MONROVIA: The United States Department of State 2024 Investment Climate Report on Liberia has outlined businesses that should be operated only by Liberians.
the U.S. Department of State’s Report highlighted that foreign and domestic private entities may own and establish business enterprises in many sectors but the Liberian constitution restricts land ownership to citizens, who, according to Liberia’s constitution, must be able to prove “Negro descent.”
The U.S. Department of State’s Investment Climate Report helps US companies make informed business decisions by providing up-to-date information on the investment climate of more than 165 countries and economies.
The reports are prepared by economic officers stationed in posts around the World and analyze a variety of economies that are current or potential markets for U.S. businesses of all sizes.
The statement, released on Tuesday, September 10, 2024, indicated that Non-Liberians, may hold long-term leases to land including rubber, oil palm, and logging concessions that cover a quarter of Liberia’s total land mass.
According to the Report, the National Investment Commission is the oversight agency that screens and monitors investments in Liberia.
As such, the 2010 Investment Act and the 2011 Amended Revenue Code mandate that only Liberian citizens may operate businesses in the following sectors and industries including:
Supply of sand, Block making, Peddling, Travel agencies, Retail sale of rice and cement, ice making and sale of ice, Tire repair shops, Auto repair shops with an investment of less than USD 550, Shoe repair shops, Retail sale of timber and planks.
Others include operation of gas stations, Video clubs, Operation of taxis, Importation or sale of second-hand or used clothing, Distribution in Liberia of locally manufactured products, Importation and sale of used cars (except authorized dealerships, which may deal in certified used vehicles of their make).
The report mentioned that the 2010 Investment Act sets minimum capital investment thresholds for foreign investors in other business activities, industries, and enterprises.
“For enterprises owned exclusively by non-Liberians, the act requires at least $500,000 in investment capital. For foreign investors partnering with Liberians, the act requires at least $300,000 in total capital investment and at least 25% aggregate Liberian ownership,” the statement added.
Amongst other things, the statement indicated that Liberia offers opportunities for investment in natural resources, such as mining, agriculture, fishing, and forestry, as well as in more specialized sectors like energy, telecommunications, agribusiness, climate financing, tourism, and financial services.
It emphasized that infrastructure is an especially glaring need, and there are opportunities with electricity generation, the national airport, and transportation, particularly roads and bridges.
” The economy, which was severely damaged by more than a decade of civil wars that ended in 2003, has been slowly recovering, but Liberia has yet to attain pre-war levels of economic development, and corrupt mis-governance continues to hinder growth, investment, and job creation.
Liberia’s largely commodities-based economy relies heavily on imports even for most basic needs like fuel, clothing, and rice, Nation’s most important staple food.
Liberia’s GDP ranks among the lowest in the world, but the economy grew by 4.7 percent in 2023 and is projected to grow 5.3 percent in 2024, according to the World Bank”.
The Report says the new government, headed by President Joseph Boakai, who was inaugurated in January 2024 promised to reduce corruption, establish more predictable business policies, and improve the investment climate, but it is too early to say whether those efforts will be successful.
Report: “Low human development indicators, expensive and unreliable electricity, poor roads, a lack of reliable internet access especially outside urban areas, and pervasive government corruption constrain investment and development. Most of Liberia lacks reliable power. There are ongoing efforts to expand access to electricity through an extension from the Mount Coffee Hydropower Plant, connection to the West Africa Power Pool, and other internationally supported energy projects. Public understanding of corruption in the public sector is high, as indicated by Liberia’s poor showing in Transparency International’s 2023 Corruption Perceptions Index, where Liberia dropped three places from 142 out of 180 countries in 2022 to 145 out of 180 countries in 2023.
“Low public trust in the banking sector and lack of access to business financing results in most cash being held outside of banks. The Central Bank of Liberia (CBL) and commercial banks are also pushing the adoption of mobile money, which Liberians access through their mobile phones to make everyday purchases and pay bills,” it added.
However, the government has yet to activate its long-planned National Electronic Payment System (NEPS, aka “the National Switch,”) meaning banking instruments like ATMs and mobile money accounts remain unintegrated and are not interoperable.
A World Bank funded project launched in February 2023 is expected to eventually implement the National Switch.
“Despite these numerous challenges, Liberia is rich in natural resources. It has large expanses of potentially productive agricultural land and abundant rainfall to sustain agribusinesses, while vast mineral resources offer significant potential to investors in extractive industries. A few large international concessionaires have invested successfully in agriculture and mining, though negotiating these agreements with the government often proves to be a lengthy, politicized, and byzantine struggle for those companies who do not pay bribes,” the report noted.
On policies towards foreign direct investment, the report says “the government does little to encourage investment in Liberia indicating that business leaders reported that it is difficult to meet with government representatives to discuss new investment or policies to address climate change unless bribes are offered.”
The statement also stressed that a weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption also deters foreign direct investment and government officials view foreign investors as opportunities for short-term graft, rather than as partners in creating long-term growth for the benefit of the country. Writes Linda Gbartie
