The Fouani Brothers US$30 Million investment deal has come under heavy criticism in recent times, with many opposing the deal claiming that its investment incentives are robbing the Liberian Government of millions.
The Fouani Brothers investment centers on the development of a palm oil refinery involving US$30 million long-term incentive agreement spanning 15 years. As part of its plan, Fouani intends to invest in an Argro Oil Production Plant at the Industrial Park.
The company’s investment also considers local farmers by targeting them as the main source of their crude palm oil (CPO) supply, something that is expected to boost local farmers and plantations in Liberia.
The deal is said to be in compliance with Liberia’s Revenue laws, but it has raised eyebrows following recent ratification by the Liberian Senate.
What is the main bone of contention?
Most critics of the deal are concern as to whether Fouani Brothers intends to farm themselves.
However, the agreement is clear, the company has no intention of doing so because they do not want to compete against farmers. Rather, they want to create a direct market for farmers in Liberia.
Currently, local small-scale farmers cannot do so much because of limited resources with their produce like exporting, etc. Because of this, most of them do not apply more efforts since they think it’s not worth the while.
Thus, looking at this new opportunity being offered by the Fouani deal, they can now have a renewed sense of hope – knowing that they have a market right before their eyes.
Interestingly, on June 26, 2020, the Minister of Agriculture wrote the Legal Advisor to the President – relative to this concern, outlining the different challenges faced in the sector.
In addressing such concerns, the government mandated in this agreement, just like similar mandate that was put in the existing Agreement signed between the Government of Liberia and Mano Manufacturing, that if there are farming constraints in the Palm Sector for which they cannot get at least up to 60% of the needed supply of CPO, they will work with the Ministry of Agriculture to remedy the situation with the affected group of farmers.
It is only during this period on working with farmers to improve their supply, will the company, be allowed to import Crude Palm Oil until the situation can change.
This is the similar practice with Mano Manufacturing Company and the Fouani agreement is no exception.
Moreover, it sounds reasonable since such a huge investment will be at risk if they cannot get local supply.
Giving the Government credit
As per this agreement, the Liberian Government deserves some credit, because the measures being put in place will not only improve the manufacturing sector but will also break the monopoly system that has existed over the years, just as same was done in the cement sector that existed for over 60 years, being broken. Now, you have about 4 cement factories in Liberia.
Other expected benefits
The passage of the Fouani Investment Agreement is expected to boost farmers production enabling them to directly benefit from their produce, which could not have been realized due to limited resources to export their production.
During his recent appearance before the Senate Committees on Judiciary and Concession, National Investment Commission Chairman, Molewuleh Gray explained that the investment, once ratified by the Legislature, will create direct jobs in the categories of 100 unscaled, 25 technical and 50 indirect.
Additionally, the agreement allows the investors to construct, use, improve, and maintain existing roads and transportation facilities in the project areas.
Initially, when the proposal was made, the investors requested to construct the facility at the Monrovia Industrial Park. As part of their social contribution, the agreement includes provisions for a health, safety, and environmental plan, which encompasses a modern public health center in the area where they operate.
In terms of education, the investor is obligated to provide training to Liberians to help them qualify for jobs related to the project. Moreover, the investor is required to pay the Ministry of Agriculture an annual direct support of US$75,000, which will be allocated towards training and the implementation of the Agro scheme.