3. Legal Regime
Companies are required to adhere to International Financial Reporting Standards (IFRS) consistent with international norms. In many instances, however, authorities do not consistently enforce or apply national laws and international standards. Furthermore, no systematic oversight or enforcement mechanisms exist to ensure government authorities correctly follow administrative rules. Accounting, legal, and regulatory procedures are often not transparent. The government does not require environmental, social, and governance (ESG) disclosure to facilitate transparency or help investors and consumers distinguish between high-and low-quality investments. Liberia passed a Freedom of Information Law in 2010 requiring government agencies to appoint a public information officer and make records available to the public, but access to government records is often difficult or impossible. Some government ministries and agencies have overlapping responsibilities, resulting in inconsistent application of laws. Government agencies are not legally required to disclose regulations before or after enactment and there is no requirement for public comment, although finalized regulations are often published. No central clearinghouse exists to access proposed regulations. Government finances, including revenues and debt obligations, are partially captured in national budgets, but are not fully transparent. Some budget documents are accessible online. For more information on regulatory transparency, see: https://rulemaking.worldbank.org/en/data/explorecountries/liberia .
Liberia is a member of the Economic Community of West African States (ECOWAS) and the Mano River Union (MRU) . The Liberia Revenue Authority (LRA) is standardizing the country’s customs and tariff systems and harmonizing its tax regime with the ECOWAS Common External Tariff . Liberia is a member of the World Trade Organization.
Liberia’s legal system uses common law alongside local customary law. The common law-based court system operates in parallel with local customary law, which incorporates unwritten, indigenous practices, culture, and traditions. Adjudication under these dual systems often results in conflicting decisions between entities based in Monrovia and communities outside of Monrovia, as well as within communities.
The Commercial Court hears commercial and contractual issues, including debt disputes of USD 15,000 and above. In theory, the Commercial Court presides over all financial, contractual, and commercial disputes, serving as an additional avenue to expedite commercial and contractual cases. Under the Liberian constitution, the judicial branch is independent from the executive, but reports regularly indicate that the executive branch frequently interferes in both judicial and legislative matters. Cases can be subject to extensive delays and procedural and other errors, and investors have questioned the fairness and reliability of judicial decisions. There are widespread reports that court officials solicit bribes to act on cases. Regulations or enforcement actions are appealable, and appeals are adjudicated in the Supreme Court . The high volume of appeals is a significant burden on the court’s five judges and often results in long delays.
Laws guiding foreign investment include the Investment Act of 2010 , the Revenue Code , the Public Procurement and Concessions Act , and the National Competitive Bidding Regulation . No major laws or judicial decisions pertaining to foreign direct investment have come out in the past year. The government does not maintain a “one-stop-shop” website for investment laws, rules, procedures, or reporting requirements.
The Ministry of Commerce and Industry (MOCI) reviews domestic and international trade transactions for competition-related concerns. If the MOCI cannot resolve the issue or it requires investigation, it may be referred to the Department of Economic Affairs at the Ministry of Justice (MOJ). The MOJ refers potential violations of civil or criminal law to the court system, including the Commercial Court. There were no significant competition cases during the review period. Liberia does not have anti-trust laws.
The Liberian Constitution permits the government to expropriate property for “national security issues or where the public health and safety are endangered, or for any other public purposes.” The government must pay just compensation and landowners may challenge the expropriation in court. When property taken for a purpose is no longer used for that purpose, the former owner has the right of first refusal to reacquire the property. The 2010 Investment Act further defines the circumstances under which the government can legally expropriate property and includes protections for foreign enterprises against expropriation or nationalization. Liberia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) Convention.
5. Protection of Property Rights
Liberian law protects property rights and interests, but with weak enforcement mechanisms. “Long term” mortgages or construction loans of up to 10 years are only available through the Liberia Bank for Development and Investment. Only Liberians may own land, with the limited exception provided in Article 22(c) of the Constitution that non-citizen missionary, educational, and other benevolent institutions shall have the right to own property, if that property is used for the purposes for which acquired. Property no longer so used reverts to the Government of Liberia.
Other foreigners and non-resident investors may acquire land on leases, which ordinarily run for 25 to 50 years. Liberian law provides for no official waiver mechanisms for limitations on foreign land ownership.
The Liberia Land Authority (LLA) , a one-stop-shop for all land-related matters, is working with international partners, including USAID, to implement strategic and targeted programs aimed at resolving critical land issues. Although the LLA encourages property owners to identify and register land titles, it does not have systemic enforcement programs. The LLA estimates that less than 25 percent of the country’s total land is formally registered. Conflicting land ownership records are common. Investors sometimes experience costly and complex land dispute issues, even after concluding agreements with the government.
The Land Rights Act, enacted in 2018, was designed to resolve historical land disputes that have caused conflict and communal strife in the past. The Act defines four categories of land ownership as follows:
Public land, which is owned, but currently not used by the government
Government land, which is used by government agencies (for office buildings or other purposes)
Customary land, on which the livelihoods of most rural communities depend
Private land owned by private citizens.
Public awareness of the Land Rights Act is growing, but still limited.
See Limits on Foreign Control and Right to Private Ownership and Establishment, above, for further information, including implementation of the Land Rights Act. See, also: https://www.doingbusiness.org/en/data/exploreeconomies/liberia#DB_rp .
Foreign companies seeking to lease land may lease privately or publicly held land. Frequently, foreign companies seeking to acquire land leases do so through direct negotiations with landlords or owners.
Liberia has a weak legal structure and regulatory environment for enforcement of Intellectual Property Rights (IPR). The Liberia Intellectual Property Act covers domain names, traditional knowledge, transfer of technology, patents, and copyrights. The Liberia Intellectual Property Office (LIPO) operates as a semi-autonomous agency under the oversight of the Ministry of Commerce and Industry. LIPO, however, lacks the technical and financial capacity to address infringements of intellectual property rights.
The Copyright Society of Liberia (COSOL) collaborates with the MOCI and LIPO to develop legal and international frameworks to guide the collection and distribution of royalties. In February 2021, LIPO and COSOL rolled out nationwide public awareness and inspection campaigns to remove pirated copyright materials from the Liberian market. In October 2021, during a meeting of the World Intellectual Property Organization (WIPO), the government recommitted to global efforts to protect and promote intellectual property rights.
There is no system to track and report on seizures of counterfeit goods. The government rarely prosecutes intellectual property violations. Many Liberians are unfamiliar with intellectual property rights, and intellectual property infringement is common, including unauthorized duplication of movies, music, and books. Counterfeit drugs, apparel, cosmetics, mobile phones, computer software, and hardware are sold openly.
Liberia is not listed in USTR’s Special 301 Report or the Notorious Markets List.
For additional information about national laws and local IPR points of contact, see WIPO’s country profiles at https://www.wipo.int/directory/en/ .
6. Financial Sector
The government welcomes foreign investment, but Liberia’s capital market is highly underdeveloped. Private investors have limited credit and investment options. The country does not have a domestic stock market and does not have an effective system to encourage portfolio investments. In 2019, Liberia committed to non-discriminatory foreign exchange auctions consistent with its obligations under IMF Article VIII , and the country does not restrict international payments and transfers. Commercial credit is allocated on market terms, and foreign investors can get credit on the local market. Many foreign investors prefer to obtain credit from foreign banks.
The country’s financial sector regulatory authority is the Central Bank of Liberia . Foreign banks or branches can establish operations in Liberia subject to the CBL’s regulations. There are 10 commercial banks. Most are foreign-owned with branch outlets in the country. Non-bank financial institutions also provide diverse financial services. These include a development finance company, a deposit-taking microfinance institution, numerous non-deposit-taking microfinance institutions, rural community finance institutions, money remittance entities, foreign exchange bureaus, credit unions, and village savings and loans associations. However, chronic liquidity shortages, especially of Liberian dollars in recent years, have undermined confidence in banks. The CBL’s 2021 third-quarter report described the banking industry as “relatively stable” based on indicators such as total assets, deposits, loans, and total capital. As of November 2021, the capital adequacy ratio of 27.47 was well above the 10% regulatory minimum, and the liquidity ratio was 44.17, above the 15% regulatory minimum. Although the banking sector is sufficiently capitalized, it is not well positioned to withstand shocks. The sector’s primary weaknesses include a high number of non-performing loans (21% in November 2021), low profitability due to high operating expenses, periodic cash shortages for depositors, low public confidence, and inadequate policing and prosecution of money laundering and other financial crimes. There are no restrictions on a foreigner’s ability to establish a bank account.
The Government of Liberia does not maintain a Sovereign Wealth Fund (SWF) or similar entity.
7. State-Owned Enterprises
Liberia has approximately 20 state-owned enterprises (SOEs), which are governed by boards of directors and management teams overseen by government ministries. All are wholly government-owned and semi-autonomous. The president of Liberia appoints board members and directors or managers to govern and run SOEs. The Public Financial Management (PFM) Act defines the requirements for SOEs.
SOEs employ more than 10,000 people in sea and airport services, electricity supply, oil and gas, water and sewage, agriculture, forestry, maritime, petroleum importation and storage, and information and communication technology services. Not all SOEs are profitable, and some citizens and advocacy groups have called for SOEs to be dissolved or privatized. Liberia does not have a clearly defined corporate code for SOEs. Reportedly, high-level officials, including some who sit on SOE boards, influence government-owned enterprises to conduct business in ways not consistent with standard corporate governance. Not all SOEs pay taxes, or do so transparently, and SOE revenue is not always transparently reported or adequately reflected in national budgets.
In 2016 Liberia’s Ministry of Education initiated a school privatization program that, as of the 2021-22 school year, had privatized 525 schools. Operation of the schools was outsourced to domestic and foreign for-profit and nonprofit education providers and NGOs. There have been numerous calls from political leaders and government officials to privatize government-owned enterprises, including the Liberia Electricity Corporation, the Liberia Water & Sewer Corporation, and Liberia Petroleum Refining Company, but the government does not have an official privatization program.
Liberia has laws against economic sabotage, mismanagement of funds, bribery, and other corruption-related acts, including conflicts of interest. However, Liberia suffers from corruption in both the public and private sectors. The government does not implement its laws effectively and consistently, and there have been numerous reports of corruption by public officials, including some in positions of responsibility for fighting corrupt practices. On December 9, 2021, the United States Treasury Department sanctioned Nimba County Senator Prince Yormie Johnson under the Global Magnitsky Act for personally enriching himself through pay-for-play funding schemes with government ministries and organizations. In 2021, Liberia ranked 136 out of 180 countries on Transparency International’s Corruption Perception Index . See http://www.transparency.org/research/cpi/overview .
The Liberia Anti-Corruption Commission (LACC) currently cannot directly prosecute corruption cases without first referring cases to the Ministry of Justice (MOJ) for prosecution. If the MOJ does not prosecute within 90 days, the LACC may then take those cases to court, although it has not exercised this right to date. The LACC continues to seek public support for the establishment of a specialized court to exclusively try corruption cases.
In October 2021 the Liberia Anti-Corruption Commission (LACC), with the Swedish International Development Cooperation Agency (SIDA) and the United Nations Development Program (UNDP), launched “The Anti-Corruption Innovation Initiative Project.” LACC will hire at least 15 officers around the country who will report on corruption to the LACC. LACC is also developing a national digital platform for the public to report corruption.
Foreign investors generally report that corruption is most pervasive in government procurement, contract and concession awards, customs and taxation systems, regulatory systems, performance requirements, and government payments systems. Multinational firms often report paying fees not stipulated in investment agreements. Private companies do not have generally agreed and structured internal controls, ethics, or compliance programs to detect and prevent bribery of public officials. No laws explicitly protect NGOs that investigate corruption.
Liberia is signatory to the Economic Community of West African States (ECOWAS) Protocol on the Fight against Corruption, the African Union Convention on Preventing and Combating Corruption (AUCPCC), and the UN Convention against Corruption (UNCAC), but Liberia’s association with these conventions has done little to reduce rampant government corruption.
Contact at government agencies responsible for combating corruption:
Baba Borkai, Chief Investigator
Liberia Anti-Corruption Commission (LACC), Monrovia, http://lacc.gov.lr/ email@example.com
Tel: (+231) 777-313131
Contact at a “watchdog” organization (local or nongovernmental organization operating in Liberia that monitors corruption):
Anderson Miamen, Executive Director
Center for Transparency and Accountability in Liberia (CENTAL)
Tel: (+231) 886-818855
10. Political and Security Environment
President Weah’s inauguration in January 2018 marked the first peaceful transfer of power in Liberia from one democratically elected president to another since 1944. International and domestic observers have said midterm senatorial and special elections since then have been largely peaceful, although there were reported instances of vote tempering, election violence, intimidation, and harassment of female candidates. Liberia’s relatively free media landscape has led to vigorous pursuit of civil liberties, resulting in active, often acrimonious political debates, and organized, non-violent demonstrations. Liberia adopted a press freedom law in 2019, but there have been reports and instances of violence and harassment against the media and journalists. Numerous radio stations and newspapers distribute news throughout the country. The government has identified land disputes and high rates of youth and urban unemployment as potential threats to security, peace, and political stability.
The United Nations Mission in Liberia (UNMIL), a peacekeeping force, withdrew from Liberia in March 2018 and turned over responsibility for security to the government. Protests and demonstrations may occur with little warning. The Armed Forces of Liberia and law enforcement agencies, including the Liberia National Police (LNP) , Liberia Immigration Service (LIS) , and Liberia Drug Enforcement Agency (LDEA) , maintain security in the country. There are also many private security firms. Most security personnel are in the capital city Monrovia and other urban areas. The effectiveness of soldiers and police is limited by lack of money and poor infrastructure.
14. Contact for More Information
U.S. Commercial Service Contact Information
Phone: (+231) 77-677-7000