A Look at The Private Sector Development In Liberia
Liberia is a rather strange place. It should not be a poor country, but it certainly is. For a few years in the 1970s, Liberia's per capita income was equivalent to that of Japan. Liberia is now ranked by the World Bank as one of the poorest countries on the planet unlike Japan that is doing extremely well economically.
The Private Sector development is key to nation building and sustaining peace. It is also a strategy for promoting lasting peace through economic growth by incorporating private industry and competitive markets into Liberia’s overall development framework. The private sector can alleviate poverty by contributing to economic growth, job creation and providing a source of income for poor people. It can also empower people by providing a broad range of products and services at lower prices.
This can be achieved by incorporating private industry and competitive markets into our country’s overall development framework. Supporters of this approach argue that Private Sector Development is an important part of poverty alleviation. They further argue that the Private Sector can go a long way in developing countries towards the provision of basic services, empowering the poor by improving quality and access to health services, education and infrastructure.
Small and Medium Enterprises can be the engines of job creation, seedbeds for innovation and entrepreneurship. But in many poor countries like Liberia, small and medium enterprises are marginal in the domestic ecosystem. Many people operate outside the formal legal systems, contributing to widespread informality, a perception/treatment as illegal which results to lack of expansion and low productivity. They lack access to protection, financing and long- term capital, the basic foundation of multinational companies.
For the Liberian Private Sector to better serve the poor, the challenge is the creation of a more enabling business environment that can increase the capacity of the formal sector to create more jobs, especially lower- qualified but better paid jobs especially in the agro- manufacturing sector. By putting in place a concrete and attainable policy framework that also encourage SME’s to transition from the informal sector to the formal sector, because this will increase productivity and trade options between Liberia and neighboring countries.
Seen from many factors, it is not growth per-se that is an issue in Liberia but shared growth. Especially, growth that is inclusive of all major sectors and labor intensive sectors in general, resulting in broad based job creation, greater and wide spread income generation activities among all sectors of the Liberian population.
Any approach to Private Sector Development, the policy and action recommendations that follow it should be grounded in the realization that, savings, investments and innovations that lead to development are undertaken largely by private individuals, corporations and communities.
The Private Sector can alleviate poverty and sustain peace by contributing to Liberia’s economic growth, job creation and provision of income for poor people. It can also empower poor people by providing a broad range of products and services at affordable cost. Part of the many responsibilities of governments in developing countries includes creating the conditions that make it possible to secure the needed financial resources for investment.
These conditions including, the state of governance, microeconomic policies, public finances, the financial system and other basic elements of a country’s economic environment are largely determined by the actions of domestic policy makers. The challenge is to capitalize on advances in the macroeconomic stability and democracy and to launch reforms that bring about further changes in institutional frameworks to unleash and foster the private sector growth and development.
The overall goal of stakeholders in this initiative should be to facilitate linkages between large businesses, potential investors, and Small Medium Enterprises (SME’s) and facilitate the development of new products and services that lead to more equitable job creation.
In light of the above, stakeholders should use their positions to facilitate the formation of broad based Pro-Poor Partnerships with the general perception of it, as a neutral and fair broker in the development of a robust private sector development strategy for Liberia in partnership with other economic development agencies active in the country i.e. UNDP, UNIDO, ILO, IFC, IMF, World Bank, USAID etc.
The above groups should champion the attraction of needed investments especially Foreign Direct Investment (FDI) including the creation of investment incentives by the Government of Liberia, which appeal to investors.
Policy makers should advocate for the creation of microfinance/inclusive finance policy and enabling SME development policies including their regulation. Policy makers should also take the lead in engaging the private sector with the expansion into rural areas for the purpose of pro-poor and total development which will enable decentralization of economic activities.
Policy makers should advocate for more investment in those sectors that bring in value added instead of mere commercial returns. Because this will bring in more return on investment and create more jobs, which are all essential in nation building and sustaining peace. Policy makers should campaign for outward growth strategies including export oriented SME’s, because this will increase the amount of moneys coming in from other countries and will subsequently increase trade and foster development.
And lastly, policy makers should create the environment that will appeal to businesses to increase value chains and make necessary the frame work for access to international and regional markets for SME’s. They should take the lead in promoting Pro-Poor (Public and Private Partnerships), advocate for the Incorporation of gender in all development strategies because this will create an enabling environment for each and everyone, which leads to lasting peace.