– Boosts private sector development
The government of Liberia through the Ministry of Finance and Development Planning (MFDP) on Tuesday unveiled US$4.8 million to boost private sector development by empowering Micro, Small and Medium-Sized Enterprises (MSMEs) in the country.
The amount was provided by the World Bank as a grant under the Post Ebola Reconstruction Project (MSME-REPERP) of Liberia to lend to MSMEs.
Unveiling the amount at the Monrovia City Hall under the theme “Access to Affordable Domestic Finance for MSMEs in Liberia,” Finance and Development Planning Minister Boima Kamara said the project is reserved for less fortunate Liberians involved in small and medium-sized businesses.
Minister Kamara, whose statement was contained in a speech delivered on his behalf by Deputy Minister for Economic Management Alvin Attah, revealed that the loan to small businesses will be done by financial institutions.
The Minister named: Liberia Bank for Development and Investment (LBDI); Afriland First Bank; GN Bank; BRAC Liberia; Business Link; Foundation for Women and Diaconoa MDI, as institutions responsible for giving out loans to the private sector on behalf of the government.
“Today’s launch is the culmination of two years of efforts by MFDP, the Central Bank of Liberia, the Project Steering Committee, and the World Bank to conduct due diligence and lay the foundations for strong grant management.
“With this US$4.8 million grant made available by the World Bank, we are striving to link Liberia’s MSMEs with financing on sustainable terms, and to strengthen the capacity of Liberia’s private sector financial institutions and banks to lend profitably to MSME,” Minister Kamara told the business community.
The objective of the launch, according to him, is to bring all of the players together-government and development partners together with private banks, business owners, and future business owners.
He underscored that the project is line with the government’s long term vision of making the private sector the engine of growth.
“This project is in line with the government’s efforts to achieve better institutional reforms to foster an enabling environment that is conducive for promoting economic growth and reducing poverty, and will be able to provide 500 new loans as well as create or sustain at least 2,000 jobs,” Kamara said. However, the minister was quick to clarify that non-performing loans under the project will be below 10 percent.
Frederick Bobby Krah, MSME-REPERP project coordinator, added that access to finance can boost job creation, raise income, reduce vulnerabilities and increase human capital investment.
“Thinking longer term about Liberia’s export opportunities, financing availability is also essential for the creation of a healthy trading system—up to 80 percent of trade is supported by some form of financing or credit.
“This initiative is truly important because, particularly in a market like Liberia, inclusive economic development is about more than simply access to credit.
“To spur growth and real job creation, lending must also be about targeting financing solutions to the needs of MSME businesses-for example, affordable loan terms and longer durations to factor in tree crop growing times-and helping them grow,” he said.
For her part, World Bank Liberia Country Manager Larisa Leshchenko maintained that the aim of the project, and the event in general, could not be more important and relevant for Liberia; small businesses are the lifeblood of the Liberian economy, generating much needed jobs and income, she added.
According to her, access to finance is consistently cited as a critical constraint to MSMEs, and promised to make important contributions in these areas.
“As we all know, the Liberian economy has faced tremendous challenges in recent years, ranging from the Ebola crisis, decline in commodity prices, to the drawdown of the UN Mission in Liberia.
“As a result, the rate of economic growth has fallen from high levels preceding the Ebola crisis to negative growth in 2016. The good news is that there are signs that the worst is behind us and the medium-term outlook is positive. Economic activity is picking up and, according to the IMF, growth is expected to reach close to 7 percent over the medium term led by mining, with support from agriculture, services and manufacturing. Now it is important to ensure that this growth is shared by everyone, and the government’s efforts to support MSMEs, including through this project, are important contributions to this critical objective,” she said.
This project, which is financed by the World Bank State and Peacebuilding Fund for US$4.8 million, aims to increase access to finance for MSMEs in a sustainable manner. “I would like to pause and emphasize the importance of the word ‘Sustainable,’ which is critical to the success of the project. Many government projects in Liberia and throughout the world have failed to deliver on their goals of economic stimulus and job creation because they are not sustainable or are not implemented in a transparent way,” Leshchenko stated.