Minister Axel Addy Explores Prospects of Liberia’s Commerce
Monrovia – FrontPageAfrica Exclusive Interview: Liberia’s Commerce Minister Axel Addy explores the prospects of Liberia’s Commerce and Industries sectors and what the future holds for the country’s economy.
FPA: The year has almost come to an end, as a Ministry and as a Minister, what would you consider as your remarkable achievement(s) of 2016?
MIN. ADDY: Thank you first of all for having me; it’s always a pleasure to have you guys here. 2016 actually has been a very difficult year for the Ministry, you know it’s a difficult year for the country overall, particularly, we had some challenges but we still remain committed to our rebranding agenda.
As you know, three years ago when we took over the ministry, we launched a strategic plan called “Rebranding Commerce”. The aim of that plan was to achieve a number of things: Build the ministry’s internal capacity to execute its mandate.
First year of that plan we spent a lot of time training our people, sending people for training either at LIPA [Liberia Institute of Public Administration] or sending people on international scholarships or training program to build internal capacity in order for the ministry to better execute its mandate.
The second aspect of the strategy was to focus on two major goals: 1) Integrating Liberia into the international trading system which is the WTO [World Trade Organization] accession process; 2) Implementing domestic reforms, particularly when it comes to SMEs (Small Medium Enterprises) and empowering Liberians to play a great role in the economy.
This year we spent a lot of energy on the accession process, Liberia was able to meet the requirement to be accepted into the World Trade Organization. We also spent some time working with our SMEs, as you know we passed the law — the Small Business Empowerment Act which works toward improving the capacity of our SMEs to go after public procurement opportunities. We worked on that this year, a lot of our SMEs are able to access some of those opportunities, we see the number is beginning to grow.
I think every year it gets better; I think there are more and more Liberian businesses, we had an excellent partnership with the PPCC that has been doing a lot of training trying to get Liberian to register through their vendor registration program so that they can benefit from this public procurement opportunity; so this is one remarkable thing we see as an achievement.
Also, this year we launched the national SME conference; this year it was the largest, it was focused on women entrepreneurs and their innovation. We launched also alongside the new Liberia Marketplace at Nancy Doe market.
We’ve been working with the LMA [Liberia Marketing Association] to find a home for our creative artists and our SMEs that are doing all kinds of creative things, trying to sell their products; and so through support from the Japanese Monetization Program, we have something called the LIFE Fund, so this Nancy Doe Marketplace is a Life Fund project and the goal there again is improving access to market which is one of the key pillars of the SME policy. So this marketplace allows us to be able to go there and buy made in Liberia products.
Next week it will officially open with the vendors. I met with them yesterday, they are getting ready and set for the Christmas holiday, so you and I will have a permanent location to be able to buy made in Liberia products.
We are also working with the Ministry of Agriculture in the implementation of the Liberia Agriculture Transformation Agenda. This is something I’m very very excited about, because it is looking at agriculture differently. Agriculture as a business and so this is also going to transform agriculture from the typical means.
FPA: Can you tell us about the Small Business Act, Foreign Trade Law, and Competition Act and how they are important in creating opportunities for Liberian Entrepreneurs?
MIN. ADDY: Well you know I always talk about this though I often get asked about the Librianazation policy. There are several laws in place to create an environment were Liberians are able to pursue opportunities and that policy is spread all across several laws. In the Labor law for example, there’s preference in terms of employment, recruitment, where international firms coming into Liberia wanting to upgrade our environment, they [international company] cannot bring in laborers where capacity does exist in country and the Ministry of Labor is responsible for executing that aspect of their mandate.
In the PPCC Act there is also a margin of preference, if you and I go and bid with a foreigner, there’s a percentage difference. The Liberian is supposed to be given preference to that contract. Then you have the Investment Code which basically sets aside sixteen (16) businesses for Liberian operators.
And another twelve with a caveat that foreign investors can participate in that sector based on the US$300,000 to US$500,000 initial capital they have to bring in that capital to invest in those particular areas. Now we have the Small Business Empowerment Act, the act for Liberian business SMEs giving them 25 percent set aside for public procurement opportunities in term of goods and services that government can purchase from the public; again that’s another opportunity Liberians can benefit.
We see that there’s a need to build the capacity of a lot of small businesses to be able to go after public procurement opportunities, and internally we have to change our system to better execute the payment processes so that those businesses that are going after public procurement benefit fully from the law.
This is a work in progress, the law created a new department call the Small Business Department Act, we are going through that process of building the capacity of that department to be able to provide a lot of training for SMEs in terms of access to finance, working with the bank to provide products and sharing that information with SMEs that are looking to start their business or already started their business but are looking for financial assistance.
The SME conference brings all of the players together. It is a lot of information sharing, a lot of exchanges during the SME conference, through that process you also see a lot of opportunities for collaboration.
This year we focused on women entrepreneurs and this year we had for the first time rubber wood competition showcasing what Liberians can do with rubber wood. We are now supporting rubber wood production; we are unlocking the potential of rubber wood.
For too many years we used it for charcoal. It is actually a fine wood, my entire office is done with rubber wood and this is something we are trying to promote that people will use it for more than just charcoal.
In terms of industry, we are working on the industrial policy. The industrial policy is very clear — in order to really really grow industry, you have to have the infrastructure in place and in order to have the infrastructure in place, the issue of energy, the issue of roads have to be addressed and we have made some substantial investment as a government.
On December 15, we had a huge celebration when the first turbine of Mount Coffee was put on. This supposed to reduce the cost of power in the country. Now this is when you can truly bring in a major manufacturer.
Implementing the industrial policy, our focus is building our capacity internally to work with existing industries and look at standards and quality infrastructure. There lot of things we worked on this year and the overall goal is that we want to build the foundation for a modern economy so that business is transparent and predictable.
FPA: You made some foreign travels over the last couple of weeks, you were in Accra and also Abuja on various conferences, could you brief us on the essences of those conferences and their outcomes?
MIN. ADDY: Well I went to Ghana like I said, one of our overall goals is to improve the business environment so that the private sector can grow and when there are issues in terms of private sector operators trying to improve their operation in the country, we try to work with them. We are working closely with the Ministry of Agriculture, they are the lead — we followed them in terms of moving agriculture as a business, it is not a charitable investment, it is actually a business.
People can get wealthy out of it, but we do have some major investments in country that are struggling, they are struggling due to the global price decline that has hit them. We’ve got hit by the health crisis that crippled the economy. It is my responsibility and the Ministry of Commerce’s responsibility to engage those operators to see what we can do best to keep them in country because many of them closed their doors and said it’s not profitable and left.
When they leave we lose jobs — the goal of the trade minister is to be creating environment where more jobs are created not losing jobs. It impacts my ability to execute our mandate. We’ve been working with the oil palm sector, we brought them to the table; they are getting ready now to go into production.
They have made huge investment in planting and we said to them our job is to link you to the market, that is what we can do to help and they raised the issue of trying to find new market to export the crude palm oil in the region, they raised the issues that Liberia has not ratified the CET, the ECOWAS Common Extended Tariff and the ECOWAS Trade Liberalization Scheme which allow us to export products within the region free of duty. This is one of the key commitments in the WTO package.
We were able to push this working with the leadership of the legislature, all of those protocols have now been ratified — thanks to the leadership, we have met that requirement. The requirement now is to link them to buyers and so after several weeks of meeting, I contacted my colleagues when they told me Ghana is processing, they are at the highest stage in terms of industry and they are actually processing crude palm oil for so many products in Ghana and they have a huge shortage and we need to supply the market that can buy from us.
They told me they have made several missions to Ghana, but things were not moving because we needed to do certain things; so on the head of states visit Madam President met with the President of Ghana, we were all in that meeting and one of deliverables that was given to the two trade ministers — myself and the trade minister of Ghana — was to organize a meeting to bring the players together — the Ghanaian buyers and regulatory authorities and our private operators and so that is why we took the delegation to Ghana.
The trade minister in Ghana organized a meeting where he brought in all the regulators and the oil palm associations on how we can work together so that we can be able to supply them to fill the gap, so that was a very good meeting and lot of it has to do with standards because when you export into a country, how they assess the quality of that product will determine the price, they are using certain international standards so our Standard Lab Director was also part of that delegation,
We had a subsequent meeting with the standard authority where they agree upon, crude palm oil going to Ghana will be tested locally and those result will be shared with them [Liberia private sector operators] based on that, they have the pricing structure for our people to be able to sell the oil palm. That’s one deliverable I’m happy about. After that, I also paid a visit to Abuja for a conference on agriculture as a business.
I was there for a day and met with some people who are promoting this thing of agriculture transformation as business and not as a charity; it was a very productive meeting.
Liberia has the vice chairmanship for the Africa regional intellectual property organization, so I was in Zimbabwe to carry my duty — to chair the meeting and to open the organization new headquarters with Vice President of Zimbabwe and they were able to negotiate some scholarships for new lawyers that have graduated to be able to go there and be trained and specialize on intellectual property law, which is needed and train some other people to help start our new IP office which will start next year.
FPA: Moving on the WTO, what’s the story behind Liberia’s accession?
MIN. ADDY: This is something I can’t take credit for Liberia; the Ministry expressed her interest eight years ago under the leadership of minister Akerele. Liberia having to be the only member in ECOWAS that was not a member of the WTO, she initiated that process.
When we came on board we saw a lot of which has been done on this and the overall goal is how do we improve the business climate what do you need to do so that you can have an enabling environment where businesses can actually grow.
If it takes a longtime to clear containers at the port, that translate into price of that product on the market because that business is definitely going to incur charges that is likely going to translate to the business. When people know where they can pay their taxes — can I just pay my taxes using mobile phone?
If I need to get on a plane and come to Liberia and explore business opportunities and there is no embassy near me, why do I have to send my passport through DHL, pay and wait for it to come back, paying all those fees to get that visa by the time I’m finish paying all those fees that visa has cost me US$400.
Why I can’t get visa upon arrival? It’s about improving the business climate, it’s moving toward certain level of discipline that will ensure transparency and predictability and it helps SME.
Right now there are people who like the business climate the way it is because they can clear their containers in twenty-four hours; for you and I, it will take us one week because there are all kinds of processes that we may not know how to fast track and cut off all the bureaucracies to get my goods out.
There’s no money that’s coming to Liberia but it does improve government’s ability to raise revenue. If you look at all of the services the government is supposed to provide, I’m sure if you were to assess our potential to collect revenue, you will see that we are not collecting all of the lawful revenue that we should legally collect under the Ministry of Commerce.
Nobody in this country should operate any industrial operations without visiting the Ministry of Commerce. No matter who you go to in this country or which agency gives you right to operate, the moment you talk about industry, there’s a law on the book that gives the Ministry of Commerce authority to ensure standards and protection. Standards mean that if you are building a factory and anything of an industrious aspect, it’s the Ministry of Commerce’s responsibility.
In order for the ministry to do that, the ministry must have the capacity to do that. One time I heard there some explosion at some concession that killed a lot of people and I was saying ‘if you don’t have compliance regime in country anybody can setup anything’. Right now, we have a lot of people setting up water business all in the communities, what is the standard?
If somebody doesn’t treat the water with the proper chemical, you can pass all kinds of water borne diseases to the population which can be very expensive. If a person who barely makes a hundred dollars a month gets sick, you have had an impact on their income. In order to execute this part of the mandate, you have to have fund to do that.
It means investing in your National Standard Lab, making it into a national regulatory board that will set all the standards. If you’re doing mill or factory, even a factory there is something called manufacturing practices. Most factories in the world get a stamp of approval to setup, they [regulatory board] look at everything — how do you manage your waste, how do you manage emergency — but to implement this you, need to have people who have the capacity. Some countries outsource this to big international company that has the standard and capacity to do that kind of work, others have done partnership or try to do it on their own.
FPA: We haven’t seen much of industrialization in Liberia since the war ended more than 13 years ago, has the Commerce Ministry any spelt out plans on how to industrialize Liberia or we should just keep hoping on the exportation of raw materials?
MIN. ADDY: You cannot create jobs without industries, that’s the fundamental. The economy in order for it to be inclusive you have to create jobs. The easiest way to create jobs is through manufacturing, access to global value chain.
So, you will find out what do I have in my country that in demand on the global market then you bring in the right capacity to now move that agenda forward. We see that we have opportunity in a number of areas, we’ve done something — we launched Expo-strategy.
The Expo-strategy looks at a number of sectors where Liberia has a number of competitive advantage that can create a lot of jobs. Oil palm, there is already two or three major oil palm investors in Liberia, when they go on line in terms of production, they are going to hire a lot of people. We’re working in that area already. Cocoa, there’s already one cocoa concession trying to improve cocoa production.
The price of cocoa right now is very very high, if we have a diversified economy where all these different commodities were already being produced at a high level, we wouldn’t feel the same pinch we feel now giving iron ore and rubber price has dropped; so we are pushing cocoa.
The other area that is the greatest opportunity is in tourism and fisheries. Fisheries, there is so many ways it can be done. You look at aquaculture, for example fish farming — we have so many water ways and so many areas where we can do fish farming.
This is a huge multi billion dollar business just for ECOWAS. Liberia has the potential to feed and supply West Africa fish product because we are endowed with so many resources when it comes to that particular sector. You see our people here selling lobsters all on the streets, if you go to Buchanan, you can buy huge crabs, lobsters and shrimps.
My dream is to one day mobilize the investment so that we can do lobster and shrimps, package it and send it off to Brussels so that I can see what I saw in Kenya where they are actually exporting roses to Amsterdam everyday on Kenya Airways. When we went to that place, hundreds of Kenyans had jobs.
At the end of the day, when the population is working you have done a huge thing to help them move out of poverty, you can give all the money away if people are not earning an income to sustain themselves then it makes it difficult to really get them out of poverty.
The Asian countries have focused on the manufacturing; we can use that same model now that we have power that is competitive. Now that we have the infrastructure that is somewhat competitive, we can look at key products that we can invest into, improve our supply on the domestic market and also begin to export.
But that also comes with the human capacity, having people not just with the training but with the discipline and got to have specialists who are trained to service the equipment. That’s the whole piece of the equation we are trying to work on.
We have a program at BWI training young people how to operate heavy duty machinery because there’s shortage of people in that field and now MVTC is open, we want to make sure the training they are targeting is faded to the market.
In order to industrialize we need to have power — cheap power as possible. The industry Minister, she’s working on the industrial park to reclaim that industrial park so that we can begin to encourage investors to come and go into that park with the goal that we will be creating thousands of jobs for Liberians.
FPA: The foreign exchange rate is increasing, commodities prices sky rocketing, government is unable to generate revenue to support its budget, as the Minister of Commerce what can you say is responsible for what’s happening to our economy?
MIN. ADDY: Well you know economy moves based on many many many variables. You look at the monetary policy, you look at fiscal policy, the trade policy and the investment policy those policy implementation impact the economy in different ways. We are lucky we have a dual currency regime.
The U.S dollar props the Liberian dollars so we don’t see the kind of depreciation the rest of our colleagues see. In other countries because we have this dual currency regime, our access to foreign exchange depend on our export basket. Your export earning you know, the more diversify that basket is, the safer the currency.
The less diversified that basket is, the more vulnerable the currency. Right now, our export basket is primarily dominated by iron ore and rubber, when you have those two primary commodities suffer such a huge drop in the global price with no real backing from the other aspects of the economy, you can have that hit on the currency.
I think the Central Bank has been doing an excellent job trying to manage this. Moving your policy instruments to make sure it does not increase exponentially where it truly truly harms the real economy and Liberians’ capacity to survive on a day-to-day basis. I know it’s rough, but when you look at where it could be giving what we have just endured. When you talk about commodity prices, you talk about health crisis, and a lot of the company closing down, you can see that it is important, the government is doing its best to make sure to manage these policies.
The monetary side: the Central Bank is the lead on that — trying to make sure that those who are trading have access to the foreign exchange to bring our food supply, our fuel supply so that people have access to that, we don’t have a shortage which is another crisis, on the fiscal side the government execution of its budget however is constrained also keeping that in mind, as member of the EMT (Economic Management Team) we are keeping that in mind what we can do more to keep money in the system.
Government is spending in strategic areas, paying our SMEs so that there’s a steady flow of cash in the system; despite the challenges no matter how constrained the budget is and more importantly paying the government employees, paying on the domestic debts that will at least keep money in the system at a level.
On the trade side what can we do right now is we have a taskforce looking at the enabling environment indicators. What can we do at the Ministry of Commerce working with the other stakeholders to improve the business climate and bring in new investment opportunities and bring in new business opportunities working with the National Investment Commission, we are looking for all kinds of ways, the SBA law is one attempt to put money in the hands of small businesses by adjusting how we execute our budget to empower Liberians to operate in the economy.
On the investment side, the National Investment Commission just had an investment forum with investors from the UK, so they are trying to do more investment promotion activities to begin to attract investors in the nine traditional areas to push more investment in agriculture and agro-processing to improve access to the market.
There are numbers of levers you have to move. I fully understand the challenges, one of the things that keeps me awake is what can we do to at least put money in the hands of our people. The SME conference is an attempt to do that.
During the SME conference, we gave contracts to a lot Liberian businesses. The Liberian Marketplace will now provide the space for SMEs to be able to sell their products to all those Liberians coming home they can buy made in Liberia product and that translate into the people who do the raw materials.
FPA: Some customers are complaining of the Ministry relaxed stance on the importation of goods resulting to a market flooded with junk products, why are we having huge of low quality products on our market?
MIN. ADDY: You know standards enforcement is an expensive exercise, often people ask me about this thing of substandard goods on our market, the bedrock of our strategic plan is lasting solutions instead of running here and there. We try to find a lasting and permanent solution in order to tackle the issues of standard; you will have to enforce standards before it actually comes to the country.
We now have a taskforce that is working with the LRA [Liberia Revenue Authority] Custom and the Ministry of Finance to look at opportunity and bring in quality infrastructure program that will bring inspection before it actually comes into the market based on standards that will take a while because we don’t have the money. the standard lab to meet ISO accreditation we need a minimum of US$700,000.00 to invest, we only have US$200,000 a year which is also used to pay salary.
We now look at different models to see what we can do differently to improve the quality of infrastructure for quality enforcement. I visited a facility in Ghana, the facility in Ghana has several relationship — it generates millions for the government. The Ghanaian government is only supporting it for salary, they generate their revenue and part of that revenue goes into investing in the regulatory, before a food product comes to the market it has to be tested.
The testing isn’t done by magic, the person has to be paid, the chemical he’s using to test has to be purchased, all of these things come with implications. We are looking at other model to see if we can bring in partners to help us to setup a national standard board. This will help answer the question of substandard goods coming into the country.
FPA: With all of the achievements you have named for this year, what do we hope for come 2017?
MIN. ADDY: 2017 we are on the path of implementing the strategic plan. We have a review process I understand the consultant is almost done with the strategic plan which will tell us what we have achieved in the execution of the plan and what we need to do to conclude on those things we have not met.
My personal passion has been SMEs getting Liberians to go into business, building entrepreneur spirit so that when an average student graduates, they’ll want to start a business. We want to work with the bank so that people can seek those opportunities; we want to work with the Ministry of Finance so that government can take the risk by investing in Liberia by putting money in the bank to invest in SMEs.
We want to push agriculture, now there are lot of people on the supply side, within the WTO there’s post accession plan with a number of commitment to improve the business climate so we will continue with that. I’m also excited about the tourism sector, we will be launching the rubber wood sector strategy, those two, I believe will create a lot of jobs for our people.
We will have rubber wood center at Nancy Doe (market), you go there and buy your furniture and arts and crafts; we also have a program called RIPE (Rural Industrial Program for Economic Empowerment) it’s to look at college industry around the country.
We building one to process the Lofa County cloth, that one will be coming on line soon, that one will be creating opportunity, so we will continue to focus on these things and working on SMEs, on the international front those commitment we have with the WTO to reform the laws, to improve the business climate, to work on those indicators, business registration improvement, clearing goods at the port improvement, investment promotion and making it clearer so that if people want to invest they know what the rules are.
So that they know the publishing fees, moving toward an E-government platform and doing e-work permit, driver licenses electronically, pay your taxes electronically, resident permit, do a national biometric all of these help to improve the business climate so we will continue down that path to reach those goals.