Liberia: Country and Foreign Investment Regime

Back to Liberia Information: Business, Taxation and Offshore

In this section:

- Liberia Geograhy
- Liberia History, Population, Language and Culture
- Liberia Government
- Liberia Economy and Currency
- Liberia Entry and Residence
- Liberia Business Environment

Liberia Geography

Liberia, on the west coast of Africa, is bordered by Sierra Leone, Guinea, and Cote d'Ivoire and has an area of 111,369 sq. km (43,000 sq. miles). The Atlantic coastline, characterized by lagoons, mangrove swamps, and river deposited sandbars, is 560 km (348 miles) long, of which over half is sandy beach. Lying parallel to the shore are three distinct belts: a low coastal belt is well watered by shallow lagoons, tidal creeks and mangrove swamps; then comes a gently undulating plateau, 500-800m high, partly covered with dense forests; finally, inland and to the north, is a mountain region which includes Mount Nimba at 1,752m and Waulo Mountain at 1,400m.

The climate is tropical, hot and humid. There are dry winters with hot days and cool to cold nights. Summers are wet and cloudy with frequent heavy showers.

The capital City of Monrovia, with an estimated population of 882,000, has one of the world's largest natural harbours, and is amongst the most modern ports on the west coast of Africa. Other Sea Ports include Harper, Greeneville and Buchanan.

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Liberia History, Population, Language and Culture

The founding and establishment of a colony on the West Coast of Africa in the 1820s, which later became the Republic of Liberia, resulted from a number of initiatives in which freed slaves from the United States of America, through the instrumentality of the American Colonization Society, returned to Africa in an eventually successful attempt to create a republic on libertarian lines. The first settlement, around Cape Mesurado, was named Christopolis, later renamed Monrovia, after the American President, James Monroe, and the Colony as a whole was referred to as Liberia. Other colonization Societies soon followed, and established colonies in diverse parts including Buchanan, Sinoe, Harper, and Robertsport. In 1839, these colonies, except Harper and Sinoe merged and created the Commonwealth of Liberia, adopted a new Constitution and appointed a Governor. Sinoe joined the Commonwealth in 1842, and four years later, on July 26, 1847, Liberia declared its independence, thus becoming the first independent Black African nation.

For several years, Liberia existed side by side with its indigenous African tribes, and through a gradual process , involving agreements, purchase of territories, and extension of its authority, Liberia came to encompass a vast territory between Sierra Leone on the West, then under British Colonial domination, and Guinea and Ivory Coast on the North and East, respectively, both then under French Colonial domination. However, the relationship was marred at diverse times by bloody battles between the freed settlers and the indigenous tribal peoples on the one hand, and by encroachments upon Liberian territory by its neighbouring colonial powers on the other. Although Liberia maintained its sovereignty and territorial integrity, its political arrangement was to be the cause of its eventual instability. For 133 years, the settlers, although outnumbered by the indigenous tribal peoples, developed a hegemony through which they entrenched and completely dominated the political, economic and social spheres of Liberian, to the exclusion of the indigenous tribes.

So on April 12, 1980, the Americo-Liberian True Whig Party Government was toppled, and President William R. Tolbert , Jr. along with several of his Cabinet Minsters assassinated , in a bloody coup d'etat led by a relatively unknown Master Sergeant, Samuel Kanyan Doe. While this coup d'etat brought to an end 133 years of Americao-Liberian political dominance over Liberia, it, unfortunately, heralded a period of instability for several years to come.

Expecting a new era of democracy in Liberia, the hopes of many Liberians were dashed when the Government of Master Sergeant Samuel Kanyan Doe suspended the Constitution, banned political party politics, declared marshal law, and became increasingly characterized by gross and persistent human rights violations committed with impunity. Under internal pressure, the ban on political parties was lifted, a new Constitution adopted in 1986 and elections held in which the Master Sergeant Kanyan Doe was declarecd the winner amidst widespread fraud and irregularities.

In December 1989, Charles Ghangay Taylor, under the banner of the National Patriotic Front of Liberia(NPFL), launched an incursion into Liberia from the Ivory Coast, which in less than six months not only escalated into a full blown civil war, but led to the disintegration of the Doe Government, and became increasingly characterized by indiscriminate killings, destruction of property, and massive internal and external displacement of Liberians. It is estimated that over 250,000 persons were killed during the conflict. Concerned that the war in Liberia would have the potential of spilling over and undermining the peace and security of the subregion, the Economic Community of West African States (ECOWAS) intervened in the conflict and deployed a peace keeping force (ECOMOG) to maintain law and order. An Interim Government was installed and after several peace agreements, under the banner of ECOWAS and the United Nations, elections were held in 1998. Charles Ghankay Taylor, the erstwhile leader of the NPFL, emerged as winner, and was inaugurated as Liberia's 23rd President for an initial six year term. However, Taylor's presidency was short lived.

In addition to widespread human rights abuses, Taylor demonstrated gross incapacity to address the deplorable and deteriorating social and economic conditions, of Liberia. His involvement in the conflict in neighbouring Sierra Leone through the supply of arms to the Revolutionary United Front (RUF) in exchange for diamonds resulted in sanctions against him and his government. Unable to contain the advances by Liberians United for Reconciliation and Democracy (LURD) and Movement for Democracy in Liberia (MODEL) (two waring groups), and under intense international pressure, Taylor resigned as President of Liberia on August 11, 2003, and paved the way for the establishment of a Transitional Government, which has now brought peace to Liberia.

Liberia's population is estimated at 3.88m (2011), 85% of whom are Christian, 12% Muslim, and 3% with indigenous beliefs.

English is the official language, but there are about 16 other indigenous languages, of which only a few can be written.

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Liberia Government

Following the resignation of President Taylor in June 2003, Businessman Gyude Bryant was chosen to lead a transitional government at peace talks in Accra, Ghana, attended by all Liberian Political parties, the Government, civil society, and the warring factions, including Liberians United for Reconciliation and Democracy(LURD) and Movement for Democracy in Liberia (MODEL) in August 2003. Under the terms of the Accra Peace agreement, the Transitional Government is composed of persons from the erstwhile Taylor Government, the warring factions, political parties and civil society.

To support the transition from war to peace, the United Nations deployed a Peace Keeping Mission in Liberian (UNMIL) to disarm, demobilize, and resettle all former combatants in the conflict, and to work with the Transitional Government toward the creation of an enabling environment for national reconciliation and for the holding of free and fair democratic elections. These were held in October 2005, with a runoff election between the two leading candidates on 8 November 2005. Ellen JOHNSON-SIRLEAF was elected President, and is both the chief of state and head of government. Elections were last held in November 2011 and Ellen JOHNSON-SIRLEAF was re-elected. The next elections are due to take place in 2017.

Constitutionally, Liberia has a republican form of government with three equal and coordinated branches with separation of powers they provide checks and balances. The Executive branch is headed by the President, who is elected by popular vote for a six-year term, and can be re-elected for another six year term, but cannot hold office for more than two terms. The President is the head of Government and Commander in Chief of the Armed Forces and is responsible for execution of the laws of the country.

The Legislature is the law making body and consists of the Senate and the House of Representatives, each serving as the negative to the other; The Senate consists of 30 senators elected by popular vote to serve nine-year terms. The House of Representatives, comprising 64 representatives is also elected by popular vote to serve six-year terms.

The Judiciary includes the Supreme Court headed by a Chief Justice and four Associate Justices, appointed by the President upon the approval and consent of the Senate. The Judiciary also consists of Circuit Courts (one in each county), and several courts of record and courts not of record.

Liberia has a dual system of statutory law based on Anglo-American common law and customary law based on unwritten tribal practices, both of which are subject to the Constitution. There have been increasing calls for the harmonization of statutory and customary laws in light of the constitutional provisions of equality before the law, and equal protection of the law. Many of the statutory laws of Liberia are patterned on that of the United States of America and can be found in the Liberian Code of Laws Revised 1972, and acts amendatory thereto.

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Liberia Economy and Currency

For several years, up to the advent of the civil war in 1990, the Liberian economy relied on the extractive sector, which consisted mainly of iron ore and which generated over fifty percent of Liberia's export earnings. Other basic products such as raw timber, rubber, diamonds, iron ore, coffee and cocoa accounted for the remaining 50%. The manufacturing sector remained relatively small and predominantly foreign-owned. Political instability introduced by the military coup d'etat of 1980 and superimposed upon by ten years of civil war, has had a devastating impact on the Liberian economy. The iron ore sector has come to a complete stop, as the three major concessions in Bong Mines, Nimba and Bomi Hills were constrained to close their operations.

Endowed with plentiful water, mineral resources, forests and a climate favourable to agriculture, Liberia's major export earnings today come from raw timber and rubber with, diamonds, coffee and cocoa on a lesser scale. Prospects also exist for commercially exploitable offshore crude oil deposits in Liberia. The local commercial economy remains dominated by foreigners, mainly Lebanese.

Liberia's success story, however, has been its shipping and corporate registry, which after some problems in the 1980s is now rapidly growing back to its former prominence. Currently it is the world's second largest maritime registry - previously it was the largest registry - and continues as the premier quality open registry for safety, security and compliance with international environmental protection requirements.

The revitalization of the economy, and the restoration of basic infrastructure and services, destroyed as a result of the civil war, depend on the re-establishment of a conducive environment for peace and stability in the country, coupled with good governance, and the implementation of sound macro- and micro-economic policies, including the encouragement of foreign investment, and generous support from donor countries.

A Governance and Economic Management Action Plan was created in October 2005 by the International Contact Group for Liberia to help ensure transparent revenue collection and allocation - something that was lacking under the Transitional Government and that has limited Liberia's economic recovery. The reconstruction of infrastructure and the raising of incomes in this ravaged economy will largely depend on generous financial support and technical assistance from donor countries.

The local currency is the Liberian dollar (LRD), quoted at 55-60 to the US dollar in 2005, after a period of rapid inflation. In June 2012, one US dollar was worth LRD74.

In its report on the Liberian economy in January 2008, the International Monetary Fund (IMF) noted that the government has continued to make good progress in implementing key policies under an IMF-monitored programme, despite severe capacity limitations.

The economy has continued to recover, growth for 2011 is estimated at 6.9%, for 2010 this was 5.6% and 4.6% in 2009. Inflation in 2011 was 10% (7.3% in 2010) and nowhere near the peak of 27% in August, 2008, and unemployment is rife. GDP per head is USD400.

International trade is conducted in the US dollar.

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Liberia Entry and Residence

All persons entering Liberia must hold a visa (except ECOWAS citizens who require a valid passport or laissez passer only). Visas can be obtained prior to departure at Liberian Embassies and Consular Offices abroad, but can also be obtained at the Airport upon arrival in Liberia.

Within 48 hours of entry, a visitor must report to the Bureau of Immigration and Naturalisation (BIN) in order to register and to be given a Temporary Stay stamp. This stamp will allow a visitor to stay in Liberia for periods between 30-90 days. Where the visitor intends to stay in Liberia for a period in excess of 90 days, he/she must apply for a Resident Permit, the receipt of which is a condition precedent to an application for a work permit from the Ministry of Labour, should the visitor intend to work or engage in business while in Liberia.

In addition to a Resident Permit, a visitor who contemplates travelling in and out of Liberia, must also apply for a Re-entry Permit, which acts as a multiple entry visa, and allows unlimited trips to and from Liberia without additional cost or procedure.

Renewal of Resident Permits, Extension of Temporary Stay Stamps, and Re-entry Permits can be obtained through the purchase and submission of the appropriate standard forms to the BIN. There are charges and fees associated with these and other services, which were at the time of writing as follows:

• 'Application for Temporary Stay' Form: USD131 (for US citizens) USD70 for non-US citizens and free for ECOWAS citizens;
• Airport Visa Fee: USD150;
• 'Application for Permit of Residence' form: USD20;
• Visa fees for US citizens: USD200 (1 year); USD300 (2 years); USD400 (3 years);
• Visa fees for non-US citizens: USD150 (1 year) USD250 (2 years)
• ECOWAS citizens: Free
• Exit tax on departure by land or sea: USD5;
• Exit tax on departure by air, USD25 plus USD15 airport charge.

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Liberia Business Environment

There are no discriminatory laws against foreign persons or entities desirous of doing business in Liberia. Foreign corporations and foreign maritime entities can operate in Liberia directly upon authorization by the Minister of Foreign Affairs or indirectly through local agents, who may be individuals, partnerships, or corporate entities. Foreign citizens resident in Liberia, subject to compliance with the Immigration and Labour Laws of Liberia, are also permitted to establish businesses in Liberia consistent with the provisions of the Business Corporation Act (BCA) and the rules and regulations promulgated by the Ministry of Commerce, Trade and Industry.

Liberia is also a maritime and corporate haven. Many corporations are registered under Liberian Law as non-resident domestic corporations (offshore companies). Since they are not permitted to do business in Liberia, Liberian offshore companies are not subject to Liberian tax. They are not regulated by the Ministry of Commerce or any similar regulatory agency nor are they subject to any enactment intended to regulate the conduct of business in Liberia. As a maritime haven, over 3,200 vessels of more than 100 million gross tons are registered under the Liberian flag, making it the second largest in the world.

In addition to complying with the requirements of the BCA, all business entities authorized to do business in Liberia, must register the business with the Ministry of Commerce, Trade and Industry, and obtain a business license as a condition precedent to commencement of operations. The Ministry may also conduct an on-site inspection of the business premises.

These formalities apart, Liberia has a very liberal business climate intended to attract foreign investment and spur economic growth and development in the country. Through a liberal Investment Incentive Code, Liberia offers several physical benefits, including exemption from custom duties, income tax, stamp fees and other benefits, to new and expanding business enterprises for approved investments projects in areas such as manufacturing, agriculture, forestry, fishing, and mining. Other potential areas for investment incentives include building and construction and transport and communication. Approved investment projects may also be eligible for support in securing loans and guaranteeing credit by the Central Bank

There are no statutory foreign exchange controls in Liberia, and funds may generally be freely remitted into and out of the country. The Prevention of Money Laundering Law of 2002 gives effect to international requirements in respect of due diligence, record keeping, report of suspicious conduct, the offence of laundering the proceeds of criminal conduct and international cooperation in identifying, freezing and confiscating the proceeds of criminal conduct in another jurisdiction.

The Electronic Transactions Law of 2002 regulates trade conducted electronically; currently there are no explicit data protection laws in force in Liberia, but drafts are in circulation for early implementation. A firm that locates a server in the country is in danger of creating a permanent establishment in tax terms; additionally many Internet activities if conducted by a Liberian corporation, would require a business licence, only available to a resident entity.

Given the damage and destruction occasioned by the civil war, electricity and communication services are liable to interruption, sometimes for significant periods of time. The official Liberia Telecommunications Corporation was offered for sale in July, 2006, but the winning bid by United Telephone Exchange (UTE), was contested by Infotel Italia.

In August, 2006, the Liberian Senate confirmed the Chairman and Board of Commissioners of the newly established Liberia Telecommunications Authority (LTA). The body oversees the scope and operations of the country's telecommunications industry.

In February 2008, LTC signed two Memoranda of Understanding with Alink, an Ivorian telecommunications company, and ZTE Corporation, a Chinese manufacturer of CDMA telecommunication equipment. The first MoU turned over the telecommunication equipment to LTC, while the other gave full ownership and control of the entire network systems.

The Freeport of Monrovia, together with the port of Buchanan, are amongst the most modern ports on the west coast of Africa; they are regular ports of call for major steamship lines operating between Europe, the US and the Far East. There are direct scheduled flights from both Europe and the US to Roberts International Airport on the outskirts of Monrovia. Airmail services are good and the international courier services are well established.

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