Privatizing Liberia’s public Corporations

By John F. Josiah, Esq.

The Perspective
Atlanta, Georgia

January 13, 2004

In a democratic society, the democratic government must be responsive to the changing needs and demands of its citizens, rather than be captive to an inflexible methods of providing social services to its people. For over a century, Liberia has been captive to public sector means of providing certain essential services to its people. This public institutional provision of goods and services has been a miserable failure. Our public corporations have not only failed to provide those essential goods and services for which they were statutorily created, but have been a tremendous burden on the scarce resources of the government. It is about time to begin to design and promote a fundamental structural adjustment reform. A reform in the direction of privatization. We must begin to seek better avenue of meeting the needs of our people. We must begin to address alternative approaches that can best provide social goods and services for the entire Liberia and not only for Monrovia.

The acute shortages for essential services such as water, electricity, communication, have contributed significantly to the underdevelopment of Liberia. There is a need to re-examine a number of our public Corporations with the intent to privatize some of them. The political rethinking of Liberia must carry with it some minimum economic rethinking. Public Corporations have been and continue to be a huge financial burden on the limited resources needed for economic development. In 1988, when the total debt of the government was a little over 800 million dollars, twenty five percents of that amount constituted government guaranteed loan for the public corporations. During the same fiscal period, public corporations imported duty free to the tune of five million dollars. Despite the huge loan guaranteed by government and the duties reprieve from government for their imports and exports, government receives no dividends from the public corporations.

Government cannot continue to subsidize and expend on Public Corporations that only function in Monrovia. The failure in the past on the part of these Public Corporations to provide basic services for greater Liberia is intolerable. These Public Corporations were created to augment government revenue and not to be a perpetual liability to government. The privatization of these corporations will definitely eliminate the enormous government intrusion in the management of these corporations, thereby yielding a maximum production of the services they were intended to produce.

There are essentially two techniques for the privatization of service delivery. The first is simply selling all government corporations. The second is contracting out these corporations. With the second, government enters into a contract with private firms to provide the required services with certain contractual provisions that guide against economic abuses.

We must keep government’s role at minimum in our economic system. Government’s role is primarily a maker of policy, and a creator and enforcer of standards, and not a major provider of social services. The public corporations of Liberia are not only termites to the coffer of the government, but rather an extension of the president's already enormous power.

And while the battle for jobs continue in Monrovia, the need to set up a commission to review the present public corporations is critical to the new Liberia.

Finally, to varying degrees, privatization has changed the macroeconomic policy environment of number of third world countries. Policies such as interest rate, price policy, to some extent has encouraged a balance budget - policies that are required for economic growth and development. A minimum political interference in any economic system is vital to a functioning economy. In order to drastically reduce political interferences in our free market economy, we must begin the process of reducing government participation in the market.

About the Author: Mr. John F. Josiah is a Public Sector Economist and a lawyer. He resides in the DC metropolitan area.