Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
In Liberia, most retail goods, including food, textiles, medicines, and machineries, are imported. Most of these goods pass through a single seaport, the Freeport of Monrovia. The Freeport is mostly operated by a foreign firm – APM Terminals – which is instrumental to setting the fees associated with importations. Importers frequently complain about the time (administrative and bureaucratic delays), effort, and expense required to pass or clear goods successfully through the Freeport. As a result, some importers route imports to Liberia through the ports at Conakry or Freetown to avoid these challenges. Once cleared, many large businesses rely on vehicles to transport their goods to destinations in the capital city and around the country. There are no effective general goods public rail systems or water transport networks. Road infrastructure in most of the country is poor and, during the six-month rainy season from May through October, many roads become impassable.
Using an Agent or Distributor
A credible agent is crucial for effective representation in the consumer and durable goods markets. Many of the larger Monrovia based wholesalers and retailers have branch locations in other cities and towns. Sales and distribution channels include stores, supermarkets, shops, hotels, filling stations, restaurants, and market stalls.
A business may operate in Liberia as a locally incorporated entity or a branch of a foreign entity (subsidiary), but the Associations Law (Title 5, Liberian Code of Laws, Revised) requires business to have a registered agent or office in the country. The law allows the use of agents, partners, or distributors to register a business, represent a business, sell goods and services, and open branch offices. U.S. companies are encouraged to exercise due diligence when hiring the services of an agent, distributor, partner, or a legal counsel, and to select one who is familiar with Liberia’s business environment, legal and regulatory framework, as well as investment laws, tax procedures, and customs processes. Foreign companies can hire individual sales agents or contract an existing firm to sell their products or services on a commission basis. Such arrangements must be witnessed by a legal counsel or notarized.
Establishing an Office
Under the Associations Law, all businesses are required to register or apply for a Business Registration Certificate to authorize doing business or provide services in Liberia. The Liberia Business Registry (LBR) under the Ministry of Commerce and Industry (MOCI) handles application and business registration processes. Registration fees vary. Standard steps to establish a local business office include:
- Reserve a unique company name with LBR: an applicant can do a name search online or at the LBR helpdesk; business names can be reserved for up to 120 days.
- Register the company using the registration application form (RF-001) and submit the completed application with the company’s articles of incorporation, proof of identification, empowered person’s or registered agent’s form, incorporator’s form, shares and shareholders’ form, and information for tax authority form.
- LBR will review the application package and request a Tax Identification Number (TIN) and bank payment slip (BPS) on behalf of the business in question. All businesses operating in Liberia must have a TIN, which is obtained free of charge from Ministry of Finance and Development Planning.
- Once a TIN has been obtained, pay associated business registration fees at the Central Bank of Liberia (CBL)’s window at LBR or use the mobile money payment system. Mobile money services are provided by the two leading mobile network operators, Lonestar MTN and Orange Liberia.
- Present the proof of payment to the LBR registrar where the process is completed.
- The entire process generally requires one to four weeks to complete. Business registrations are valid for 12 calendar months from the date of registration. Conducting commercial activities in Liberia without a valid business registration may result in penalties. The LBR publishes a fee schedule for new enterprise registrations applicable to different types of legal entities.
Franchising is not a popular business model in Liberia, partly because the concept is unusual in the country’s business culture and partly because it is difficult for local entrepreneurs to secure start-up capital. Liberia has a few foreign franchises and authorized service contractors, such as Western Union, MoneyGram, FedEx, UPS, DHL, and Pinkberry.
There are considerable challenges to direct marketing in Liberia due to limited internet penetration, limited and ineffective postal services, lack of electricity, and low literacy rates. Mobile phone companies employ short message service (SMS) messaging to market and advertise their products and services. Other common methods include radio advertising, television advertising, billboards, loudspeaker announcements in commercial areas, and newspaper advertisements.
According to the Associations Law, “Any business venture carried on by two or more corporations as partners shall be governed by the Partnership Law.” A partnership is defined as “an association of two or more persons to carry on as co-owners of a business for profit.” Legislation stipulates that within 90 days of signing such an agreement, an acknowledged copy of the partnership agreement or a memorandum of partnership (MOP) be filed with the office of the registrar of deeds of the county in which the principal office or the partnership or its registered agent is to be located. A partnership with a non-Liberian partner is recognized as a foreign-owned entity and is taxed as such. Besides registering with the Liberian Business Registry (LBR) as a legal entity in Liberia, a registered business must obtain an operating permit or license from other agencies depending on the sector or industry involved. Such permits or licenses are required by and obtained from a supervisory authority in that sector or industry. For example, a registered construction company is required to obtain a construction “permit” from the Ministry of Public Works, while a registered fishing company must obtained a fishing license from the National Fisheries & Aquaculture Authority (NaFAA), a registered medical company must obtain a permit from the Ministry of Health, and a registered timber or logging company must obtain a license from the Forestry Development Authority (FDA). Commonly required licenses, permits, and tax registrations include, but are not necessarily limited to:
- Zoning and land use permits, especially for new manufacturing businesses and certain home-based business operations
- Health department permits, especially if a business involves the preparation or sale of food
- Sales tax clearances for the selling of almost all products and services
- Fire department permits, especially for businesses that will attract large numbers of customers (e.g., nightclubs and bars)
Some of the agencies that issue licenses or permits include, but are not limited to:
- Ministry of Justice (MOJ): issues permits and clearances for all security-related or fire-related services
- Ministry of Public Works (MPW): issues permits and licenses for construction companies
- Liberia Maritime Authority (LIMA): issues permits and licenses for marine-related activities
- Ministry of Mines & Energy (MME): issues licenses for mining operations
- Liberia Business Registry (LBR) under the Ministry of Commerce & Industry (MOCI): handles all aspects of business registration and incorporation, and issues certificates to operate a business entity in Liberia
- National Fisheries & Aquaculture Authority (NaFAA): licenses and permits required for artisanal and industrial fishing activities
- The Liberia Electricity Regulatory Commission (LERC): created by the 2015 Electricity Law of Liberia to oversee and regulate the electricity sector and issue licenses to operators. (No website yet).
Non-Liberian citizens wishing to establish a resident domestic construction company are required to do so in partnership with a registered Liberian owned construction, engineering, or architectural firm with at least 10 years of proven experience in the construction industry. Some service firms, including legal and accounting firms, have collaborated with larger foreign firms to increase recognition and credibility with potential clients. The real estate and timber sectors boast a fair number of joint ventures. Opportunities exist for joint ventures or partnerships in the mining and construction sectors.
Although express delivery is not fully developed in Liberia, international parcel delivery companies such as DHL, Fedex, and UPS offer some private express delivery, courier, and shipping services. Although costly, FedEx and DHL also deliver envelopes, packaged documents, and parcels to clients in Monrovia and surrounding communities. For express shipment to Liberia, the expected delivery or shipping times, charges (including de minimis value for duty), guidelines, relevant customs procedures, standard prohibitions, and restrictions can be obtained from the service provider and may vary depending on which items are shipped or delivery service used. The service provider may collect some other fees charged by the Liberian government when a product or an item is delivered.
U.S. firms wishing to do business in Liberia are encouraged to conduct comprehensive due diligence on potential business partners, agents, distributors, attorneys, etc. Hiring a local attorney or accounting firm is recommended. Contact information for attorneys, accounting firms, banks, and business associations can be obtained from the Liberia Chamber of Commerce. Banks, law firms, business associations, private security firms, and business advisory or consultancy firms can assist with references and due diligence as part of the overall business arrangement, but not as a standalone commercial service.
Embassy Monrovia provides fee-based commercial services such as International Company Profile (ICP), International Partner Search (IPS), Gold Key Service, and Single Company promotion. Please contact your nearest U.S Export Assistance Center (USEAC) if your company desires one of these services.