21 January 2014

Liberia: Advancing Liberian Dream - Incoming NIC Boss Wotorson Opens Up


Monrovia — Michael Sio Wortorson is Chairman and Chief Executive Officer of the National Investment Commission. With almost five months on the job Mr. Wotorson says he has begun to swing into place his responsibility of guiding the overall management and the vision of the NIC consistent with the government's development goals.

The former Executive Consultant/Technical Advisor for Opportunities Industrialization Centers International (OICI), in this first part of an exclusive interview with FrontPageAfrica says his passion is driving the Liberian dream of empowering locals to take charge of the investment climate in the country. He tells FrontPageAfrica that he wants to see a more robust and proactive NIC that aims at driving the sector to benefit Liberians while enforcing transparency and accountability.

We've seen several NIC bosses come and go since Richard Tolbert the man credited with luring over US$ 16 billion worth of investment to Liberia; blessings and curses all woven together, but can Wotorson take the country on the right path to safeguard future generations?

FRONTPAGEAFRICA: What were you doing prior to your appointment?

MICHAEL WOTORSON: Prior to taking over at the NIC, I lived in the United States where I was a policy advocate, I worked primarily on Capitol Hill, interacting with members of the US Congress; helping to analyze legislation and to advocate for specific types of legislations, particularly in education and justice. In 2012 I moved to Liberia and I spent the year working for an organization here in Liberia-an international NGO, promoting access to finance for small farmers and small agriculture associations. So I spent a great amount of time upcountry and the important thing about that experience is the fact that agriculture in this country accounts for about 70% of our GDP. I spent a great deal of time trying to capacitate the agric sector from the standpoint of helping them to gain access to finance and access to credit-access to capital.

FRONTPAGEAFRICA: Since the departure of Richard Tolbert, the NIC has been sort of dormant; what do you intend to do to bring life back to this commission?

WOTORSON: The biggest thing that I plan to do with the NIC is to increase its focus strategically on effective outreach to the Liberian entrepreneurs. The NIC did a fair amount of work in terms of attracting nearly 20 billion dollar foreign direct investment and we are certainly going to continue to attract foreign direct investment. But you are going to see the NIC asserting even greater effort at helping Liberian entrepreneurs-Liberian businesses grow. There are some specific things that we are planning to do that will help Liberians.

FRONTPAGEAFRICA: And what are these things?

WOTORSON: For example, you may have heard about this concept that we refer to as local content; the basic idea behind local content is that when you have a foreign investor in the country, you require of that investor through some way that they include local content in what they are doing. And what that means is you require them to involve not only hiring Liberians but to purchase their goods and services from Liberians, so that everything that they are doing reflects local content. So that is what you are going to see us doing at the NIC.

FRONTPAGEAFRICA: This whole Liberianization issue, people still complains that Liberians do not have a lot to gain from especially these huge investments that come here. They do not have the capital and even if they try to invest, they do not have access to loans and other incentives, what is the NIC doing specifically to open up the space so that Liberian businesses can be able to compete with their foreign counterparts?

WOTORSON: We've always had something at the NIC called Special Investment incentives, which is basically a plan that we use to encourage local business development. What it does is this- a company comes to the NIC and apply for investment incentives and if we grant them that certificate, it gives them certain privileges-privileges that allows them to import equipment without the usual duty fees, it gives them certain types of tax breaks and a range of things that are designed to make it easier for that business to turn in a profit. Under my administration at the NIC we are actually taking a fresh look at the Special Investment incentives regime, and the specific change that we are making, particularly as it relates to foreign businesses, we are requiring that they measurably demonstrate not only how they are going to hire Liberians, we are going to be requiring them to show us numerical targets of how they are going to hire Liberians. But we are also requiring them to demonstrate for us in a measurable way how they are going to interface with Liberian training institutions like the LOIC, BWI and others because we want them to hire graduates from those places. They have to show us a plan; but not just a plan, we want them to show us that they've entered into some kind of agreement with these institutions; so they will have to bring us a copy of that agreement.

All of those kinds of things, including showing us proof in two years, 20% of their management staff will be Liberians. They have to bring all of that proof to us now before we look at their application to determine whether or not we give them the special investment incentives. I believe it is measures like these that will actively promote Liberianization.

FRONTPAGEAFRICA: We've seen troubles at some of these big concessions like the China Union and the Equatorial Oil Palm; most of the stories we hear are that Liberians do not have security on the job and they also are lacking in basic services like housing-is the NIC responsible for addressing these kinds of concern?

WOTORSON: Somewhat. Our primary responsibility is, attracting the investment, negotiating the agreements and helping the investor both foreign and domestic, navigate their way through the rules and regulations-the laws and everything, so that they comply with our rules but ultimately also so they get set up. As it relates to the problems that you are talking about, you are absolutely right, there has been a number of problems-but I will be the first to tell you that one of the primary reasons for the problems that we have seen, has to do with the way we've entered into some of these agreements in the past and let me give you an example.

If we decide we are going to give an agriculture-related concession out to a particular organization and we say we are going to give them a hundred thousand hectares of land, it becomes incredibly important for us to properly survey that land to make sure that the land is in fact not encumbered. It is incumbent upon us to make sure we properly conduct outreach to the people who live on that land so that they understand what the concession agreement is about and that they understand what they are going to gain as a result of that concession. That has not happened as much as it should and so in many cases when we get the concessions here, they begin to attempt to start work, they find out that in fact the land is encumbered and that there are people there. That's where a lot of the problems come from. So it becomes our responsibility (the entire government) to work with the concession and the communities to make sure we address and put the land issues to rest and the NIC has to play a lead role in that.

FRONTPAGEAFRICA: With the oil and gas reform process ongoing, what is the NIC's role in fixing the oil law?

WOTORSON: The NIC sits on the committee that reviews these draft laws/legislations and so the NIC provides its input, its substantive thoughtful advice on a lot of these issues, but you also have to understand that both those who draft the petroleum laws and the people who sit in the ministry of finance-all of these people across government-we all sit on interrelated committees. Whether we're talking about the petroleum laws, whether we're talking about agriculture issues, we're all collaboratively talking about these issues at the same time. In essence, the NIC has been and will continue to be at the table providing its input on a lot of these issues.

FRONTPAGEAFRICA: Is there anything that the NIC can do to push Liberian interest in these agreements? Like you know we think this is what you should do for these concessions to benefit Liberians?

WOTORSON: Absolutely! When we are negotiating agreements, it is my commitment that the NIC under my leadership to make sure that when we are negotiating agreements moving forward, we include even stronger legislations that, make sure that these companies not only hire appreciable numbers of Liberians but place them in substantive positions and provide clear plans on how they are going to hit certain numerical targets. The idea will be, if we sign concession agreement A, we want to make sure that they agree that within two years, within one year for example, 20% of their management staff will be Liberians. If they break those kinds of agreements, then we have grounds to go back in revoking such an agreement.

FRONTPAGEAFRICA: What are you doing about some of the faulty concession agreements? There are situations where some Liberians bring in these companies in the country, but do not follow the right procedures; is there something the NIC can do in some of these instances to stop things spot things like these?

WOTORSON: Absolutely! We are-along with the Public Procurement Concession Commission (PPCC) - we are trying to make it abundantly clear that there are set of rules and regulations around how we enter into some of these processes. While we certainly do not want to discourage any patriotic Liberian from going out there and finding a partner who happens to be a reputable multinational cooperation and bringing them to Liberia to potentially do some work- we don't want to discourage that but we are trying to make sure that people understand what the rules are. If there is interest in doing some sort of infrastructure project, perhaps involving roads, we are trying to make sure that everyone understands that in that case, the concession entity or agency is first and foremost, the ministry of public works. The ministry of public works is the entity that will get the initial permission from the PPCC, to begin the process. But the NIC will sort of run the process. You may be familiar with the NIC's inter ministerial concessions committee, which is a committee that chair that comprises high level representatives from the various ministries that will be involved in the concessions. We go through all those processes, but at the very beginning, the main concession agency will be that entity that is going to be primarily benefiting from this concession.

FRONTPAGEAFRICA: Investors are often threatened by issues of corruption in the sector, especially with some influential persons demanding under the table cuts for these concessions, what are you doing as head of the NIC to address and weed these things out and also find faulty concessions that are only formed for some rip-off?

WOTORSON: We are very concerned about this issue of flipping where a company comes in gets a concussion and turn around and sell the rights to another company. I believe strongly that publicity is the best disinfectant to move people who have ulterior motives away from the process. So what you will see under my leadership at the NIC is much more public access to our processes, so that virtually nothing that we are doing is done behind the scenes or done in the darkness. I intend very shortly to conduct an open house in fact, where I will invite members of the Press and literally take them through the building and have them meet every office, every department at the NIC and give them a clear understanding of exactly how the processes are supposed to work and what each office does. More importantly, I intend to start making sure that we immediately start sharing publicly, what these MOU's and what these concession agreements look like. Honestly, we have borne in mind some caution because sometimes, particularly before you conclude the agreements, there may be proprietary information included in the agreements that the businesses may not want public. But inasmuch as it is information that is critical to the public, to the strength of our democracy- this NIC will make that information available to the public through the Press.

FRONTPAGEAFRICA: People say Liberia has improved since 2006; we've had a lot of investment come to the country; how would you rate the country's investment climate?

WOTORSON: I was here in 2005; pretty much between 2005 to present, I have been coming to Liberia every year; so I can definitely gauge the improvements. I definitely see the changes. In terms of the investment climate, I certainly think we are getting better, but I certainly feel we have a long way to go. There are processes and procedures, perhaps well-intentioned but they can be very complicated and sometimes that leads to confusion and misdirection for our investors. Ultimately, we want our country to have a reputation that we are investor friendly and in order to do that we have to constantly reexamine all of our rules and regulations and make sure that we are indeed doing things that protect and safeguard us as a country. But at the same time we also have to think about the degree to which our rules and regulations make it unnecessarily difficult for investors to get a foothold, because remember, an investor may come to Liberia but he or she may also have had the option to go to Ghana, Nigeria or Sierra Leone. Ultimately, as the NIC chairman, I want them here in Liberia; so it becomes my responsibility working with my colleagues across government to make sure we examine over and over again our rules, so that if there is something that we can modify, we do so.

FRONTPAGEAFRICA: So will we see a more robust NIC?

WOTORSON: I absolutely believe you will see a more robust NIC. You will see more of the inside of the NIC because I think that's critical to our democracy. We can't be making decisions and running processes and the public doesn't know what we are doing. That doesn't make sense at all. The public is our most important shareholder.

FRONTPAGEAFRICA: When does a company qualify for tax exemption?

WOTORSON: The circumstances vary. Generally, a company is not going to qualify for tax exemptions just because there are certain rules and regulations that apply. And I'll give you an example; a company like BHP Billiton, has a certain kind of importing duty preference that the government has granted them, that allows them to bring in a certain amount of equipment that assist in their work and they don't pay import duty for that. However, in order for them to get that, the government also requires them to pay a flat fee; so those large companies actually pay to the government a flat fee of somewhere in the neighborhood of about US$400,000. So the government is still getting revenue, but it is a give and take kind of situation. We require you to pay that flat fee, but then over the course of the year as you are bringing in lots and lots of equipment, we will choose not to charge you import duty on every piece of equipment that you bring in. The other way has to do with the special investment incentives; even under that scenario, it varies greatly whether a not a company is getting tax exemptions. For example, it would depend on where that company is located in Liberia. If a foreign direct investor comes and sets up a factory in Monrovia, and another company comes and sets up a factory in Zwedru, we would probably give greater tax relaxation in the company in Zwedru because that factory located in Zwedru that potentially intends or needs to hire let's say four or five thousand workers, that promotes development in a far away part of the country, it attracts people for employment away from Monrovia and provides employment opportunities for areas of our country that we need to see rapidly developed.

FRONTPAGEAFRICA: What are the topmost things that you want to see achieved as head of the NIC?

MICHAEL WOTORSON: Absolute focus on Liberian Entrepreneurs; not only helping them to develop, but using everything that we can use at the NIC to make Liberian entrepreneurs gain access to finance. That is going to be key. Related to that, under my administration, we are going to dramatically increase the methods that we use to connect Liberian businesses with foreign companies that come to the country to do business. The idea for us is that we need to increasingly require these foreign companies to do business with Liberian companies. You are going to see under this NIC a renewed focus on agribusiness; whether it is helping to promote the transportation aspect of agribusiness, the storage aspect; all of those things that exist along the value chain in the agriculture sector. We are going to be working with the ministry of agriculture to really promote that sector, so in that sense you are going to see a much more robust set of activities from the NIC.

We are also going to try and create a special impact investment fund for Liberian entrepreneurs. But a fund that is below market, by that I mean; if you were to set up a cooperation today and you walk into a bank seeking a loan to allow your company to expand- most banks here are probably going to tell you, you need about 140% collateral of the loan that you are asking for. But if you had that kind of money, you probably wouldn't need the loan. But what it does, is unfortunate, it effectively locks out a lot of our Liberian business. A lot of those struggling entrepreneurs, it locks them out of the process. What we want to do at the NIC is to create a special impact investment vehicle or special impact investment fund that will be capitalized in some small way by the government of Liberia, but significantly attracts foreign impact investment capital. The fund will exist as a below market fund, meaning it will allow people to borrow money; who would otherwise not be able to borrow money from the banks because they don't meet those strict guidelines. Those are the kinds of things that a national investment commission can do and convince foreign venture capitalists and foreign impact investors to pull their monies in this vehicle to benefit Liberian entrepreneurs.

FRONTPAGEAFRICA: How do you get the money back?

WOTORSON: The same way the commercial banks get their monies back; payment on loans. The key difference is, with an impact investment fund the decisions that are made about who loans are given to, tend to be much more aggressive and less risk adverse than the commercial banks. So a special impact investment vehicle, say in agriculture, as I intend to do it in terms of the way I envision it at the NIC; you might see a situation where a group of women who has a small cooperative in Gbarnga for example called the Yawele's Women Social Club. That small cooperative might not be able to walk into a bank today and get a hundred and fifty thousand dollar loan from that bank to buy equipment and start milling rice and selling that rice on a mass scale because hey might not have the collateral. The fund will allow that to do that; the fund would have more flexible repayment terms as opposed to, I will give you a loan today and next month your first payment.

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