Monrovia — Liberians have long played a peripheral role in the formal aspects of the country's economy since the introduction of the capitalist-oriented model of economic relations nearly a century ago.
In the aftermath of his election victory in late 2017, George Weah promised to transform the enduring marginalized status of Liberians in the economy to one in which capital-intensive competition with foreign merchants would be the hallmark.
An inaugural speech of 22 January 2018 captured Weah's vision for Liberians in the economy. "We cannot remain spectators in our own economy," declared Weah, in reference to Liberians, while announcing that his government "will not permit Liberian-owned businesses to be marginalized."
Apparently seeking to strike a balance between the quest for continuous foreign direct investments and Liberians' substantive involvement in economic activities, Weah told the private sector that while "Liberia is open for business," his "government will prioritize the interests of Liberian-owned businesses."
One aspect of this priority entails "offer[ing] programs to help make them [Liberian-owned businesses] become more competitive," explained Weah.
Putting this vision of a competitive Liberian-owned economy into some form of reality came some eleven months later, however. With zeal and enthusiasm, President Weah formally launched the Liberia Business Development Fund (LBDF), which has now come to be widely known as the Small Business Pro-Poor Development Fund (SBPDF).
The date was December 19, 2018; and the venue was the once commercially bustling suburb of Red Light in Paynesville, specifically near the branch of the Liberian Bank for Development and Investment (LBDI).
Thirty-one (31) months have since passed after the launch of the small business pro-poor development fund. In those intervening months, controversies have surrounded the loan scheme amid claims and counterclaims, bordering on corruption. Questions still suffice as to what has happened to the loan scheme since.
Refusing or complying with FOI Act?
As part of efforts to understand the administration, operations and status of the small business pro-poor development fund, a Freedom of Information (FOI) request was filed separately to the central actor involved in providing administrative responsibilities and oversight over the loan scheme: the Ministry of Commerce and Industry (MoCI) through Minister Marwine G. Diggs.
Since the FOI request was filed on October 29, 2021, Minister Diggs did not respond despite a number of physical attempts - through in-person visits and telephone calls to her office- to have her reply.
However, a similar FOI request filed to the General Auditing Commission (GAC) through - at then, newly confirmed - Auditor General, P. Garswa Johnson, Sr., was responded to, in a timely fashion, in line with the FOI Act - thanks to the Office of the Auditor General and the GAC Communications Department, headed by Mr. George K. Barpeen, former President of the Press Union of Liberia (PUL).
The GAC, during the administration of the late and former Auditor General, Mrs. Yusador S. Gaye, had between July and November 2020 conducted and submitted a "compliance audit report on the financing, disbursement of funds and the administration of the small business pro-poor development fund loan scheme."
It was in relation to this audit report that the FOI request was filed to the Auditor General, requesting "information from the GAC regarding the administration of the US$3m Small Business Development Grant scheme launched by the government through the Ministry of Commerce."
A damning picture of corruption & fraud
The GAC, in its response, shared the internet link to the compliance audit report, which is uploaded on its website. Significantly, the audit report presents a damning picture, revealing a chain of non-compliance issues on the disbursement and administration of the funds, which amount to corruption and fraud.
The 19-page audit report provides a comparatively comprehensive understanding of the George Weah administration's small business pro-poor development fund, albeit from the establishment of the loan program in December 2018 to the period covered by the audit - January 1, 2019, to July 31, 2020.
Structured around two major headings and nine sub-themes, the GAC made twelve (12) audit observations underpinned by the assessment of risks associated with the loan scheme.
The audit observations, which represent statement of facts substantiated by objective evidence, border around the unavailability of the full amount of the pledged funds; uneven and concentrated disbursement of the available funds; disadvantageous local currency lending; disbursement of funds to unqualified businesses; defaults in loan and interest repayment; inadequate monitoring of loan scheme along with borrowers; illicit and clandestine payment for unperformed media advertisement; illicit contract award and wasteful spending; and questionable signature omission.
The audit observations are accompanied by a set of 'risk assessment statements,' essentially highlighting the potential consequences of the problematic nature of the non-compliance issues detected by the GAC.
Consequently, the Weah administration small business pro-poor development fund is inherently confronted by nine key risks, which in auditing terms means 'there is a high probability of failure' of the loan scheme, "whether due to fraud or error," as highlighted by the GAC.
Good intentions, bad implementation?
The Small Business Pro-Poor Development Fund (SBPDF) is a loan scheme, which according to a circular jointly issued by the Ministry of Commerce and Industry (MoCI), Ministry of Finance and Development Planning (MFDP), and the Liberian Bank for Development and Investment (LBDI), is "intended to provide financing opportunities to Small Medium Enterprises (SMEs), Micro Finance Institutions (MFIs), and Village Savings and Loans Associations (VSLAs)."
The circular, dated January 17, 2019, shows that the three entities (MoCI, MFDP and LBDI) make up the institutional setup meant to provide administrative leadership over the loan initiative.
Under the arrangement, funding for the loan scheme by the Government of Liberia (GoL) is "disbursed by the Ministry of Finance and Development Planning" through a "payment instrument check" which is sent to the Ministry of Commerce and Industry.
"The Ministry [of Commerce and Industry] then deposits the instrument in a bank account at the LBDI, consistent with standard operating procedures and guided by the Memorandum of Understanding" between the Government of Liberia (GoL) and the LBDI.
Once the GoL financial instrument is deposited at the LBDI, "the loan program is administered, managed and operated by the Liberian Bank for Development and Investment," said a July 23, 2020 press release issued by Mr. Jacob N. B. Parley, Communications Director at the Ministry of Commerce and Industry.
Notwithstanding, the Commerce and Industry Ministry, the press release made clear, "provides strategic oversight and guidance as a sector Ministry," responsible for "the promotion, development and regulation" as well as "operation and expansion of commercial, industrial enterprises and activities" in Liberia as stipulated in the approved 1987 amended Legislative Act creating the Ministry of Commerce and Industry.
Described as a "fiscal stimulus," the Small Business Pro-Poor Development Fund (SBPDF) came against the backdrop of what was identified as "the constraints faced by [Liberian] SMEs [Small Medium Enterprises] in accessing financing from Banks and Financial Institutions" in Liberia.
Misinformation over seed funding
The 'seed funding' of the loan scheme was put at Three Million United States Dollars (US$3,000,000) as symbolically displayed and presented by President Weah during the launch ceremony.
As an objective, "this fund," stated the GoL-LBDI circular, "seeks to provide financing opportunities for ordinary Liberians in the Micro-Small and Medium Enterprises (MSME) and Small-Medium (SME) sectors."
The circular went on to assert that "[t]his fund will assist Liberian owned Small Medium Enterprises which are largely not bankable to access funding for the rebuilding of their businesses and provide employment opportunities, particularly for the poorest so as to help stimulate the economy in the medium and long run."
In a nutshell, the central objective of the SBPDF concerns "providing job opportunities, capital formation, and wealth for the underprivileged in society." Yet the GAC audit is critical not only of the shaky fate of the loan scheme but how achieving its objectives would be elusive in light of its audit observations accompanied by key risk assessments.
Firstly, there is misinformation in communication by the Government of Liberia (GoL) about the exact amount it made available to the LBDI regarding the loan scheme. On January 17, 2019, it was announced in a joint circular that, "... the GOL has provided a seed fund of $3,000,000 (Three Million United States Dollars) to the Liberian Bank for Development & Investment (LBDI) as initial funding for onward lending to under privileged Liberian owned businesses across the country."
The GAC audit of November 2020, however, finds the contrary. "It was ... observed that only US$1,000,000 was deposited into the SBPDF bank account during the period under audit," said the GAC.
Although the audit observation was confirmed by the Commerce and Industry Ministry, the shortage of 67 percent of the seed funds prompted the GAC to warn in its risk assessment that, "[t]he objectives of the loan scheme could be undermined if a substantial portion of fund earmarked for the scheme is not made available."
Slow disbursement, a well-organized crime?
Secondly, rather than disbursing the one million United States Dollars deposited into the SBPDF account at LBDI, the GAC found a pattern of "slow disbursement of the loan," slamming the Commerce and Industry Ministry for having failed to have "created more awareness to attract large numbers of potential business to apply for the loan."
The failure to create more awareness on the loan scheme is apparently linked to what the dismissed Deputy Minister for Small Business Administration at the Ministry of Commerce and Industry, Jemima Wolokollie, called a "well-organized crime," involving the clandestine channeling of the loan to "unknown people," inclusive of partisans of the ruling Coalition for Democratic Change (CDC) of President George Weah rather than qualified Liberian-owned businesses.
But Madam Wolokollie herself stands at the center of corrupt or questionable transactions in relation to the SBPDF while she was still a Deputy Minister under Professor Wilson Tarpeh, the then Minister of Commerce and Industry, who was also removed amid controversies over the SBPDF.
Tarpeh accused Wolokollie of requesting and authorizing the payment of over 41-thousand US dollars to cover the cost of a training she reportedly conducted and the cost of advertisements and associated activities she said were needed to support the SBPDF.
Despite making a payment of over eight thousand US dollars to what the GAC calls an "ineligible entity," named and styled Liberia Events [&] Marketing Services (LEMS) to advertise the loan scheme, the GAC found that the Commerce and Industry Ministry could not produce material facts about the performance of the task.
"Management did not provide any evidence that the loan was advertised even though the amount of US$ US$8,380.80 was used from the loan account for said purpose," wrote the GAC, declaring that the payment was made to LEMS "without evidence of using the competitive procurement method."
This, said the GAC, was in "breach of financial discipline" and amounted to "wasteful expenditure," quoting Section-I, Parts A.15 and A.20 of the Public Finance Management Regulations for the 2009 Public Finance Management Act of Liberia.
Legal or illegal advertising entity and training contract?
In an attempt to verify the existence and legality of LEMS, efforts were made (by this author) to locate and speak with its authorities, if any.
In an age of digital technologies, the "entity" apparently operates two Facebook accounts - one last updated on March 17, 2018 and the other last updated on December 5, 2017. Both Facebook accounts seemed to have been created in early and late 2017. While one Facebook page shows that the LEMS provides a physical address, locating the "entity" at Old Field, Thinkers Village Road, Monrovia, Liberia, with an Orange Mobile Number, 0775251143, the other Facebook page does not list a physical address but has an Orange Mobile Number, 0770729975. Both numbers were dialed. One, 0770729975, was answered by a male while the other number did not go through. The receiver of the call, when asked about the "entity," said "the group no longer exist[s]," noting "they are [now] into graphics on social media."
In relation to the payment made for training, the GAC observed that the payment of US$33,216 to the group Business Start-Up Center (BSC) to provide training for eleven (11) Micro-finance Institutions (MFI) was done by the Commerce and Industry Ministry "without evidence of a binding contract, a competitive procurement process and a valid tax clearance."
The payment thus represented a violation of Sections 37 and 46 (1-3) of thePublic Procurement Commission (PPC) Act of 2005 as Amended and Restated in 2010, according to the GAC.
MoCI and GAC clash over missing training contract
The Commerce and Industry Ministry took exception to some aspects of the finding, claiming specifically that, "There was a contract regarding this transaction, but got missing along with many other files and documents during the Ministry's relocation to its current offices, the Ministerial Complex."
This response was found to be flimsy. The Commerce and Industry "management's assertion" in the words of the GAC, "is not a material justification." "Contract of this nature," insists the GAC, "are usually kept in several copies with the parties to the transaction." Continuing, it stressed that "[t]he MoCI management purportedly losing its copies of the contract does not negate the fact that another copy cannot be obtained from other parties to the contract."
Aside from the observation of the violation of the PPC Act, the GAC described as "high" the amount paid to BSC for the training, although the Commerce and Industry Ministry claimed in its response that "the payments for training" like the "publicity are direct costs that are necessary for the orderly administration and successful operation of the Loan Scheme."
Defeating objectives of loan scheme?
With another audit observation that out of the one million US dollars deposited into the SBPDF account at LBDI only US$533,317 had been disbursed, the GAC as part of its risk assessment warned that, "The slow disbursement of the SBPDF could defeat the objectives of the loan scheme and deny Liberian-owned businesses cash needed to accelerate their participation in the Liberian economy."
Even with the slow disbursement of the loan, the GAC was critical of the decision by the LBDI Management to disburse 81 percent of the loan in Liberian dollars rather than US dollars - the currency in which the SBPDF is financed - as stipulated in the GoL-LBDI MOU.
Lending the fund in Liberian dollars has the potential to "create an added cost for ... businesses to source foreign exchange; thus, increasing their overall borrowing cost," commented the GAC. However, the LBDI management justified the disbursement of the loan in local currency as a decision "driven by the business cash flow (repayment source) to mitigate foreign exchange risk that would stall the collection/repayment process."
Notwithstanding, the GAC insisted that the LBDI "should ensure that the loan is disbursed in United States dollars" than Liberian dollars to "enable the beneficiaries to avoid added costs associated with the purchase of United States dollars on the market."
The disbursement of the available funds itself to businesses was, moreover, found to be problematic in terms of geographical concentration. The MOU between government and LBDI stipulated that the "LBDI shall ensure that the disbursement of funds is spread across the country with at minimum two (2) businesses in each of the fifteen (15) count[ies]of Liberia benefiting."
But it was found by the GAC that "the loans were not disbursed to beneficiaries across the country as instructed by the MOU." "The loans," the GAC pointed out, "were disbursed to beneficiaries in only four (4) of the fifteen (15) counties with 75.6 percent of the loan portfolio disbursement concentrated in Montserrado County."
Rather than two businesses, loans were disbursed to thirteen (13) businesses in Montserrado, amounting to over 403-thousand United States dollars. The businesses in question included six micro-finance institutions: Women Empowerment for Self-Employment; Universal Employment Mission; In God We Trust Club Multi-purpose Credit Union; Fidelity Micro Loan LLC; Foundation for Women; and New World Finance.
Each of the micro-finance business institutions received 50-thousand US dollars in loans, except Universal Employment Mission which received 20-thousand US dollars.
The other seven businesses receiving the loans in Montserrado County are regarded as Small Medium Enterprises (SMEs) and included: James Transport; Nupolu's Business Center; S B Wood Shop; Cee-Breeze Enterprise; James Blamo Bus Cent.; AYS African Fashion; and CAM Fashion. The loans received by each of the SMEs in Montserrado ranged from five - to 50- thousand US dollars.
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Bong, Grand Gedeh and Nimba are the three other counties where the loans hit. However, instead of two businesses being targeted, loans were given to only one business entity in each of the three counties.
The Trust Savings Credit Union Inc. is listed as the micro-finance institution that received 50-thousand US dollars in loan fund in Nimba County. Similar amount of loan fund was given to the Joseph D. Solo Agriculture Farm, a small-medium enterprise in Grand Gedeh County; while the Francis T. J. Pharmacy in Bong County, another small-medium enterprise, received 30-thousand US dollars in loans.
In whose interest is Weah's government loan scheme?
Eight of the 16 businesses that received the SBPDF loans were found not to have met the eligibility criteria to benefit from the scheme because they failed to submit all required documents, for example, Business Registration, Business Tax Clearance, Real Estate Tax Clearance, and Business Plan. The businesses include Trust Savings Credit Union Inc., Jamel Transport, Nupolu's Business Center, New World Finance, CAM Fashion, CEE Breeze Enterprise, Women Empowerment for Self-employment, and James Blamo Business Cent.
Despite failing to meet the loan eligibility criteria, the LBDI disbursed a total of US$216,785 to the eight businesses, a move the GAC described as a "risk," stating that this has the potential of "depriving qualified businesses the opportunity to benefit from the loan scheme."
The observation by the GAC of ineligible businesses benefiting from the SBPDF loan scheme is essentially related to the issue of loan repayment. It was found that 10 of the 16 businesses that received the loans were in default of repaying their loan installments when due. The businesses concerned are Trust Savings Credit Union Inc., Nupolu's Business Center, New World Finance, Cee Breeze Enterprise, Women Empowerment for Self-employment, S B. Woodwork Shop, AYS African Fashion, Universal Empowerment Mission, Fidelity Micro Lloan Llc, Joseph D. Dolo Agriculture Farm Incorporated.
What is even more surprising was the lack of adequate monitoring of the loan scheme manifested by the failure of the LBDI management to forward minutes of the joint meetings of the bank's Executive Credit Committee (ECC), Internal Control Department (ICD), and Legal Department (LD) to the bank's Board Credit Committee (BCC).
The GAC said the failure by the LBDI Management to inform the bank's Board Credit Committee on issues relating to SBPDF borrowers' default and the steps to be taken to remedy the situation violates the bank's Credit Policy. Because, in the view of the GAC, [t]he lack of monitoring of the loan scheme could lead to delinquency and further deterioration of the SBPDF loan portfolio; thereby, making recovery difficult."
Another important observation made by the GAC was that the signing of the loan scheme MOU or contract between the GoL and LBDI exceeded the US$250-thousand threshold for procurement contracts. Therefore, the MOU needed to have been attested by the Minister of Justice as stipulated in the Public Procurement Commission (PPC) Regulation on the Schedule of Thresholds for Procurement.
But this was not adhered to by the GoL, represented by the Ministry of Finance and Development Planning and the Ministry of Commerce and Industry (MoCI), even "though the [MOU] document made provision for the Minister's signature."
The Commerce and Industry Ministry admitted as "an oversight" the omission of the signature of the Justice Minister, promising that it "will be corrected." Without such correction, the GAC warned that the MOU could be rendered "invalid," thereby making "its terms and conditions difficult to enforce should disputes arise." It is not clear whether the correction has been made since, coupled with the series of recommendations made by the GAC regarding the administration of the loan scheme.
What is clear though is that questions loom large as to whose interest is the George Weah administration small business pro-poor development fund as the financing, disbursement of funds and the administration of the loan scheme is marred by corruption, fraud, errors, and now shrouded in secrecy since the GAC audit.
M. Dennise Nimpson, FOI Journalism Investigative Fellow
