Liberia: Local, Foreign Owned Businesses Shutting Down amid Deteriorating Economy
Monrovia – Doing business in Liberia is getting harder by the day. This is particularly because the economy is shrinking so badly that small and medium-size businesses are suffocating and fighting to survive. Some cannot cope with the degree at which profit margins have declined – leading to the last alternative – shutting down.
Report by Lennart Dodoo, [email protected]
There have been speculations about the pulling out of several investments, including Total Liberia, Exclusive Supermarket, amongst others. However, managements of these investments are yet to provide some clarity on these speculations, despite several media engagements.
FrontPageAfrica has received unconfirmed reports that Total Liberia has already sold several of its filling stations outside the nation’s capital, including the ones in Sinoe, Bomi and Grand Cape Mount Counties.
Total Liberia is the largest importer of petroleum products in the country and second highest tax payer.
Economic pundits have warned that the pullout of Total would seriously injure the country’s revenue base.
They are also fears that several other companies including concessions are reading between the lines and studying the variables while observing how adequately the government would handle the prevailing situation. Pulling out is also an option for some of these companies.
Exclusive Superstore, according to reports, is considering shutting down its Center Street branch due to the high cost of operation and low patronage. The management is tight-lipped on rumors of shutting down that branch under the pretext of carrying out renovation.
DITCO, a renowned electronic store in Monrovia which has been dealing in the sales and supply of electronic gadgets and home appliances decided to close its doors to the public after 58 years of operating in Liberia.
Unlike other stores and investments said to be on the verge of closure, DITCO did not hold back its reason for the sudden closure. In a notice posted on the gates of its stores, the management wrote.
“Management of DITCO wishes to extend sincere thanks to its numerous customers for their support for the past 58 years. Regretfully, due to our slow business, we are compelled to close down for time indefinite.”
Several attempts to get comments from the Minister of Commerce on the closure of DITCO and the impact it may have on government’s push to attract more investors could not materialize. The Minister failed to respond to several phone calls and SMS sent to him.
However, some Liberians see the closure as a bruise to the country’s already wounded economy as many Liberians have lost their jobs due to the closure. Others believe such reports may discourage future investors from looking Liberia’s way.
In an interview with FrontPageAfrica, the Chairman of the Patriotic Entrepreneurs of Liberia (PATEL), Mr. Presley Tenwah, said he while they have been bearing the hardships, they as business owners are faced with, they’re being patient because the government has been in existence for only 10 months and has asked for time to come up with an economic stimulus package.
However, Tenwah said should things remain status quo until July next year, without any major intervention from the government, the business sector would experience its worst nightmare.
He said major issues affecting businesses in Liberia, especially local businesses are taxes, particularly custom duties.
“If you really go down Waterside and Red-Light you’ll realize that most of the businesses there are closing, but because they’re small businesses, nobody is taking notice,” he said.
According to him, what even makes it worse is the refusal of banks to give out loans to Liberian businesses, with the exception of Access Bank, which has a very short repayment period.
He expressed fears that the majority of hotels around the country may be closing down soon due to poor patronage.
‘When investors are not coming into the country, the hotels don’t make money. The loans that the banks gave us are not long-term loans. These are very short-term loans so it’s not easy. Most of the hotels might end up closing. Most of the hotels are not making profits,” he lamented.
“The government needs to work hard to stimulate the economy. We need an economic stimulus package, but if the country’s economy stays as it is from now to July we are going to see a worse situation,” he forewarned.
He described the closure of DITCO as a setback to the economy, noting, “every business count”. Tenwah said he believes DITCO can be reopened if the government offers them some tax waivers.
“In this particular economic crisis now, what government needs to do is to lower taxes,” he added.
PATEL Chairman believes in the midst of a downward trend of grants and donor-funded projects, the government is placing a lot of pressure on businesses as its last straw in generating revenue.
According to him, President Weah must consider making his government internationally friendly in order to attract grants and donor funds that would help alleviate the burden on local taxpayers.
Tenwah said his organization has been engaging the President to help him understand the plights Liberian businesses are going through and how such plights can be mitigated. He said, he believes improving the systems would be a gradual process but would turn out successful if the President heeds to their suggestions.