Liberia, as a country, faces many development challenges. Amidst this, one major constraint that continue to undermine the country's ability to optimally grow and develop is the lack of access to finance.
A World Bank Study revealed that only 13 percent of adults in Liberia have bank accounts and less than 2 percent have access to formal credit. This can be blamed largely on the cash-strapped banking system battling serious liquidity constraints, which has affected business expansion and overall growth and development. It is obvious that as the country recovers from the Covid 19 pandemic, businesses are more likely to require additional credit support for expansion, which cannot be optiamally achieved with the current cash-strapped banking system.
It is important to note that most of the big players in the Liberian economy are Multinational Corporations created through Foreign Direct Investment (FDI). The latest estimate by the World Bank in 2023 placed FDI at 17.6 percent of Liberia GDP, which represents over USD 625 million in value. The World Bank latest estimate also reveals that the net outflow from these investment accounted for 2.1 percent of GDP in same year. When put in real figures, this amounts to over USD74 million.
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Amidst all that has been presented, the country got an investment law that grants these players unrestricted rights to repatriate the wealth created and or generated from our country. While this has been used as a means to attract investment, many studies are now speaking against same. This has been criticised by many empirical research as a fundamental reason for uneven economies. Paul Baran as far back as 1973 pointed that repatriation of surplus from FDI-financed economic activities is a fundamental root cause of backwardness of poor countries. Liberia cannot continue to live in the mistakes of the past.
It is now time for us to demand that a portion of profit generated from FDI economic activities is domicile in a Liberian commercial bank of choice. Maybe we can begin with 10 percent and have time frame within which same can be domicile. What this will do is that it will increase liquidity of the banks and hence enhance access to finance by Liberian businesses, thus spurring expansion, job creation, and wealth creation. This will be a very good catalyst for economic growth and development, if adopted. Howbeit, this cannot be achieved when we still have Section 11 of the Investment Act of 2010 requiring unrestricted right to repatriate earnings from FDIs.
This cannot even be achieved through concessions agreements, since many are negotiated using as benchmark current legislations. Hence, it is now time that we consider amending this section of the Investment Act of 2010 to enhance control and restriction on the repatriation of earnings from FDIs. It is my hope that policymakers can give this attention and act accordingly before we be left with the same old "when lamco was lamco" story that has little or no developmental impact. As an extractive country, endowed with mineral resources, it is important that we act now as every mineral taken will not be replenish. As such, we must seek to create wealth that will benefit generations. Hence, it is high time we see
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