Attitude toward FDI
Liberia’s economy is based on a free enterprise system and the GOL adopts an open-door policy towards FDI. Overall, the GOL continues to make starting a business easier by eliminating business trade license fees. It has streamlined the steps and procedures involved in the business registration process to make it easier and faster. The transfer of property has also been made easier through a digitized records system at a land registry, known as the Center for National Documents and Records Agency (CNDRA). The report also indicates that Liberia made progress in reforms related to contract enforcement, issuance of construction permit and cross-border trade. Despite these measures and a commitment by the GOL to improve the regulatory environment for investment, Liberia’s business climate remains poor with a ranking 179th out of 189 in the World Bank’s 2016 Doing Business report. This poor ranking is partially attributed to non-regulatory factors such as the general infrastructure constraint including lack of electricity for many businesses, limited road network to connect commercial and population corridors, and difficulty SMEs face in accessing finance and market. Furthermore, there are laws and practices that discriminate against foreign businesses by prohibiting, limiting, or conditioning foreign investment in certain economic sectors as stipulated in the Investment Act of 2010. The intent of these laws is to empower Liberian entrepreneurs. However, the International Finance Corporation's (IFC) Investment Climate Team collaborates with the GOL to improve the investment climate by increasing access to finance and inspiring greater confidence in Liberia as an investment destination.
Other Investment Policy Reviews
Neither UNCTAD nor the OECD has conducted an investment policy review for Liberia in the last few years.
Laws/Regulations of FDI
To obtain a new concession agreement or long-term investment contract, potential investors have to engage in lengthy bidding and negotiation processes. In addition to the Investment Act and Revenue Code of 2000, the Public Procurement and Concessions Act of 2005 and the National Competitive Bidding Regulations, theoretically provide a clear, standardized, and transparent system for awarding concessions and public tenders. However, requests for Expressions of Interest (EOI), International Competitive Bids (ICB), and Invitations to Bid (ITB) are often poorly advertised, which hampers the process from the onset. An Inter-Ministerial Concession Committee (IMCC) chaired by the National Investment Commission (NIC) includes the Ministries of Justice and Finance and Development Planning. The IMCC is statutorily responsible to handle bids, evaluate, award, and finalize concession agreements for the GOL. The President of Liberia sends the IMCC-awarded concessions to the national legislature for ratification. Concession agreements become legally binding (laws) after having been ratified by the legislature, signed by the president, and printed into handbills by the Ministry of Foreign Affairs (MFA). Depending on contract clauses and stipulations, a re-negotiation and subsequent round of ratification may be necessary in the case of ownership transfers. Besides the general weakness of the judiciary, there is no executive or other interference in the court system that could significantly affect foreign investors.
The following list of websites may help navigate the laws, rules, procedures, and reporting requirements for foreign investors:
http://www.ppcc.gov.lr/ : The PPCC prepares, monitors, and guides public procurement policies, procedures, and guidelines for awarding concessions;
http://www.lra.gov.lr/: The Liberia Revenue Authority (LRA) collects all lawful revenues due the government, and is the custodian of the 2000 Revenue Code;
http://www.investliberia.gov.lr/ : The National Investment Commission (NIC is the investment promotion agency of the GOL, and chief negotiator of all concession agreements;
http://www.mfdp.gov.lr/ : The Ministry of Finance & Development Planning (MFDP) is responsible for the country’s fiscal policies, and is the custodian of the Public Financial Management Act of 2009.
Business Registration
All businesses are required to register and/or apply for an authority to do business or provide services in Liberia. There are several ways to legally structure a business in Liberia. Currently, the options are as follows:
- Sole proprietorship
- Partnership or Limited Partnership
- Business Corporation
- Limited Liability Company (LLC)
- Non-profit
- Foreign Corporation
- Foreign Maritime Entity
Business registration is handled by Liberia Business Registry (LBR), http://www.lbr.gov.lr (site currently under maintenance). Certain business types require a notarization by the GOL, and foreign companies are advised to refer to the LBR for advice on registration processes. The wait-time required to register a business can be between three and four working days. The NIC is the investment promotion agency that facilitates foreign investment and crafts investment policies. It is the chief negotiator of all concession agreements and the custodian of the Investment Act. Investors seeking to invest in Liberia generally take one of the following three paths:
- Standard Business – requires no incentive from the government; typically, these are small businesses with capital of less than $500,000, but some larger businesses fall into this category; sector specific licenses and permits may be required for registration and incorporation; for more information, please refer to http://investliberia.gov.lr/business/permits/
- Special Investment Incentives – typically businesses that invest less than $10 million and seek government incentives; for more information on incentives, please refer to http://investliberia.gov.lr/invest/incentives/
- Concessions – typically businesses that invest more than $10 million and seek extra consideration from the government; for information on the process of negotiating a concession, please refer to http://investliberia.gov.lr/invest/concession/
In cases where an entity is already registered in different country and wants to do business, provide services, or take part in a bids in Liberia, that entity must apply for an “Authority to do Business” through the LBR, http://www.lbr.gov.lr. The fees charged for this process are found on the LBR’s website. The GOL established the Department of Small Business Administration (SBA) in December 2014, with the objective of promoting the interests and fostering the development of micro, small, and medium enterprises (MSMEs). According to Liberia’s MSME Policy, micro enterprises are firms with three or fewer employees; small enterprises are firms with four to 20 employees; and medium enterprises are those with 21 to 50 employees. For more information on the policy, please refer to this link: http://www.moci.gov.lr/doc/Final%20MSME%20Policy%20Liberia%202011-2016.pdf
Industrial Promotion
Liberia is well known for its opportunities in the extractive and forestry sectors. The country also offers a wide range of opportunities in agriculture, mining, energy and power generation, agribusiness, and warehousing and storage. The NIC has packaged opportunities in four strategic sectors that have programs to guide potential investors and attract investment. This information is disseminated to the general public via this link, http://www.investliberia.gov.lr/invest/sector. The strategic sector opportunities are as follow:
- Road Transport: large scale fleet to service concessionaires; small scale trucking services targeting small and medium sized businesses.
- Costal Transport: operating short haul cargo services along the coast targeting demand from oil rigs and concessions across the country; market opportunity also exists in intra-West Africa trade.
- Fisheries: Liberia has 186,322 km2 of fishing ground within its Exclusive Economic Zone (EEZ) along the coast; strong local and regional demand creates opportunities for fish harbor management, fish processing, and aquaculture production.
- Fruits and Vegetables: Liberia has abundant rainfall, temperate climate, and rich soil that offers ideal growing conditions for tropical fruits and vegetables; there is potentially high demand from domestic, regional, and international markets for locally grown fruits and vegetables.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign private entities have the right to establish and own business enterprises, and engage in all forms of remunerative activities, except for businesses that are restricted exclusively for Liberians. According to the Investment Act and Revenue Code, which govern investments in Liberia, foreign investors have similar rights and are subject to similar duties and obligations as those that apply to domestic investors with several notable exceptions. The Investment Act imposes restrictions on the operation of, and investment in the following business activities or enterprises:
- Supply of sand
- Block making
- Peddling
- Travel agencies
- Retail sale of rice and cement
- Ice making and sale of ice
- Tire repair shops
- Auto repair shops with investment of less than $550,000
- Shoe repair shops
- Retail sale of timber and planks
- Operation of gas stations
- Video clubs
- Operation of taxis
- Importation or sale of second-hand or used clothing
- Distribution in Liberia of locally manufactured products
- Importation and sale of used cars (except authorized dealerships, which may deal in certified used vehicles of their make)
Under the Investment Act, foreign investors may invest in the following business activities provided they meet minimum capital investments thresholds:
- Production and supply of stone and granite
- Ice manufacturing
- Commercial printing
- Advertising agencies, graphics and commercial artists
- Cinemas
- Production of poultry and poultry products
- Operation of water purification or bottling plant (exclusively the production and sale of water in sachets)
- Entertainment centers not connected with a hotel establishment
- Sale of animal and poultry feed
- Operation of heavy-duty trucks
- Bakeries
- Sale of pharmaceuticals
According to the Investment Act, for enterprises owned exclusively by non-Liberians, the total capital invested shall not be less than $500,000. For enterprises owned in partnership with Liberians and the aggregate shareholding is at least 25 percent, the total capital invested shall not be less than $300,000.”
Despite these restrictions, the Investment Act has not effectively increased Liberian participation in commercial industries. The act officially eliminated a mandate that foreign-owned companies must employ qualified Liberians at all levels. Most investment agreements dictate that foreign-owned companies employ a certain percentage of Liberians at all human resource levels, including upper management. In practice, this rule is rarely applied as foreign companies usually face difficulty in finding the right skills for high profile technical or managerial positions. Business registration regulations enable a foreign company to open a fully-owned subsidiary in the country. Certified documentation of proof of a holding company will be required along with other necessary documents during registration.
While land ownership is restricted to Liberian citizens, the acquisition of public land by non-Liberian citizens is possible through a leasehold. Leases ordinarily run for 25 to50 years, but exceptions are permitted under the law. The ownership, leasing, and use of land are governed by both statutory and customary laws. Chapter III, Article 22 of the Liberian Constitution states that: “Every person shall have the right to own property alone as well as in association with others, provided that only Liberian citizens shall have the right to own real property within the Republic. Private property rights, however, shall not extend to any mineral resources on or beneath any land or to any lands under the seas and waterways of the Republic.” In 2013, the Land Commission, which is responsible for reforming land policies, laws, and programs, developed a Land Rights Policy. The policy categorized land into Public Land, Government Land, Customary Land, and Private Land. There is a cross-cutting category called Protected Areas, which must be preserved for conservation purposes for the sake of environmental protection that would benefit all Liberians. Verification of land titles is conducted at the Center for National Documentations and Records Agency (CNDRA), www.cndra.gov.lr.
Rights to land ownership and use of resources such as minerals and timber have become increasingly critical issues in recent years, fueled by increased foreign investment interest and clashes between traditional and statutory land uses. In January 2015, the GOL extended the moratorium on public land sales to resolve conflicting land tenure systems and allow for new land laws, regulations, and procedures to be formulated by the Land Commission. However, the moratorium does not stop the GOL from entering into legally binding investment agreements with companies to use land, including for mineral and agricultural concessions. The moratorium, which has been renewed annually since 2010, applies to individuals, groups, government functionaries, local authorities, and communities that are involved in land transactions. However, concession-related land challenges have not been fully addressed. As firms commence operations, local populations believe their lands are being encroached upon, often leading to disputes, strikes, and sometimes violence. In the interest of minimizing lost productivity and in the absence of GOL adjudication, companies often make additional community-level payments or agreements to resolve competing land claims. The future enforceability of such agreements is unclear. Prospective investors should not underestimate the potential for costly and complex land dispute issues to arise even after concluding their agreements with the GOL.
Privatization Program
Not applicable.
Screening of FDI
Not applicable.
Competition Law
In December 2015, the WTO approved Liberia’s membership to the organization, and the Liberian Senate has passed a Competition Law, which is expected to maintain and encourage a free market economy, as well as to promote fair competition in trade, meeting WTO standards.