The Liberian Entrepreneurship Dilemma
I am usually hard on my fellow Liberians when it comes to entrepreneurship. My critique comes from years of observation, seeing Liberians miss out on common sense business opportunities, and letting those possibilities fall in the hands of foreigners.
It is not a situation of foreigners coming into Liberia and taking business opportunities away from Liberians; it’s about Liberians, by default, due to a lack of interest, surrendering these entrepreneurial endeavors to foreigners.
The most graphic and cringe-worthy example was a dubious, self-styled Nigerian Prince coming into Liberia, putting in an oil bid, bribing the legislators, and walking away with $200 million after flipping his bid to the American oil giant Chevron. Willis Knuckles, now deceased, went on the air, did interviews warning his countrymen to participate in this bid, to even find a foreign investment partner , but his yodeling fell on deaf ears.
The result, Prince Eze of Oranto Petroleum $200 million, Liberian legislators, one hundred twenty thousand dollars in bribes. This was a national shame. Prince Eze, the benefactor, could not believe his luck; the gullibility and pettiness of the legislative branch coupled with the lack of interest by Liberians in the bidding process led the prince to walk off with a King’s ransom.
A similar scenario played out in Ghana during the bids for the multi-billion dollar Jubilee oil fields. This time two enterprising, big picture Ghanaians, George Owusu and Kwame Ewusei, saw an opportunity and seized it. They partnered with Kosmos Energy an American firm for the bid; after winning the bid, Kosmos stock soared on the capital markets to dizzying heights making the two Ghanaians hundreds of millions of US dollars in the process.
I am not alone with this criticism of Liberians cavalier attitude toward entrepreneurship. Two years ago I remembered having a conversation with an outgoing western diplomat in Sinoe County during the 26th independence celebrations when she laid out her frustration about Liberians misconception of nation-building; how we wrongly fail to see the forest for the trees by assuming that development and prosperity are solely the by-product of government’s policies and programs.
True, the government has a part to play in development, she said, but growth and prosperity have always been driven by the buoyancy of the private sector through SMEs. The entrepreneurial class in any society generates economic expansion and eventually creates growth and prosperity.
The diplomat’s pessimism was somewhat shared by another American, Bobby Digi, President of the New York Staten Island’s North Shore Business Association. Mr. Digi, an entrepreneur, is an advocate for minority businesses in his city, especially African SMEs. As an advocate, Digis job is to ensure that minority businesses get their fair share of financial and training support from the city’s Staten Island Economic Development Corporation.
What baffles Digi is while other African nationals like the Nigerians, Guineans, and Ghanaians have taken advantage of the resources provided by the SIEDC, and now have sprawling small businesses dotting the city’s landscape, Liberian businesses are virtually non-existent, he told a local newspaper, Global City. Want to find a Liberian business in an area that has the highest concentration of Liberians in the US, you have to look in the informal sector; roasted meat, palm oil, and other produce on the sidewalk.
“These businesses could be formalized, and receive support and training from city offices But there has not been “aggressive interest” from Liberians, he said. “You can’t get them to come and attend these things en masse,” though the result would be much different, said Digi, “if you said ‘let’s throw a big party.’”
But even when setting up a formal business, as Digi suggested, we go in without the tools for success. The concept of a business plan, a document that serves as a compass, a road map to success is virtually alien to most Liberians, even the ones who claim business smarts. Consider an acquaintance of mine whom I will call Robert. Robert, like most Liberian Baby Boomers age 50-60s in the U.S., has seen a dramatic decline in his value on the job market due to brisk competition from younger workers, hence, he opted to start a business in Liberia. Trucks, generators, as well as agriculture implements were put on a container headed for Liberia.
His mission was to start an agricultural project in Lofa, Fast forward a year later his project laid waste; an abysmal failure. Of course, in true Liberian tradition he lazily found someone to blame, in this case the government, because of what he claimed was the deplorable state of roads that eventually took a toll on his vehicles. Fact is he had no risk mitigating mechanism in place that would guide him during his foray into a frontier market. A business plan would have lay bare the strengths, weakness, opportunities, and threats his business would face.
He went to Liberia on an assumption that his project would take off in the absence of any formal planning. As the French scientist, Louis Pasteur once said, “fortune favors the prepared mind. Hoping that your business will succeed without full preparation is a recipe for disaster.
But Robert must be given credit. Although his project was ill-conceived, at least he thought of an entrepreneurial agribusiness venture that would have made a contribution toward Liberia’s economic growth through job creation and paying government taxes, instead of targeting a position within government, as is the norm. He had the perfect poverty reduction idea, entrepreneurship, but execution was his Achilles heel.
True, in an ideal world, the government has a major role to play in helping to spur innovation and entrepreneurship by creating an ecosystem of laws, that would provide a level playing field for entrepreneurs, ensuring contract rights, fair play, intertwined with business friendly infrastructure, i.e. stable electricity supply, roads, airports, etcetera.
However, the reality is that governments, especially African governments, have development priorities that may not meet the universal entrepreneur complete checklist of pro-business pre-conditions. In the absence of some of these conditions, that’s when the entrepreneurial impulse and instincts of its people kick in….in some cases, what we see as a government’s dereliction of fiduciary duty may be a business opportunity – For instance, Tourism.
With 300 miles of some of the most visually spectacular beaches in the world, not to mention lakes, and one of the largest virgin forest on the planet, tourism is still crudely underdeveloped in Liberia. Government cannot involve itself in the business of building hotels, restaurants, eco-lodges, etcetera, because I doubt if there’s a businessman who will feel comfortable competing with the government in the private sector.
Financing, or access to financing, is an albatross that has been a major constraint, due to stiff collateral rules at banks. There are no visible intermediaries to provide credit reference services to the banks regarding the SMEs credit profile or credit worthiness.
These risk mitigating institutions are few and far between in emerging markets, including Liberia, so banks find themselves in the untenable position of evaluating SMEs to determine their fit for loans. This is a deficiency that is also a business opportunity. A group of enterprising Liberians can set up a credit agency that will provide services to the over one hundred banks in the country.
That said, there are various work-arounds for financing, including hundreds of international institutions, investment firms, as well as private or Angel Investors. In 2016, over $300 million flowed into Africa’s tech start-ups alone from investors abroad.
One of the most noteworthy examples was the Chan-Zuckerberg Initiative’s $24 million investment in Andela, a Nigerian startup which trains engineers and programmers for outsourcing to tech companies in the USA and Europe. The Chan-Zuckerberg Initiative is owned by Facebook’s Mark Zuckerberg and his wife Priscilla Chan.
Again, the importance of a business plan that lays out a vision that an investor can buy into…cannot be over-emphasized. A potential investor looks at a business plan with an eye on profits, or in some cases, the environmental and social impact of the business.
I am not sure as to how factual this information is; I was told that about 65 percent of Liberia’s economy is dominated by foreigners. If this is true, then it is time for a reordering of our attitude toward entrepreneurship, and we can only overcome this deficit through aggressive private sector participation.
JM Cassell, Contributing Writer