President-elect of Liberia, George Weah is set to be sworn in on January 22, 2018, and he will be inheriting several challenges. Liberia said to be one of the poorest in the world but rich in resources, Mr Weah has to deal with close to 85 percent youth unemployment.
According to the United Nations, young people account for about 65 percent of Liberia’s population of 4.1 million.
A visit to Liberia and the evidence is in black and white. In Monrovia, many people walk the streets either unemployed or involved in menial jobs. That will include people whose secondary school education was truncated and currently have to resort to riding motorbikes for a business or simply getting wheelbarrows to do business.
At $150 a wheelbarrow can be purchased to start any business, from groundnut to sale of bread. Right on the streets of Monrovia, boiled groundnut is being sold in wheelbarrows.
JoyBusiness’ Odelia Ntiamoah visited Liberia before the elections and reports that, “Contrary to what I see often I follow the seller with my cameras, taking about two or three steps I walk into several of them. Vegetables from carrots, cucumber, spring onions among others are arranged beautifully in the wheelbarrow. Then there is fresh bread, shoes, singlet, drinks and other provisions.”
Since the war in 1989 which lasted for almost 10 years Liberia has hardly developed their infrastructure. Markets, ministries including the ministry of justice still lie in ruins with the evidence of bullet holes.
Based on this, many businesses are done in the open including having the forex bureau in the open and in some cases in wheelbarrows as well.
Weah has the magic wand?
Away from the Americo-Liberian leadership, George Weah is believed to be an indigene who understands the plight of the ordinary Liberian. His election was made possible by several of these young people; from those selling CD’s on wheelbarrows to those who are totally jobless. They believe the election of Mr Weah will change their fortunes. But does Mr Weah have the magic wand to rescue Liberia’s wheelbarrow economy?
IMANI Africa recommends the newly elected President pays attention to five sectors of Liberia’s economy in pragmatic ways that could enable Liberia leapfrog into the league of highly effective countries.
As at 2011, access to publicly provided electricity in the whole of Liberia was close to 0%, Monrovia, Liberia’s capital city, had an urban access rate of 0.58% of its population.
In 2016, access rate had improved to 2% in the country and 6.7% in Monrovia. Surprisingly, allocation rules for revenue from extractives are derived from the Liberia Revenue Authority (LRA) Act which states that revenue collected by the LRA should be paid directly into the consolidated fund (Section 26).
All extractive industry revenues, therefore, go into and are distributed from the consolidated fund. In this case, revenue from extractives is not earmarked for specific developmental projects. Also, it becomes difficult to track the use of revenues from extractives.
IMANI recommends, that, keeping in mind the potential of the extractives and power sectors of Liberia, President-elect Weah should demonstrate capability in leveraging these two sectors for growth and development to achieve the following:
1. A commitment to prudent revenue management in the extractives sector: This will involve the formulation of requisite policy that will determine the direction of allocations or earmarking of resource revenue preferably towards development in pro-poor sectors such as education, health, agriculture and infrastructure development.
This will also foster transparency and accountability as it will allow the tracking of the use of resource revenues. Ghana has been able to define the allocation of its petroleum revenues through its Petroleum Revenue Management Act, an example that Liberia could follow.
2. A commitment to formulate targeted policy towards long-term industrial growth that would facilitate value addition to natural resources
3. A commitment towards securing fuel supply for thermal power generation in the short to medium term from neighbouring countries such as Ivory Coast and leveraging the country’s potential petroleum resources towards power generation in the long term. There should also be a critical look at diversifying sources of fuel for thermal generation.
4. A structured investment plan that would ensure growth and expansion of the electricity network (generation, transmission and distribution) in the long term and in the short term, intensifying the proliferation of mini/microgrids and stand-alone renewable energy systems in urban as well as rural areas.
5. Provision of and following clear timelines for the implementation of the policy recommendations in the National Energy Policy and a commitment to implementation.
IMANI finally recommends that given the importance of a vibrant private sector to the growth of the Liberian economy, President-elect George Weah should also carefully consider the following in their quest to promote a conducive business environment.
1. Regulations that protect investors must be strengthened. Liberia ranked 179 out of 189 countries in terms of protecting minority investors in the 2017 Ease of Doing Business Index. A World Bank survey on investors identified insufficient legal protection of investors as the primary concern to Public-Private Partnerships (PPPs).
2. The number of days required to access electricity for business needs to be reduced. Currently, it takes an average of 465 days and cost 4066.6 percent of income per capita to get electricity due to factors such long bureaucratic processes. This can greatly hinder investor interest.
3. A robust credit information system is needed to facilitate wider dissemination of credit information aimed at reducing credit risk and to encourage lending. Liberia has zero percent credit bureau coverage and very limited distribution of credit information on both firms and individuals.