The 2022 Climate Report on Liberia says the government is doing much to discourage investors and investment while its decisions affecting the business sector are driven more by political cronyism than investment climate considerations.
The Government of Liberia describes the country as “open for business” and supports programs and initiatives to foster commerce, including an ad hoc Business Climate Working Group (BCWG) to improve the investment climate.
The government-backed BCWG has been working with the public and private sector stakeholders to explore how to create a friendlier business environment yet in practice; some business leaders have reported how difficult it is to even meet with government representatives to discuss new investment or policies damaging to the business climate.
International donors are also working with the government to improve the investment climate, which ranks toward the global bottom by most global measures but despite these numerous challenges, Liberia is rich in natural resources.
The BCWG, chaired by the Minister of Finance and Development Planning, collaborates with the Ministry of Commerce and Industry, the Liberia Business Registry (LBR), the National Investment Commission (NIC) and the Liberia Revenue Authority (LRA).
Several large international concessionaires have invested successfully in agriculture and mining, though negotiating these agreements with the government often proves to be a lengthy and byzantine struggle.
During Liberia’s National Judicial Conference in June 2021, President George Weah called on the Judiciary to partner with agencies on reforms to improve the investment climate.
A weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption inhibit foreign direct investment and the investors are often treated as opportunities for graft.
Many businesses are said to be finding it easy to operate illegally if the right political interests are being paid, whereas those that try to follow the rules receive little if any assistance from government agencies.
According to the “Limits on Foreign Control and Right to Foreign Ownership and Establishment”, Liberia’s Investment Act restricts market access for foreign investors, including U.S. investors, in certain economic sectors or industries.
Foreign and domestic private entities may own and establish business enterprises in many sectors as the Liberian Constitution restricts land ownership to citizens, but non-Liberians may hold long-term leases to land.
The NIC is the oversight agency to screen and monitor investments as well as the Investment Act and Revenue Code mandate that only Liberian citizens may operate businesses in the following sectors and industries, but it is not clear to what degree this mandate is enforced.
The Investment Act also sets minimum capital investment thresholds for foreign investors in other business activities, industries, and enterprises.
For enterprises owned exclusively by non-Liberians, the Act requires at least USD 500,000 in investment capital while for foreign investors partnering with Liberians, the Act requires at least US$ 300,000 in total capital investment and at least 25 percent aggregate Liberian ownership.
It is as per law that all businesses must register with the Liberia Business Registry (LBR) to conduct business or provide services in Liberia yet investment contracts, such as concessions, are reviewed by the Inter-Ministerial Concessions Committee (IMCC).
Concessions are ratified by the Legislature and approved by the President while businesses are registered with the LRA for taxes and the National Social Security and Welfare Corporation (NASSCORP) for social security thereby making it possible for foreign companies to obtain investment incentives through the NIC.
In 2021, the Mano Manufacturing Company and Jetty Rubber LLC received long-term investment incentives, according to NIC’s 2021 Annual Report.
Foreign companies must use local counsel when establishing a subsidiary and if said subsidiary should engage in manufacturing and international trade, it must obtain a trade license from the LBR.
