Entrepreneurship is a trending topic in Liberia nowadays. From hearing people refer to themselves as entrepreneurs to actually being introduced to innovative products; the trend is going viral. Every day, we get introduced to an entrepreneur with an innovative idea hoping that he can contribute to change in the Liberian business environment. We also see a myriad of new products that were once unavailable on the Liberian market being produced locally by Liberian entrepreneurs.
While innovation and entrepreneur ventures are welcoming, research shows that most small businesses fail within the first five years of operation while others never transition from the start-up phase to medium or large businesses (Friedrich, 2016). The latter is particularly true for Liberia. To address this, the government in partnership with donors have implemented several private sector development projects to strengthen the capacity of Micro Small and Medium Enterprises (MSME) and make them more competitive. This is so because the government recognizes MSMEs as crucial to developing both internal and external trade, and to provide employment and income to thousands of Liberians.
Investing in Micro, Small and Medium Enterprises (MSME)
MSMEs provide 66% of all formal jobs in developing countries and up to 80% in low-income countries, contributing 33% to GDP in these countries. MSMEs drive over 90% of ECOWAS economic activities, in a market of about 335 million consumers. They impact over 60% of the youth population, vulnerably employed or unemployed, in both the formal and informal sectors. Investing in MSMEs provides the greatest opportunity for sustainable poverty alleviation through job creation.
The economic crisis as a result of the Ebola epidemic dramatically highlighted one structural weakness of the economy of Liberia: overdependence on extractive sectors, inherently causing vulnerability toward external factors. As a result, the government enacted into law the Small Business Empowerment Act (SBA) (See:SBA Law – ACT 2014) and created a division at the Ministry of Commerce to administer this law. The intent is to encourage and promote the establishment and growth of MSMEs as well as assist and foster the interest of these enterprises by ensuring that; i) they receive their fair share of procurement contracts for the provision of goods and services to the government; ii) they operate in a friendly business environment that improves business competitiveness which will lead to increased employment opportunities for a largely youth population; increase in the supply of goods and services on the Liberian market; and increased export of Liberian goods to regional and international markets; and iii) provide access to finance and capacity building through the Liberia Innovation (LIFE) Fund.
With the newly elected government keen on promoting “Pro-Poor Policies” and Liberian entrepreneurs, promoters and media influencers keen on rebranding the country from “post war “and “post Ebola” into an investment and tourist destination, the time could not be better for business minded Liberians to begin thinking about making that move from full-time employment to self-employed entrepreneurs. More to that, the time is even best for existing businesses to transition from small and obscure businesses into medium-sized or large and competitive businesses.
So, if you are thinking about becoming an entrepreneur and starting a business in Liberia here are some priority sectors ripe for investment.
Invest in Agriculture –it’s the new gold mine
The Government estimates that the agriculture sector has the highest potential to transform the Liberian economy from low-income to a middle-income status. As a result, the Liberia Agricultural Transformation Agenda (LATA) for Economic Diversification and Inclusive Growth through Agriculture, Agro-Processing & Manufacturing was developed. The goal for LATA is to create conditions so that Liberia achieves a higher level of economic resilience and inclusive growth. This strategy – moving away from raw commodities export towards value added exports from priority sectors —is vital for laying the foundations of private sector development and inclusive growth in Liberia.
Agriculture sectors with high potential for MSME investment currently being promoted by the Government.
1. Oil Palm
Given Liberia’s optimal climate, oil palm grows easily and abundantly across the country. The market for oil palm and oil palm products was at least $91.5 million in 2014 and had average annual growth of 5.9% per year in real terms since 2004. The domestic market consumes 11 kg of crude palm oil and kernel oil per person per year making it a large market for oil palm and oil palm products. The ECOWAS market also provides a large and growing market for oil palm products. In 2014, ECOWAS consumed 2.4 million tonnes of crude palm oil and an additional 1 million tonnes of refined palm oil. Liberia provides the optimal location to supply oil palm products to West African countries in the ECOWAS network where demand is burgeoning.
- Spotlight: Processing of crude palm oil into refined oil for cooking, soaps and cosmetics, food processing, mulch, fertilizer, animal feed and biofuel are key areas ripe for investment.
2. Rubber
Liberia has been in the natural rubber business since 1890. With excess rubber, land and a cheap cost of production, Liberia is the optimal country for processing the byproducts of the rubber tree. Until recently, the primary product, latex was the only commodity being exported in its natural form. Now, investments are being made in rubber wood and dry rubber manufacturing. Investing in the rubber sector not just for cultivating rubber but for manufacturing and transforming natural rubber and rubber wood into finished products has a high potential for return on investment and will create jobs for Liberia’s youthful population.
- Spotlight: Dry Rubber Manufacturing and Rubber Wood processing into dry wood; Ribbed Smoked Sheets (RSS), Rubber Crepe and other concentrated latex products like gloves, doormats, boots and masks for household and industrial use. Rubber wood products – Parquet flooring, Staircases (steps, railing, treads), Windows and doors, interior finishing, Ornamental and novelty items, etc.
3. Marine Fisheries and Aquaculture
Marine Fisheries and Aquaculture is a new and untapped market in Liberia. The domestic market is unsaturated. The average Liberian only consumes 5 kg per year compared to an ECOWAS average of 10kg per year; 30 kg per year in Sierra Leone and 20kg per year in Ghana. Liberia is perfectly situated for export growth to these neighboring markets. The coastline and continental shelf offers 20,000 sq km of fishing ground while inland renewable water sources is about 200 billion cubic meters compared to 77 billion in Côte d’Ivoire, 60 billion in Mali, 45 billion in South Africa, 30 billion in Ghana and just 21 billion in Kenya. The government has invested in fish landing, storage and processing infrastructure and is streamlining investment regulations in the sector.
- Spotlight: PPP management contracts for Fish landing facilities in Robertsport and the Mesurado Fishing Pier at the Freeport of Monrovia; processing and packaging of shallow and mid-water fish for local and regional markets; fishing and farming of high-value fish such as cassava fish, fair trade tuna (pull and line vessels), barracuda and deep-sea red crab.
4. Cocoa
With a climate perfect for growing cocoa, abundant rainfall and land, a highway linking the cocoa belt (Grand Gedeh through Nimba, Lofa and Bong down to Grand Cape Mount counties) to the port of Monrovia, Liberia provides excellent opportunities for growth in the cocoa sector. Neighboring cocoa producers –Cote D’Ivoire, Ghana and Nigeria –markets are saturated, with limited scope for expansion and many competitors. This makes Liberia the next growth market for the production and transformation of cocoa.
- Spotlight: Cocoa cultivation; processing into cocoa butter or powder; production and packaging of cocoa products: drinks, chocolate, candies, cosmetics; animal feed from cocoa pod husk.
5. Cassava
Next to rice, cassava is the second most important food crop in Liberia. Cassava is very versatile and can be used as food for humans as well as feed for animal; non-food products like starches and in some pharmaceutical products. These intrinsic characteristics of cassava makes it interesting as a commodity and as a major economic driver. Investing in the Liberia’s cassava sector will not only contribute to food security but also lead to a significant boost in the empowerment of women and youth, who make up the majority of smallholder producers and carry out over 80 percent of trading activities in the rural areas.
- Spotlight: growing, processing and packaging cassava products like: cassava flour, chips, gari/cereal, fufu, deepa etc. Processing cassava for the production of starches, glue and animal feed.
6. Horticulture
The Liberian market for horticulture in 2013 was worth $103.6 million, of which $90.4 million was produced locally. A huge gap still exist in this market as total imports in the same year was 14,300 tons. Liberia has the largest renewable water assets (See fisheries above) among leading fruit and vegetable producing countries in Sub-Saharan Africa. Considering its position in the Mano River Union (MRU) Basin and membership with ECOWAS, Liberia has access to lucrative markets within these networks. Investing in fruits and vegetable production for preserving, processing and packaging will not only reduce the amount of produce that goes to waster every year but also generate a very high potential for returns on investment. Additionally, there are 20 concessions operating in Liberia with a potential to create 100,000 jobs and demand high quality fruits and vegetable produce.
- Spotlight: Processing and packaging the varieties of fruits and vegetables, into dried products, juices, spices, teas, jams etc. is a virgin market waiting to be explored.
This article was created to provide information for aspiring entrepreneurs and small business owners looking to invest or expand their businesses in the agric sector. It’s the first in a series of articles on investment opportunities in Liberia. In later series, we will look more closely at each agriculture sector and highlight strengths, weaknesses, opportunities and threats. We will also tell you who the key players are in each sector. There are other priority sectors that the government is promoting investment in: Waste Management, Education, Infrastructure Development, Information Communication Technology (ICT), Transportation and Logistics, and Health. Read more about them here: Liberia_Investor_Guide
Visit: http://www.investliberia.gov.lr for more investment related information.
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Balance with Ade 