VZCZCXRO8542
RR RUEHMA RUEHPA
DE RUEHMV #1348/01 3201622
ZNR UUUUU ZZH
R 161622Z NOV 07
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 9509
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHLMC/MCC WASHINGTON DC

UNCLAS SECTION 01 OF 03 MONROVIA 001348 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS USTR FOR CONNIE HAMILTON 
DEPARTMENT FOR AF/EPS, AF/W AND EEB/IFD/ODF 
 
E.O. 12958:  N/A 
TAGS: EAID ECON ETRD KMCA MCC PHUM LI
SUBJECT: LIBERIA: MCC SCORECARD DELIVERED; GOL EAGER FOR THRESHOLD 
STATUS 
 
REF A) MONROVIA 1322; B) STATE 146777  C)  MONROVIA 1201 
 
MONROVIA 00001348  001.2 OF 003 
 
 
¶1.  (SBU) Summary:  Econoff delivered Liberia's MCC scorecard and 
reftel points to Minister of Commerce and Industry Frances Johnson 
Morris during an introductory call.  There has been press reporting 
here on President Sirleaf's appeal, during her recent meetings with 
the President and others in Washington, for MCC Threshold status for 
Liberia.  Although Liberia has below-average results in 10 of the 
indicators, current GOL initiatives are focused on the "trouble 
spots" -- land tenure; strengthening rule of law; controlling 
corruption; enhancing health and education; and improving the 
business climate.  Progress on those initiatives should soon be 
reflected in the Government Effectiveness and Regulatory Quality 
indicators.  Although Liberia is not ranked for two of the 
indicators (UNESCO on Girls Primary Education and Heritage 
Foundation on Trade Policy), the trends are positive.  While The USG 
provides a tremendous level of support for Liberia, there are still 
areas where additional resources could effectively support GOL 
efforts to accelerate its progress in improving scorecard results. 
Embassy Monrovia strongly supports MCC Threshold status for Liberia. 
 The GOL's commitment to reform is unquestionable, but the window is 
limited.  A modest, well-targeted award could accelerate GOL efforts 
to show progress in building a just and equitable society.  End 
Summary. 
 
Commitment to Primary Education 
-------------------------------- 
 
¶2.  (U) School enrollment increased 40 percent in the past year, 
according to GOL data, and the FY2007-08 education budget is up by 
over 40 percent from the previous year.  The President has called 
for universal primary education and for an end to children selling 
items in the streets during school hours. 
 
¶3.  (SBU) According to the UNESCO representative in Monrovia, 
Liberia's absence from the rating is due to the time lag in 
publication of the annual statistics.  He said Liberia may appear in 
next year's compilation of 2005 data.  More recent data, such as the 
census being conducted in March 2008, will not appear for several 
years.  However, UNESCO confirmed that the information on primary 
education expenditures provided by post in response to the initial 
MCC request in August was collected by UNESCO at the request of the 
Ministry of Finance for the MCC. 
 
Business Climate Improving 
-------------------------- 
 
¶4.  (U) In September, the World Bank's International Finance 
Corporation included Liberia on its "Doing Business" ranking for the 
first time.  The ranking (170 out of 178) was a wake-up call for 
both the GOL and the Liberian private sector, and provides excellent 
ammunition for those who have been advocating reform.  During a 
presentation to the President and members of her cabinet on November 
14, the IFC highlighted administrative reforms (not requiring 
legislation) that, had they been made before the deadline, would 
have moved Liberia from number 170 to number 140 (assuming other 
countries remain constant).  Many of the reforms are already in 
train and the GOL is eager to continue progress. The IFC 
presentation was prepared at the request of the GOL to provide 
concrete examples of regulatory changes that would improve the 
business climate. 
 
¶5.  (U) Businesses, both Liberian and American, report that things 
are getting better.  The U.S. Center for International Private 
Enterprise (CIPE) held a week-long workshop in early November to 
strengthen management of business organizations and teach them how 
to cooperate in advocacy efforts.  Major legislation, including the 
tax code and investment code, is being revised, but the GOL is 
instituting reforms in advance of legislative changes.  The Ministry 
of Finance has restructured its revenue bureau, creating an office 
to oversee tax reform.  The process of paying taxes is already less 
onerous and work continues to broaden the tax base and lower rates. 
Although the customs process remains more cumbersome (and subject to 
rent-seeking) than necessary, a "one-stop-shop" at the port for 
importers has been created, eliminating a third of the steps needed 
to clear inbound goods, and the GOL is also working towards 
harmonizing tariffs with ECOWAS neighbors.  The Liberian Better 
Business Forum, a public-private dialogue, has gained new momentum 
and will be coordinating more closely with the Poverty Reduction 
Strategy initiatives already underway. 
 
Wrestling with Land Reform and Corruption 
----------------------------------------- 
 
¶6.  (SBU) Land reform is fundamental to growth and stability.  Many 
consider land disputes, if not resolved, to be the most likely 
source of future conflict.  Unreliable land title records hamper 
 
MONROVIA 00001348  002.2 OF 003 
 
 
economic growth by limiting access to bank loans.  Contested land is 
difficult to develop, slowing agriculture, mining exploration and 
urban planning.  The GOL is tackling the complex issue head-on.  The 
Governance Commission has been charged with proposing comprehensive 
land reform.  President Sirleaf's government is going beyond just 
trying to restore pre-war property records; it is committed to 
establishing an equitable system that will correct injustices dating 
from the 1822 arrival of settlers under the auspices of the American 
Colonization Society.  A particularly thorny issue is improving 
access to land for women and young men, whose rights under 
traditional tenure systems are tenuous. 
 
¶7.  (SBU)  The Sirleaf Administration is also committed to fighting 
corruption.  A bill to establish an Anti-Corruption Commission is 
before the legislature.  The government has initiated the trial of 
Gyude Bryant, chairman of the former (interim) government.  The GOL 
took the concrete step of raising Civil Service salaries (although 
they are still extremely low) and paying salary arrears from past 
governments, and is pursuing broad-based civil service reform. 
 
¶8.  (SBU) The battle against corruption is being waged on a more 
concrete level.  Government ministries, such as Finance and 
Commerce, have signs displayed prominently noting which forms and 
services are free of charge.  The Minister of Foreign Affairs 
conducted a publicity campaign detailing the process of applying for 
new passports, enumerating the costs and the stages for which there 
is no charge.  The Deputy Minister of Finance for Revenue reportedly 
established a phone number for reporting corruption, but it has not 
been widely publicized, and whistle-blower protection legislation, 
while endorsed by the President, has not yet been drafted. 
 
¶9.  (U) The Governance and Economic Management Assistance Program 
(GEMAP) has been successful in capturing revenue that previously 
"leaked" from government coffers.  GOL revenues increased 75 percent 
last fiscal year, well in excess of GDP growth.  Publication of the 
FY2007-08 budget and of the FY2006-07 final fiscal outturn is 
shining a spotlight on government finances and creating a climate of 
transparency. 
 
Government Learning the Ropes 
----------------------------- 
 
¶10.  (SBU) All three branches are learning the delicate balancing 
act of governing in a democracy.  Each branch of government has used 
its powers (and the press) to defend its prerogatives and challenge 
the other branches.  Legislation has been delayed; officials have 
been embarrassed by public disclosure; unsubstantiated accusations 
have been reported; but through it all the government has functioned 
and its institutions are growing stronger. 
 
¶11.  (U) There have been solid steps towards improving government 
effectiveness.  In addition to becoming eligible for the Kimberley 
Process, the GOL is finalizing a chain-of-custody agreement that 
will govern logging, and is refining the customs pre-shipment 
inspection regime to make it more equitable and effective.  Evidence 
of commitment to improving daily life is ever more evident as the 
dry season arrives: road repairs, uniformed police directing 
rush-hour traffic, the opening of newly-rehabilitated markets, shiny 
new dumpsters, and work on sanitation system restoration are a few 
of the most visible changes.  In short, the GOL's commitment to 
reform is unquestionable.  However, the President needs to show 
results quickly to solidify Liberians' expectations of government 
effectiveness and transparency before the 2011 elections. 
 
Poverty Reduction is Not Just a Slogan 
-------------------------------------- 
 
¶12.  (SBU) The GOL has a target of July 2008 for its HIPC-related 
Poverty Reduction Strategy (PRS).  The process is guided by the 
Liberian Reconstruction and Development Committee (LRDC), chaired by 
the President.  Ministerial-level "pillars" of the LRDC focus on 
Security; Economic Revitalization; Governance and Rule of Law; and 
Infrastructure/Basic Services, such as education and health. 
Stakeholder consultations in each county on PRS proposals started in 
October and will continue through December.  There is keen awareness 
that changes are necessary in each pillar to create a just and 
stable society conducive to economic growth and development, and 
that progress in one pillar is not possible without progress in all. 
 The Embassy is closely involved in all aspects of the process and 
will continue to work with the GOL on supporting initiatives of the 
PRS that will move Liberia closer to Threshold status. 
 
What Would Make a Difference? 
----------------------------- 
 
¶13.  (SBU) The President is under tremendous pressure to show 
results, and is tackling the most fundamental and intractable 
 
MONROVIA 00001348  003.2 OF 003 
 
 
barriers to equitable development.  The U.S. Government provides 
strong support for Liberia, but there are still areas where we could 
do more to enhance the government's efforts.  The following 
suggestions are all high priorities for the GOL, and are all 
receiving donor support.  However, a modest, well-targeted 
commitment under the Threshold program to speed the process would 
help the GOL show results before the public becomes disillusioned 
with the slow pace of progress. 
 
--  Private investment (domestic and foreign) is hampered without 
basic infrastructure, primarily roads and electricity.  Although 
international donors are funding infrastructure projects, major 
financing gaps remain and investment there would have tremendous 
multiplier effects.  This would improve the Investment in People 
indicators by extending the reach of government programs. 
 
--  Tax reform is key to boosting government revenues, improving 
equity, and spreading a sense of participation in the economy. The 
Ministry of Finance has made dramatic improvements, with revenue up 
75 percent over last year, but advice on crafting legislative 
changes or support for further computerization of the revenue system 
would improve government resources and effectiveness.  This would 
boost performance in all three indicator categories, improving 
government effectiveness, allowing greater investment in people, and 
improving regulatory and fiscal policy. 
 
--  Human capital is desperately inadequate.  Boosting the GOL's 
capacity to manage (through long-term training, graduate studies, 
e-governance systems) would ensure that innovations in government 
operations, such as those instituted under GEMAP, are sustainable. 
Private sector firms are ham-strung by the lack of professionals 
with basic financial, accounting/audit or legal credentials.  This 
would further improve government effectiveness, regulatory quality, 
and economic freedom. 
 
--  The GOL is addressing the land issue, but well-targeted 
financial support for consolidation of land records or a catalogue 
of pending land disputes could accelerate resolution of the problem, 
speed economic develop and support political stability.  Resolving 
land ownership problems will unshackle the economy and reduce 
potential for conflict.  It will lay a foundation for ruling justly 
and provide extremely visible proof of GOL commitment to progress 
and reform. 
 
--  Improvements in the financial sector would ripple through the 
economy. Most counties in Liberia still do not have a single bank. 
We have been told that if all Liberia's banks formed a syndicate, 
they could probably support a loan in the $2-3 million range. 
Access to capital will encourage economic freedom. 
 
¶13. (U) Embassy POC for MCC issues is Economic Officer Lucy Abbott 
at AbbottLK@state.gov. 
 
BOOTH