The United States Department of State 2022 Investment Climate report on Liberia says the Government of Liberia does much to discourage investors and investment.
“In practice, however, the government does much to discourage investors and investment. Some business leaders report it is difficult even to meet with government representatives to discuss new investment or policies damaging to the business climate,” the report says.
It says further that a weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption inhibit foreign direct investment.
Investors are often treated as opportunities for graft, and government decisions affecting the business sector are driven more by political cronyism than investment climate considerations, the report states.
“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.”
It detailed the Investment Act restricts market access for foreign investors, including U.S. investors, in certain economic sectors or industries.
Foreign and domestic private entities may own and establish business enterprises in many sectors.
However, it says the Liberian constitution restricts land ownership to citizens, but non-Liberians may hold long-term leases to land.
Examples are rubber, oil palm, and logging concessions that cover a quarter of Liberia’s total land mass.
The National Investment Commission is the oversight agency to screen and monitor investments.
According to the report, the Investment Act and Revenue Code mandate that only Liberian citizens may operate businesses in certain sectors and industries, but it is not clear to what degree this mandate is enforced.
They include supply of sand; block making; peddling; travel agencies; retail sale of rice and cement; ice making and sale of ice; tire repair shops; and auto repair shops with an investment of less than USD 550,000.
Other sectors or industries are shoe repair shops; retail sale of timber and planks; operation of gas stations; video clubs; operation of taxis; importation or sale of second-hand or used clothing and distribution in Liberia of locally manufactured products.
It also named the importation and sale of used cars (except authorized dealerships, which may deal in certified used vehicles of their make).
The report states that the Investment Act also 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 USD 500,000 in investment capital.
For foreign investors partnering with Liberians, the Act requires at least USD 300,000 in total capital investment and at least 25 percent aggregate Liberian ownership.
It notes that the Government of Liberia describes the country as “open for business” and supports programs and initiatives to foster commerce, including an ad hoc Business Climate Working Group (BCWG) to improve the investment climate.
During Liberia’s National Judicial Conference in June 2021, the report recalls that President George Weah called on the Judiciary to partner with agencies on reforms to improve the investment climate.
It says the BCWG, chaired by the Minister of Finance and Development Planning, collaborates with the Ministry of Commerce and Industry, Liberia Business Registry (LBR), National Investment Commission (NIC), and Liberia Revenue Authority (LRA).
The National Investment Commission (NIC) is Liberia’s investment promotion agency. It develops investment strategies, policies, and programs to attract foreign investment and negotiates investment contracts and concessions.
The NIC oversees the implementation of Liberia’s 2010 Investment Act and chairs an ad hoc Inter-Ministerial Concession Committee (IMCC).
In 2021, the report states, the NIC became a member of the World Association of Investment Promotion Agencies (WAIPA) See link ( https://waipa.org/members/ ). It also participates in the African Investment Promotion Agencies (IPAs) Forum.
However, in its executive summary, the report said Liberia offers opportunities for investment, especially in natural resources such as mining, agriculture, fishing, and forestry, but also in more specialized sectors such as energy, telecommunications, tourism, and financial services.
It notes that 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 development.
It states that Liberia’s largely commodities-based economy relies heavily on imports even for most basic needs like fuel, clothing, and rice – Liberia’s most important staple food.
It says the COVID-19 pandemic disrupted many sectors of the economy, which contracted in 2019 and 2020.
“However, the World Bank and IMF expect per capita GDP to return to pre-COVID-19 levels by 2023. Growth will be driven mainly by the mining sector, although structural reforms are also expected to increase activity in agriculture and construction,” the report says.
It notes that 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, 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.”