By Bill W. Cooper
The Ministry of Commerce and Industry (MOCI) and the Central Bank of Liberia (CBL) have boost the Liberian economy precisely the private sector through a whooping US$6 million credit investment.
The lifeline changing movement followed by a signing of the participating agreements for a Line of Credit (LOC) under the Liberia Investment Finance and Trade (LIFT) Project with Afriland Bank, Citi Trust, and the Liberian Enterprise Development Finance Company (LEDFC).
Giving the overview of initiative, Head of the Development Finance Section at the CBL, Jay Gbleh-bo Brown, said the project also aims to strengthen the CBL’s ability to implement the scheme through training and advisory services.
He noted, “Today marks an important moment as part of concerted efforts to promote access to sustainable finance for Micro, Small, and Medium Enterprises (MSMEs) in Liberia and we are delighted to be part of this significant event that ushers in the implementation of the LOC under the LIFT project.”
According to him, the LOC is a key component of the World Bank-funded LIFT Project, which aims to support an MSME lending scheme, indicated that the scheme will provide US$6 million to participating financial institutions (PFIs) for on-lending to eligible SMEs, alongside an additional US$1 million for technical assistance to PFIs and the CBL.
Funding sources for the LOC include government funds, donor contributions, grants, loan repayments, interest on loans, and other related sources.
Brown explained further that the MSME Lending Scheme’s primary goals are to improve access to finance by building the capacity of selected financial institutions, providing sub-loans to MSMEs on sustainable terms, and enhancing the capacity of local financial institutions to lend profitably to MSMEs.
“The Line of Credit is designed to support MSMEs across all regions of Liberia, not just urban areas. Loans will be in US dollars, Liberian dollars, or both, based on the cash flows of the proposed portfolio. At least 50% of the loans will be on-lent to women-led or women-owned MSMEs,” he said.
“Eligible MSMEs are defined as registered enterprises employing one to fifty adults. The LOC will focus on new loans, with limited refinancing of existing loans.”
Brown detailed the structure of the loans: for PFIs, the repayment period is up to five years, including a one-year grace period. For MSMEs, the loans will have a duration of between 15 months and five years, including a grace period of up to one year.
PFIs will use sub-loans as collateral, with banks’ balances at the CBL serving as security. MSMEs will provide collateral in line with the lending policies of PFIs.
The National Project Steering Committee (NPSC) will provide strategic direction and oversight for the LOC component. The CBL, acting as the apex institution, will handle the administration of the MSME Lending Scheme, including disbursement projections, technical training coordination, and reporting on portfolio performance.
The Project Financial Management Unit (PFMU) at the Ministry of Finance and Development Planning will manage day-to-day financial operations.
Significant milestones achieved thus far include the completion of a comprehensive LOC Operations Manual, the signing of a Subsidiary Agreement between MFDP and CBL, and the evaluation and due diligence of twelve financial institutions that applied for the LOC.
Next steps involve transferring funds to LOC accounts, processing disbursement requests from PFIs, monitoring disbursements, facilitating allocation decisions on unallocated LOC amounts, and strengthening LOC implementation.
Delivering a special remark, CBL Executive Governor and Co-chair of the National Project Steering Committee (NPSC), J. Aloysius Tarlue expressed gratitude to the World Bank for their support and MOCI for the partnership.
Governor Tarlue emphasized the importance of ensuring that the funds benefit those in need, particularly single mothers, and affirmed the project’s significance in the context of COVID-19 economic recovery and the President’s ambitious agenda.
The CBL Governor further stressed the need for the project’s success to secure future funding and urged commercial banks to remain sensitive to Liberia’s social and economic conditions while implementing the program.
Tarlue at the same time highlighted the obligation of beneficiaries to repay the loans, and disclosed that the project’s focus on empowering SMEs and fostering sustainable economic development.
Commerce Minister and Chair of the National Project Steering Committee, Amin Modad said the signing of the line of credit comes at a very critical point for the Joseph Boakai administration.
He said, “We are currently formulating an aggressive agenda to boost the private sector and develop our economy, noting, “Under the President’s ARREST agenda, the private sector is a critical bedrock for their entire agenda. So, this really comes at a good moment and in time.”
He further thanks the commercial banks for their participation and financial institutions, and intoned, “To the commercial banks, I admonish you to truly appreciate the support from the World Bank and encourage you to use this as an opportunity to strengthen the Liberian private sector.”
He said the primary objective of the funding is not to capacitate the commercial banks or the financial institutions and believe that the primary objective is to lift our people and empower them towards sustainable economic development.
“So, we hope that in this process, as you implement this program, you understand that you are taking the credit risk. We also hope that you will remain sensitive to the social and economic conditions of Liberia at this time,” Modad added.
The World Bank Liberia Country Manager, Georgia Wallen, expressed her delight at the signing ceremony of the Participating Agreements between the Government of Liberia and the first three selected financial institutions under the LIFT Project.
