Monrovia — President George Weah's emphasis on the importance of direct foreign investment in value-added projects during his 2022 Annual Message has been overshadowed by a recent report shedding light on the challenges facing Liberia's investment climate. The report indicates that the Weah-led government's approach to foreign investment has been discouraging, with corruption prevailing over the pursuit of long-term benefits for the nation under the pro-poor agenda.
Since the inception of the Pro-poor-led Agenda, the government has struggled to attract investors to Liberia, and the situation appears to be exacerbated by actions that deter rather than encourage foreign investments. Business leaders have reported difficulties in even securing meetings with government representatives to discuss new investment opportunities or policies without offering bribes, according to the 2023 U.S. Statement Department Investment Climate Report on Liberia.
Key factors contributing to the unfavorable investment climate, according to the report, include a weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption. Instead of viewing foreign investors as potential partners in fostering long-term growth for Liberia, some government officials perceive them as opportunities for short-term graft, the report stated.
The report highlights that decisions affecting the business sector are often driven by political cronyism rather than considerations for the investment climate. This has led to situations where some businesses operate illegally by paying off the right political interests, while those attempting to follow the rules receive little or no assistance from government agencies and, in some cases, face harassment from officials seeking illicit payments.
Moreover, the Investment Act imposes restrictions on market access for foreign investors, including those from the United States, in certain economic sectors or industries, creating additional barriers for potential investors.
According to the report, the lack of consistent enforcement of national laws and international standards, especially in adhering to International Financial Reporting Standards (IFRS), raises concerns about the transparency of accounting, legal, and regulatory procedures in Liberia.
The government's failure to require environmental, social, and governance (ESG) disclosure further hampers transparency, making it difficult for investors and consumers to differentiate between high and low-quality investments.
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Liberia passed a Freedom of Information Law in 2010, aiming to promote transparency by requiring government agencies to appoint public information officers and make records available to the public. However, in practice, access to government records remains challenging, hindering transparency efforts.
The report also uncovers overlapping responsibilities among government ministries and agencies, leading to inconsistencies in the application of laws. Additionally, government officials seem to find ways to bypass the government's own laws and policies concerning foreign investment, including transparent tendering and concessioning processes.
Lack of regulations' public disclosure and public comment processes further exacerbates the problem, leaving investors uncertain about the legal landscape.
Transparency issues also extend to government finances, with only partial disclosure of revenues and debt obligations in national budgets, leaving the full picture shrouded in mystery.
