The text (as prepared for delivery) of the keynote address by H.E. Charles Gyude Bryant, Chairman, National Transitional Government Of Liberia, to the Leon H. Sullivan Foundation Forum On Liberia
I want to thank you for inviting me to speak on 'the role of the private sector in Liberia's recovery and development'. For me, the topic is particularly appropriate because, as many of you know, I came into my present position from the private sector. That's my background and that's the arena in which I have operated all of my working life. It's a subject that I feel most passionate about.
The other reason this topic is important is that expansion of the private sector is really the key to Liberia's economic recovery. Fourteen years of intermittent civil war has all but destroyed our country's infrastructure and devastated the economy. By some estimates, unemployment is around the 85% mark. The government is of necessity a major employer, but it cannot possibly make a serious dent on unemployment numbers like those. First, the government is severely constrained because its revenue base has shrunk dramatically. The current fiscal year budget is $80 million. That is less than 20% of what it was 18 years ago, before the war. $80 million to run an entire government: that's not a lot of money. But more to the point, the government is essentially a consumer of resources. It's the private sector that produces. It's the private sector that will create real jobs.
But, the main revenue engines of the economy of the past are either non-existent or operating at a fraction of normal capacity. The large iron ore mines have long since closed. Firestone, which at one time had 600,000 acres in rubber production, is only just now emerging out of a prolonged war-induced dormancy to contemplate reinvestment. Smallholder rubber farmers, whose estates represented sizable production acreage in years past, ceased replanting some time ago. The forest has reclaimed a number of farms, trees are old, and many farmers have decided that chopping trees down to produce charcoal is a better alternative to just allowing their acreage to remain fallow and not generating any financial return.
Industrial production is down because of the absence of electricity from a central grid. That and the water system in Monrovia and other urban centers were early casualties of the war. Businesses are generating their own electricity but it's expensive.
If the picture I have just painted appears gloomy, don't despair. All is not lost. There is light at the end of the tunnel. This transitional government is taking a number of steps to lay the foundations for reviving private sector activity and, through that, job growth and economic development.
Someone once said that money is a coward. It does not like political instability. We know the truth of that statement all too well. We have lived with instability for close to a quarter century and seen how it has ravaged our economy. So, our first priority was to disarm and demobilize the fighting forces. UNMIL, the 15,000-strong UN peacekeeping force that succeeded the ECOWAS intervention force of last summer, has disarmed some 70,000 fighters and collected tens of thousands of weapons and millions of rounds of ammunition. The disarmament process will be winding up in the coming weeks, establishing yet another milestone in our onward march to a gun-free, warring faction-free civil society.
And to ensure that it stays that way, we have requested, and the US government has consented to, Defense Department leadership in restructuring our military in order to reorient the thinking and behavior of our men and women in arms and transform the Armed Forces of Liberia into a professional force that supports the Constitution and democratic governance.
Taking guns away from these ex-combatants, many of whom are adolescents, is just the first step in a long journey of rehabilitation and reintegration that we must travel if we are going to keep these former fighters from returning to their old ways. For, idle minds and idle hands are the devil's plaything. We are called upon, therefore, to create employment opportunities for these young people in order to channel their energies into positive pursuits that will make them productive, law-abiding citizens.
We are accomplishing this through innovative programs like the Liberia Community Infrastructure Project, launched last May and funded by USAID through a US contractor, Development Alternatives Inc., which over the next 2-3 years plans to hire 10,000 former fighters and 10,000 non-fighters to rehabilitate roads, bridges, schools, clinics and other social amenities in a manner reminiscent of the conservation corps projects undertaken here in the United States after World War II.
Some of you in the audience are probably thinking, 'Hiring ex-combatants sounds like a socially worthwhile avocation, but what we need are skilled workers'. Well, we have thought about that too. High on our list of priorities is equipping our working population with vocational skills: carpentry, masonry, plumbing, blacksmithing, etc. LOIC, established in Liberia by Rev. Sullivan several decades ago, is actively involved in this process. Our mutual goal is to ensure that the large pool of unskilled labor is complemented by a cadre of workers with the kinds of skills that are a prerequisite for creating viable enterprises.
Now I want to turn my attention to the other aspects of the enabling environment that we are trying to create in order to attract direct private investment. First, on the governance front, we have established a Governance Reform Commission that is, amongst other things, looking at the thorny issue of ethics in government, a subject that is of particular interest to the business community.
While it is unrealistic to expect this transitional government, within the space of two years, to single-handedly wipe out the culture of corruption that has developed over the course of several decades, we accept that unless a determined start is made to attack the problem at its roots, it will be that much more difficult to attract investors. After all, you have options, and if we do not provide the right environment, you will simple take your capital elsewhere, to places where you can operate without being put through a meat grinder every time you have to interact with government functionaries.
One of the key reforms we are undertaking is in the area of public procurement. With assistance from the World Bank, we have established a unit, anchored in my office, that will put in place a system that is more competitive, more transparent and offers better value for money than the current system we have. And for enforcement, we have established a Contracts & Monopolies Commission to police public sector procurement to verify that it is being conducted under conditions of transparency and in keeping with the law.
When I left Monrovia, a separate World Bank mission had just arrived, at our invitation, to put in place an international competitive bidding process for the importation of petroleum products. Under a law passed in 1998, importation of petroleum products is a monopoly of the state-owned Liberia Petroleum Refining Company, which until recently had single sourced importation to one company. By opening procurement to competitive bidding, it is our hope to offer the Liberian public better quality products at cheaper prices and increased tax revenue for the government. This will be our first real life test of transparency in a major public procurement activity. We hope that the results achieved in this area will convince private sector providers that public sector procurement is fair and transparent.
As many of you probably know, sanctions were imposed by the United Nations Security Council on exports of Liberian timber and diamonds because of allegations that former President Charles Taylor was using proceeds from these exports to fuel conflict in the region. Well, we have established excellent relations with our neighbors and are not engaged in destabilization activities. We have taken steps to bring us into compliance with the Kimberly Process so that the provenance of our diamonds can be verified.
We are also undertaking a set of specific activities incorporated in the Action Plan published in early June, under a US State Department funded Liberia Forestry Initiative program, to address issues directly related to timber sanctions. The diamond and timber sanctions are preventing private investors from reviving these sectors, thereby constraining our ability to create jobs, generate tax revenue and improve the welfare of our people, and I intend to plead our case at the General Assembly tomorrow.
Earlier I mentioned the situation with electricity. One of the legacies of the civil conflict was the near total devastation of the nation's physical infrastructure-----electricity and water plants, sanitation facilities, roads, bridges, and telecommunications facilities. In the needs assessment document we presented to donors last February, we requested $130 million to expend during the transition period in order to begin the process of rebuilding the infrastructure. Donor response to date has been disappointing. We are about $100 million shy of our target.
But we recognize that repairing the infrastructure is essential to attracting private investment. So, as we continue to dialogue with donors, we are also looking at public-private partnerships as one option for raising capital and delivering services.
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Earlier this year, I appointed a special executive committee to examine our options on electricity and recommend the way forward. The European Commission, which has been our principal partner in the electricity and water arenas, funded a number of studies that recommended liberalization of the sector as a way of tapping private sector resources to invest in power generation, which will require significant amounts of capital, and involving the private sector in managing the commercial aspects of consumer distribution, which has been a perennial headache for our state-owned electricity monopoly.
The committee has also presented a plan for emergency power for Monrovia, again involving private sector participation, which was discussed with the recent World Bank infrastructure mission to Liberia. We plan to put out a tender within the next 4-6 weeks to test private sector interest in investing in power generation. If it works, we will move forward. If not, we will go back to the drawing board.
Now I want to deal with the issue of elections, which is of no small interest to people contemplating investment in Liberia. A key requirement of the Comprehensive Peace Agreement signed in Accra last August was for this transitional government to conduct free and fair elections next October, under the watchful eyes of the United Nations, ECOWAS and other international actors.
Come January 6, 2006, I shall be leaving the Executive Mansion, no ifs ands or buts. I have made that perfectly clear to anyone willing to listen. The National Elections Commission (NEC) has been constituted. It has agreed voting procedures with the political parties (and at last count we had 18 of them), submitted election law amendments to our National Transitional Legislative Assembly, and just before I left Monrovia I saw a $19 million budget that the NEC had compiled that donors and the government will be discussing. So everything is on course.
Before I take my seat, I want to share a piece of good news with you. Our legislature recently ratified the convention admitting us into the World Bank's Multilateral Investment Guarantee Agency (MIGA). MIGA membership provides foreign investors with an opportunity to obtain political risk insurance on their investments in Liberia. The message is the sun is shining in Liberia. Come partner with us.
I thank you.
