VZCZCXRO5424
OO RUEHMA RUEHPA
DE RUEHMV #0336/01 1261348
ZNR UUUUU ZZH
O 051348Z MAY 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9982
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 03 MONROVIA 000336 
 
SENSITIVE 
SIPDIS 
 
E.O. 12598: N/A 
TAGS: EINV BEXP EFIN ETRD ECON KMCA LI
SUBJECT: LIBERIA: 21 REFORMS TO IMPROVE THE BUSINESS CLIMATE MAY 
BOOST MCC SCORE 
 
REF: A) MONROVIA 255  AGOA WORKSHOP 
 
¶1.  (SBU) SUMMARY:  The GOL has announced 21 reforms to improve 
Liberia's ranking in the IFC "Doing Business" index by enhancing the 
business climate.  The rapid progress reflects President Sirleaf's 
commitment and the productive collaboration between the GOL and the 
business community to target regulatory changes that do not require 
legislative action.  There was special emphasis on reforms that will 
also affect Millennium Challenge Account ratings.  The reform 
process is on-going, with the more complex changes to be tackled 
next.  However, legislation revising the Investment Code that was 
withdrawn in February for further consultations with the business 
community has not been resubmitted to the legislature.  The full 
list of 21 reforms is at para 8. END SUMMARY 
 
¶2. (U) Liberia debuted at number 170 of 178 countries on the 
International Finance Corporation's "Doing Business" index in 
September 2007.  The pride of being rated for the first time was 
mitigated by the stark recognition that onerous GOL procedures are 
hampering economic growth.  President Sirleaf called for a 
government-wide initiative to improve Liberia's standing as much as 
possible for the 2008 rankings, establishing a cabinet-level 
Business Reform Committee in January to revise administrative 
procedures that taint the business climate and calling for 
implementation by April (in time for the next IFC rating period). 
The reforms were announced April 29 but had been phased in over the 
past few weeks. 
 
¶3. (U) The IFC supported the GOL by creating a public-private 
partnership, the Liberia Better Business Forum, to brainstorm on the 
most effective changes.  The short-term focus was on regulatory 
changes that could be made without legislative approval and targeted 
four of the indicators:   Starting a Business; Construction 
Permits/Licenses; Trading Across Borders and Registering Property. 
The reforms in Starting a Business may improve Liberia's performance 
on that element of the MCC scorecard.  A new website containing 
regulations and other essential information is in progress and 
should be launched in May as part of a massive publicity campaign. 
There are already notices posted at ministries informing the public 
that government forms and Tax Identification Numbers are free, and 
providing contact information in case of questions or problems. 
 
¶4. (U)  The improvements include reducing the number of required 
signatures, establishing time limits for GOL approvals, and 
consolidating officials in one location to reduce the need to go 
from place to place for permits and approvals.   One major systemic 
change is publication of procedures and prices for obtaining permits 
and registering a business.  The next step is to refine the current 
reforms and identify the longer-term reforms. 
 
Skeptical Optimism 
------------------ 
 
¶5. (U) At an April 30 workshop on the Starting a Business reforms, 
the business community was engaged but skeptical that the reforms 
alone will significantly reduce corruption and delays.  Participants 
were introduced to the officials at the Ministry of Commerce and 
Industry (MoCI), Ministry of Finance (MOF), and the Ministry of 
Foreign Affairs (MoFA) at the Assistant Minister and Director level 
who have been charged with implementing the changes.  Regarding past 
frustrations with corruption and inefficiency, participants were 
told to look forward, not backwards, and to notify one of the 
officials in charge should there be problems in the future. 
 
¶6.  (U) While welcoming the changes, business community 
representatives noted that even with the reforms clerks have 
discretion to demand bribes.  They highlighted the need for more 
realistic salaries and better working conditions for civil servants, 
noting that officials in the domestic trade office share desks and 
work with (an inadequate number of) old typewriters.  If civil 
servants are backlogged in processing paperwork, it will remain 
tempting to pay an over-worked typist to "expedite" an application. 
One new reform, permitting businesses to register throughout the 
year rather than requiring that every business register in January, 
should even out the workload.  Multi-year registration, under 
consideration but requiring legislative approval, would also ease 
the crunch. 
 
Still Plenty of Room for Improvement 
------------------------------------ 
 
¶7. (U) Several further changes proposed by the business community 
are under consideration but require legislative action.  These 
include adjusting the fees for registering a business and easing the 
requirement that Articles of Incorporation be signed by the Minister 
of Foreign Affairs and not a designee.  The quagmire of land tenure 
conflicts is also likely to require legislative, if not 
constitutional, reform. 
 
List of Agreed Reforms 
---------------------- 
 
MONROVIA 00000336  002 OF 003 
 
 
 
¶8. (U) The major innovation is publication of flow charts explaining 
every stage of each process and specifying authorized fees.  The GOL 
has also clarified that business registration at the Ministry of 
Commerce precedes application for licenses or permits from sectoral 
ministries.  There had previously been confusion about whether 
companies should register before or after receiving the necessary 
permits to conduct their business. 
 
STARTING A BUSINESS  (MCA indicator) 
 
--  Standard form for articles of incorporation will enable 
businesses to register without an attorney; 
 
-- Computerized list of corporate names; (This list will be posted 
on-line when the website is operational so entrepreneurs can check 
in advance that their proposed name is available.) 
 
-- Co-location of the MoFA official at the MoF to eliminate the need 
to go to several ministries; 
 
--  Reduction of MoFA approval time for new Articles of 
Incorporation to 5 business days; 
 
--  Reduction of MoCI approval time for new business registrations 
to 5 business days; 
 
--  Reduction of the number of required MoCI signatures from 4 to 
2; 
 
--  Elimination of MoCI's previous practice of physically inspecting 
all new business sites before approve the registration; (Screening 
will be random, to confirm accuracy of business registrations.) 
 
--  Implementation of a standard checklist that will specify all 
required forms and fees prior to application.  The checklist will 
also allow the ministry to quickly identify whether or not 
applications are complete prior to acceptance; 
 
--  Reduction in approval time from 90 days (as reported in last 
year's DB survey) to 30 calendar days.  Applications not rejected 
within 30 days will be deemed approved; 
 
--  Reduction in the number of signatures required for approval at 
the Ministry of Public Works from 4 to 2 (zoning and technical 
services). NOTE: Where a project involves an international 
government or has a market value in excess of US$1M, the Minister's 
signature will be required. The 30 day approval time will still 
apply. 
 
IMPORTS 
 
--  50% reduction in customs usage charges from 3% to 1.5%; 
 
--  Creation of a tiered fine structure for violation of 
pre-shipment inspection requirements; 
 
--  The Seaport Police and National Police are the only authorized 
security forces at the port. Unauthorized security officials and 
other nonessential staff have been removed; 
 
--  Elimination of the Ministry of Transport vehicle import permit 
clearance fee; 
 
--  Reduction in the number of required MoCI signatures for an 
Import Permit Declaration from 4 to 3; 
 
--  Reduction of pre-shipment inspection (PSI)  fees from 1.5 to 
1.1% of FOB value; 
 
--  Shift from compulsory PSI to compulsory destination inspection 
(DI) for rice, petroleum and cement; 
 
--  Reduction in clearance steps from 40 in early 2007, to 24 in 
July 2007, and further reduced in April 2008 to 9 steps (with PSI) 
and 11 steps (without PSI). 
 
EXPORT 
 
--  Elimination of the MoF Excise Tax Division and the Bureau of 
Concessions from the process; 
 
--  Approval and processing of all MoF export documents (including 
transshipment and bonded goods clearance) at the port vs. at the 
ministry; 
 
--  Elimination of the MoF export clearance requirement. NOTE: an 
Export Permit Declaration is still needed. 
 
REGISTERING PROPERTY (an MCA indicator) 
--------------------------------------- 
 
MONROVIA 00000336  003 OF 003 
 
 
 
¶9. (SBU) There were no reforms announced in this round but that does 
not reflect a lack of concern.  Land tenure issues are the biggest 
threat to Liberia's stability and the focus of a broad range of 
initiatives.  On the most fundamental level, the Archives, housed in 
the Ministry of Foreign Affairs, is building shelves to try to 
provide safer storage for the deeds and land records, many of them 
crumbling papers from the 1800s that were not destroyed in the war. 
The GOL has created a Land Commission and is taking other steps to 
tackle the problem but progress will be slow and careful. 
 
¶10. (SBU) Regarding non-real property, Liberia has a solid legal 
base for protecting intellectual property rights but enforcement and 
implementation are almost non-existent.  A new Board for the 
Copyright Office, appointed by President Sirleaf in late 2007, could 
add new vigor to that organization. 
 
¶11.  (SBU)  Comment:  These reforms were identified through an 
effective process of private-public consultation.  Success depends 
on two factors:  the willingness of firms to report shortcomings in 
implementation to the appropriate GOL authorities and the ability of 
the GOL to address those shortcomings.  We believe the political 
will is there, but it remains to be seen if it will be enough to 
overcome the low salaries and deeply entrenched habits of Liberia's 
civil service.  Continuing difficulties in passing revisions to the 
Investment Code do not bode well for the next round of reforms that 
will require legislative approval.  The Investment Code was updated 
in consultation with the International Finance Corporation (IFC) and 
others, but the President withdrew it in February after strong 
objections by members of the business community.  Despite what was 
described as fruitful consultations, the draft bill has not been 
resubmitted to the legislature and we see no signs in the broader 
business community of support for those reforms. 
 
ROBINSON