VZCZCXRO7232
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DE RUEHMV #1067/01 3651555
ZNR UUUUU ZZH
R 301555Z DEC 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 0648
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INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 02 MONROVIA 001067 
 
SENSITIVE 
SIPDIS 
 
E.O. 12598: N/A 
TAGS: EINV ECON EFIN OPIC LI
SUBJECT: LIBERIA: Encouraging Investment? 
 
REF A)  MONROVIA 999; B) MONROVIA 336; C) MONROVIA 32 
 
¶1. (SBU) Summary:  In recent meetings with the Ambassador, two top 
GOL officials confirmed that they expect the revised Investment Code 
to pass quickly after the legislature convenes in mid-January. 
President Sirleaf has called on her Cabinet to expedite major 
concession agreements, but investors continue to express frustration 
at the slow pace of negotiations.  New procedures designed to 
improve transparency continue to slow negotiations, and the Cabinet 
itself is divided on the appropriate balance between the need for 
revenue now and the need to provide incentives that recognize the 
challenges of starting a business in Liberia.  End Summary. 
 
GOL:  Investment Code Will Pass 
-------------------------------- 
 
¶2.  (SBU) Minister of State for Finance, Economic, and Legal Affairs 
Morris Saytumah, who serves as President Sirleaf's representative on 
concession negotiations, expressed certainty during a December 10 
meeting with the Ambassador that the much-delayed revisions to the 
Investment Code (Ref B) would be re-submitted to the legislature in 
January and would pass without difficulty.  According to the new 
Code, incentives will be standardized according to the size of the 
investment and the priority of the sector or region, rather than by 
the current time-consuming, discretionary process of negotiation. 
(Note:  The draft Investment Code revision was withdrawn from 
legislative consideration last year after protests by members of the 
Liberian business community, who objected to the lack of 
consultation prior to elimination of protected sectors of the 
economy.  The revised draft reflects a compromise.  End note.) 
 
Why are approvals so slow? 
--------------------------- 
 
¶3.  (U) By the numbers, investment is a success story in Liberia, 
having increased steadily from an admittedly low base of $20 million 
in 2005 (excluding $1 billion invested by Mittal Steel) to $97 
million in 2007.  However, major U.S. investors in tree crops, 
minerals and other sectors are increasingly frustrated by the lack 
of progress in concession negotiations. 
 
¶4. (SBU) During an introductory call on Chairman of the National 
Investment Commission (NIC)Richard Tolbert November 11, the 
Ambassador said U.S. investors report feeling sidelined as firms 
from other countries conclude deals.  Noting reports that 
negotiations drag on, commitments are ignored, and meetings are 
cancelled at the last minute, she asked Tolbert if he was satisfied 
with the pace of investment approvals.  (Note:  The NIC, chaired by 
Tolbert, adjudicates requests for investment incentives.  The other 
members of the Commission are the Minister of Finance; Minister of 
Justice; Minister of Planning & Economic Affairs; Minister of 
Commerce & Industry; and the Minister of State for Finance & Legal 
Affairs.  End note.) 
 
¶5. (SBU) Tolbert said he shares the frustration caused by his 
Cabinet colleagues' over-estimation of Liberia's appeal to investors 
and desire to secure short-term funding at the expense of 
longer-term goals.  He reiterated President Sirleaf's call for 
flexibility in approving investments that will boost employment (Ref 
A), and noted that Liberia is too small a market to attract major 
U.S. firms.  He expressed appreciation for OPIC and ADF programs 
that support small-to-medium businesses in Liberia, and called on 
them to be expanded.  He pointed out that investment creates a 
middle class, which provides political insurance for Liberia's 
stability. 
 
¶6. (SBU) With regard to American investors specifically, Tolbert 
agreed the process has been lengthy.  He blamed Liberia's volunteer 
outside lawyers, who review major agreements but tend to get tangled 
in endless detail.  He also criticized U.S. firms' 
"take-it-or-leave-it" approach, calling for more patience and an 
understanding of the difficulty the GOL faces in negotiating 
agreements: there are very few qualified people, and so little 
technical support that even copying documents can be a challenge. 
He also criticized the tendency of U.S. investors to go straight to 
the President for help with every problem. 
 
¶7. (SBU) Comment: From their statements in meetings with us, it is 
clear several major U.S. investors are considering Liberia only in 
response to President Sirleaf's personal request.  They have a right 
to expect expeditious, transparent and professional negotiations, 
and to convey their concerns when the negotiation process stalls. 
There are tremendous opportunities for investors in Liberia, but the 
risks are high.  As commodity prices drop, every deal delayed has 
cost Liberia money, and the lack of progress in concluding 
negotiations damages its reputation.  Some delays are understandable 
given the complexity of proposed contracts, inexperience with new 
and complicated concession laws, and the lack of capacity within the 
government to engage investors efficiently.  But other delays remain 
inexplicable and suggest to investors that the GOL is not always a 
reliable negotiator. 
 
MONROVIA 00001067  002 OF 002 
 
 
 
¶8. (SBU) Comment continued:  The USG has an interest in supporting 
GOL efforts to improve the legal and regulatory regime and to 
conclude concession agreements in line with international best 
practices.  Investors also stand to benefit from improved 
transparency and accountability in the concession process, and the 
new procedures will help underpin growth and stability.  Post will 
continue to support these reforms, but we will also continue to 
stress the need to be fair, professional and expeditious in response 
to legitimate proposals for investment.  The draft Investment Code, 
while probably still not WTO compliant, will be an improvement and 
should remove most discretion from decisions on investment decisions 
and help expedite future deals. 
 
THOMAS-GREENFIELD