On 2nd Thoughts: How Gov’t Kills Local Businesses in Liberia

By Othello B. Garblah

Ideally, business failure means a company ceasing operations because of its inability to make a profit or to generate enough revenue to cover its expenses. Equally so, a profitable business can fail if it does not generate adequate cash flow to meet expenses.

In Liberia, the failure of businesses is not only the presence of the conditions listed above but lack of government support is the main reason why businesses failed here.

The country’s dual currency regime, tax incentives, and laws protecting investments make it an appealing destination for investors.

However, political interests, corruption, and the country’s weak legal system influenced by government actors continue to kill off small businesses and some foreign investments.

Ideally, to grow their economies, countries put in place regulations and laws to protect local industries, small businesses, and or indigenous businesses which are the engines of economic growth in any society, but in Liberia, those laws and regulations only exist on the books, while politically motivated interests take precedent.

The Liberian government on paper appears to put in place some protective claw for indigenous businesses, but in practice, government actors are the canker worms that undermine these indigenous businesses for their selfish interests or kickbacks.

Take for example the Liberianization policy which reserved certain businesses for Liberians only. There are sixteen businesses exclusively reserved for Liberians. Those businesses are 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 550,000, Shoe repair shops, Retail sale of timber and planks.

The rest are the 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, and the Importation and sale of used cars (except authorized dealerships, which may deal in certified used vehicles of their make.

The reason for these exclusive reserves is to protect Liberians from competing with foreign investors in these sectors so that they do not become spectators in their own country due to the belief that the foreign investors who are mostly Indians and Lebanese have more financial capacity as compared to the Liberian businessman or woman.

Unfortunately, these exclusive businesses are being taken over by foreigners authorized by government agencies and ministries who grant them such licenses to operate, thereby pushing Liberians off their businesses.

A typical example is the supply of sand or sand mining. Today, the Chinese are supplying sand and crushed rocks all over the place with the blessing from the Ministry of Mines and Energy, while Liberians who once spearheaded this supply chain are now at the beg and calls of the Chinese who are siphoning millions of US Dollars out of the country.

A ten-tyre load of sand that was once sold between US60 to 75 USD is now being sold for between US 250 and US300, making it difficult for a poor man to build a concrete house.

Not only are the Chinese engaging in sand and crushed rocks supplies, but they are also into block making as well. These are proudly patronized by not just government officials but even government agencies as well during construction.

Next comes the Lebanese and Indians who are into retailing almost everything from used clothing to rice and cement. As if that was not enough, the Lebanese now control the auto repair industries with their garages on every street corner.

But these are supposed to be businesses reserved by laws for Liberians. However, these are the very businesses government officials will patronize over Liberian ones.

In the Printing industry, for example, the Liberia Revenue Agency and other revenue-collecting agencies will squeeze taxes out of these businesses just to pay government officials.

In return, these government officials and agencies take their printing contracts to Ghana and China to businesses that pay no dime in taxes to the Liberian government.

The Liberian businesses are not alone. Policies to protect local industries and promote manufacturing are lacking and if they exist, the laws protecting them are weak. Yet government will want you to believe that it is bent taking the economy from being import-driven to consuming locally manufactured goods.

The rubber industry is a good example. Last year, former President George Weah, like his predecessor, Mrs. Ellen Johnson Sirleaf put a moratorium on the exportation of unprocessed rubber.

The aim is to ensure that local rubber manufacturing companies here whose existence depends on unprocessed rubber have the supply to continue doing business.

As good as this intention is, the possibility of it being revoked to satisfy just a few political interests over the greater good of the country’s economy is most likely. The question then is how can the country grow its local industries when raw materials needed are being allowed to be sold to companies operating outside of its borders with no Liberian in their employ.

Until, the new administration, takes an inner look, and puts in place appropriate policies that stop the killing of Liberian businesses and prioritize the same, the Liberian economy is bound to be stagnant forever.