Upwardly Mobile. Building Markets Releases 2nd Market Overview Report
In Liberia Building Markets often calls itself a business linkages program that connects buyers and local suppliers. This is an apt description because we work with both to develop these relationships.
When it comes to convincing both groups to use our services for the good of the country’s economy, we find the supplier side easier. It doesn’t take much to convince local business owners and managers of the utility of our services, such as the tender distribution service or our various trainings.
The other side, which we call buyers, can be a bit trickier. There are a variety of reasons why a buyer would and would not want to purchase from local suppliers. So how can we make the case to buyers and investors to forgo the risk to procure from and invest in local businesses?
Enter our second annual Market Overview Report: “Upwardly Mobile.”
Building Markets’ first Market Overview Report was published in April 2012. Both reports analyze the Liberian economy and why local investment matters. And let me tell you we’ve discovered a lot of reasons.
Like the fact that for every dollar exchanged with local businesses, 78 cents will be spent within the Liberian economy either on salaries or purchases.
Or the fact that on average contracts won by local businesses result in the creation of 13 full-time jobs, 5 part-time jobs and 91% of the time in reinvestment into that business.
Of course, there are constraints to doing business with local SMEs. Most local businesses are small or micro-sized with 57% of businesses employing less than four employees and 20% employing five to nine employees. Annual turnover is quite low, as over 80% of businesses report making profits under $20,000. And while regular Internet use has grown among local businesses since the last report, only 31% of businesses use it daily. All of these constraints might impede businesses from bidding on and fulfilling large or complex tenders.
On the buyer side, procurement officers tell us that the main weaknesses they see among suppliers include poor customer service, poor quality of goods and services, a lack of capacity and delayed delivery time. Despite this, buyers also report that they’ve seen improvement in the capacity of local businesses since one year ago.
Overall, the second Market Overview Report confirms that local procurement betters the local economy, and that local businesses are stronger than they were just one year ago. The report also concludes that the Liberian economy is now stronger than it was in 2012 due in part to efforts undertaken by the Government of Liberia, donors, investors, concessionaires, NGOs and local businesses to increase local procurement. We have every reason to believe this will only get better for next year’s report.