Liberia: COVID-19 Shrinks Extractive Revenues in 2020
MONROVIA – Revenues generated from Liberia’s extractive industries in the first half of last year dropped by more than US$5 million due to the coronavirus pandemic, according to in the latest report by Liberia Extractive Industries Transparency Initiative (LEITI).
By Siaway T. Miapue with Journalists for Human Rights
The report, the 12th by the agency since its establishment in 2007, found the Liberian government generated US$37,104,314 last year compared to US$42,240,233 in 2019. That is a fall of US$5,135,919 million or 12.16 percent.
LEITI’s Multi-Stakeholder Steering Group (MSG) release the entity’s 12th EITI report a few months ago following years delayed in releasing the report. It covered the period Jukly1, 3018 to June 30, 2020, under the Flexible Reporting Framework (FRF) adopted by the EITI Board.
The FRF was adapted during to the emergence of the coronavirus pandemic which disrupted annual reporting plans.
SG-LEITI secretariat described the report as a significant gains made by the country.
Prepared by BDO in collaboration with Parker and Associates Liberia, two reputable firms that began work at the start of November 2020, the report shows that the government of Liberia generated US$79.63 million as total revenues from the extractive sector, pointing out that the report also shows that total revenues from the extractive sector increased from US$68.98m in 2017/18 to US$79.63m in 2018/19 resulting in a net increase of US$10.65m or 15.4%.
“This however dropped by 12.2% in the first half of 2020 due to the impact of the coronavirus pandemic on the economy,” the chairman of the MSG-LEITI, C. Mike Doryen Doryen noted. The report also revealed challenges in sectorial oversight, data collection, and licensing process among others.
“The LEITI will begin to work with relevant government ministries and agencies to address these concerns,” the Chairman said.
He says the report is an indication that Liberia has professionals who can positively shift the developmental paradigm of the country.
Liberia’s Finance and Development Planning Minister, Samuel Tweah, also lamented the loss of revenue in the sector due to the pandemic.
“Covid-19 has slowed down activities in the extractive sector and that is affecting revenue generation in the sector,” told in a forum in Monrovia recently, “but the Liberia Revenue Authority is doing well in other areas. This means that the government is on course to meet its revenue target for the fiscal year.”
The slump in income from the natural resource sector did come not come as a surprise. The World Bank had projected Liberia’s GDP to contract by 2.6 percent due to the outbreak after it had earlier forecast a 1.6 percent growth.
COVID-19 limited government’s revenue generating capacity as companies, scaled down their works, and lockdown and travel restriction measures instilled to break the virus’ chain of transmission. All sectors—mining, oil/gas, forestry, and agriculture—were affected.
“[The year] 2020 was a very difficult year for the rubber industry with very low sales prices and shut down of factories (tires manufacturers) during the 1st semester of 2020 affecting our long-term Contracts,” the LEITI report said about the rubber industry, adding “2021 seems to be positively oriented but a downturn of the rubber industry is still possible.”
The disease is already showing signs of subsiding in Liberia since the turn of this year. There are 67 active cases in the country as of May 9, according to the National Public Health Institute of Liberia (NPHIL). And the United States Center for Disease Control and Prevention (CDC) listed Liberia as one of the 20 places safe to travel.
The government received more extractive revenues within the 2018/19 fiscal year than last time around, according to LEITI report. The sector generated US$US79, 632,411 in 2018/19, US$23 million higher than the revenue generated within the 2017/18 period, according to the LEITI report. Of that amount, 88.55 percent represented direct revenues, while the others came from social and environmental payments companies paid, the report said.
The mining sector was the biggest contributor with US$42,596,473 (53.49%), followed by agriculture US$26,009,261 (32.66%) and forestry US$8,148,559(10.23%). Oil/gas was the lowest with US$2,878,118 (3.61%).
ArcelorMittal was the biggest payer with US$19,090,748 (23.9%). It was followed by Firestone with US$14,648,794 (18.40%), Bea Mountain US$9,583,127 (12.03%) and China Union US$5,290,341 (6.64%) in second, third, and fourth places, respectively.
MNG Gold US$3,655,182 (4.5%), Golden Veroleum US$3,116,511 (3.9%) and Liberia Agricultural Company US$2, 089, 57 (2.62%) completed the seven-highest-contributor list in that order.
The LEITI process covers four sectors in Liberia: mining, oil & gas, forestry, and agriculture. To date eleven (11) annual EITI Reports have been published covering the period from 1 July 2007 until 30 June 2018.
Liberia was admitted as an EITI candidate country in 2008 and was the first African country to become EITI compliant in 2009. The LEITI Act of 2009 requires all extractive companies and covered government’s ministries and agencies disclose, at least once every year, the data of all payments made and revenues received in respect of the extraction of Liberia’s forest and mineral resources.
This initiative is in support of the government’s effort to promote transparency and accountability over the management of revenues from Liberia’s extractive resources, ensuring that all citizens benefit from such resources.
The country was temporarily suspended from the EITI in September 2018 due to reporting delays and a stalled MSG process. In March 2019, the Board mandated the Secretariat to undertake a review of adherence to Requirements 1.1 & 1.5 and found that limited progress had been made in meeting the requirements.
The Board agreed that Liberia would need to demonstrate progress in meeting the requirements by 31 December 2019 to avoid delisting. The EITI Board reviewed progress made and agreed that the EITI process in Liberia has been credibly revived.
The Board agreed to lift Liberia’s temporary suspension effective 6 March 2020. The decision is due to improvement in implementation related to multi-stakeholder group (MSG) oversight (Requirement 1) and the publication of outstanding EITI Reports.