Construction Sector: Challenges of Liberian Owned Firms
Monrovia – When James Johnson decided to move back to Monrovia from the United States in 2009, he had his mind on exploring the opportunities of Liberia’s construction sector.
Later, did he realize that he must maneuver through unprecedented challenges of a sector so familiar.
The country was just recovering from a devastating civil war and its entire infrastructure was in tatters.
Reconstruction was a priority for both the government and its development partners.
In Johnson’s prediction of the country’s construction market, he saw an opportunity to help rebuild his country and at the same time make some profits.
“Because of the experience that I had already gathered in the States, I thought it wise that I must come back to Liberia and do something,” he said during an interview with FrontPageAfrica.
“It was difficult because many Liberian professionals saw me as a man coming from the States, as a hindrance to their operations, because these individuals have been here for a while so they think that you stepping on their turf.”
Johnson left Liberia as a young man but was returning to stay permanently after more than three decades.
It was a new system – perhaps a broken one – that he was about to venture.
His full knowledge of the business while working in the US was pretty much not fully applicable in the war-ravaged nation.
“So, you have to go through the ‘we don’t know you’ phase and when they get to know you, things kind of change, but not drastically. But for me, I strongly believe in competition irrespective of who I’m going against.”
He was coming to Liberia with a 25-year experience after working for Turner Construction as an engineer and project manager.
Turner is the largest construction firm in the United States.
Turner is an America-based, international construction services company and is a leading builder in diverse market segments with recognition for undertaking large projects.
It has 5,200 employees and completes $10 billion of construction on 1,500 projects each year.
Before he opened his own firm in Liberia, between 2005 and 2008, he landed his first job on home soil with Sawyer and Associates as a project consultant for the rehabilitation of the Capitol Building – offices of the Liberian Legislature.
Johnson then began his own company, CJ Construction Company Incorporated, as the senior managing partner.
His firm’s philosophy includes training locals as a means of empowering Liberians and narrowing the gap in the technical manpower capacity of the country.
The company is concern about the future of Liberia’s manpower competence and young engineering graduates.
“How can we build the capacity of these young people, we need to create the environment for them to obviously build the society,” he suggests.
“We need to bring the professionalism – the things that we’ve learned in the United States and build an organization for the next generation to be able to compete internationally.”
Over the past eight years, Johnson has led his company, executing several projects including the construction of the new ELWA Hospital in Paynesville City.
The firm has 20 permanent employees and a poll of over 100 workers for projects.
He recalled that his breakthrough project in the country was implementation of a major sub-contract for BL Herbert during the construction of the new American Embassy in Monrovia.
“After vetting me and seeing the work I did in the United States, they hired my company and that boost our reputation and then we moved on to working for APM Terminals for the rehabilitation of the Free Port of Monrovia,” he said.
But the difficulties in running a construction firm in a country, where foreign companies dominate the sector, have also tested Johnson’s resilience as an expert from the developed world.
While there are repeated concerns about Liberian firms marginalization in the construction sector created by several underlining factors, Johnson says one of the reasons is stereotypical.
“A lot of people come with international firms and some of these people don’t even meet your qualification or experience but you are basically just marginalized because you are a Liberian. I don’t think that should be the norm and the way to proceed in rebuilding Liberia.”
“I thought Liberia – before coming back home – was if an individual is qualified to do a specific task, you will have no choice but hire that individual.”
However, there’s a line between expectations and realities and Johnson has lived through both while working in the country.
He keeps his two eyes most times on private sector projects than government’s projects to avoid collapse of his firm.
“Because the way the government and other people in Liberia look at Liberian owned companies that all Liberian businesses are failures, and they fail at doing things, but they do not look at the underlining reasons for these failures,” he said.
He claims corruption engulfs most procurement processes as individuals request kickbacks or bribes, and there’s an entrenched syndicate of individuals who feel untouchable.
They impede the overall development of Liberia and Liberian businesses, he said.
His firm has endured mistreatment from the National Housing Authority after NHA failed to pay him retention fees for the construction of housing units in Brewerville City. Although the Debt Court ordered the NHA to pay the firm, NHA has failed to pay the full amount.
Affirmative Actions Needed
Like many other Liberian entrepreneurs, Johnson reckons that only a well-enforced legislation can protect Liberian owned businesses against corruption and manipulations by foreign players, who have huge capital.
“It’s shameful that we must call for affirmative action because we are in our own country, but we need to come up with some kind of policy that will ensure that every Liberian company or business must have a threshold percentage of what we should benefit from the contracts,” he said, adding that a 25 percent threshold should be a good start.
While the government seeks grants and loans for projects, he said massive consideration must be given to Liberian firms during the bidding process.
Economists say this would be a means of empowering the local economy and augmenting the country’s technical human resource capacity.
“The population as a whole should be benefiting from these loans and grants projects, and consider how many Liberian professional engineers that are working on these projects.”
“Liberian government should not be paying for a loan and then as far as our capacity building is concern, it is just the minimum in terms of professional engineers,” Johnson said.
Johnson, who dares to compete with international firms if once bidding processes are fair, also insists that privileges must be given to local firms in order for Liberians to steer the affairs of their economy and take ownership of projects.
“For example, if the United Nations or the World Bank project comes to Liberia and they’re asking for construction companies turnover, which is equivalent to around US$50 million, for example, how many Liberian firms can make to have such turnover within two years,” he said.
Johnson argues that these “unfavorable standards” are strangulating Liberian companies and compounds already limited access to loans from banks to pre-finance projects.
“I think the government needs to give Liberian companies some kind of tax incentives or have some agreement with the bank to grant Liberian companies loans, which would help the sector thrives,” he said.
“Usually the banks ask for collateral that are sometimes three times the amount of what you are asking for, which makes it difficult for many Liberian companies and this is troubling for the sector.”
“I think, many times the bank creates situations for Liberian business to fail because the government is not helping the Liberian engineering and construction companies to succeed.”
Against these odds, Johnson and his firm are managing to survive and when he completed the ELWA new hospital project, former president Ellen Johnson Sirleaf joined many others to laud his outstanding work.
He says one reason for his success with the project was because of the project owner, Samaritan Purse, who sought only a qualified Liberian owned firm for the job.
It was not just building the hospital but opening corridors for Liberian companies to succeed and inject life into the construction sector, he said of the firm’s decision.
Creating a Consortium, the Answer?
Amid these challenges, Johnson is optimistic and says Liberians must challenge the status quo if their firms must survive, warning that “working individually” would means facing more hurdles in the sector.
He is opting for a conglomeration of Liberian firms into a consortium.
This, he said, would means stepping toward a new and robust approach in dealing with the challenges dogging locally owned construction and engineering firms.
“If we can bring them together and take away all our selfish attitude and bring our selves together, I think we will be a force to reckon with because that will demonstrate to the Liberian government and to any foreign partner or group coming that we have the capacity and deserve a very good piece of the pie.”
“Once we get into a situation where we formed a consortium and take on big projects, this will help the government’s pro-poor policy because we will be hiring Liberians. So we need the government to provide tax incentives that will provide opportunity for Liberian businesses,” he said.