Impact of the Proposed Dangote Agreement and LICEMCO Agreement on the Liberian Economy in General, the Cement Industry Specifically and the Health of the Liberian People


By Meo Debbah Beyan, J.D., LL.M.

1. Introduction

Shortly before her term of office expired President Ellen Johnson-Sirleaf (President Sirleaf) presented to the Legislature (perhaps only the Senate) several investment agreements, among which are the LICEMCO Agreement and the Dangote Agreement) for ratification. Both agreements grant to these proposed investments unprecedented investment incentives and it is the opinion of the writer of this Critique that were these investment incentive agreements ratified as submitted to the Legislature (perhaps only the Senate), they will negatively impact the Liberian economy and the health of the Liberian people. The facts that this Critique reveals are incontrovertible and other investigators, which could include the Liberia Cement Corporation (CEMENCO), the only company which produces cement in Liberia, importers of cement, the Ministry of Commerce & Industry, the Environmental Protection Agency and the National Port Authority could verify the information contained herein. 

Incidentally, this Critique concentrates on the cement industry of Liberia; and as to the Tidfore Investment (Hong Kong) Company Limited, which seeks to develop and operate a steel plant in the China Union Concession Area, not much is covered by this Critique. However, the writer of this Critique intends to deal with the proposed investment for a steel plant in a latter paper. 

2. The Current Cement Industry of Liberia

The current cement industry of Liberia consists of local production by CEMENCO), which started business in 1966 under an “An Agreement For Establishment of Cement Factory in Liberia” (hereinafter the 1966 CEMENCO Agreement). In the 1966 CEMENCO Agreement, it is referred to as the Concessionaire and given the investment incentives granted to CEMENCO at that time, it is fair to refer to the aforesaid 1966 CEMENCO Agreement as a “concession” agreement, which term was first used in the General Business Law, 1956 Code, section 200(a), 1956 Code, Vol. II, page 648. The term “concession” is repeated in the revised General Business Law, section 6.1(a), approved June 27, 1973, published September 8, 1978, Vol. III, Liberian Code of Laws Revised, page 733.

Given that the CEMENCO Agreement provides that the Liberian Government was entitled to 25% (twenty-five percent) of CEMENCO’s shares at no cost to the Liberian Government (Paragraph 20) and that 15% of CEMENCO’s shares would be available for purchase by Liberian citizens at a fixed price (Paragraphs 18 & 19) and considering that CEMENCO has been the only local producer of cement in Liberia, it was assumed by certain quarters of the business community and private persons that CEMENCO was granted a monopoly to produce cement in Liberia and to import and market cement in Liberia, in keeping with section 481, General Business Law, 1956 Code, Vol. II, page 664.  Similar exception of Liberian against monopolies and restraint of trade is provided for at section 2.1(2) of the General Business Law, approved June 27, 1973, published September 8, 1978, Vol. III, Liberian Code of Laws Revised, pages 714-715. The writers of this Aide Memoir have found no documentary evidence to substantiate the assumption that the Liberian Government granted to CEMENCO a monopoly over the production and marketing of cement in Liberia; and more than that, it is publicly known that in recent years the Liberian Government has allowed the importation of cement into Liberia and sale thereof by enterprises other than CEMENCO and CEMENCO never protested. This fact alone debunks the assumption that the Liberian Government granted to CEMENCO a monopoly over the production of cement in Liberia, even though such monopoly might have been necessary for an “infant industry” as CEMENCO was in 1966.

3. Market capacity

Notwithstanding the fact that CEMEMCO has not protested permits to other enterprises to import and sell cement in Liberia and CEMENCO itself has imported cement into Liberia whenever its production could not meet the market’s demand due to breakdown of its machines, CEMENCO would be faced with a serious problem if major investors such as Dangote and LICEMCO were to enter the Liberian market with the investment incentives that their agreements appear to grant to them. This should be a concern for the Senators, not necessarily for the protection of CEMENCO, but to ensure that the Liberian Government does not lose the massive revenues that it has contracted under the Dangote Agreement and the LICEMCO Agreement and also to ensure that CEMEMCO is not “killed” and Liberian Government’s equity and the equity of Liberian citizens in CEMENCO destroyed by such “kill”. More than this, the Senate should be concerned about the environmental impact of another cement production company at the Free Port – a health hazard for Bushrod Island resident from the pollutants.

The total demand for cement in Liberia is currently between 300,000-400,000 metric tons per annum and this can and has been fully met by CEMENCO and a few importers for many years. There has never been a shortage of cement on the Liberian market for the past 10-15 years and CEMENCO alone with the addition of its new US$20 million second grinding line in 2017 has the capacity to produce up to 500,000 tons of cement a year.

4. Future Demand

Assuming the Liberian economy and demand for cement continues to grow CEMENCO is well-positioned to meet any anticipated demand growth for cement over the next 10-15 years. In fact, it is the information of the writer of this Critique, confirmed by the management of CEMENCO that CEMENCO is already in the process of planning for a new third US$20 million expansion of its production lines in 2018 that will bring its production capacity to over 600,000 metric tons per annum by 2020. Because, if CEMENCO can meet the demands of the Liberian market, why another two cement production companies, unless their ultimate objective is to “kill” CEMENCO, thereby causing a loss to the Liberian Government and ordinary Liberian business people who own portion of the equity of CEMENCO?

5. Price Stability

CEMENCO has not taken advantage of its dominant position in the Liberian cement market to raise prices.  In fact the situation is quite the opposite. Despite global inflation over the past decade, cement prices in Liberia have actually been flat to declining. The Ministry of Commerce & Industry can confirm this fact; any independent economist can also confirm this fact.  Every patriotic Liberian should be interested in verifying this fact before deciding whether the Legislature should ratify the Dangonte Agreement and/or the LICEMCO Agreement. Because, if CEMENCO has managed to stabilize the price of cement on the Liberian market despite inflationary pressures, what is the justification for two (2) additional cement production companies except to stifle CEMENCO, “kill” it, and thereby cause both the Liberian Government and ordinary Liberians, who have invested in CEMENCO, to lose their investments?

6. Predatory Pricing 

Since CEMENCO and current importers can fully supply the Liberian market and cement is a fairly homogenous product (i.e. most good quality cement is roughly equal in quantlity), the only way that Dangote and LICEMCO will be able to enter the Liberian market will be through “cut-throat PREDATORY” pricing. This has been the practice of Dangote in other markets in Africa (Nigeria, Ethiopia, Tanzania, Ghana, etc.) and Chinese investors in the cement markets in developing countries have also adopted similar business tactics to force the existing cement companies out of business. And though such “cut-throat PREDATORY” pricing may lead to temporary price declines for consumers, it can have a disastrous effect on the local cement industry and the host’s country’s economy within a few years. For once the new entrants have driven out the old cement producers, they are bound to raise the price of cement and there will be little the host country and consumers can do about it.  This has certainly been the case in Nigeria where it is reported that consumers are paying 50%-100% above world market prices for cement due to the “special protection” Dangote enjoys. And Chinese companies like LICEMCO which are heavily subsidized by the Chinese Government (unlike CEMENCO, whose majority shareholders are Germans) can afford to lose millions of dollars in order to penetrate a market before capturing it and raising prices to recoup their investments.

7. CHINA UNION’s Steel and Cement (LICEMCO) Project

This Aide Memoir refers to this Project as a China Union Project using two (2) related/affiliated companies (Tidfore Investment (Hong Kong) Company Limited and Liberia Steel & Cement Mining Company (LICEMCO) Limited). The inference that these two (2) latter companies are affiliates of China Union, which has the concession for the old Bong Mines iron ore reserves, is inferred from the use of China Union’s name in the preambles of the LICEMCO Agreement (specifically Paragraphs “B”, “C”, “D”, “E”, “G”, and “I”). There are many other provisions of this Agreement, which validates the inference that these two (2) companies are affiliates of China Union.  

The LICEMCO Agreement is not really a cement FACTORY proposal at all. It is primarily a proposal for a so-called “integrated steel mill” with cement business thrown in. Therefore, it should be totally separated into two Investment Proposals.  (In fact LICEMCO is asking for a 10-year monopoly on steel production in Liberia under Clause 9.2 of its Agreement, even though such facilities already exist (Check the JETTY Agreement, which has already been ratified by the Legislature). This means that the LICEMCO Agreement interferes with rights already granted by the Liberian Government under the JETTY Agreement and therefore the LICEMCO Agreement has the propensity to subject the Liberian Government to law suit by  shareholders of the JETTY Agreement. All patriotic Liberians should be concerned about this propensity as the Legislature considers ratification of the LICEMCO Agreement.

 It is not clear if the LICEMCO Agreement permits LICEMCO to IMPORT bagged cement prior to the construction of its “slag cement factory”; but this is precisely what is happening in Ghana where a Chinese company has been permitted to import 500,000 tons of bagged cement prior to building its cement factory; and this is having a devastating effect on local cement manufacturers in Ghana.  This should definitely not be allowed to happen in Liberia as it would just lead to the “dumping” of cheap Chinese cement on the Liberian market in order for LICEMCO to capture the Liberian market and a real cement factory by LICEMCO may NEVER be built. The Liberian people should be cautious to ensure that the LICEMCO Agreement is not a replica of what is now obtained in Ghana; at the minimum, if the LICEMCO Agreement is to be ratified, the Leigslature should be convinced that LICEMCO’s operations will not amount to what is now obtained in Ghana.

8. Transfer Pricing

It should be recalled that one of the disadvantages of the LAMCO Agreement and the original Bong Mining Company Agreement was the void which made it possible for transfer pricing to occur. Both LAMCO and Bong Mines created affiliated companies, which provided goods and services to them at prices far higher than the market value of those goods and services. In the case of the LICEMCO Agreement, it is already clear that both Tidfore Investment (Hong Kong) Company Limited and Liberia Steel & Cement Mining Company are affiliates of China Union and there are no provisions to check on transfer pricing; which these three (3) companies are highly likely to engage in. Why should Liberia repeat the same mistakes of the past generations? The author of this Critique  thought that Liberian learned from the LAMCO and BMC years; but it appears that the drafters of the LICEMCO Agreement did not learn or they did not care to apply that education to the LICEMCO Agreement.

9. Competing against Liberian interests

The author’s investigation reveal that the Liberian Government, Liberian institutions such as the Liberia Bank for Investment and Development (LBDI) and private Liberian investors own approximately  twenty-two percent (22%) of the equity of CEMENCO. To allow Dangote and LICEMCO to enter the Liberian cement market would simply be Liberia competing against itself. By owning shares in CEMENCO not only have the Liberian people benefited directly through the profits and dividends of CEMENCO for more than fifty (50) years, but they have also gained valuable insights into the running of the cement business and had a direct say in the policies and practices of CEMENCO through representation on the Board of Directors. Not many Liberians might be aware that the Chairperson of the National Investment Commission (NIC) is a member of CEMENCO’s Board of Director and he/she represents the Liberian Government’s equity interests in CEMENCO. No Liberians are known to be shareholders in either Dangote Cement Liberia or LICEMCO, both latter companies are one hundred percent (100%) foreign-owned companies.  Both Dangote and LICEMCO are contrary to President Weah’s policy that Liberians shall not be mere spectators of the Liberian economy; through CEMENCO, Liberians are actual participants in the cement industry. Under the Dangote Agreement and the LICEMCO Agreement Liberians will be mere spectators, especially after these two new companies have succeeded in forcing CEMENCO out of the industry.

10. Environmental Impact I

In order to supply its energy needs, it has been reported that Dangote will build a 20-30 MW COAL FIRED power plant either in the Freeport of Monrovia where its cement factory will be located or somewhere nearby close to major residential areas such as Barnersville, LPRC  orLPRC or Chicken Soup Factory. Is this true? At least, it is public knowledge that this is what Dangonte did in both Ethiopia and Tanzania and so there is reason to believe that it will do the same in Liberia. This will obviously pose a major potential health hazard through particulates and other chemical emissions either to the local community where such a plant is located or to major food supplies in the Freeport of Monrovia. Has this risk really been studied enough and measures put in place to mitigate the potential dangers? It appears not! The Liberian people and relevant institutions responsible for such matters  shouldmatters should question the Environmental Protection Agency on this and insist on seeing the environmental impact assessment studies which might have been conducted.

According to environmentalist all over the world there is no such thing as “clean coal power”. It is important that before consideration is given to the Dangote Agreement, a copy of Dangote’s Environmental Impact Study for Coal-Fired Power Plant should be submitted to the Liberian Legislature for its review. 

11. Environmental Impact II

According to the Dangote Agreement, it will build a cement factory right in the Free Port of Monrovia. This would definitely pose a serious health hazard through the particulate emissions from the cement factory to Liberia’s vital food supplies  (rice, flour, sugar, salt, cooking oil, etc.), which are all imported and mostly stored in facilities at the Free Port. Has this risk really been studied and measures put in place to mitigate the potential dangers? This is not a mere theoretical conjecture for Dangote had major environmental issues like this in Kogi State in its own home-country of Nigeria in 2016. Shouldn’t Legislature ask for a copy of Dangote’s Environmental Impact Study Report for a cement plant in Liberia? Shouldn’t Legislature request for a copy of LICEMCO’s Environmental Impact Study Report for its cement plant? The author of this Critique thinks the Legislature should ask for both before considering ratification of these two (2) investment incentives agreements and the Legislature should ask independent persons or institutions to evaluate them.

12. Fire hazard at the Free Port?

In addition to the potential environmental impact of the power plant and cement factory at the nation’s major gateway, there is a danger of fire, explosion or other hazardous danger to the Free Port from cement plant and/or coal-fired power plant  being located in the nation’s gateway where 90% of our goods are trafficked. What if there was a major fire at Dangote’s power plant? Would this not shut down Liberia’s economy? At least, CEMENCO’s plant is located some distance away from the Free Port and no previous problem at CEMENCO has affected management or operation of the Free Port. Might not problems at a Dangote cement plant and coal-fired power plant at the Free Port materially adversely affect the operations of our country’s economic gateway (the Free Port)? The author of this Critique thinks so.

13. Road damage and impact on local trucking industry

In Ghana where Dangote is building a 1 million ton cement factory that company has announced plans to import 1,000 trucks to distribute its products all over Ghana. With a proposed 500,000 ton plant in Liberia Dangote might import at least 500 trucks in keeping with its business plan in Ghana, or in the best case scenario, at least 250 trucks.   Pursuant to clause 12.2 (b) of the Dangote Agreement, the company will  be able to do so DUTY FREE on the trucks for a period of 10 years.  Not only will duty free privilege kill the local Liberian trucking industry, which has only about 300-400 trucks in the entire transport industry; but more than this there will be major infrastructural damage to the road network of Liberia for which Dangote may not bear the cost because the Dangote Agreement does not require it  to do that. Who, other than the Liberian Government, will pay for reconstruction of the roads damaged by the Dangote trucks? The trucking of Dangote’s cement in Nigeria was a major problem Dangote had in 2016 with the local government of Kogi State in Nigeria. The Legislature should be concerned that this will not be a major problem in Liberia.

Additionally, local transportation business is reserved by law for Liberians; foreign investors may not engaged in transportation of their own goods. An exception has been made for Firestone Liberia Inc. in its concession agreement, much to the anger and dissatisfaction of Liberian truck owners; but the exception for Firestone Liberia Inc. appears to be acceptable only because of the nature of its products – the susceptibility to contamination. However, cement is not susceptible to contamination merely from transportation from the factory to distributors in Liberia. What then is the justification for Dangote importing duty-free into Liberia all its trucking needs? This provision of the Dangote Agreement will anger Liberian truck owners; it contradicts President Weah’s policy that Liberians shall not be mere spectators of their economy.

14. “Take-or-pay” power purchase agreement?

Dangote’s 500,000 ton cement factory will only need less than 5 megawatts of electricity, yet it is our information that the company is planning to build a 20-30 megawatts power plant? What will happen to the surplus capacity? According to additional information, Dangote is planning to sell the surplus power to the Government of Liberia. Is this true? The authors ask this question because this is what Dangote has done in some African countries, one of which is Tanzania. If the same thing is done in Liberia, this would necessitate a “take-or-pay” power purchase agreement with the Government of Liberia as no investor will build a power plant with surplus capacity without a guaranteed off-taker.  But the Government of Liberia, through its Liberia Electricity Corporation (LEC) and the hydro-electric plant at Mount Coffee, already has the capacity to generate 140 megawatts of power but only the capacity to distribute about 20 megawatts thereof. Even if LEC’s transmission and distribution capacity increase by 100%-200% (40 megawatts or 60 megawatts) in the future, LEC will not have a need for Dangote’s 20-30 megawatts? So what will happen to Dangote’s surplus power? If the Liberian Government signs a “take-or-pay” agreement, which will be a side agreement once the main Dangote Agreement is ratified, the Liberian Government may be liable for millions of dollars in power produced which it cannot consume. So, if there is a plan for Dangote to produce its own power for its cement plant, the Legislature needs to inquire about the capacity of that power plant and what Dangote will do with the excess power, if any. And if Dangote intends to sell its excess power to the Liberian Government, the Legislature ought to be concerned about the terms of the power purchase agreement. Simply, it is advisable that the Legislature requests for a copy of Dangote’s power purchase proposal to the Liberian Government. 

15. Illegal land Grab?

How did Dangote get the land within the Free Port’s properties for its cement factory? By all reports this land was leased by the National Port Authority (NPA) to another company (SOCIPAR of Ivory Coast) that spent almost US$1million to reclaim the land. After reclamation the land was taken away by NPA and given to Dangote without any compensation to the prior investor. This could be a serious case of expropriation without compensation if proven and so the Legislature  needs to be cautious and to have NPA answer questions about this land transaction before the Dangote cement deal goes forward. The Legislature should be cautious that SOCIPAR might sue for damages at the ECOWAS Court, not at a Liberian court, as other ECOWAS persons have done before and this will be another embarrassment for the Liberian Government.

16. Liberianisation?

Under Article 8.1 of the Dangote Agreement only twenty percent (20%) of Dangote’s top management in Liberia is required to be Liberians within five (5) years.  This is contrary to most concession/investment agreements where up to fifty percent (50%) of the concessionaire’ s top management are required to be Liberians within five (5) years and seventy-five percent (75%) within ten (10) years. Even in the LICEMCO Agreement (Clause 8.1) Liberians are required to hold 30% of the top management positions within four (4) years. Why this departure from standard practice in favor of Dangonte? Why a different treatment for  LICEMCO?

CEMENCO’s staff is at least 98% Liberian; if Dangote and/or LICEMCO, because of investment incentives granted to them, manage to force CEMENCO to close down, so many Liberians, including ordinary Liberians, will lose their jobs . This will be against President Weah’s pro-poor policy, which calls for jobs for Liberians.  In respect of the Liberianization Policy, if the Dangote Agreement and the LICEMCO Agreement are to be ratified, then both companies should be made to comply with the standards already set for other investment incentives or concession agreements. 

17. Duty free fuel imports?

Under Clause 12.3 of the Dangote Agreement the company is entitled to import one hundred percent (100%) of its HFO (Heavy Fuel Oil) duty free for the 15-year life of the Agreement. This will definitely give Dangote a major competitive advantage over CEMENCO in one of its major costs; CEMENCO is only entitled to duty reduction on fuel under its 2017 Concession Agreement for a period of five (5) years.

Under Section 12.2 of the LICEMCO Agreement, LICEMCO is fifty percent (50%) free of duty on fuel for two (2) years by which time it will have built its power plant. And if fuel is defined as a “raw material used in production” under Section 12.1 (a) of the LICEMCO Agreement (which interpretation is highly possible), then fuel for its power plant will be duty free for ten (10) years. How can CEMENCO possibly compete with these other two (2) companies? 

18. Withholding taxes on interest payments

Dangote’s project will undoubtedly be funded by Dangote’s parent company in Nigeria and their bankers; that is how they have done business in every African country. Under Clause 12.7 of the Dangote Agreement dividends and interests paid by Dangote Cement Liberia to Dangote Cement Nigeria or any other offshore entity will be free of withholding taxes in Liberia for a period of seven (7) years. This could be a major loophole for the transfer of profits out of Liberia. The Liberian tax law calls for withholding tax of 15% on dividend payment and interest payments by a Liberian-based company to a foreigner or a foreign-based entity. The reduction of this withholding tax is standard in many concession and investment incentives agreements to ten percent (10%) or at worse, to five percent (5%). But in this case of Dangote, its Agreement provides for withholding tax on dividends and interests at zero percent (0%) for seven (7) years and there is no cap on the amount Dangote Liberia can be charged by its inter-company affiliates. And anyone should assume that inter-company affiliates of Dangote Cement Liberia will give loans and provide services to Dangote Cement Liberia at a cost.  With interest rates on corporate loans as high as thirty percent (30%) in Nigeria versus just ten percent (10%) to fifteen percent (15%) in Liberia, this could be a major loophole for classic “transfer pricing” of profits outside of Liberia. Why didn’t the Liberian drafters of the Dangote Agreement see this? In any event, this is an issue which the Legislature should look at.

LICEMCO is similarly free of withholding taxes on interest and dividends for a period of ten (10) years from the effective date of its Agreement under Section 11 of the LICEMCO Agreement. On the other hand, CEMENCO pays fifteen percent (15%) withholding tax on interest, fifteen percent (15%) withholding tax on dividends to foreign investors, and five percent (5%) withholding tax on all payments to Liberians. Under these tax regimes, CEMENCO will not be able to compete with Dangonte or LICEMCO.

19. Services by Contractors

Similarly, under Section 12.9 of the Dangote Agreement  the company is free of withholding taxes on payments to contractors. This means, for example, Dangote Cement Nigeria could charge Dangote Cement Liberia anything it wants for services and that amount would be remitted to Dangote Cement Nigeria or any other offshore contractor free of withholding tax. This is not standard under concession and investment incentives agreement heretofore entered into by the Liberian Government. Under the 2010 Revenue Act (also called the Comprehensive Tax Amendments 2010) the withholding tax on services by a contractor is ten percent (10%) for contractors in Liberia and twenty percent (20%) for offshore contractors. Dangote’s 0% withholding  on payments to contractors is another potential classic loophole for “transfer-pricing”; it discriminates against CEMENCO and will be one of the factors that will eventually force CEMENCO out of business and destroy the equity investments of the Liberian Government, LBDI and ordinary Liberian people in CEMENCO.

On the other hand, CEMCEMCO is subject to Liberian tax laws of general application; it pays fifteen percent (15%) withholding tax on payments to foreign contractors and six percent (6%) withholding tax on payments to local contractors. These costs are all added to the costs of production and they will make CEMEMCO much less competitive with Dangote or LICEMCO.

LICEMCO is subject to withholding taxes on payments to contractors at the rate of only six percent (6%) to all contractors under Section 11.4(c) of the LICEMCO Agreement. 

20. Goods and Services Tax (GST)

Under Liberian law GST is paid by the consumer of the product (goods) and services; the GST payor is merely an agent of the Liberian Government to collect the GST from the consumer. To facilitate administration of GST, it is inserted as part of the invoice issued by the producer or seller of the goods. CEMENCO’s cement production is subject to GST of US$0.25 cents per 50 kg bag of cement on its finished or imported product under Article IV (A) 6 of its 2017 Investment Incentives Agreement.  But LICEMCO is exempt from GST under Clause 11.6 of its Agreement for a period of ten (10) years and Dangote is one hundred percent (100%) exempt from GST for a period of seven (7) years under Section 12.10 of Dangote’s Agreement. This is a tremendous cost saving for both LICEMCO and Dangote, which will obviously make their cement production far cheaper than CEMENCO’s production and therefore CEMENCO would not be able to compete with them. CEMENCO will be forced out of business within a few years after the Dangote Agreement and/or the LICEMCO Agreement takes effect. The net result is that the Liberian Government, LBDI and ordinary Liberians will eventually lose their equity investments in CEMENCO.

Assuming Dangote or LICEMCO is at peak production of 500,000 tons a year, the Liberian Government would be losing US$5 million a year in GST alone if, had it not been for their Agreements, they were paying the US$0.25 cents per bag GST that CEMENCO has to pay ! (500,000 tons x 40 bags per ton x 25 cents per bag = $5 million!!)

21. Duties on Raw Materials and Equipment

CEMENCO  is subject to a three percent (3%) duty rate on raw materials for its production for five (5) years whereas Dangote pays 0% duty on raw materials for ten (10) years under  Section 12. 2 (b) of its  Agreement.  LICEMCO pays zero (0%) duty on raw materials and equipment for ten (10) years under Section 12.1 (a) of its Agreement. And CEMENCO gets duty free on its packaging materials for only five (5) years whereas Dangote enjoys duty free on packaging materials for the ten (10) years under Section 12.2 (b) of the Dangote Agreement. How can CEMENCO possibly compete with Dangote Cement and LICEMCO under these new investment incentives contracts pending before the Legislature for ratification? CEMENCO  can’t!

22. Real property taxes

Dangote Cement in Liberia is exempt from all property taxes in Liberia for a period of five (5) years from the start of commercial production and only fifty percent (50%) of the applicable tax rate for the remaining ten (10) year term of its Agreement as per Section 12.11 of the Dangote Agreement. CEMENCO pays all normal real estate taxes (10% withholding tax on lease payments and 1.5% tax on the value of its commercial property). LICEMCO is free of all property taxes in its concession area (Section 11.5 of the LICEMCO Agreement). Property tax another tax that eventually finds itself in the price of the production of each company and this will make CEMENCO much less competitive than these other two (2) companies. 

23. Tax Loss Carry forward and Corporate income taxes

This is one of the most underestimated but valuable ways of avoiding taxes used by shrewd investors.  Although all three 93) Incentive) Incentive Agreements all say that CEMENCO, Dangote and LICEMCO will pay  corporatepay corporate income taxes at the regular 25% rate, the agreements allow for different levels of “tax loss carry-forwards” that can effectively shelter an investor from paying corporate income taxes for many years. For the “tax-loss carry-forward” allows an investor to offset corporate profits against losses the investor may have incurred for a number of years. In the case of Dangote Cement, Dangote can offset its losses, if any, from the early years of operations against its income taxes for seven (7) years “from the start of commercial operations.” Similarly, LICEMCO can offset its losses for seven (7) years “from the date of loss”. CEMENCO however is only allowed to offset its profits against losses for five (5) years. Again, this is an uneven playing field. Dangote has skillfully used a similar provision in the Nigerian tax laws known as “Pioneer Status” to reduce its effective corporate income in Nigeria down to 1%.

24. Corporate Social responsibility

There is no mention of specific payments to the communities where Dangote or LICEMCO intend to operate as in most recent concession and investment incentives agreements in Liberia. Although not required to by law, CEMENCO has over the years provided hundreds of thousands of dollars in scholarships and charitable contributions to Liberians. Why the discrimination in favor of these other two (2) companies?

25. Level Playing field Term of Agreements?

At the very least, there should be a level playing field for all cement producers. CEMENCO should get the same incentives as Dangote and LICEMCO; if possible, CEMENCO being the older company, it should get the most favorable treatment. All producers of cement should be able to compete fairly; the Liberian market should be fully supplied at all times; the highest quality cement should be maintained; and prices to the consumer should be stable and fair. The entry of Dangote and LICEMCO into the market with their current preferential treatment will destabilize the cement market and will not achieve these objectives. Even the terms of the Dangote’s Agreement is fifteen (15) years, LICEMCO’s seventeen (17) years and CEMENCO only five (5) years. Whatever incentives are granted to Dangote and LICEMCO should be extended to CEMENCO or to no-one at all.

26. Investment Incentives for investment in Parts of Liberia other than Monrovia and its Immediate Environs

Many countries provide investment incentives where the investor goes to new areas, especially areas of the host country which are economically depressed. For example, if investment incentives are to be given to Dangote, then Dangote should take its cement factory to counties such as Bomi, Cape Mount, Gbarpolu, Margibi or Grand Bassa. It should be recalled that when the National Milling Factory was started in Liberia to mill flour, the concession agreement entered into provided that that the flour mill would be located in Buchanan, Grand Bassa County and that is what happened. The operations of the National Milling Company at that time boosted Liberia’s economy in general and Grand Bassa County’s economy specifically; it provided jobs and other economic opportunities and activities in Grand Bassa County. Why didn’t the Liberian Government consider taking the Dangote cement factory to another county as was done in the case of the National Milling Company’s flour factory back in the 1970s? Why should everything be concentrated in Monrovia and its immediate environs? This is another question which militates against the ratification of the Dangote Agreement by the Legislature. 

27. Conclusions

While its investment incentives are necessary to attract foreign investment to Liberia, investment incentives should be ear-marked for essential industries which could bring economic benefits to Liberia. Investment incentives should not be given to investors whose only intention is to force another investor out of Liberia and simultaneously siphon away revenues that could otherwise revamp the economy and stimulate development as the Dangote Agreement and LICEMCO Agreement appear to be doing. More importantly, investment incentives should never be used to dispossess the Liberian Government, Liberian entities and ordinary Liberians out of their equity participations in existing companies or to obstruct or undermine the Liberianization Policy and destroy business opportunities for Liberia as the Dangote Agreement and LICEMCO Agreement appears to be doing in the trucking industry. Indeed, CEMENCO’s current capacity is good for Liberia for the next ten (10) years. According to reliable information, CEMENCO is developing a business plan and an expression of interest (“EOI”) to make an additional investment of US$20 million to expand its current plant. Such new investment of  US$20 million will cover any demand that Liberia might have for the next 20 years. Liberia does not need a LICEMCO or Dangote investment in a cement factory when Liberia already has a cement factory which meets the current market demand and the foreseeable market demand; but if LICEMCO and Dangote must get investment incentives in order to open factories in Liberia, then the same investment incentives should be given to CEMENCO so that there will be open competition on a level playing field. These two (2) new investment incentives agreements will force CEMENCO out of business and this will be inimical to Liberia and its economic development policy and growth.



  1. Thank you authors for high light on this matter. There is evidence that the two new cement companies are looking with the legislature, a Monopoly position to evict from liberian cement market, CEMENCO! It is not acceptable. I hope the legislature won’t be deceived for this time!!!


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