourism and financial services.

However, the Report mentioned that “low human development indicators, expensive and unreliable electricity, poor roads, lack of reliable internet access in rural Liberia and pervasive government corruption” constrain investments and development.

“Most of Liberia lacks reliable power, although efforts to expand access to the electricity grid are ongoing through an extension from the Mount Coffee Hydropower Plant, connection to the West Africa Power Pool, and other internationally supported energy projects. Public perception of corruption in the public sector is high, as indicated by Liberia’s poor showing in Transparency International’s 2021 Corruption Perceptions Index, where Liberia ranked 136 out of 180 countries,” the report added.

Interestingly, the 2022 US State Department Investment Climate report on Liberia comes at a time when the West African Nation, headed by President George Weah, is almost losing grip on the inflow of much-needed investments and jobs creation.

The report, among others, stated that low public trust in the banking sector and seasonal currency shortages result in most cash being held outside of banks.

To remedy this, the report added, the Central Bank of Liberia (CBL), in 2021, initiated a plan to print and circulate additional currency.

According to the State Department Report, CBL and commercial banks have successfully pushed the adoption of mobile money, which Liberians access through their mobile phones to make everyday purchases and pay bills.

However, it says, the government has yet to activate the “national switch,” meaning banking instruments like ATMs and mobile money accounts remain unintegrated and are not interoperable.

Though the Weah’s government describes the country as “open for business” given its instituted policies towards foreign direct investment, the latest report strongly maintains that, in practice, the government does much to discourage investors and investments.
“Some business leaders report that it is difficult even to meet with government representatives to discuss new investment or policies, something which they say, is damaging to the business climate.

A weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption inhibit foreign direct investment,” the 2022 US State Department Report on Liberia’s Investment climate intoned.

Investors, according to the report, are often treated as opportunities for graft, and government decisions affecting the business sector are driven more by political cronyisms than investment climate considerations.

The State Department says: “Many businesses find it easy to operate illegally if the right political interests are being paid, whereas those that try to follow the rules receive little, if any assistance, from government agencies.

“The Investment Act restricts market access for foreign investors, including U.S. investors, in certain economic sectors or industries,” the report discloses.

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