It was a conversation that had been held in many different pockets of the economy, throughout the Sirleaf Administration, though hardly as propitious as it was yesterday, when Commerce and Industry Minister Axel M. Addy called on commercial banks to do more to support the development of Small Medium Enterprises (SME) in order to achieve long-term growth for the Liberian economy.
Speaking on April 19, 2016 at a one-day roundtable conference with donors and the private sector on Liberia’s Accession to the World Trade Organization (WTO), Minister Addy declared that support to Small Medium Enterprises (SME) will greatly help to increase employment opportunities and decrease the burden of importing on Liberia.
In the midst of stakeholders including government officials, representatives of banking institutions and non-governmental organizations, and ambassadors, the Minister said banking institutions in the country were [mainly] after big investors and not SME entrepreneurs.
His remarks sparked a spirited exchange of experiences from representatives of local banks, the Liberia Revenue Authority (LRA) and other stakeholders, who weighed in on the concern.
Responding to the Minister’s plea, a representative of the Liberia Bank for Development and Investment (LBDI) contended that most loans taken by SME owners are “non-performing”. Loans that are not repaid, said the LBDI representative, cause serious setbacks for the banks.
Francis A. Dennis, President of the Liberia Chamber of Commerce (LCC), said one cause for non-compliance with payment of loans is the absence of a commercial court in the country to try delinquent borrowers indebted to banks.
Mr. Dennis, who is also a former president of LBDI and former president of the Liberia Bankers’ Association, said banking institutions are not open to every player in the economy but chasing the same customers, noting that opening up to the economy will enable SMEs to grow.
Also commenting was Elfrieda Stewart Tamba, Commissioner General of the Liberia Revenue Authority (LRA), who said “The Judiciary has problems. Many young people are employed by banks and they steal taxpayers’ monies, but getting them prosecuted in the court is difficult, and law enforcement is weak.”
Another participant suggested that the “naming and shaming” method instituted by the Central Bank is helping to minimize delinquency on the part of borrowers. The participant, however, said for such behavior on the part of borrowers to be further curtailed, there should be legal reforms to enhance compliance with loan payment. He said when cases are adjudicated and borrowers are convicted, they take their appeals to the Supreme Court, where the case will also experience delay with adverse effect on the banks’ profits and capital.
A representative of the International Monitory Fund (IMF) at the conference also suggested that banking institutions should set a proper and affordable credit rate analysis that will encourage “would be SMEs.”
Minister Addy was speaking from the perspective that “Liberia has over the years heavily imported [more] than exported, which has aversely burdened the country’s economy,” and that giving preference to SME entrepreneurs to have access to finance and be capacitated to operate will surely enhance the growth Liberia needs. He also said prioritizing SMEs is significant to the growth and development of the economy because it will enhance even agriculture, which serves as a backbone to the economy.
He disclosed that the ministry is currently partnering with an institution to train some local entrepreneurs; and when they complete the training, each will be given US$10,000 to start their businesses, and they will be monitored.
“Students in Liberia and Africa in general are graduating from universities and colleges every year without hope of employment,” the Minister told the gathering. “If you ask them about where they want to work, they will respond that they want to work in government; and if asked where they want to live, they will prefer to live in the West because they see how better their friends are in those western countries. Investment in SMEs is very important to changing the dynamics of thoughts of many of our citizens because it will create the jobs they need to sustain them.”
He added that Liberia has heavily relied on exporting its raw materials including iron ore, rubber, timber and cash crops without added value, while at the same time importing larger portion of its needs including rice, petroleum products and other manufactured goods. And now that the price of iron ore has fallen on the world market, he said, Liberia’s economic growth can be enhanced only if SMEs are supported to get locally produced commodities properly packaged for export.
“It only takes support of investors to come in as middlemen to have packaging facilities that will help local entrepreneurs package their goods and properly labeled for export; and when this is done, the agriculture sector will be highly promoted that more people will produce agricultural commodities in the country,” Minister Addy suggested.
The roundtable conference about Liberia’s Accession to the WTO Protocol and Post Accession Plan was organized by the Enhanced Integrated Framework (EIF) and the Ministry of Commerce and Industry. The EIF is a multi-donor program which supports least developed countries to be more active players in the global trading system by helping them tackle supply-side constraints to trade.
Giving some synopsis on the gathering on Tuesday, Minister Addy said “This gathering today is part of a series of discussions about Liberia’s accession to the World Trade Organization (WTO); and by the way, we have had discussions on the same matter with the National Legislature.”
He said the gathering comes following Liberia’s participation in discussions on its accession to the WTO for the last seven years, and the ongoing phase is to discuss with donors and the private sector some domestic challenges and opportunities in making business under WTO protocol. Donors have supported the process of Liberia joining WTO for the last seven years, he disclosed, and now that Liberia has met the standards of WTO, donors and the private sector are joining government to strategize how the post accession plan can be implemented.