The private sector is the Holy Grail; it will make or break any society! The degree to which this happens is largely contingent on whether the sitting administration factors this sector into its grand strategy! Moreover, can any developing country grow beyond its "third world" status without a national arrangement geared towards developing private enterprise? Better yet, can Liberia up the standard of living for its people, and build an adequate national infrastructure if her leaders continue to only rely on a dwindling, extractive resource revenue? The move to develop a private sector cannot be an afterthought; rather, it must be an integral part of the Boakai-led administration's grand strategy if the president's "ARREST" agenda is going to "rescue the people".
The private sector is a vital segment of the economy; it ensures local people control, own, and manage the direction of their society. It creates a competitive environment, efficiency, and market flexibility that cater to consumers' demands. This sector presents opportunities for sustainable development strategies and a broader approach to engage a larger segment of the population through effective and innovative partnerships across all areas of the economy. The government can lessen its burden, and mitigate some of its risks through credit enhancements, direct financing, and a national strategy that incorporates the private sector in a more elaborate way.
The private sector facilitates a systemic approach to development and brings on board tested techniques that have evolved in the open market so that public policy can be looked at through different lenses. Considering the private sector's unique ways of building capacity, sharing information, and mobilizing expertise, it benefits society on a larger scale when this area is coupled with the public sector, utilizing its pragmatic ways of problem-solving to enhance service delivery to the people. The government must closely work with the private sector to get the best results for development. Secondly, a vibrant domestic market grounds your best and brightest minds, forcing them to hone their skills locally thus keeping them in the country while at the same time avoiding the brain drain that derails so many developing countries.
The open market is crucially important because it defines the direction of the country by generating large-scale employment opportunities, engages in processes of industrialization, and provision of goods and services, and decentralizes the country, but most importantly, expands the government tax base to finance essential social and economic infrastructure. This sector encourages ingenuity and innovation, thus ensuring a country develops. In essence, the private sector is not just an economic tool, it is the tool that makes government work. The private sector is the engine that churns government operations!
Initiate a Private Sector Strategy
Private Sector Development (PSD) is a combination of strategies that expand government economic development, reduce poverty, and grow the national tax base through targeted diversification-all of this is made easier through microfinance and controlled government infusions. This sector, if taken seriously, has the potential to dwarf anything the government can do to truly transform the lives of the people! Moreover, the private sector forces the government to revisit its internal strategies and extend them over a broader, more inclusive area of the economy. It is the way forward if development is the goal.
To develop a thriving private sector in a place like Liberia, the leadership must get several things under control and redirect a healthy portion of its resources to ensure PSD can be protected and grown in that environment. The public and private sectors must be interlinked in an inseparable manner to achieve the agenda of development and a higher quality of life for its people-the government must champion this marriage.
National Strategy/Business Climate - Have we defined a national strategy that promotes a business climate that yields results? Who are the business experts implementing this strategy? Is this enabling environment considering investors' expectations and protection of property rights, transparency, and simplified business regulation? Is corruption under control? What about the legal system and its independence? Can investors count on the system to get a fair shake should the need for justice arise? The administration must weigh all of this and incorporate them into its service delivery approach to the people if the government intends to expand the economy and, by default grow its tax base.
Access to Finance-Given that Liberian Banks/Financial Institutions do not have the kind of liquidity to truly support a growing private sector, the government must set aside a minimum of $50 million in its $700 million annual budget to facilitate growth in the private sector. The money must be put into areas that will grow Liberian Millionaires through public/private partnerships so they can eventually own the process and develop industries across their country. Yes, create local Liberian Millionaires and they will perfect the process and build a more robust system.
This benefits the government in a substantial way. Secondly, the aim here is to empower Liberian Citizens so they can take control of the economy, define the social and political direction of their country, discourage outside influence in our domestic affairs, and build a financial front against foreign importers/exporters who openly bribe their way through the process without any legal consequence. Remember, a country will not develop, especially where foreigners suck the lifeblood out of that country and ship the resources to their home countries -- Liberians must take total control of our domestic market in every area and keep the resources here in Liberia for development.
These austerity measures are not government giveaways, but structured and organized financial infusions meant to grow the economy and expand the government tax base as was done by every developed or middle-income country, especially the Japanese in the 1800s. See "The History of Japanese Economic Development" by Kenichi Ohno. This approach transformed Japan from a feudal system to a market economy and industrializing society. Government must take the lead in growing private enterprises, enhance development effectiveness, and hasten the process of economic growth. Know that the public sector cannot adequately provide services to the people without sufficient private sector capital infusion; both sectors are inseparably linked and must work hand in hand to achieve the dreams and aspirations of the people - national development.
Infrastructural Support -- What is our approach to critical infrastructure such as ports, telecommunications, roads, energy, water, sanitation, etc. to attract private enterprise? Are our local facilities being prepared to bring on board the kind of investments that will expand our tax base? Who are the experts spearheading this operation? Where are the policies? Infrastructural support is the framework that will define the direction of the country. What direction have we defined?
Know that capital investments are designed to generate more revenue for the government-put more money towards ventures that grow government intake. This may seem like common sense, but do not be fooled; the process must be guided by free-thinking experts to create the kind of results that grow the economy. Target and focus your efforts; evaluate and recalibrate in areas that are not meeting set benchmarks. Develop a matrix that tracks the process and redesigns your approach where necessary to get desired outcomes.
The system must be continuously checked and rebalanced. Know that the push for development is an evolution -- dedicate a team to monitor and report on targeted growth. Be very pragmatic in your approach; do not take faraway ideas and try to implement them, indigenize them first! To improve the quality of this public/private partnership and to get the optimum outcome, your team must be chosen strictly based on merit, with no exceptions.
Human Capital Development/Support -- To get more out of your citizens, you must invest more in their preparation. First, focus on understanding local customs and traditions; get local stakeholders involved. Embrace technology and innovative ways of getting results. Make your people appreciate the importance of economic sustainability, the social impact of doing business, and responsible business practices. All of this should be a crucial part of their education. The more aware your people are, the better they can protect themselves and the future of the country. Liberians must be developed with the awareness and expectation that they are required to deliver certain results. Push for those results through government policy implementations-make them own the process. In fact, tie their identity to the stages of development.
Trade & Entrepreneurship Support-To get results and grow the private sector, the government must create a business climate that promotes trade and develops the skills of our people. Sponsor incubators, development centers, and business accelerators. Establish entrepreneurship training programs, mentorship, and networking opportunities. Enhance domestic market access, adjust tariffs to local market conditions, expose our traders to international business operations, and build export-oriented industries. To increase our capital intake, we must go far beyond our own borders-there is more money outside!
"ARREST" and The People
No strategy will work if the people do not own the process! The concept of "ARREST" (Agriculture, Roads, Rule of Law, Education, Sanitation, and Tourism) is a noble one, but have the people bought into the president's agenda? What is the administration's strategy to get a full buy-in from the people?
No national strategy can succeed in the absence of public incorporation. The surest way to get public buy-in is through private-sector expansion and widespread public policy implementation. Note as was stated previously, there can be no widespread public sector service provision without sufficient private sector capital-one must be expanded for the other to grow its bottom line and meet the government's ultimate purpose. Once again, the private sector is coming into play. For the "ARREST" strategy to succeed, the private sector must grow. Why is the government budget leaving out of the private sector? Is this action deliberate? And if this is the case, how does the government intend to meet its purpose of service provision?
The private sector is ripe and ready for harvest. From fishery to small-scale manufacturing, countless agricultural opportunities, to cassava consolidation and export, coconut processing and woodworking, etc. Tens of thousands of private sector jobs can be created across these industries in no time! Liberian workforce is ready to go to work, they just need a little organized help. Why isn't their government helping?
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
To facilitate a systemic approach to building a vibrant private sector, the government must put money into private businesses to grow the economy. This is not free money, but monies strategically loaned out for growth motives. These measures must be taken without favor or patronage, but targeted for private sector growth purposes. Private sector expansionary policies cannot be political; they must be entirely driven for profit and serve as a broader government strategy to expand the tax base and incorporate a larger segment of the population.
The provision of government subsidies is not done simply because the government has money and does not know what to do with it, but it is another way for the government to extend services to the people and grow its reach. Will Liberia grow its tax base with these time-tested measures or continue to ignore practical ways of governance? Any serious country will choose pragmatism simply because it has proven to work. Why aren't we?
Liberia must embrace the concept of collectivism. There is no argument that the private sector contributes significantly to developmental initiatives; when you factor in the benefits of innovation and technology, increased revenue, job growth, and economic stability, or corporate social responsibility that normally accompanies the private sector, why will any government hesitate to aggressively capitalize on these opportunities? For Liberia to grow, we must grow private enterprise -- this is the surest way to sustainable development!
Reference:
Ohno, K (2018). The History of Japanese Economic Development: Origin of Private Dynamism and Policy Competence. Taylor and Francis
Private sector development strategy: directions for the World Bank Group (English). Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/611361468314083684/Private-sector-development-strategy-directions-for-the-World-Bank-Group
About the Author:
Mr. Dualu is the author of countless articles that focus on finding solutions to some of Liberia's pressing national issues. Some of those papers include "A Simple Economic Guide to Fix Liberia", "Institutional Governance is the Only Hope for Liberia" and "Leveraging Liberia's Resources to Lift the Pro-Poor Agenda." The author works as a financial professional out of Massachusetts.
