Finding Liberia’ Niche “From Ad-hoc Deliverables to Strategic Programming”

By Sunny G. Nyemah, CIA, CISSP, CIPM

The Perspective
Atlanta, Georgia
December 29, 2006


A famous American Promoter (Don King) once said, “Opportunity is the greatest charity” Liberians and Liberia have an opportunity that is so glaring that it is almost impossible to notice. The failure or success of Liberia will depend on how this untapped opportunity is perceived, nurtured, exploited, harnessed, and realized.

In many gatherings involving Liberians in the Diaspora instead of discussing this untapped opportunity, I often hear that the Ellen led government has done nothing significant since its inception. Sometimes it becomes tempting to comment objectively, but most times I remised myself realizing that our orientation as Liberians has always lean towards “immediacy” That is, we want what we can get now at whatsoever cost. Moreover, the expectation, perception, and definition of what constitutes something significant for most of these individuals, might not be what a reasonable person would considered significant. Getting what we want now could come with a heavy price tag, such as rampant corruption, disregard for the rules of law, marginalizing the majority, and the lack of development. Instead of being optimistic by tapping into this opportunity, we see pessimists tapping into failure. “To know and not to do is not yet to know” Zen Saying

With the above premise, this article will propound practical ideas, and roadmaps on how Liberia can find its niche, and how the basic tenets of the found niche can be used as a tool to make this untapped opportunity a reality.

The international community has played, and is playing its role by sponsoring and funding a multi-party election, executing the GEMAP program, and providing security. What we need now are programs that will compliment these efforts. This could mean in some instances constitutional changes, amendments, or additional enactments. Furthermore, it could mean that private initiatives, especially from Liberians could help achieved this task. Let look at some areas or programs that need to be given priority:

Regulations and Standards
National Standards Setting Body – Establishment of Liberia regulatory framework. In every area of Liberia’s re-orientation, re-development, and re-alignment we need some sort of standard that will guide the way things are done. For instance we need to develop standards in the financial Services & banking sectors, accounting, engineering, medical, manufacturing, construction, training, etc. To ensure that these standards have the needed effect, the following must be implemented:

? “National Standards Setting Organization must be established with semi-autonomous authority. This body will research, and promulgate standards based on each of the above areas.

? The organization will encourage professionals in these areas to organize themselves into self regulating professional institutions that will use these standards as a basis to license, and train their members

? Set-up a mechanism within this body for monitoring, and evaluating the activities of these organizations. An opportunity for the government to generate additional revenue from annual licensing, and registration fees, and bring Liberia in line with international best practices, standards, protocols, and frameworks.

? Examples of areas that need immediate attention (Accounting & Auditing, Engineering, Real Estate & Housing, banking & Financial Services, Land & Land development, Shipping & Travel, Transportation, and construction) – This is an area of opportunity for private investments by Liberians. The government cannot do all – Establishing the various organizations, providing trainings, and consulting services, etc.

Review, and the elimination of obsolete regulations
The need to review the various Tax Treaties, and income tax regulations for individual or corporation. This is a very important area of concentration for the government. We look at developed economies, and we began to wonder why they are so unique. The tax system of a country is one of the most cardinal developmental tools that the government uses to generate bulk of its revenue. It is therefore important that tax laws remain current in its existence, promulgation, review, application, and execution. Today in Liberia many citizens are not aware of their duties or obligations to pay taxes. Because they considered paying taxes a problem. Historically, we have no knowledge of our tax system. We Belief that everything should be provided by government, but refused to pay our taxes. Can you imagine how much needed revenue would have been generated, if each and every Liberian in the Diaspora paid just 1% of their gross earned income to Liberia? Or if Liberia had tax treaties with countries in the Diaspora to remit at least 5% of taxes collected from Liberians in the Diaspora irrespective of their residence or status.

How do we achieve fluency in our tax laws, and create the needed awareness among our citizen when it comes to paying taxes:

? Review, and update the existing tax code-Use a flat income tax rate across the board. Our present income tax code is more progressive, but ineffective. How do we determine residency for income tax purposes?

? Determine the residency requirements for taxation

? Make our tax code part of the university curriculum

? Set-up a research department within the tax enforcement division of Ministry of Finance,

? Set-up a technical unit within the legislative branch of government to support the house in researching, reviewing, interpreting, and promulgating tax legislations.

? Transparency and accountability on the collection and disposition of collected taxes. Decentralization is the key. On corporate, and property taxes, let at least 20% remains with the political subdivision where the tax originate, or where the business or property is located. This is an area of opportunity for private investments by Liberians. The government cannot do all. Consultancy & training as the tax code becomes more standardized, and enforceable. Businesses would request professional services in interpretation, guidance, and preparation.

Professional Organizations
When those from the developed countries classified us as underdeveloped, lacking the needed manpower or skills necessary to develop our own countries we sometimes get annoyed. It is sometimes not true that we do not have the needed skilled manpower. We do have plenty of skilled professionals, unfortunately these skilled professionals are not organized, or do not operate in the appropriate environments that would showcase, or validate their abilities. How do we minimize this problem?

? First of all, we must organized or revitalized professional organizations, and secondly, we must begin to streamline our institutions of higher learning with competitive curriculum that focus on those areas where we believe we can excel. For instance, we cannot compete with Nigeria, Ghana, or Ivory Coast when it comes to the areas such as manufacturing, infrastructures, telecommunication, and local skilled manpower. However, we can develop strategies that will focus on banking & finance, and technology as our competitive niche. To be a leader in these two areas we have to invest in our institutions of higher learning, network with top universities in Asia (China & India), Africa, (South Africa, Ghana, Nigeria, Morocco, and Egypt), Europe, and America (Canada, USA)

? We must encourage Liberian Professionals to organize, and align themselves with international professional organizations. Let look at some professional organizations in Liberia as we know them:

Liberia Institute of Certified Public Accountants (LICPA). This organization enjoys the protection of an Act, but it is very dormant, and lacks authority amongst practitioners, or prospective practitioners. Because it does not administer any professional exams, it does not provide any professional training, membership is limited to few individuals, it has not adopted or tailored the international accounting standards to its environment even though is a full member of the International Federation of Accountants. To make this body more relevant, a new competing organization has to be established, or those in control of the present arrangement must allowed changes to take place within, by implementing the appropriate activities as mentioned above to reflect currency and fluency in the accounting profession in Liberia.

The Medical Board- It is one of the most prestigious, and organized professional organizations in the country besides the Liberian Bar. No body can enter Liberia, and began to practice medicine without the prior knowledge and scrutiny of the Medical Board. It has the authority, and does uniquely self regulate itself.

The Bar-It is one of the oldest organized professional organizations in the country besides the Medical Board. It also has authority, and self-regulate is members.
Engineering Society- None in existence, I might be wrong. An opportunity to organize one in order to weed out non-professional with fraudulent credentials, and control the entry of non-Liberians.

Financial Services Industry (Banking, Investment & Financing, Real Estate, Mortgage Lending) - None in existence. An opportunity to organize and help develop these industries. Liberians and non-Liberians partnership (Vast areas for everybody, Investment banking, real estate development, insurance, Anti-money laundering, and mortgage lending)

Other areas (Nursing, Primary Care, Education etc) - None in existence, except for nursing, everything else is open. An opportunity to organize one in order to weed out non-professional with fraudulent credentials, and control the entry of non-Liberians.

Researching and Setting Practical Developmental Policy
We must commend the government for the recent ad-hoc deliverables that were published. It shows the government quest, desire, and commitment in moving Liberia forward. However, for Liberia to make sustainable progress, it must begin to transition from ad-hoc deliverables to short and long term strategies. This means Policy formulation, outlining and committing to implementation strategies, and establishing and applying monitoring, and evaluation standards. As a post-conflict country, Liberia will face difficulties in attracting private investments in infrastructures in the short term. But short-term policy formulation and implementation could boost private investment in the long-term. The focus should be on ensuring the timing and sequencing of segmental reforms, reducing investment risks, and developing “Small Medium Enterprises” (SME) with escrowed ownership for Liberians were privatization occurs. To begin policy development, we must map out strategy sector identification with the following:

? Energy & Mining (Build on the Kimberly process, and expand to include exploration of oil)

? Agriculture (policy on reforestation, low quota for finished products processing on Liberian soil, review land used policy to include 20-40 years lease terms)

? Manufacturing & Transportation (More tax incentives, capital allowances, location incentives, exemptions, and duties)
? Service (Tourism, construction, telecommunication, Banking & Finance, Marketing and Communication)

? Developing infrastructure (Roads network, -policy and strategy on how we hope to achieve this in two to three years-the key to decentralization and growth)

? Citizen & Investors Protection (Citizen & Investors want guarantee protection of the fundamental rights, rules of law enforce by the judiciary that is enshrined in the Liberian Constitution)

The idea of boosting private investment, and ownership should be practically implemented. For instance, the recent Mittal Steel concession should have had provisions that allocate at least 30% ownership to the Liberian government. 10% should be escrow for direct Liberians ownership out of the Liberian government 30%. The escrowed 10% should be sold to Liberians at 50-60% discount. In addition, 30% of all royalties, dividends should remain with the political sub-division (s) where the direct mining operations occur. The same idea can be translated to our failing state owned enterprises (Telecommunication, LEC, LPRC, RIA, NPA, LPMC, etc). These SOE can be partly privatized 50/50, 50% to the government and private Liberians, and 50% to foreign investors. The infusions of needed capital from all partners could make these SOE more viable and profitable, and create more employment opportunities.

Developing more practical curriculum and technical institutions
Technology –Emphasis on Information technology, not just software, but programming, computer architecture, learning complicated platforms, and topologies, and various forms of applications. Liberia has an opportunity to be an out-source haven in the areas of Customer service call centers, and Tax preparation services from abroad, because of its unique school system. Westerners can easily understand our kids than other nationals from most countries in our hemisphere.

Mechanical and Electrical – Build better and highly equipped technical colleges

Construction – More construction engineering emphasis

Automotive – High-tech training

Aviation – High-tech training

Marine - High tech training, maritime law, etc.

Practical Medical Education (Ex-ray technician, nurses, Lab technician, pharmacist, Imaging technician, etc)

Developing Strategies on Attracting Foreign Direct Investments
Liberia as a tax haven – Presently Liberia has known tax treaties with Sweden, and Germany the purpose of the income tax treaty is to eliminate double taxation for residents. Liberia also has some sort of bilateral agreement with United States of America in the areas of air transportation, and shipping. Tax exemption for both Liberian and American companies with stringent implementation requirements. These area need to be research thoroughly, because it could be a huge source for foreign direct investments. To benefit, we must enact strong Anti-money laundering laws, and standards, promote our flexible capital tax incentives, and our favorable income tax exemption for non-residents. Moreover, Liberia should begin to leverage its membership in the following multi-lateral organizations:

MRU – A unique developmental institution that needs leadership. Liberia can take the lead. An investor would rather invest in a jurisdiction that has a combined population of 30 Million plus than deal with a single country with just 3 Million people. The strategy should focus on drawing up unique treaties that will benefit all members equitably with regards to business arrangements that involve attracting “Foreign Direct Investment” for instance factories can be build in Freetown, headquarters in Monrovia, and a divisions in Guinea, and (Ivory coast –outside looking in)

ECOWAS – ECOWAS has made significant in roads, in the areas of immigration, economic activities, and regional security. However it needs to be more progressive in adopting similar strategy as the EU, which has managed to strike a balance between being an intergovernmental, and supra-national organization. It has succeeded in sharing sovereignty with members’ nations without usurpation. Liberia role will be one of a consultative champion of a full economic, investment, and technical integration. As West Africa financial and IT hub this will benefit Liberia more when FDI began to flow through Liberia. Moreover, regional operating headquarters or centers of influence will be based in Liberia (strategy effort) if the right local strategies are implemented. Formula (Ellen Factor-Ellen equals Harvard trained, international financial Banker, and international developmental manager leads to international investors’ confidence) if Liberia builds the requisite infrastructures, develop the requisite policies, and implement the required monitoring and evaluating mechanisms. Since the war, we have to revisit the ECOWAS amended treaty to see how it affects us. For instance the issue of free movement and the establishment of businesses by ECOWAS citizens as if they were Liberians need to be look at strategically. Liberia is at a disadvantage in many areas when it comes to implementing some provisions of the ECOWAS treaty. The government must set-up a committee to review all treaties with ECOWAS, AU, MRU, and other countries outside of our hemisphere.

Complimenting GEMAP
It was disheartening to learn that because Liberia could not establish the requisite controls, the sanction on diamonds could not be lifted. We have always preach that the GEMAP program needs to be complimented with the requisite framework that will ensure that what is being implemented by the GEMAP team can be codify into appropriate controls that are unique to those institutions where GEMAP has been implemented. It will also ensure continuity, foster knowledge transfer, and overtime, this framework could be duplicated to other areas in the government. For instance, The GEMAP responsible authority or partner at these institutions will establish minimal controls that will allow GEMAP to streamline and monitor the revenue generation, and disbursement of financial resources. However, the operational and technical aspects of those institutions will be left completely in an ad-hoc mode. In order to have a fully functioning internal controls system that ensures accountability, and transparency, the institution must implement all components of an internal control structure with regards to the institution Financial, Operational, and Technical environments. Why do we design, and implement (Codified) an internal control system? An internal control system should be designed and operated to provide reasonable assurance that an organization’s objectives are being achieved in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. To achieve this, we must work with the interrelated components of internal controls:

Control Environment Provides the foundation for the other components. Encompasses such factors as management’s or government’s philosophy and operating style. This is what we referred to as the “Tone at the Top”

Risk Assessment Consists of risk identification and analysis. What are the foreseen risks? How do we identify them, and if identified, how do we mitigate or minimize them?

Control Activities (This is the heart and soul of what we call Controls) Consists of the policies and procedures that ensure employees carry out government or management’s directions. Types of control activities an organization that must be implemented are preventative controls (controls intended to stop an error or malfeasance from occurring), detective controls (controls intended to detect if an error or malfeasance has occurred), and mitigating controls (control activities that can mitigate the risks associated with a key control not operating effectively). This involved process mapping based on the core activities of all operational units. It requires the participation of process owners – Line managers, and or supervisors.

Information and Communication Ensures the organization obtains pertinent information, and then communicates it throughout the organization. How do we ensure that each and every member of the institution knows exactly what to do? Do we automate the system with appropriate access control? Or do we disseminate it manually by producing operating manuals? Training and “Constant Personal Communication is the key.

Monitoring - Reviewing the output generated by control activities and conducting special evaluations. This aspect includes real-time monitoring, internal audits, and external audits. These days with technology, most applications are developed with build in audit and security tools that support real-time monitoring. As Liberia design and implement these controls, the technological aspect must also be considered: General technological controls on one hand, and applications controls on the other hand. I understand the government has implemented an integrated procurement system that is intended to link all procurement activities of the government. This poses a serious challenge with respect to the risks associated with controlling that system. (Risk review will focus on the Network-IT infrastructures, the Operating systems and/or platforms, and the individual applications or software)

Private Sector Development
The government of Liberia is overwhelmed with emergency activities that have produce deliverables that are intended to pacify the international community, and the Liberian masses. It is also glaring that this government is more committed to private sector development than any other government in our national existence. But due to the limitation of resources, the government will focus more on these emergency activities to the detriment of sustainable activities. To ensure that this latter does not happen, Liberia needs an official policy position on developing Small Medium Enterprises that will employ between 20-100 persons, and with capital based of approximately $50,000.00- 300,000.00 United State dollars. The resources that are needed to help fund these initiatives can be access from the following sources: International Finance Corporation (IFC) of the World Bank, New Partnership for Africa’s Development (NEPAD) of the African Union, ECOWAS Bank for Investment and Development (EBID), and private Liberians venture capitalists. Again we need structure that will ensure that whatever program we initiate to tap into these external resources are transparent, accountable, and will provide the necessary know-how to help manage and sustain these businesses into profitable enterprises. (Retired business and government executives, and or business professors can provide voluntary business consulting services to these enterprises. Senior business students can obtain internship at these businesses).

As the Liberian government develops its “Poverty Reduction Strategy Paper” (PRSP) it should commit to private sector development. How does the government ensure this commitment? Firstly, we must take a quizzical and thorough look at the structure of Liberia fifteen subdivisions or counties. If we cannot elect our superintendents, we should at least have a council in each county compose of three representatives from each district within the county (Constitutional dilemma) – This council will be empowered to work along with the superintendent to make decision affecting their county within the constitutional framework of Liberia. The council role must be explicit with regards to their specific functions. They must deliberate and approve all issues relating to developing their county, from constructing schools, paying teachers, constructing other infrastructures, to how concession and resources are contracted to foreign companies. It could be done consultatively with the national government. Take for instance, Nimba, Rivergee, Grand Gedeh, Sinoe, Grand Kru, and Maryland counties could establish a joint venture that will enable them to construct a road network that provides access to each county. 20% of the cost should be finance by the national government, 10% by the counties collectively, and the remaining 70% can be finance with a loan form IFC, ADB, China, or a private bank. How do we pay back the 70% loan? The constructed road will be a “Toll” that charges $10.00 each way from all vehicles that use it. The proceeds from this will be used to paid the off the loan, maintain the road, and any profit can be place in a reserved that is allocated to each county. The 10% from the counties can be raised locally, and from citizens abroad. In fact bulk (80%) of the 10% should be raised from the Diaspora. We cannot overburden the government with everything. It is now time for us to take self-initiatives.

Secondly, Liberian government must revisit the constitutional issue of citizenship. Liberia is one of the last countries in the world that based citizenship on race. The geo-political dynamics of nationalism has change. We must wake-up if we want to compete regionally or globally for foreign direct investment. I understand that this issue is controversial especially so when the government has just inherited a system that has been devastated by 20 years of anarchy. Any change must be done strategically, and gradually. The key is, Liberians must be empowered first, and then we can set in motion a time frame that is ten to twenty years for full implementation. We can begin to allowed long-term leases that are tied-in with citizenship and investment criteria for land ownership. In addition, we can set quotas on acreages, and location restrictions. A combination of these strategies can help us eliminate the only negative to our national; re-orientation, re-development, and position Liberia as one of Africa best place to live, invest, and work.

Generational Gap, and the issue of who know you
We can say today that Ellen has done everything to make her government more embracing, balanced, transparent, and accountable. However, the government lacks any commitment to ensuring that young Liberian professionals are given the opportunity to govern. We have observed that the composition of the Ellen led government with respect to key technical and or supervisory positions is almost determined based on who you know or how closed you are to Ellen, or within Ellen circle of influence. This sycophancy tendency is creeping into this government. The government must commit itself to a plan of action that will identify young Liberian professionals in Liberia, and the Diaspora that will map out their skills to specific areas in the government functionaries. These identified skills can be transition into govern through mentorship, and mid-level placement in positions such as assistant Directors, Ministers, Controllers, Managers, etc. without regards to party affiliation. To these so-called young professional, we have not done much to prepare ourselves for opportunities that could avail themselves to us if the plan of action is implemented. We always complain, and whine that it is our time, but we have failed to organize ourselves into a responsive network that would support our efforts, and make us relevant. How can we compete positively if we lack the necessary resources, and connections if we are not organize? Everybody cannot work for government, the idea is to know what we are capable of as young Liberian professionals (Categorized ourselves either as Entrepreneurs, Technocrats, Civil Servants, Politicians, or Power brokers), and use this knowledge to nurture, and empower each network member to achieve their specific potential. When we speak, we speak as “Social Techno Politician, not a mere-politician. Most mere-politician will gimmick with rhetoric, and empty talk without anything substantive. However, a “Social Techno Politician will propound issues straight forwardly from different angles irrespective of his or her political affiliation. Therefore this dialogue is not intended to edify, or downgrade anybody, and or institution (s).

Liberia Unique Selling Proposition (USP)
Liberia USP is that single compelling ideal that makes people or countries want to invest in Liberia. To put it another way, it is that distinct and appealing idea that set Liberia apart from other countries in her region. Liberia can sell herself as the Financial, and Technology center of West Africa. It will require planning, resources, the commitment of the government, and private Liberians. We will have to augment our universities, junior colleges, and technical institutions. Additionally, we will have to invest heavily into these institutions and infrastructures as well. We must use the Ellen factor to take advantage of the international goodwill, China, India, Nigeria, Ghana, and South Africa. We must also Engage and partner with universities in India, China, South Africa, Ghana, and Nigeria in order to attract or borrow professors, technocrats, and resources. Remember Liberia is a virgin; laws are inadequate, and or obsolete. These disadvantages are also advantages. Citizens from these countries will want to invest in Liberia because of these disadvantages. The government must be smart in using these disadvantages as selling strategies. As these resources flow in, and things began to take shape, the government can begin to institute changes to guide against the abuse of these loopholes.

Sunny G. Nyemah, CIA, CISSP, CIPM
Vice President, National Lending Corporation
& Adjunct Professor, Metropolitan State University

7701 France Ave. S.
Edina, MN 55435

© 2006 by The Perspective

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