Liberia: Can Eton, EBOMAF Deliver? Potential Risks for Lenders in Billion-Dollar Loan Scheme

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Addis – When Liberian President George Manneh Weah put pen to paper on both the Eton Financial Private Limited and EBOMAF SA Loan Agreements last week, following ratification by the National Legislature for the construction and pavements of 830 kilometers road network, it paved the way for the next stage of the process, the fifty banking days within which both EBOMAF AND Eton are expected to come up with the money to facilitate the projects.


Report by Rodney D. Sieh, [email protected]


The EBOMAF SA Loan, according to the agreement, is expected to cover the pavement of 323.7 km roads including the Somalia Drive via Kesselley Boulevard to Sinkor in Monrovia -16km, Tappita to Zwedru in Nimba and Grand GedehCounties and from Toe Town in Grand Gedeh County to Ivory Coast Border-10.2km road. It includes the 185km road from Zwedru in Grand Gedeh County to Greenville in Sinoe County.

The ETON Financing loan covers 505.3km of roads including the corridor from Grand Bassa County in Buchanan through Cestos City in Rivercess County to Greenville City in Sinoe County onward to Barclayville City in Grand Kru County -316km road.

The road construction also includes the corridor between Barclayville to Sasstown road-21km in Grand Kru County; while the Barclayville to Pleebo road-75km in Grand Kru and Maryland Counties will be constructed and paved.

The ETON Financing Road Agreement will also cover Western Liberia counties including the Tubmanburg to Bopolu -52km road in Bomi and Garpolu Counties while the Medina and Robertsport-41.3km road in Bomi and Gbarpolu Counties.

Despite the swift speedy passage and signing of the agreements by President Weah, questions continue to linger over the numerous red flags ignored bordering conflict of interest and clear breach of the country’s code of conduct.

EBOMAF is managed by Mr. Mahamadou Bonkoungou, the wealthy Burkinabe businessman who President Weah has acknowledged is friend who just happened to provide a plane which the President has been using for his presidential travels since his inauguration.

The administration has also come under fire over the lack of transparency and proper vetting of Eton, which on paper presents itself as a Singapore-based financial company. Investigation by FrontPageAfrica previously established that several weeks before the Liberia Loan arrangement, Eton Finance Private Limited, on May 7, 2018, re-applied to the Accounting and Corporate Regulatory Authority (ACRA) to be reinstated under the same name and Unique Entity Number, 200510984K, and re-naming the same shareholders and directors (Receipt Number ACRA180507174296).

Additionally, a FrontPageAfrica query of the Singaporean Business Registration Portal (www.bizfile.gov.sg) using the Unique Entity Number obtained from the Eton Finance Private Limited, 200510984K, shows that the company status is still listed as “Struck Off”, raising more questions about their capability to raise the money for the Liberia loan.

Last week, the Executive Board of the International Monetary Fund (IMF) emphasized that future Liberia debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects.

The IMF is concerned that acquisition of new debts is not being done transparently. The Fund demands transparency.  “Directors emphasized that future debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects”, directors noted in a report last week.

Confusion Over EBOMAF Agreement

Diplomatic and economic analysts have already begun raising issues with the two loans.

In the EBOMAF deal for example, analysts point to the fact that it is a rather confusing agreement that mixes up a number of different concepts.

For example, the Government is called a guarantor, which, in the project finance context, normally meaning that the government is providing a guarantee to the lending banks that the project developer, who is normally the borrower, will repay the loans taken out to finance the development and construction.

In the case of the EBOMAF deal, however, the borrower is the government which some say suggest that there is no need for a guarantee.

One financial expert speaking to FrontPageAfrica on condition of anonymity said Monday that a normal lender on an arm’s length basis would expect far more protections than are contained in this agreement.

“These would include –a far more detailed and precise description of the projects. — a feasibility study in advance that the projects are actually achievable and what the costs would be. There is no explanation for the amount of the loan ($420,810,000) other than to say this is the amount of the road building work but there’s no basis for this number. The number looks very high on a per kilometre basis — money would only be disbursed when it was actually needed by the borrower rather than 30% being disbursed before the work has even begun –various covenants, undertakings and default/acceleration provisions — additional security for repayment in the case there’s any question about the Government’s ability to repay the principal.”

Concerns are also being raised over the fact that EBOMAF is not only the lender but also the contractor building the project which analysts say is extremely unusual and the disbursement schedule is confusing.

Among the concerns, many are wondering why would the Government borrow 60% when the work is only 40% complete? Similarly, why would the Government only be able to borrow more funds when the project is 100% complete? A normal construction company would expect much more regular progress payments.

But more importantly, the high price of the works raises the question whether EBOMAF is getting a sweetheart deal in exchange for making a very large loan with some of the loan proceeds to be diverted to government officials.

Furthermore, the agreement says the Government will finance the loan by issuing a “Eurobond” at 6.5% interest, a proposition analysts say makes no sense since the government is the borrower and isn’t providing the money to make the loan.

The agreement also talks about repayment of the Eurobond rather than repayment of the loan so the two concepts are jumbled together. Presumably, analysts say, it’s intended that the “Eurobond” is in fact the loan extended to the Government by EBOMAF, something the government has so far not been able to clarified.

Assuming the Eurobond is the same as the loan, economists say, the interest rate is stated to be 6.5%, which seems to be a random number as interest is waived for the first five years of the loan, which makes no commercial sense and is not something an ordinary lender would ever agree to unless it’s factored into the 6.5% payable in years 6 through 15.

FrontPageAfrica has also been able to established that There’s a reference to a Sovereign Guarantee in the agreements, which some stakeholders say, makes no sense when the government is the lender. Additionally, the section on management and other fees is unclear — particularly involving “HI Flat”

This suggest that whoever brought the loan to the table may be in for a big pay day.

Confusion Over Eton agreement

Unlike the EBAMOF agreement, the Eton agreement is slightly less confusing in that it makes it clear that the government of Liberia is the borrower. However, financial analysts say, the Eton deal has many of the same issues that a normal lender would never agree to, such as a very vague description of the work to be conducted — no basis for cost estimate; no indication that a feasibility study has been performed — disbursement of the entire loan within 110 days after approval by the Legislature and issuance of Sovereign Guarantee, as opposed to disbursements tied to progress of construction.

Additionally, requirement of a Sovereign Guarantee makes no sense when the Government is already the lender. Like the EBAMOF deal, the Eton agreement has some of the same issue of the lender also being the construction company.

Reference to an unidentified “major Chinese” construction company suggests that there may be a Chinese company behind the scenes, perhaps providing the funding.

Also drawing concern is the issue of the interest rate of 1.46% which financial analysts say, is far too low for sovereign debt of Liberia. “The effective interest rate is then further reduced by a seven year interest waiver (unless the intent is that the interest continues to accrue during this seven year period).  Repayment schedule is unclear. Is it 15 years from making of loan or is it 15 years from end of seven-year grace period, i.e., 22 years,” one analyst wondered Monday.

Clock Ticks Underway

President Weah has made road construction projects a priority and is hoping to complete both projects during the first term of his administration.  “It’s my desire and I pledge that at the end of my tenure, I shall have connected all 15 counties. This shall be my focus; this shall be my legacy and my footpath after my tenure”, the President said last week.

While the President is confident that the loan agreements will help provide the opportunities for economic growth and make impactful and meaningful contributions to national development, the coming fifty days or so could prove to be decisive for the administration as both EBOMAF and Eton race the clock to come through for an administration leaning heavily on their ability to deliver and the expectations of a nation  still skeptical amid lots of lingering concerns and questions dogging the two loan agreements.

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