Ebola Free, Liberia Introduces Reforms to Encourage Business Growth
Running a business in Liberia is hard. Last year, the World Bank ranked Liberia 174 out of 189 countries for its ease of doing business. This environment is particularly difficult for SMEs, which often lack the capacity or networks to navigate the business environment and access new opportunities. New signs show that the government is taking this issue seriously, and we at Building Markets are excited to see the results.
On September 3rd 2015, the World Health Organization declared the country Ebola free and the Liberian government has recently rolled out a series of measures to make sure the economy bounces back quickly. When Hon. George Wisner, the Executive Director of Liberia’s National Investment Corporation presented these plans at the 2015 US-Liberia Trade & Investment Forum, one of the policies that caught our attention concerned the ease of starting a business. At the time of the World Bank’s 2015 Doing Business Report, if you combined all the procedures required to register a business, it took 25 days to complete. The announced reforms hope to reduce the registration process to two days and will have both an online and in-person channel for registration.
The World Bank report had this to say about the value of formally registering businesses:
“Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protection provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk.”
Through our programs in Liberia, we have seen the negative effects of cumbersome registration processes and know that the World Bank’s second point about access to services and institutions is a particularly critical one. We believe the best way to create jobs and contribute to economic development is to tie local businesses to local and global supply chains. Unregistered businesses, operating in the informal sector, can miss out on many of these opportunities.
Building Markets has long advocated for SMEs to register with the appropriate entity. In Liberia, the team has created a network of more than 3,600 businesses and facilitated 480 contracts worth $56 million between local SMEs and buyers, including major concessionaires. We are excited to see how easier access to registration can lead to a stronger, more competitive local market.