— Says the US Department of State
With a national literacy rate of just under 50 percent, much of the Liberian labor force is unskilled as foreign companies find it difficult in locating local skilled labor, the US Department of State said in its 2022 investment Climate report.
The report, released last year, comes a year after the IMF had reported that Liberia’s severe underdevelopment is the result of its human and knowledge capital not being developed to productively and sustainably exploit the country’s natural resources and produce wealth.
This illuminating assessment comes as Liberia's economically active population transitions into the labor market are expected to grow from 1.6 million in 2018 to nearly 2 million in 2023, with nearly 80 percent of them found in informal employment, according to the IMF.
The informal employment population is also expected to grow from nearly 1.3 million in 2018 to 1.6 million by 2023 without significant intervention in job creation — creating a serious unemployment crisis. And with pervasive poverty, inequality, and widespread deprivation, the county in the next few years might struggle to restrain the crisis rising from unemployment amid efforts to accelerate growth and development.
“Low human development indicators, among others, are constraining investment and development. Most Liberians, particularly those in rural areas, lack basic vocational or computer skills,” the report said. “Government workers comprise the majority of formally employed Liberians. The predominantly female workers who sell in markets and on the streets face significant challenges, including financial literacy and business training.”
The report added that there is an acute shortage of specialized labor skills, particularly in medicine, information and communication technology, as well as science, technology, engineering, and mathematics (STEM).
It further states that there are an estimated four out of five Liberian workers engaged in “vulnerable” or “informal” employment — many working in difficult and dangerous conditions that undermine their basic rights.
“The Ministry of Labor (MOL) largely attributes high levels of vulnerable and informal employment to the private sector’s inability to create employment. There is an acute shortage of specialized labor skills, particularly in medicine, information, and communication technology, and science, technology, engineering, and mathematics (STEM), and [it has led to] migrant workers being employed throughout the country.”
Liberia, being Africa’s oldest Independent republic, is rich in human and natural resources. However, its most valuable asset — Liberians themselves — suffers from pervasive poverty with growing inequality. This is a weakness that has severely undermined the development of the country’s human knowledge capital to productively and sustainably exploit the natural resources and produce wealth.
And the issue of a highly unskilled workforce is age-old with the structure of the Liberian economy somehow bearing responsibility as it limits prospects for formal sector employment — hindering needed growth for the skilled workforce.
For decades, the government has been the largest employer with little focus on expanding the private sector to remove such a burden. Other factors for the alarming rate of unskilled workforce include the country's educational system, which is remarkably weak. Due to protracted instability, the educational system lacks the proper infrastructure to place emphasis on education that enhances employability.
What else did the report say?
The Liberian Government, according to the report, does much to discourage investors and investment as some business leaders report it is difficult even to meet with government representatives to discuss new investments or policies damaging to the business climate.
It added that a weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption inhibit foreign direct investment — and that investors are often treated as opportunities for graft, and that “government decisions affecting the business sector are driven more by political cronyism than investment climate considerations.
“Many businesses find it easy to operate illegally if the right political interests are being paid, whereas those that try to follow the rules receive little if any assistance from government agencies.
“No systematic oversight or enforcement mechanisms exist to ensure government authorities correctly follow administrative rules. Accounting, legal, and regulatory procedures are often not transparent,” the US government report said. “The government does not require environmental, social, and governance (ESG) disclosure to facilitate transparency or help investors and consumers distinguish between high-and low-quality investments.
“Liberia passed a Freedom of Information Law in 2010, requiring government agencies to appoint a public information officer and make records available to the public, but access to government records is often difficult or impossible. Some government ministries and agencies have overlapping responsibilities, resulting in inconsistent application of laws. Government agencies are not legally required to disclose regulations before or after enactment and there is no requirement for public comment, although finalized regulations are often published. No central clearinghouse exists to access proposed regulations. Government finances, including revenues and debt obligations, are partially captured in national budgets, but are not fully transparent.”
Liberia, according to the report, has laws against economic sabotage, mismanagement of funds, bribery, and other corruption-related acts, including conflicts of interest; however, Liberia suffers from corruption in both the public and private sectors.
The government, the report added, does not implement its laws effectively and consistently, and there have been numerous reports of corruption by public officials, including some in positions of responsibility for fighting corrupt practices.
“Foreign investors generally report that corruption is most pervasive in government procurement, contract and concession awards, customs and taxation systems, regulatory systems, performance requirements, and government payments systems.
“Multinational firms often report paying fees not stipulated in investment agreements. Private companies do not have generally agreed and structured internal controls, ethics, or compliance programs to detect and prevent bribery of public officials. No laws explicitly protect NGOs that investigate corruption.”
“Liberia is a signatory to the Economic Community of West African States (ECOWAS) Protocol on the Fight against Corruption, the African Union Convention on Preventing and Combating Corruption (AUCPCC), and the UN Convention against Corruption (UNCAC), but Liberia’s association with these conventions has done little to reduce rampant government corruption.”