By Jean Claude-Kasandu
Monrovia, Liberia- In 2005 when Liberia just returned from nearly 15 years of civil upheaval, no investor would wish to venture into a country that was known for cannibalism, destruction and where some of the worse forms of inhumane acts in recent history took place.
Venturing into such land was seen a risk at the highest level; which many dares do at that time. Shareholders would not even be keen to grant them time to justify their decision to enter Liberia.
The first postwar government had a huge task of trying to convince investors to bring their money into a country that had no history of successful investment- profit making over nearly two decades.
It was a difficult thing to do in portraying a positive image of Liberia to attract investors but some investors took that risk and signed concession agreements with the Government. The Government of Liberia promised to be investment friendly by providing protection for investors.
It is known that prior to 2006, Liberia’s external debt stood at $4.9 billion dollars. But In 2010 the Government was able to cancel $4.9 billion of debt by reaching the completion point of the Heavily Indebted Poor Countries (HIPC) initiative, with financial reforms approved by the World Bank and IMF.
This took place during the regime of former president, Ellen Johnson Sirleaf. At that time, the country’s GDP grew by 6.9% in 2011, up from 5.6% in 2010 and 4.6% in 2009 respectively.
Liberia’s Gross Domestic Product (GDP official exchange rate) in 2011 reads $1.2 billion, while GDP per capital in the same year was $400.00. In 2009, GDP per capital was $260.
With such promise when former president Ellen Johnson Sirleaf took over, it attracted dozens of investors to the country thereby bringing some relief to the population where unemployment was very high. The presence of investors led to a booming economy, with GDP growth reaching 8.9% in 2013 and $16 billion in Foreign Direct Investment, according to records at the Ministry of Finance.
Some of the big investors worldwide including steel giant, Arcelor Mittal, Oil Palm giant Sime Darby all invested in Liberia embarking on ambitious projects.
The business climate created by former president Ellen Johnson Sirleaf was conductive. Yes, but there were few lapses which were left at the mercy of the investors. For instance, at Arcelor Mittal, there was not much done by the government in terms of discussions to help the company start its work.
For the oil palm sector, the government singed the concession agreement and left the companies at the mercy of the locals.
With coming in of the new government, they are unable to help some of these companies in the oil palm sector. Some locals said recently, “the government was only interested in the money from the companies and said go and hustle.” “When you succeed, then, you are strong.”
Gradually, these investments faced huge challenges including conflicts between investors and locals over land, Corporate Social responsibility (CSR) and communities’ huge demands frominvestors for issues that were not agreed upon concession agreements.
From virtually begging investors to invest in Liberia, twelve years down the line, the story has now changed as the new administration has turned to undo some of what was done by its predecessor putting investors on the negative side, causing some unwarranted reputational issues.
Now, with the inauguration of George Mannah Weah, international soccer legend, he promised to protect investments saying his government would be investment friendly.
“To investors, we say Liberia is open and ready for business. Over the long term, private investment will be our key strategy to delivering transformation. We will work to relax constraints to private investment; strengthen the business, legal and regulatory environment, and protect business profits.”
But it appears his team may not be living up to its inaugural promise.
Who’s Violating the Agreement?
The Sime Darby concession agreement is for a period of 63-years covering 220,000 hectares in Gbarpolu, Bomi, Grand Cape Mount and Bong Counties.
The same for GVL, EPO and that of Mary Land. Each has different time line.
But for SDPL, since the signing of the concession agreement from July 2009 to current, the company has only been able to utilize a little over 10, 000 hectares of the total land area agreed in the agreement.
In specific provisions of the concession agreement, the Government of Liberia granted 220,000 hectares exclusively to the company. The company is unable to move ahead with it. Not much is being done, according to locals by the government.
Section 4, Grants of rights, 4.1 production and leasehold rights provides “The Government herebygrants to Investor the right, in accordance with all laws, to (i) exclusively engage in production inthe Concession Area and in any Additional Areas (subject, in the case of Additional Areas, to anyterm to the contrary in the agreement between investor and the relevant private entity pursuant to Section 4.2”.
Further parts of the agreement grant the exclusive right for Sime Darby to develop and utilize the concession area. This, the company is gradually doing. For instance, the housing units, schools, clinic among others.
Subsection b of the agreement also states “Subject to the terms hereof, Government hereby leasesthe Concession Area to Investor for its exclusive use in the Production of Rubber, Rubber Productsand Oil Palm products and for other related Investor Activities. Subject to and in accordance with all laws and pursuant to the terms and conditions of this Agreement, Investor shall have the right to develop and utilize the Concession Area and conduct Investor Activities without any interference from Government”.
Since the company started clearing, it found itself in confrontation with locals over the concession land area that has already been granted exclusively to the company by the Government of Liberia.
The government has been unable to help in giving the land to company. SDPL is left at the mercy of the locals to expand. Yet, taxes are collected monthly from the company.
Up to date, the company has paid over US$2 million to locals for land on which it is yet to expand its operations.
Sime Darby like other concessionaires might just be facing the wrath of bad governance, a common practice in many countries across the African continent.
Many African governments are noted for undoing that has been done by their predecessors whether good or bad.
President George M. Weah with just six months in office has recalled four concession agreement signed during the administration of the previous government.
Agreements that are now victim of this process include Dangote Cement Liberia Ltd, TIDFORE/(LICEMCO), Nimba Rubber Incorporated Inc., Liberia Traffic Management Inc. and Amended to the amended Firestone agreement.
In recalling the agreements, President Weah stated in a communication to the Liberian senate “Honorable Pro-Tempore, I hereby recall these agreements from the Legislature for reassessmentby the National Investment Commission (NIC) to enable them meet fully procedural andsubstantive requirements, as well as vale-for-money test, to assert the benefit of the Liberian people before possible resubmission to the Legislature”.
No one is against reviewing a concession agreement. But the intent needs to be seen in a pure play manner.
The new wave of what is seen a venom against investors by the current government is a worrying sign for investors who took the risk of investing in a post war country that had no history of providing protection for investors.
The government could be setting the stage of scaring investors from increasing their investment or discoursing new ones from coming to the country since they do not know what the future holds.
Although it is not yet too late for the current regime to reexamine how it deals with investors, but the start is leading to some level of uneasiness amongst investors.
With the economy shrinking, the government needs to be more investment friendly to attract more investors and build a vibrant private sector rather than chasing those that are already struggling to make their investments succeed in a though terrain.
Any downturn in investment activities will impact negatively on the country as government is unable to provide jobs for the growing population.
The New Republic Newspaper is an independent newspaper established in 2009 by a Liberian journalist, Alphonso Toweh with many years of experience for the key purpose of reporting a balanced coverage of events as well as promoting Liberia’s image locally and internationally.
Toweh has been working for Reuters News Agency as its correspondent since 1998 to present. In addition to that, he has served as correspondents for the following magazines: West Africa New African, Africa Week and African Observer.
More to that, he worked for Radio Deutche Welle radio in Germany, Radio Netherlands and contributed to CNN, BBC News hour, BBC TV as well as Africa Confidential and Sunday Times in London.
The paper has no political affiliation nor ethic lineage. The focus and primary commitment is to ensure the sovereignty of Liberia and unity for Africa. It seeks to foster human rights and freedom of the press.
The New Republic is a liberal paper dedicated to upholding the tenets of democracy. It believes that state can not only create the political, social, economic and cultural spirit, but also to ensure that all human beings, irrespective of any affiliation is able to achieve its highest human potentials.
The paper strives for free speech and equal opportunity for all. Importantly, it believes that the nation must intervene judiciously in the economic life, in order to minimise the adverse effects of free enterprise and ensure that less privileged people have reasonable and fair access to the basic necessities of life. By this, it would help reduce some level of threat.
New Republic brings huge commitment to its readers and offers the nation the type of media that will advocate for the people and nudge our nation on the path of development and social re-engineering