Monrovia – The Vice President of Liberia, Joseph Nyumah Boakai has emphasized the need for a robust investment in the private sector.
Speaking at the start of the Liberian Finance Leasing Forum hosted by the National Investment Commission (NIC) and the International Finance Corporation (IFC) in Monrovia on Tuesday, Vice President Boakai noted that investing in the private sector will accelerate the country’s economic growth.
“The private sector is the engine of growth. As we promote growth, we are mindful that growth is inclusive.’
“With financing leasing, both the FDIs and the domestic private sector will enjoy inclusive growth,” Vice President Boakai said.
“While Liberia has taken a laudable first step in laying the foundation necessary for this investment in the leasing sector will be necessary to propel Liberia’s leasing sector to the next level and make the leasing business effective and sustainable.
The benefits of leasing to both the lessee and the lessor are enormous,” he said.
The Liberian Vice President said understanding the benefits of a developed leasing sector, the Government of Liberia had developed an enabling environment for finance leasing in Liberia.
He added that increasing interest, awareness and participation of all local, regional and international stakeholders in leasing business development was keen to supporting widespread finance leasing opportunities for private sector development in Liberia.
Describing regulatory framework, legal framework, and tax burden and accounting practice as the four pillars a successful leasing industry is funded on, the Vice President disclosed that the government of Liberia was successful in implementing several of the components to promote leasing development.
He stressed that owing to the Ebola crisis and the decline in commodity prices, the government was now considering economic diversification, and investing in micro, small and medium-sized enterprises (MSMEs) is a key in achieving that goal.
“The twin shock of the health crisis and the decline in the prices of commodity has compelled us as a government to considered economic diversification.
This new approach takes a look at developing key sector within the agriculture value chain. We have reminded all before that the Liberian economy is currently is a process of transition towards higher growth. MSMEs are the very heart of this forward match.
In the Liberia of tomorrow, we should be able to envision small business functioning as a network of waterways that are both a source of innovation, job creation, and a channel through which these advantages will flow through to the rest of the economy,” Vice President Boakai said.
Speaking earlier, the Country Manager of the International Finance Corporation, Cassandra Colbert said that leasing was an alternative and important tool for financing and can contribute significantly to increasing access to finance for SMEs.
Colbert noted that leasing is much gainful than the traditional way of acquiring money from banks and other financial institutions.
“We are all here today because leasing as an alternative and important tool for financing can contribute significantly to increasing access to finance for SMEs. Leasing is based on the notion that income is earned through the use of the assets, rather than its ownership.
It focuses on the lessee’s ability to generate cash flow from productive use and basic operation in order to service the lessee’s payment rather than on the balance sheet or the past credit history.
It is much less restrictive in terms of requirement and eligibility criteria than traditional credit. It is why it is crucial to develop a long and viable leasing sector here in Liberia and other parts of Sub-Saharan Africa.” Colbert said.
She asserted that the ICF and the World Bank Group were actively supporting the private sector because the sector hugely contributes to global economic growth.
“Those SMEs are the ones that do the expansion, drive business, create jobs and move the economy forward. Indeed at the global level, the private sector represents 90% of all jobs created as well as most of the goods and services that are necessary to improve people’s lives.
It is for these reasons that IFC and the World Bank Group in general with the six decades of experience as the largest global development group, are focusing on the private sector in emerging markets and putting assets to finance at the height of our strategy,” she acknowledged.
Colbert intimated that having access to a wide channel of financing is a huge hurdle for small and medium-sized enterprises (SMEs).
She then made a passionate appeal to financial institutions to reach out to SMEs and called on them to live by the side of the bargain.
“Access to finance is the first obstacle along with access to information and access to market,” Colbert said.
“You know that the goal of private sector is intrinsically linked to the goal of the SMEs. To the financial sector, leasing is a product that allows you to reach out to the SMEs and make the call to the SMEs.
To the entrepreneurs, when you get that finance, respect the terms, when you get that loan, respect the term, when you get that credit, respect the terms, it is through your success that you will show that leasing can work.
Your behavior, during the terms of this credit will determine whether leasing will take off in Liberia or not,” IFC’s official intoned.
For his part, World Bank Group’s Director, Sabastian Molineus, outlined that the program has supported a number of reforms including the enactment of 24 leasing law including Liberia managed to transform 20,000 SMEs and has mobilized US$57 million in capital across Africa.
Since 2013, according to him, the ALF continue to revamp and remain focus on fragile and conflict affected countries with the need that assets to finance will have a biggest impact. The World Bank official then expressed hope that the Leasing Program in Liberia will be a success.
“We hope that after today’s event that all those that are present here, private sector as well as public sector, in addition to our guest that are here from Tanzania, Uganda, Nigeria, Ghana, will commit to making the development of the leasing industry here in Liberia a success and again giving the strong turn out and strong commitment I have a strong a great hope that this will occur,” Molineus said.
The Liberia Finance Leasing Forum is part of the IFC’s Africa Leasing Facility program, which promotes leasing as an innovative financing tool for the small-scale business sector across Sub-Saharan Africa, was attended by key players in the financial sector of Liberia as well as financial expert and investors from Tanzania, Uganda, Nigeria and Ghana.
The IFC’s Africa Leasing Facility program, first launched in 2008, has established leasing as an innovative and robust financing tool to increase access to finance for small-scale business sector.
The second phase of ALF, launched in 2013, focuses almost exclusively on fragile and conflict-affected nations, where the need for access to finance is the largest and where leasing can have the biggest impact.
According to a statement from IFC, any type of machinery, equipment, or vehicles can be leased to small business owners with a solid business plan.
Some examples include farm equipment, construction equipment and medical equipment.
Others include sewing machines, appliances for businesses, computer equipment and computers and work vehicles.
Report by Gerald C. Koinyeneh – 0880881540/[email protected]