Entrepreneurs and stakeholders who attended a the two-day business forum from Feb. 1 – 2 in Ganta Nimba County want reforms that would better the country’s business climate.
The meeting was organized under the theme: Resolving constraints have called for more reform in laws and regulations that govern the processes of doing business in Liberia. The forum, which brought together experts from banking and finance, law, public policy and governance, witnessed the frank exchanged of ideas on how to create a business-friendly environment in the country.
Drawing from the World Bank Business Indicators, participants spent their times discussing Getting Credit, Resolving Insolvency and Enforcing Contracts. According to the Bank’s Report, the country rank 172 out of 190 economies with very low scores in the three indicators.
The Minister of Commerce and Industry Wilson K. Tarpeh said he’s he hopeful Liberia’s performance in doing business will be improved.
Minister of Finance and Development Planning, Samuel D. Tweah, Jr. expressed appreciation to the Liberia Bankers’ Association, the Judiciary, the private sector, the donor community, the media and others for responding to the Ministry’s request to attend the business forum. He pledged government’s support and commitment to the process.
Several presentations highlighting the problems and possible solutions were made during the deliberations. During his presentation, the President of the Bankers’ Association of Liberia, John Davis noted there were lots of issues that made getting credit difficult in Liberia.
Ethical behavior of loan officers was also mentioned as an impediment to getting credit. Loan officers are allegedly demanding shares on loan sought thereby leaving borrowers with no alternative but to provide fake titles as collateral.
Even at that, it is always difficult for a bank to access the legality of a title. In some cases, banks and financial institutions are not even granted access to borrowers’ credit information whether online or through a system to system connection.
In terms of accessing loans from the banking sector, he noted that it was a pity to see investment in agriculture accounting for only 2%. If the nation must rise out of food insecurity, more investment must be placed on the agriculture sector thereby raising the need for the revitalization of the Agriculture Development Bank, he said. Most of the loan provided by the banking sector goes toward roads and infrastructure development. Without a cadastral map, it is difficult to indicate landownership throughout the Republic.
According to the WB report, it takes on average 3 years to commence foreclosure proceedings leading up to judgment from the Supreme Court of Liberia. Due to the long processes involved including the high fees such as those pay to lawyers, court administrators, fees for auctioning, banks and other investors find effortless in trying to seek legal redress. The difficulty also lies within the Debt and Commercial courts. According to Judge Morgan, the Commercial court can only hear cases value more than USD$ 5,000.00 whereas the rest can be handled by the Debt Court.
As the debate ensued on the role of the court as a viable means of addressing insolvency it was discovered that the Debt Court has only one judge. Participant expressed dismay over the fact that there was only one judge responsible to handle the multitude of court cases. Another serious issues was the continual use of type writer in the courts. Finance Minister noted that it was unbelievable that in the 21st century, courts were still using type writers. The lack of recorder was also cited as one of the problems inhibiting the court performance. Without a recorder, it is difficult to contradict the report from a clerk typist.
The dismal ranking of the country’s on enforcing contracts say a lot about the relationship between the banking or financial sector and the court system in the country. On average, it takes 1300 days to enforce a contract in Liberia. The report noted that it takes 730 days for trial and judgment and 540 days to enforce same. The court has not automation system that allows for complaints to be filed electronically as well as the time for hearing. The lack of publication of judgment from commercial cases whether at the appellate or supreme courts level was also cited as a serious challenge to the judicial system.
During his presentation, Cllr. Mark Marvey of the Heritage and Associate noted that one reason it was difficult to enforce contracts was due to the lack of trust between the banks and the investors. Sometimes, the officials in the bank are well aware of the deficiency of the collateral but yet still, they connive with the borrowers to get loan. He also blamed the court system for not addressing cases on time. Sometimes when people take the law into their own hand, it is simply because they have no confidence in the court system”
The next step will be the development of an action matrix that will outline the challenges and possible solutions for improving the business climate. Since October 2018 after the constitution of the Business Climate Working group by President George Manneh Weah, the group has been working with both the public and private in trying to find solutions to constraints that impede a business-friendly environment. The next meeting is expected to focus on Trading Across Borders. Thereafter, a final report will be presented to the Chair of the BCWG, Samuel D. Tweah Jr, for onward submission to President, Dr. George M. Weah.