In the wake of the devastating impacts of the Ebola virus epidemic on the domestic private sector in Liberia, an array of entrepreneurs have appealed to the government and international partners to assist with ‘sustenance grants’ to carry them through the current economic crisis. The entrepreneurs, who manage hotels, manufacturing and service institutions, amongst others, told our business desk in separate interviews that the sustenance grants will help businesses recover from the shocks of the Ebola crisis.
“We need sustenance grants to carry us through these low occupancy and our slow production periods,” the entrepreneurs who also expressed interest in special low interest long-term financing solutions to restructure their commercial debts and recapitalize, said. The World Bank Group, through the International Finance Corporation (IFC), has begun capitalizing a number of banks in the country to enhance financial access to small and medium size enterprises (SMEs) to tackle the post-Ebola economic recovery program.
Ecobank Liberia Limited and Guaranty Trust Bank (GT Bank) have received US$7.5 million long-term financing each from the IFC to support the Liberian private sector. However, details of how the money will be loaned to local businesses have yet not emerged as many businesses want the banks to lend the money at a low interest rate.
Speaking recently to our business reporter the chief executive officer of the National Toiletries, Inc., Mr. Fomba Trawally, and the proprietor of Bella Casa Hotel in Sinkor, Mr. Amin Modad, welcomed the latest development from the IFC. They explained how the Ebola outbreak has hit their businesses hard to the extent that they [businesses] have cut down their staff and taken some measures at their respective business areas for safety reasons.
“When the Ebola epidemic hit, all hotels experienced an unprecedented sharp decline of occupancy from an average of 50% to about 5%. In fact, as early as May, we [hotel owners] began experiencing cancellations as far out as December. For a Liberian entrepreneur paying about US$22,000 monthly towards bank loans, this meant getting into immediate defaults with the banks for nonperformance,” Modad explained.
With the post-war Liberian economy already experiencing challenges before the epidemic, Mr. Modad explained that he had to take few measures to ensure the survival and continuance of his business.
“I had to take a couple of actions for both health and financial reasons; these did not only affect the business, but also the livelihood of the staffs and contractors who depended on the hotel for survival,” he said.
“I temporarily put down about 40% of my staff–especially those who lived furthest from the hotel in communities that were more susceptible to the virus; we had to downgrade our generator to much smaller generators as the larger ones were consuming incomparably to our occupancy hence the revenue we were generating because we produce our own electricity. This downgrade also required some investment. We also had to slash prices in order to compete because the larger hotels are always the first to get the clients during crisis situations.”
Fomba explained the playing field between domestic businesses and those foreign-owned is not leveled.
“They [foreign] businesses have advantage because they have access to more finance than us [domestic businesses]. And because of this we have to sell at the price proposed by them [foreign businesses] or we’ll go out of business. So the best way forward for us [domestic businesses] is to have increased access to finance,” said Mr. Trawally.
Mr. Modad, for his part, said the government needs to do more to create a more relaxed business climate.
He wants taxes and duties to be relaxed for the most vulnerable Liberian-owned businesses and critical sectors.
“I understand the stress the government is going through due to drop in revenue and increased social obligations, but much needs to be done to create a more relaxed business environment; taxes and duties must be relaxed for the most vulnerable and critical sectors,” he said.
The Liberian businessman explained how doing business has always been a challenge to local entrepreneurs primarily due to limited access to adequate financing options.
“We are compelled to take up short-term high interest loans with normally unacceptable terms (for example US$300,000 for 18 months at 18%) in order to compete with larger foreign own counterparts,” Amin stated.
The Ebola virus has already killed over 3,000 people in Liberia, says the World Health Organization (WHO), and infected over 4,000 others. The virus has, however, been contained to a larger extent thanks to the combined efforts of the international community, the government of Liberia and local health workers.
Mr. Modad recognizes the concerted effort of the international community, but it is belated. “Their [international community] effort is working but it’s disappointing that thousands had to die,” he said.
“The situation would have to get very complex and grave, and [the] threat to global safety had to be realized before the world began to respond to the emergency,” said he.
The Liberian businessman noted that the government of Liberia's incapacity and inability was not a secret to the international community because, according to him, the country is still a post-conflict, least developed country that is struggling to put its economy and society back together.
He warned it will take some time before Liberia becomes totally cleared from the Ebola epidemic and guests and expats begin to travel back to the country.