IBEX Identifies Constraints Facing Liberian Owned Businesses

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A feasibility study and business plan validation sponsored by Investing for Business Expansion (IBEX) and implemented by Agency for Economic Development and Empowerment (AEDE) has shown that many Liberian entrepreneurs lack basic values including customer service, quality goods and services, and viable business networks with high degree of informality and low capacity.

The findings were presented on Friday, September 25 by Mr. Samuel W. Thompson, an AEDE consultant, during a one-day validation workshop organized by IBEX for a proposed National Business Development & Advisory Center (NBDAC).

The NBDAC is a key component of the sustainability and exit strategy for the USAID-IBEX Liberia program, which should come to an end in 2016. It was established to supervise and monitor Liberian businesses in the absence of IBEX.

The findings presented in the presence of many members of the Liberian business community also highlighted the lack of access to finance as another major problem facing Liberian owned businesses.

Mr. Thompson attributed the lack of access to finance to the mind-set that many Liberians do not pay back their loans, thus causing banks significant loses.
He added that a lot of Liberians have demonstrated dishonesty over the years. As a result lenders no longer have trust in them.

He also indicated that many local businesses are just one family crisis away from defaulting on their loans.

In addition to Liberian business woes, Mr. Thompson said service providers do not give quality and satisfactory services, while at the same time those for whom services are provided do not pay providers on time.

Meanwhile local businesses employing Liberians have complained about government’s failure to pay them.

For instance, many newspapers operating in the country complain that government constantly delays in settling its financial obligation with them causing inefficiency in their operations.

Furthermore, complaints have mounted over time that government prioritizes foreign companies in awarding contracts, resulting in the inability of local businesses to develop the needed capacity, on one hand.

Pointing out the advantages enjoyed by foreign businesses, the AEDE consultant said foreign owned businesses are well organized, have coordinated networking, technology, and access to finance.

He also attributed success of foreign businesses to an unfriendly legal system toward local businesses and solidarity among foreigners, demonstrated by Lebanese or Indian business people preferring to purchase goods and services from their respective compatriots.

Liberians, on the other hand are recorded for not patronizing each other and for fronting for foreign owned businesses which contributes to the foreign dominance of business in the country.

Profiling existing businesses in Liberia, the AEDE consultant said 88% of Liberian owned businesses are classified as micro businesses with 48% employing 0-3 persons and those hiring 4 to 20 employees constituting about 40%.

Medium and large businesses according to him constitute 8% & 4% respectively. He also said 67% of Liberian owned businesses in all mentioned categories are sole proprietorships.

Business corporations according to the study rose from 18% in 2012 to 25% in 2013.

He also stressed that business registration is a constraint for many Liberian owned businesses.

According to him, business registry offices are lacking in the counties except in Monrovia where the central office is located.

The AEDE update shows that of the 12,642 businesses that registered in 2013, 80% are in Montserrado and 20% concentrated in Bassa, Margibi, and Nimba counties.

The update also added that Liberian owned businesses operate in difficult environments with lack of good roads and electricity causing impediments to their progress.

Among suggestions for a way forward, AEDE mentioned business/finance training, procurement information sharing, facilitation of access to finance and business linkages with legal support as some mechanisms to put in place.

The business consultant group also recommended customer service and supplier certification training, record keeping and preparation of financial statements, decentralized GOL services, internet access and market research and a resource library to as other requirements for the growth and success of Liberian businesses.

In her statement on IBEX’s program, the Chief of Party of USAID-IBEX, Mrs. Watchen Harris Bruce said her organization provides training for low capacity business entrepreneurs.

She said as the program is expected to end next year, IBEX will be working with commercial banks to see reason to develop long-term loan schemes and help businesses establish and become sustainable.

Furthermore, she said IBEX is working to ensure that businesses develop knowledge about cash flow and its management.

The meeting was also attended by the Chairperson of the National Investment Commission (NIC), Mrs. Etmonia David-Tarpeh, former NIC Chairman Natty Davis and officials of the Ministry of Commerce & Industry.

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