Both Liberian and foreign-owned businesses must determine synergies that will allow them to work together in order to improve the overall business environment, achieve shared prosperity and consolidate social cohesion. By aligning objectives, they can constructively engage the public sector to comprehensively advance the cause of the entire private sector.
The Liberian private sector comprises differing shades of business support organizations (BSOs) from the Petty Traders Association, Liberian Marketing Association (LMA), Liberia Business Association (LIBA), Liberia Chamber of Commerce (LCC), and the Coalition of Liberian Business Organizations (COLINBO) and Liberia Better Business Forum (LBBF) all the way to the powerful World Lebanese Cultural Union of Liberia and the Fula Business Association. There are also many other sector based BSOs such as the Rubber Planters Association of Liberia (RPAL) and the Liberia Timber Association. Together, these BSOs form the foundation of the Liberian economy. However, due to disparate interests, the Liberian private sector has never been a cohesive force for positive change in the business environment, and it has not brought about shared prosperity.
The disjointed and selfish ordering of the relationship between the private and public sectors cannot produce wealth for most citizens, but instead continues the business as usual model that sustains deep pockets of poverty and deprivation. It promotes the narrow, powerful business interests of the well connected and ignores the needs of the powerless majority. As constituted, the status quo permanently keeps the bottom rungs of the business ladder wobbly and stifles the progress of the hundreds of thousands of men and women who are born and will die in subsistance trading and agriculture. It does not advance the cause of expanding economic opportunities for all in the private sector. The large group of informal participants in the economy and vulnerably employed are examples of a system that has limited opportunities for advancement. In order to save free market capitalism in Liberia, the private sector must therefore promote the entire spectrum of participants, from poor market women to wealthy industrialists in order for all to ride the growth curve of an expanding economy in the Post-Ebola recovery process and beyond.
The Liberian private sector is the engine of economic growth, and it must not abdicate its role as innovators. It must be a positive force for change in the business environment in order to assure equality of opportunities. It can start the process to expand and consolidate its role in the economy by using the post-Ebola economic recovery process as a platform to achieve its objectives.
It would be recalled that in November last year, the Liberian private sector held a Forum on Economic Recovery from the impact of the Ebola Virus Disease (EVD). The Forum, sponsored by UNDP and the World Bank, which was co-hosted by the Ministry of Commerce and Industry, brought together a significant number of representatives from the public and private sectors, academic institutions as well as international donor organizations. Forum participants sought to design and implement a new model of cooperation between the private and public sectors that would provide resilience to offset the effects of the catastrophe in order to protect trade and commerce. Forum participants also advanced many proposals, including expansion of the role of the private sector in health and education.
Apparently, the Liberian private sector needs to play a leading role in building resilience in the health and education sectors. The scourge of Ebola emanated from two particular weaknesses in the country’s institutions; an inadequate health care delivery system, coupled with ignorance as a result of limited educational attainment. According to Sir. Mary Laurene Browne, Ebola did not overtake us suddenly; its effects, rather, were largely due to improper planning. The rapid spread of Ebola is a manifestation of poor planning, characterized by weak institutional management systems. A poor educational system is characterized by inadequate conceptual analysis, which accelerated the spread of Ebola. There is the need, therefore, for a functional decentralized system that seeks to devolve greater autonomy to local authorities.
A sound education is the only productive way to national recovery. The private schools system can play a role in removing systemic weaknesses from the health and education sectors, by improving the capacities of healthcare workers, which can be accomplished by designing a curriculum that is driven by the demands of the market place. The Government can support the process by increasing subsidies to private institutions and providing guarantees to commercial banks that lend to the private schools system.
Another weakness is the limited role the private sector plays in the development of structures to support the expansion of economic activities in Liberia. The Liberian private sector cannot ride the growth curve of an expanding economy unless it plays a role in supporting the development of physical and social infrastructures. The private sector must be involved in building physical infrastructure, not just as mere implementing arms of government development priorities, serving as contractors, but it should originate ideas for the short, medium and long term needs of an expanding economy. For example, what are the growth corridors for the next generation?
The private sector should develop financing models, using both equity and debt to fund infrastructure development, and by so doing contribute to the development of growth corridors. Additionally, the private sector can participate in the building of social infrastructures such as schools and hospitals that would be required to support the expansion of economic activities to improve livelihoods in economic growth corridors.
A major obstacle to socioeconomic progress in Liberia is the disproportional ownership of private capital by foreigners. Domestic resource mobilization and other barriers to entry limit the participation of Liberians in productive enterprises. The private sector can shift the paradigm by recognizing that economic empowerment of Liberian entrepreneurs makes good business sense, not as a means of corporate social responsibility (CSR), but as a support mechanism to improve the business environment. More ownership of capital stock by Liberians validates the free market as an avenue for socioeconomic advancement and promotes social cohesion and stability. At all levels, the private sector must provide linkages to Liberian small and medium enterprises as suppliers of goods and services.
Currently, and as constituted, Liberia is rudimentarily a trading post that offers opportunities for foreign businesses to take income from Liberians, with limited reinvestment of profits. Most of the expansion in the trading sector is the replication of businesses to increase market share and profits in building materials and other consumer goods. The replication and expansion of trading businesses in the economy by foreigners produce a marketing inefficiency (Galbraith, 1955) that does not support substantive Liberian citizens’ participation in economic growth and development and is not sustainable. The Liberian private sector can and should encourage significantly more citizens’ involvement in the import, wholesale and retail of consumer goods, but better yet, the private sector should start capital formation to accomplish import substitution and to create trading opportunities for agro processing.
The milling, packaging, storage and marketing of Liberian agriculture products to existing and new markets must be a centerpiece of the post-Ebola economic recovery process. No nation can develop without creating surpluses in trading with the international system, and the private sector must innovate in order to achieve this objective.
The private sector has a tall order to consolidate and expand its role in the Liberian economy in order to build resilient institutions to safeguard trade and commerce against catastrophes. It can do so by making sure it represents all segments of the business community instead of powerful special interests. The challenge is to innovate in order to save the free market.
Culled from The Capitol Insider Magazine