13 June 2014

Liberia: Monopoly - China Influence Hurting Local Liberian Businesses

Monrovia — The scramble for raw materials, money and other materials from Africa is growing like a war between western powerful nations who are all fighting to exert control over strategic African countries. Outside Africa the situation is the same as oil rich countries like Syria, Ukraine and other countries where western powers are using these countries as grounds for show of political, military, economic and other strengths.

In Africa, many countries are aid-dependent and unable to withstand the heavy influence of powerful western countries, forcing many to sellout their resources for cheap, allowing the complete takeover of several sectors of the economy, making the locals to go out of business making the locals poorer than they already are. Many of these powerful western countries, already developed, insists on huge tax waivers, undue influence and advantage for their home grown companies over African companies that are custodian of the resources and raw materials.

Based on the high demands for aids by African countries, foreign countries impose their expertise on African countries, whether their companies and experts can perform up to the task or not, resulting in what has now become a cartel where aid from these companies, driven into projects must be given to companies from their countries irrespective of the past records of poor performance and implementation of these projects.

Local businesses in most African countries are collapsing as major contracts are awarded to foreign companies like in the construction industry the Chinese have nearly overtaken Africa as from Kenya to Liberia and other countries, Chinese companies get an undue advantage over local companies, despite the past dismal performance of these Chinese companies, constructing short-lived roads and other infrastructures.

In African countries experiencing rapid growth like Ghana, Tanzania and others, the governments of these countries have taken measures to protect the locals against powerful foreign companies and also dealing with the issue of tax waivers and other huge waivers granted these foreign companies. Ghana has passed into law the Companies Act protecting local businesses against foreign companies. In Ghana, foreign companies are subjected to huge initial capital and there is a provision requiring foreign companies to have Ghanaians shareholders in their ranks as a means of empowering Ghanaians.

President Ellen Johnson Sirleaf has acknowledged the need to empower Liberian business and all the awarding of contracts to Chinese is coming in the wake of the President's May 28, 2014, speech on the economy in which she suggested the importance of breaking down the walls of monopolies so that more local companies can continue to benefit from quality services at affordable prices.

President Ellen Johnson Sirleaf has acknowledged the need to empower Liberian business and all the awarding of contracts to Chinese is coming in the wake of the President's May 28, 2014, speech on the economy in which she suggested the importance of breaking down the walls of monopolies so that more local companies can continue to benefit from quality services at affordable prices.

For Liberia, beginning 2006 the country experienced the huge influx of foreign companies with the Chinese mainly moving into the construction industry knowing that the country had experienced over a decade of civil war and revamping of basic infrastructures, roads, bridges, buildings amongst others would be of primary focus.

Chinese Monopoly in Construction industry

On their own, the Chinese have completely taken over the construction industry of Liberia as nowadays when a bid is published for tenders, Chinese companies account for more than 50% of the total bidders, making their chance of winning these bids very high. Behind the contracts these Chinese companies making huge profits from lucrative contracts are granted waivers on imports, tariffs and other waivers increasing their profit margins.

The Ministry of Finance recently admitted to FrontPageAfrica that one Chinese company, CHICO is enjoying tax waivers despite the fact that the company has been benefiting from construction contracts worth millions of dollars. To date, contracts to Chinese companies have reached more than a billion United States dollars.

Early Chinese push for contracts

Prior to the October 2005 election in Liberia, the Chinese had already started the ball rolling by signing an agreement worth US$10 million for the reconstruction of the Samuel K. Doe Sports Complex beginning July 2005. The SKD was reconstructed and officially opened, but within a year the stadium started feeling the impact of fast track construction with the playing pitch going back to its normal deplorable state.

From the SKD, the Chinese moved onto the University of Liberia and begun the construction of the only state-owned higher institution of learning, but after construction that was praised by Liberians the structure soon started breaking up with cracks in the new walls constructed within less than a year.

Since then, the Chinese with the help of some higher ups in the Liberian Government have taken complete control of the construction industry as they are normally favored over local engineering and construction companies during the bidding processes and the awarding of contracts.

Chinese numerous Underperformance story

These contracts have been awarded to the Chinese companies, despite their long history of underperformance, constructing short-lived buildings and roads where new works have to be done within a short time after completion of several of these projects.

The Samuel K. Doe Boulevard was constructed twice by a Chinese company, CHICO and other construction projects implemented by other Chinese companies have to be redone. The University of Liberia had to undergo a major rehabilitation less than a year after the construction works were completed and the building dedicated.

The Caldwell Road is already damaging with the ripple effects of sand-mining ruining the roads while some of the street lights are currently inoperable. The Chinese contractor, CICO installed less light poles than what was billed to MPW to be ordered, leaving doubt on what happened to the rest of what was billed.

Jamaica Road on the Bushrod Island was also reconstructed after a Chinese company had undertaken the project. There are countless other instances of Chinese companies performing below par but yet they are favored over other Africans and local Liberian companies. The contract for the renovation of the 4th floor of the Executive Mansion of Liberia was awarded a Chinese company, but up to date the work is yet to be completed nearly eight years after the building got damaged by fire.

Chinese companies troop on China Union's Bid

While Chinese companies are winning contracts from the Government of Liberia and other private institutions, the Chinese company that won the bid to take over the former Bong Mining Company of Liberia, China Union recently solicited bids from companies for the construction of Liberian staff dormitories in Bong Mines.

China Union in communications to several construction companies including Liberians owned requested companies to tender bids for the construction of dormitories. In the end out of a total of eight companies that submitted bids, Chinese companies accounted for half of the total number.

In its evaluation, China Union rated the Chinese companies high over the local companies. Qingjian International (Lib) Development Co. was rated higher followed by Semoh Group of Companies, B-Con Engineering Company, Kpandu International Construction Company, Trokon Construction Incorporated, Modern Architectural Construction Engineering and Global Construction Mechanical Company.

With China Union been a Chinese company, there are high indications that Chinese companies will get the deal over Liberian owned or other local companies. More besides the Chinese influence, China Union is insisting that local bidders notify it on where it will procure the materials for the performance of the construction works.

"The employer reserves the right to change the material type and its brand. If the materials required are to be purchased in Liberia, the employer is to specify the brands of those materials before procurement. If the materials required are to be purchased outside Liberia, the brands of those materials are to be above the standard listed in 6, and the contractor shall send a report about the brands to be examined by the employer before the materials are put into use", portion of the tender documents stated.

Some of the local bidders confided to FrontPageAfrica that China Union intends to use this clause to compel bid winner to purchase Chinese materials for the construction work. As matter or formality, China Union wrote several local companies requesting bid for the construction project ,but in its final evaluation local companies were rated bottom of the Chinese companies.

There are strong signs that if the Liberian government does not move to protect Liberian owned or local contractors, they will go out of business and the Chinese that have already taken over the construction industry will continue to dominate the sector. In several countries, locals are protected against foreign investors as incomes generated by local companies from contracts empower the local economy as compared to foreign companies who send bulk of their income back to their home countries.

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