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investment needed to spur recovery and growth.
"This is a country that needs a significant amount of investment to rebuild its infrastructure," Alex Cummins, president and chief operating officer of Coca Cola Africa," said in an interview after he spoke at the conference luncheon, which was addressed by President Ellen Johnson Sirleaf. The situation represents both a challenge and an opportunity, he said, adding: "We see the potential for an economic boom in Liberia, and as a business we want to be a part of that economic boom."
One announcement designed to provide an investment boost is a proposed $30 million entrepreneurial fund launched with a $3 million contribution by Robert L. Johnson, the Black Entertainment Television (BET) founder who now directs a real estate and private equity firm with over $3 billion in combined assets. The Liberia Fund will be backed by the U.S. Overseas Private Investment Corporation.
Johnson, who plans to lead a delegation of African American business leaders to Liberia next month, said he has been impressed by Sirleaf's leadership and her determination to turn the country around. Cummins, who was born in Liberia, said that "the government has begun to build a foundation for what could be a path-setting process of post-conflict reconstruction."
"I was touched and happy with what I saw when I visited Monrovia last year," Cummins said. "People are confident and optimistic and believe in the future of the country, and that's a good harbinger of growth for our enterprise."
Making the case for investing in Liberia during the forum's opening session was Richard Tolbert, chairman of the National Investment Commission. Tolbert, who spent two decades on Wall Street at Merrill Lynch and UBS Payne Webber before being tapped for the Cabinet-level position by President Sirleaf last year, began his presentation with a short video produced by the World Bank. Here is the text of his speech as delivered.
Distinguished Guests, Ladies and Gentlemen:
On behalf of the Government of Liberia, the Ministry of Commerce and The National Investment Commission, which is the principal arm of the Liberian Government responsible for attracting foreign investment to Liberia and interfacing with the private sector, I would like to thank all of you for coming from your various destinations all over the world to attend this first of its kind private sector forum on Liberia.
I would be remiss if I did not on the very outset thank our International Investment Partners the Corporate Council on Africa, Overseas Private Investment Corp, IFC (International Finance Corp) as well as all the members of the Liberia Private Sector Group for the hard work and co-operative spirit which they have put into making this event such a success.
Your attendance here is an affirmation that the policies of the present government led by her Excellency Madame Ellen Johnson Sirleaf is on the right track to turning around our nation in a positive and concrete manner that will eventually bear fruit for all of our international partners as well as the people of Liberia.
Just over one year ago, the image and reputation of our country was such that it would hardly have been possible to host a conference such as this, let alone call Liberia a preferred investment destination. After some 15 years of brutal civil war and a quarter century of economic decline and mismanagement, the Liberian people in a clear and resounding vote for a return to peace, stability and progress overwhelmingly elected a leader who has for decades fought and stood up for the rights of the common man and woman in Liberia against dictatorships and autocracies, often at great peril to her own life; an African leader who was not only a mother and grandmother, but who has also been trained at Harvard, gained professional experience at the World Bank, worked as an international banker with Citibank, helped to run an international investment fund, run the United Nations Development Program for Africa, been a Finance Minister of her own country; and who also, by the way, happened to be a woman, the first woman President elected to office in Africa.
Without this leadership and a team that she has got around her, I am sure many of you would not be sitting here today - as a matter of fact, many of us who are in her government today, might also not be back in our homeland working with her to rebuild our nation.
Within the space of just over one year, this leadership has not only turned around the image of Liberia in the eyes of the world but has begun to transform the reality of the lives of millions of Liberian people and restored hope and dignity once again to the Liberian people. It has made Liberia once again a credible investment destination.
I believe that the fundamental reason why Liberia is once again becoming an attractive destination for serious investors (and will in time resume its place as the "jewel of West Africa") is because under the leadership of Madame Ellen Johnson Sirleaf we once again have a credible, honest, transparent government with a clear vision for turning around our country and a strategy for achieving that vision built upon pillars that are essential building blocks for our national reconstruction and development.
For those of you who were in the two day donor's conference you might have heard about these pillars many of you from the private sector were not there so I hope you do not mind if I take a minute to expand a little upon what those four pillars of this government's initial reconstruction policies are.
- First and foremost, peace and security which is the sine quo non of political stability.
- Secondly, good governance and the rule of law.
- Thirdly, rebuilding infrastructure and delivering basic services.
- Fourthly, revitalizing economic activity and the private sector.
As simple as these four pillars may seem, they are in fact the essential building blocks on which the entire reconstruction of our nation depends.
On Peace and Security:
Working closely in collaboration with its international partners, especially the United Nations, which is spending some $700 million a year to maintain one of the largest peace-keeping forces in the world in Liberia, the Government of Liberia has:
- Completely disbanded its prior national army and some 17,000 members of its police, and special security forces.
- Begun the recruitment and training of a brand new trimmed down national army with the assistance of the U.S security company Dyncorp, carefully screening recruits for ethnic diversity, education and past human rights abuses.
- Completed a national security review which led to the demobilization of several state security agencies and the professional retraining of the rest.
- Completed the disarmament, demobilization and reintegration of some 100,000 ex-combatants, a not insubstantial feat.
- Facilitated the return of over 100,000 of the 300,000 Liberian refugees from neighboring countries and reintegrated some 50,000 internally displaced persons to their homes; providing basic support such as health, water, training, and employment opportunities.
On Governance and Rule of Law:
Having witnessed first hand the corrosive effects of corruption upon good government and development in Liberia over many years, President Sirleaf from the very first day of her administration made corruption public enemy number one and the elimination of it through all levels of government one of her highest personal priorities. And in pursuit of this, she has:
- Required all of us, senior level government officials to publicly declare their assets upon assuming office which is a first in Liberia's history.
- Established a zero tolerance policy for corruption demanding accountability and transparency at all levels of the government.
- Established a mandatory code of conduct for public servants and a Governance Reform Commission to ensure monitoring of the reform agenda.
- Established a Truth and Reconciliation Commission to begin the painful process of national reconciliation and reunification.
- Enacted a Public Procurement law and established a Public Procurement Commission to ensure that all government purchasing is transparent, competitive and complies with international best practices.
- Drafted a plan of action to establish a law reform commission and hired a legal advisor to begin work on reforming courts, access to law texts and other reforms.
- Set up an Economic Management Assistance Program (GEMAP) with our international partners whereby international financial experts are placed at key revenue generating ministries and agencies, such as the Ministry of Finance, Ministry of Commerce, National Port Authority, Roberts International Airport, Forestry Authority, Liberia Petroleum Refining Company, Central Bank, Bureau of Budget and Ministry of Lands, Mines and Energy.
- Developed a program for increasing Liberian government capacity building through the recruitment and funding of Liberian professionals from abroad and better pay to highly qualified Liberians at home.
- Increased the pay scale of all civil servants by an average of 60% across the board, bringing the minimum wage to what is still a dismally low level of at least $1 a day.
On Infrastructure and Basic Social Services:
The government inherited a national infrastructure that was largely devastated or in total disrepair as a result of decades of civil strife and conflict. Roads, lights, water, sanitation, telecommunications, housing, schools, hospitals, airports and seaports were basically in a state of functional disuse. The government has set about addressing these challenges by:
- Submitting legislation through Congress for enactment of a new Telecommunications Act that will establish a National Regulator and a National Operator for the telecommunications sector.
- Becoming the systematic rehabilitation of the country's entire road network, starting with roads, such as the Zwedru-Fishtown road, Zwedru-Greenville highway, Monrovia-Buchanan highways.
- Starting to rebuild the national power grid by bringing public lights (like you just saw) to the main streets of Monrovia within the first six months in office in order to meet its pledge to the people of Liberia that lights would be restored in the capital by the anniversary of this administration's first national Independence Day. As small as this may seem to some of you, it is major for some of us who come back and seeing our country for the first time. If you see kids doing their homework, on the street lights at night, you will understand the value of electricity in a developing country.
- Restoring pipe-borne water to many parts of the capital city of Monrovia for the first time in a decade.
- Increasing the budgetary allocations to the health and education sectors to over 8 percent each, far above previous levels and the largest share of outlays in the national budget.
These are some of the basic works they have done in the infrastructure sector.
On Revitalizing the National Economy:
Recognizing that discipline begins at home, the government has begun the arduous task of revitalizing the national economy by putting its own fiscal house in order first. It has:
- Established sound fiscal and budgetary policies such that the national budget has been able to be increased by over 50 percent within the first fiscal year from a meager $80 million to $129 million.
- Begun to "right size" government payroll by reducing the payroll of the public sector from 49,000 to 48,000 largely by the elimination of ghost workers and duplicate job holders.
- Begun to establish and verify the extent of the $700 million domestic debt and begun procedures for eventual paydown of a portion of this debt.
- Introduced legislation to limit the Executive Branch's own powers to effect major changes to budgetary allocations without legislative approval.
- Introduced a computerized "flag receipt" system at the Ministry of finance and Central Bank of Liberia.
- Submitted a balanced budget for the fiscal year 2006/2007 thereby binding the government's budgetary allocation to its cash receipts i.e. no deficit spending.
- Reviewed over 100 contracts entered into by the Interim Government for the period 2003-2005, beginning with the one billion US dollars Mittal Steel Agreement which was successfully reviewed and renegotiated to the satisfaction of all parties.
- Canceled all dubious forest sector concessions which had in fact licensed out some two-times the nation's entire forest reserves.
- Strengthened the management of the public corporations to the extent that companies such as the Liberia Petroleum Refining Company whose workforce was downsized by over 60 percent from 650 to 235 in 2006 whilst at the same time producing a profit of $6.4 million on revenues of $12 million versus $1.5 million on revenues of $8.4 million in 2005. That is quite a big achievement for any business.
- Closed or merged dozens of foreign diplomatic missions in order to fund a limited number of more important missions abroad, adequately and on time.
- Regularized the foreign exchange auctions at the Central Bank of Liberia and reactivated the money management committee of the Central Bank.
- Enforced strict application of customs and excise tariffs as well as the pre-shipment inspections of goods leading to an over 8 percent increase in customs revenue.
- Put into place a chain of custody for the Forestry Development Authority so that the process of re-licensing forestry concessions can begin some time in late 2007.
- Put into place safeguards for sustainable forest management which led to the lifting of sanctions on the forestry sector by the international community.
- Put into place procedures that will, we believe, lead to the lifting of sanctions on the diamond industry in the very near future.
- It has convened a Rubber Plantation Taskforce to resolve issues surrounding the illegal occupation of plantations by ex-combatants.
- Secured admittance as the Minister of Commerce said, to preferential tariff regimes such as the AGOA (Africa Growth Opportunities Act) and the U.S Generalized System of Preferences (GSP).
- Secured OPIC (Overseas Private Investment Corp) coverage for Liberia, as Mr. Robert Mosbacher attests which is believed will lead to substantial new funding initiatives for the business sector.
- Completed an Investment Climate study by the Foreign Investment Advisory Service (FIAS) of the World Bank leading to preparations for the revision of the Investment Code.
- And finally, it has sought funding through institutions such as the African Development Bank, local banks and other institutions for lending to small and medium sized Liberian businesses.
These then are just a few of the concrete accomplishments of the Sirleaf government during its first 12 months in office, which we believe made the investment climate of Liberia much healthier. Of course, all is not perfect and much remains to be done. There are many pressing challenges ahead, not the least of which are the high rate of unemployment which has in turn exacerbated the problems of petty crime; the need to increase the level of literacy and skills training in the workforce; infrastructural inadequacies particularly in the areas of roads, housing, ports, airports, and electricity which pose serious challenges to doing business and raise the cost of doing business in Liberia.
Nevertheless, as our Chinese friends say, these challenges also carry within them the seeds of great business opportunities, as you will hear later on today when our various ministers make specific presentations to you on the case for investing in their sectors.
As numerous investment visitors to the National Investment Commission over the past year have pointed out to me, there are so many investment opportunities in a country that is being rebuilt from the ground up that one barely knows where to begin or what to choose.
But one thing that has struck me consistently in the comments of many of those visitors to our country especially those coming for the first time is that, although they see the physical devastation of Liberia, they do not feel in any way that the spirit of the people of Liberia is broken. In fact it is quite the opposite; they find a population that is largely young, energetic, optimistic, and friendly. I invite you to come to Liberia and see and judge for yourself.
Before moving on to a discussion about some of Liberia's unique comparative advantages, I would just like to say a few words about my agency, the National Investment Commission. This agency is the primary agency of the Liberian Government responsible for attracting foreign investment into Liberia and for developing policies to stimulate investment activity both domestic and foreign in the private sector.
The Commission is responsible not only for coordinating the nation's investment policies but also for concluding all investment agreements and concessions on behalf of the government in every sector ranging from minerals and agriculture to telecommunications and oil and gas.
The Commission was created in 1979 as a result of the Government's recognition of the vital role of investment and the private sector and is headed by a Chairman who is by law, a Cabinet Minister and reports directly to the President of Liberia. The Chairman heads a six-member Board of Commissioners who jointly decide on the granting of special incentives to investors, this board is comprised of the Ministers of Finance, Minister of Planning, Minister of Commerce, Minister of Justice and Minister of State from the Office of the President.
The National Investment Commission has a staff of 150 persons, (right-sized from 175 when I took over) and seeks to serve as a "one stop shop" for investors, particularly foreign investors. We assist you in all aspects of your investment process from obtaining basic macro-economic data on the economy to doing pre-feasibility studies on priority areas of investment; assisting investors get through the bureaucracy of government as speedily as possible, even assisting you with work permits, business licenses, and on occasion for special investors visas, transport and hotel arrangements.
In pursuit of its mandate to seek ways to promote the investment climate of Liberia over the past 12 months, the National Investment Commission has:
- Received over 150 business delegations and prospective investors from all over the world including China to Brazil, Canada to Australia, France to Spain.
- Processed some 20 concrete new investment proposals in areas ranging from quarrying to hotels, saw-milling to nail and zinc manufacturing, totaling in excess of $50million with an employment generation capacity of over 500 jobs.
- Participated in the review and renegotiation of all major investment agreements including, as I mentioned, the $1billion Mittal Steel contract followed now by the Firestone Agreement.
- Participated in trade missions all over the world, to Malaysia, China, Nigeria, Ghana and North America.
- Developed one of the first government websites to provide basic information on Liberia and investment opportunities to a worldwide audience. That is www.libnic.com .
- Convened small private gatherings of leading members of the business community with the President of Liberia for free and frank exchanges of views.
- In conjunction with the Ministers of Commerce and Finance, we have held meetings with major business groups such as the Chamber of Commerce, the Liberia Business Association and small business Organizations.
- With the assistance of Columbia University's Earth Institute, we prepared our first up to date "Investment Guide to Liberia" in over a quarter century.
- With the support of the World Bank's Foreign Investment Advisory Service, we have begun a systematic review of the investment policies and laws of Liberia with a view to a complete revision of the 1975 Investment Code.
- Sought to attract capital to the Liberian private sector through initiatives such as the African Development Foundation, which has pledged $6 million over a six year period and the NIC's own Small-Medium Size Enterprise Fund in conjunction with banks such as the Liberia Bank for Development and Investment.
- Conducted a survey of the 1000 acre Liberia Industrial Park which falls under the mandate of NIC and which was an area set aside close to the Freeport of Monrovia for factories and industries, but which has now due to war become a town of squatters, of homes, shops, churches and occupied by over 40,000 persons.
- Introduced investors to all key sectoral ministries and accompanied them to investment sites from Bong Mines to Buchanan, from Firestone to Fendall. (The NIC Chairman himself has been known on occasion to accompany investors into the Bush to look at potential land sites as I did for a major hotel investor.)
- Finally, we are seeking to provide investors with a clear roadmap of the important factors government looks at when evaluating investment applications such as, employment generation, financial strength, technical know-how, reputational background, environmental standards, local value-added component, use of local raw materials and services, social contributions, and regional distribution of investments all over the country.
These then are some of the achievements of the government in the area of